ECONOMIC SPOTLIGHT - POLISH SANCTIONS

  Poland says U.S. Sanctions have cost its
  economy 15 billion dlrs and has made clear it wants Washington
  to take a lead in repairing the damage after lifting remaining
  restrictions two weeks ago.
      Polish officials are unable to provide a precise breakdown
  of the figure, saying it takes into account a number of
  hypothetical losses. Some of them are "too sophisticated to
  convert into financial terms," one banking source said.
      But Western economic experts say the effect of sanctions is
  impossible to calculate.
      They say it is blurred by the poor performance of Poland's
  economy, and dismiss the 15 billion dlr figure as illusory.
      "Sanctions have provided a very useful excuse for under-
  achieving. They did have a bad effect, yes, but they only
  contributed to largely internal, economic problems," one said.
      The U.S. Imposed the measures and withdrew Most Favoured
  Nation (MFN) trading status from Poland in 1982 in retaliation
  for suppression of the Solidarity free trade union under
  martial law. The estimated cost to the Polish economy was
  originally devised several years ago by the Institute of
  National Economy, an offshoot of the central planning
  commission.
      According to one Western envoy, an expert on Polish
  economic affairs, it extrapolated 1979 information on growth
  trends in trade with the United States, as well as increases in
  credits from Western commercial and government lenders.
      But the calculations were based on a time when trade was
  booming and credits still flowed freely, he said, dismissing
  the estimate as "a theoretical projection based on a high point,
  which has no real scientific evaluation."
      A foreign trade ministry official said Polish exports to
  the U.S. In the late 1970s averaged around 400 mln dlrs
  annually and had fallen by half since the sanctions were
  imposed.
      Imports have suffered, slumping from around 800 mln dlrs to
  200 mln, as credits ran out. Poland has a dwindling trade
  surplus with the West. Last year it was one billion dlrs
  against a targeted 1.6 billion, official figures show.
      Acknowledging that sanctions have lost Poland important
  U.S. Markets -- including agricultural equipment, textiles,
  chemicals and some foodstuffs -- Western economists say credits
  dried up for economic not political reasons.  "Poland is
  accusing the West of letting economic relations deteriorate for
  political reasons," said one expert. "It's an illusion based on a
  misunderstanding of Western economy."
      "There's a limit to how much you can go on giving someone
  who has no hope of repaying it," another said, adding that
  Poland had benefited from a global phenomenon of easy credits
  in the 1970s which were no longer today's reality.
      Describing the 15 billion dlr assessment as "nebulous," one
  diplomat said it also included losses of hypothetical orders
  and setbacks to Polish research through the curbing of
  scientific links and exchanges.  Western officials say the
  lifting of sanctions and new MFN status will have little impact
  on Poland, which has a hard currency debt of 33.5 billion dlrs
  and lacks the means to modernise its industry.
      "MFN doesn't really mean anything, only that Poland will not
  be treated worse than other countries. It will be difficult to
  regain access to the U.S. Market because different forces are
  in play now," said one Western envoy.
      He said Polish products were not competitive, and their
  quality was too low. Trade wars and possible protectionist
  measures amongst the U.S., Japan and Europe would also hamper
  Poland's efforts to regain entry.
      Deputy foreign trade minister Janusz Kaczurba recognised
  this fact recently.
      Kaczurba told the official PAP news agency recently, "Making
  up our lost position will take a long time and be uncommonly
  difficult, and in certain cases impossible... In a period of
  two to three years it will be possible to increase the level of
  exports by only about 100 mln dlrs."
      While Poland is unlikely to seek compensation, it says it
  has a "moral right" to assistance from the U.S. Which it says
  imposed the sanctions illegally. But a Western economist said
  "The argument that U.S. Sanctions were a unilateral torpedoing
  of the Polish economy won't cut any ice. The Americans will
  just reply that the Poles acted immorally in crushing
  Solidarity."
      Nevertheless, Polish National Bank head Wladyslaw Baka, in
  talks in Washington last week with the International Monetary
  Fund (IMF) and World Bank, made it clear that Poland was
  looking for a lead from the United States.
      He was quoted by PAP as saying that Poland would meet its
  financial obligations to the United States, "but not in a short
  time and not without a cooperative stand on the part of its
  foreign economic partners."
      He stressed that the U.S. "had a particular opportunity to
  play a part in the cooperative policy of Poland's partners
  interested in the settlement of Polish debt."
      Putting it more sharply, one senior banking official blamed
  Washington for obstructing talks with the World Bank, IMF and
  Paris Club of Western creditor governments in recent years and
  said it should now play a more positive role.
      "As a major superpower the United States can influence
  international organisations," he said, citing recent meetings
  aimed at stabilising currencies as an example of the extent to
  which Western nations were prepared to cooperate.
  

