East Europeans Look To West Democracies For `Trade Not Aid'

REFORM in Eastern Europe is close to real trouble and next month's G-7 summit of industrialized nations in London should take note. Problems stem largely from the Soviet Union's economic plight and the consequent trade losses suffered by its old partners in Comecon, the Soviet-led trade group. Worst hit, ironically, are those most advanced on the painful road to open economies.

Hungary, Czechoslovakia, and Poland suffered disastrous losses in the collapse of that market. The West - in terms of aid pledged by the United States, Japan, or the European Community (EC) - is seen as doing little to help them compensate.

At a meeting of Polish, Czechoslovak, and Hungarian ministers in Slovakia in early June, ministers accused the Community of inconsistency in its attitudes. ``You press us to greater, swifter reform but, at the same time, maintain protectionist barriers keeping us from your markets,'' they said.

The new democracies contributed to their own problems. They badly underestimated their certain losses from the demise of their once-assured Comecon market. They were also over-euphoric about how soon the EC might let them in.

Since hard-currency accounting replaced Comecon's barter system in January, Soviet exports to and imports from Eastern Europe fell to half what they were this time last year.

Everywhere, enterprises that had previously worked mainly for the Soviet Union are closed or are doomed to close because of the reduced supplies and higher prices of energy, etc., as the Soviet Union itself opts for markets in the West.

This has already cost tens of thousands of jobs. An anticipated rise in unemployment could easily jeopardize the whole reform process by forcing slowdown, say, in privatization, for fear otherwise of crossing a politically and socially acceptable threshold.

Grumbling at Western tardiness has mounted through the year. Poland, for example, is often assured it is ``part of the wider European family.'' Yet President Lech Walesa commented after an April visit to London that Western private industry seemed ``less ready to invest in a reformed Poland than under Stalinism.''

Recall of Poland's experience of the pre-Solidarity 1970s suggests he had a point.

THE unhurried EC response on ``associate'' status - which in any case would entail nothing like the open sesame the East Europeans want - is not encouraging. The East Europeans look enviously at Austria as a model. But Marshall aid put Austria in the world market in the 1950s. It is ``ready made'' for the EC, as an EC foreign minister has just said here. But it will be long before even the most reformist East Europeans achieve that status or, to put it quite simply, prove competitive enough.

Their worries about the Soviet Union, meantime, have acquired a new dimension.

Until recently, the West was urged to use the G-7 summit to ``help Russia.'' It looked like a way of reducing the impact of its economic decline on Eastern Europe.

With Soviet President Mikhail Gorbachev's invitation assured, there was alarm that a big G-7 aid package to the Soviets could sidetrack the bigger East European entry into Western trade.

``Trade, not aid,'' was the leitmotif during the meeting in Slovakia. Said Polish Prime Minister Jan Bielicki: ``If Western Europe is serious about wanting stability in Eastern and Central Europe, it simply has to open its doors.''

Harvard Prof. Jeffrey Sachs - an economist of standing as author of Poland's so far relatively successful reform strategy - says much the same. He thinks countries ``persevering with politically difficult reforms'' - which really includes them all - merit more recognition and that this (he says) would provide ``exactly the political spur'' to keep them boldly on course.

For the East Europeans - and for Mr. Gorbachev too - it is going to be a testing point for the G-7 leaders next month.