Past and future collide in post-Communist Poland

The country's failing industry clashes with visions of joining the European Union by 2004.

Dariusz Bargiel's eyes light up with hope when he thinks about Poland's future.

"The economy is going to get better," he says. "I expect to have my own business within five years. It doesn't really matter what the business does, as long as I own it."

A new graduate of southern Poland's Academy of Economics, Bargiel is already manager of the Krakow branch of Inteligo Bank, part of an Internet service trend that is taking central and Eastern Europe by storm. Yet, as he talks, a shadow of doubt creeps over his face. For the first time, there are parts of this vibrant city he is afraid to walk through, after recent incidents of violent crime.

Behind the spires of medieval churches and new office buildings loom the smoke stacks of the failing steel works, which is still Krakow's largest company.

Poland's third largest city, packed with students and entrepreneurs but surrounded by rotting industrial districts where jobless men scour the streets for scrap metal to sell, Krakow reflects Poland's contradictions with startling clarity. While its youth enthusiastically embraces a vision of a bright future in the EU, the industrial relics of its hastily forgotten communist past threaten to drag it down.

"Young people in the city are obsessed with the future," says Olaf Swolkien, a Krakow sociologist. "They would rather just leave the rest of the country behind and go on into their bright European future but the weight of economic misery in the country won't allow it."

These same contradictions are entangling the country's five-month-old government. The new coalition, dominated by the Democratic Left Alliance (SLD), was elected on a seemingly conflicting program pledging social protection alongside spending cuts and painful reforms required for European Union membership.

SLD leaders say privatization of heavy industries and an austerity package are urgently needed to boost business and prevent a financial crisis, but this is hard to balance with the party's roots in social protection. Analysts say the strain is likely to fracture the SLD's only real strength - its unity.

Impractical promises were the bane of the last government, an alliance of parties sprouted from the working-class Solidarity movement that overthrew Poland's communist regime in 1989 and initiated a chain reaction which led to the demise of Soviet influence in eastern Europe.

"The industrial workers, in particular, placed enormous expectations on Solidarity and they were disappointed," says Kazimierz Bujak, professor of public affairs at Jagiellonian University in Krakow. "But they didn't originally want a free market society. They wanted socialism with a human face. Only slowly did they realize they are on the losing end of the new pecking order."

After the most vigorous reform program in the post-Communist world, Poland surged briefly as an economic tiger, the fastest growing economy in Eastern Europe, and the darling of international investors.

But the boom didn't last. This year economic growth and investment are slumping, and unemployment hovers between 16 and 18 percent.

The Solidarity bloc also fell into internal bickering and suffered a series of high-level corruption scandals. Voters expressed their disappointment in September's parliamentary elections by driving the Solidarity parties out of parliament and electing the leftist coalition and a series of upstart radical parties in their place.

Economic hardship hit Solidarity's electoral foundations hardest in the industrial areas. Voters there now support leftists at the polls.

On the outskirts of Krakow, stands Nowa Huta, a gray complex of apartment buildings constructed in a star around the steel works. The district was built by the Communist authorities in the 1950s as a model of a "new socialist paradise" in contrast with traditional Krakow. Two months ago, the steel enterprise filed for bankruptcy.

In its heyday, the steel works employed 40,000 people. Today it employs just 8,000 and workers say another 2,000 layoffs are expected soon. In the past few years, those who still have jobs at the factory have seen their salaries degrade from some of the highest in Poland to among the lowest.

Now, Nowa Huta's main boom is in shabby pubs, which fill quickly with the unemployed. The main street is lined with women selling shriveled apples and household odds and ends. "I supported Solidarity, but not any more. Never again," says Maryja Wojdela, who huddles in the bitter cold by her meager wares. "They failed us. We have no work, no money for food."

Ryscard Sulek, a foreman walking out of the gates to the smoke-blackened factory, says he fears the worst is yet to come. "I know privatization is generally good economic policy but we are afraid that some Western company will take over the factory and close all the inefficient parts," he says.

"They will keep only a tiny profitable part of the plant running and many more people will lose their jobs." Mr. Sulek has been working at the Nowa Huta steel works for 25 years. Analysts say workers at the mill make about 1,500 zlotys, or around $370 a month, which is twice the minimum wage. Still, Sulek has a wife and four children to support and has to work a second job in the evening to get by. "I haven't been laid off yet, but I worry," he says. "It is very difficult to find work at my age, but what really makes me worry is what will happen to this town."

But even within Nowa Huta there is a stark generation gap. Marta Szczurek, a resident of Nowa Huta, is studying English at Jagiellonian University and dreams of moving to the city center and working at an upscale private school. Unemployment among new graduates is rising quickly, but this doesn't bother Miss Szczurek. She perceives a different world at her university. Boasting 16 universities, Krakow is known as the "city of students" and is ranked among the most attractive cities for investment in Eastern Europe.

"Somehow things always go my way," Szczurek says. "Somehow I will be lucky and get out of Nowa Huta."