Bush has gift for Walesa: forgiveness of 70% of debt

March 21, 1991|By Karen Hosler | Karen Hosler,Washington Bureau of The Sun

WASHINGTON -- President Bush, in an unusually generous bid to help the chaotic economy of Poland weather the transition from state control to a free market, announced yesterday that the United States would tear up 70 percent of the $3.8 billion it holds in Polish IOUs.

Mr. Bush delivered the word at a sunny, spring-like arrival ceremony for Lech Walesa. The erstwhile electrician credited with leading Poland's anti-Communist revolt was accorded full White House honors yesterday as the first democratically elected president of post-World War II Poland.

"You have worked hard to build a prosperous land upon tyranny's ruins," Mr. Bush told him. "We want your economic transformation to succeed, your new democracy to flourish."

Mr. Walesa also appeared here as the top cheerleader for Poland's budding capitalism.

"In all the post-Communist countries, and particularly in Poland, there is big business to do," Mr. Walesa told reporters later at the State Department. "Today's assistance on the part of the American taxpayer would allow us to start doing business which would bring profit for the taxpayer tomorrow."

The Bush administration, which has been reluctant to forgive foreign debt except in rare instances, for a time resisted Poland's entreaties to its major creditor nations, known collectively as the Paris Club, to erase all or part of the $33 billion it owes on loans going back two decades or more.

But the administration recently reversed course and began lobbying hard for a Paris Club agreement to write off at least 50 percent of Poland's debt.

Yesterday, Mr. Bush said he would take that agreement a step further by forgiving 70 percent of the amount owed to the United States, and he challenged other creditors to follow his lead.

Secretary of State James A. Baker III explained that the turnabout was prompted by a concern that Poland, which is the first of the Eastern European nations to attempt a full-scale transformation, might fail without this extra help.

"It is important that they succeed as examples of democratization and free markets," Mr. Baker told reporters. "The United States wants to do everything we can to assist and assure that success."

Mr. Walesa had come here hoping for a debt reduction of 80 percent or higher, but officials said that 70 percent was the most Mr. Bush would spare.

Poland will not be off the hook for all of the $2.7 billion in debt Mr. Bush forgave yesterday. Ten percent of the total amount -- or about $380 million -- must be invested by Poland in a special environmental fund for that badly polluted nation.

The Bush administration has already asked Congress to approve more than a 50 percent increase in foreign aid to Poland next year, raising the total to $470 million from $300 million this year.

Mr. Bush also announced yesterday two new trade and business initiatives to benefit Poland and said that Commerce Secretary Robert A. Mosbacher Sr. would lead an investment mission there this summer.

The trade initiative calls for a $182.4 million expansion of duty-free imports from Central and Eastern European countries, including $93.3 million from Poland.

In addition, he said, a U.S. business center to be established in Warsaw would provide office space and technical services for a fee.

"Free Poland is becoming a country of new economic opportunities," Mr. Walesa said in his White House pitch. "It is worthwhile to broaden the cooperation with it, to trade and to invest. I invite you to this cooperation, for it is going to be advantageous to both sides."

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.