[L-I] "Free market, enslaved people "

As Poland Endures Hard Times, Capitalism Comes Under Attack
By IAN FISHER, NYT


SZCZECIN, Poland ― In Communist times, no one was louder than Poland's famously 
feisty shipyard workers about the state's inability to provide a decent 
standard of living. So now it seems a cruel joke that, as the sparkle fades 
from the market economy, it is private enterprise that has failed them.


  


 
Since March, the Szczecin shipyard has been closed, and 6,000 workers have not 
been paid. When violence loomed, the government stepped in, announcing a plan 
in May that would, for the first time, renationalize a Polish company.

"It is certainly very abnormal," said Bogoslaw Rydzenski, 48, a worker. "No one 
could have predicted this."

These are hard times in Poland, which grew for nearly 10 straight years into a 
country of stocked shelves, giant malls and impressive self-confidence ― a 
40-million-strong symbol of Central Europe's post-Communist hopes.

Now, the will to continue privatization and other reforms, and even the desire 
to join the European Union, have flagged. The story is much the same around the 
region, as the transformation from gangly state economies has brought material 
comfort, but also insecurity and a new set of inequalities. In Poland, indeed, 
the very notion that Western-style capitalism will work in the eastern nation 
that embraced it perhaps most heartily is under attack.

"There is an apropos graffiti," Krzysztof Bledowski, an economist, said as he 
sat in a cafe in downtown Warsaw. He pointed across the street to a car parts 
shop, where someone had scrawled on a wall: "Free market, enslaved people."

"It's the spirit of the day," he said. "The mood has shifted. Capitalism is not 
seen by many people as a system for justice, growth, better times for kids and 
so on."

What is happening now is not economic collapse of the kind that engulfed Russia 
in the 1990's.

Many companies are doing well, and Poland appears set to move into the European 
Union in 2004. But there is a serious slowdown, compounded by what many experts 
say is political dawdling and disagreement about how to fix it. 

Around the region, the cost to top leaders is high: Second terms here are rare, 
and experts say Poland's new coalition government, led by the socialist 
Democratic Left Alliance, will be no exception if it cannot reverse this 
downturn.

Last year, growth dropped to just 1 percent. Unemployment this year hit 18 
percent, the highest in the post-Communist era, and there are real worries of 
street disturbances and protests in the largest nation up for joining the 
European Union, if more people lose their jobs.

This downturn, Mr. Bledowski said, is "causing a lot of soul searching. People 
are revising a lot of assumptions and expectations."

Some experts worry that the problems at the shipyard in Szczecin (pronounced 
SHTESH-een), once the German Stettin, may usher in an era of greater economic 
control by the state. Although the center-left government elected last year 
says Szczecin is a singular case, there are already calls for intervention over 
a Daewoo car plant that went bankrupt this year and where angry workers are 
staging a hunger strike.

"There is a queue of other potential bankruptcies, and it worries me," said 
Hubert A. Janiszewski, managing director of Deutsche Bank in Poland.

Unlike many other former Soviet bloc states, whose economies alternately surged 
and faltered, Poland's trajectory since the early 1990's has been largely up. 
Economic growth in the mid-1990's hit 7 percent. Unemployment dipped for a time 
to below 10 percent. Foreign investment flooded in. "People felt you could 
throw in a little money and watch it expand into enormous piles of cash," said 
Tony Housh, the former leader of the American Chamber of Commerce in Warsaw.

But Poland remained two nations economically. Cities, especially Warsaw, 
prospered, as poverty ground on in the countryside, especially on the many 
inefficient farms. Many large- and medium-size private business did well, more 
or less masking big problems in overstaffed nationalized companies, in coal 
mining, steel and chemical production.

Then in 2000 and 2001, the world economy turned, especially that of Poland's 
main trading partner, Germany. Monetary policies, aimed at staving off 
inflation, kept the national currency, the zloty, strong and interest rates 
high. Unemployment surged as companies, feeling the pinch of reduced demand, 
shed workers. Reduced tax receipts and increased spending by the old government 
during the elections last September ratcheted up the budget deficit to crisis 
levels.

In the disillusionment with the new economy and the mainstream parties of both 
right and left, fringe parties, particularly Self Defense, led by a radical 
populist, Andrzej Lepper, have surged.

Mr. Lepper talks often about a middle road between communism and capitalism, 
greater state protections over the free market ― a notion that appeals these 
days to many Poles and resonates especially here in Szczecin. Many shipyard 
workers say private management drove the company into the ground.

"Polish yuppies!" spat out Janusz Gajek, a 43-year-old worker here who led 
worker protests after the plant here closed in March. A fellow protest 
organizer, Roman Nizurski, 46, added: "What about the rest of us? The 
relationship between managers and workers has been broken."

Poor management decisions, in fact, are often cited as a reason for the 
shipyard's problems. But there are others: a downturn in the worldwide 
shipbuilding market; the strong zloty, which increases the prices of ships; 
problems with a new prototype tanker. In March, banks simply stopped extending 
credit.

Many workers say they are not happy with the state plans to insert itself again 
into the shipyard ― after all, it was the Solidarity trade union in the Baltic 
shipyards that led the fight against communism in the 1980's. Equally, they 
know there is no other choice to save their jobs.

"We know this is some kind of temporary salvation," said Mr. Gajek. "A rope has 
been thrown."

Mr. Janiszewski, of Deutsche Bank, sees a major problem in state intervention 
because, he said, "the government has no guts to reverse the situation in a 
decisive way."

Reducing the deficit and privatizing the big industries still under state 
control means taking on the powerful unions and making more job cuts at a time 
when high unemployment has become a real political liability.

Government officials declined repeated requests for interviews. 

But Stanislaw Gomulka, a prominent economist who advises the finance minister, 
contended that the present government inherited many economic problems from the 
previous administration, while acknowledging that Prime Minister Leszek Miller 
and his team have been slow to impose their own reforms.

"The government is a little bit afraid that if it imposes radical laws that are 
opposed by the trade unions that we will have street fights, demonstrations, 
large political fights," said Mr. Gomulka, a professor at the London School of 
Economics who has advised governments in Poland since 1989. That, he said, 
could strengthen populists like Mr. Lepper even more. "They want to see if a 
consensus can be reached."

Mr. Gomulka predicted that reforms ― cutting taxes, easing bureaucratic burdens 
on vital small and medium-size enterprises ― will come. Poland, he said, 
remains strong in its foundations, an opinion shared by many economists and 
business executives.

William V. Carey, a former golf professional from Florida, came to Poland in 
1991 to explore exporting Polish agriculture. With a quick look around at the 
empty shop shelves, he decided it might be better to bring in goods instead. 
Starting simply by importing Fosters' beer ― before the Polish beer industry, 
like so many others, took off ― he slowly built his company into the nation's 
largest distributor of beer, wine and spirits.

His company is flourishing, and he remains optimistic, despite Poland's 
backward bureaucracy, poor roads (of special concern to a distribution 
company), and the downturn.

"It is quite a remarkable success," said Mr. Carey, now 37, sitting in the new 
Warsaw headquarters of his business, the Central European Distribution 
Corporation. "I viewed Poland as 40 years behind when I got here, and it is 
just a few years behind now."

But, he said, Poland's new business class is learning a rough lesson from the 
downturn: "That there is a lot more to running a company than just getting it 
up. It is a lot of sweat to get it into progressive growth ― not just to do 
well when the economy is growing."


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