West gives debt-ridden Poland and Romania some breathing space

Eastern Europe's two big over-spenders - Poland and Romania - have each been given a breathing space by their Western creditors.

But it is only a modest one.

Between them, these two heavily overextended communist states owe some $38 billion to Western governments and banks, a debt that is big enough to have caused a major upset in East-West financial links.

Latest estimates put Poland's share at more than $26 billion. Last week US banks in New York agreed to an interim formula under which the Warsaw regime will receive short-term credit inducements for trade on the condition it meantime pays $400 million in interest due this year.

At a Paris meeting the same day, Romania, which owes the West some $10 billion to $12 billion, secured agreement from the banks of 15 Western creditor countries for rescheduling 80 percent of some $600 million it was to have paid by December. The debt is being readjusted over six and a half years.

The US banks' concession to Poland, meanwhile, will do little to ease Poland's anxiety about its mounting Western debts and continuing US disinclination to accept Warsaw's argument that, without accommodation from the West, Poland's difficulties - and martial law - must be prolonged.

Besides meeting interest charges due this year, the American banks are asking Poland to pay 5 percent of the principal on borrowings due this year, with the rest to be rescheduled in due course. The situation is to undergo review by all of Poland's foreign bank creditors in London this week.

Earlier this year, the 500 Western and Japanese banks to whom Poland owes money agreed on a new timetable for repayment of $2.4 billion outstanding from 1981. No decision was made on another $2.5 billion in principal and $2 billion in interest that normally should be met this year.

The Poles say they simply cannot pay and that they have to have much more time. They want the West to accept more linkage between rescheduling and trade, since if they can boost trade, they have a better chance to earn the hard currency needed to pay their debts.

The West Europeans, notably the West Germans, are ready to allow four-year terms in trade credits. At present US banks are holding out for a year's limit to allow annual review of the Polish situation.

The Poles probably are right in believing that their bank creditors will not foreclose to the point where Poland might be forced into default. Neither Poles nor Western banks appear to consider default a serious possibility, since it would mean the Western creditors would have no prospect of ever getting any of their money back. It is just as unacceptable to governments because of the further dislocation default would cause in the international financial system.

The prospect of a collapsed, bankrupted nation of 35 million people in the middle of Europe would be as undesirable for the West as for the Soviet Union, which would have to do at least the initial bailing out.