Hungry and jobless Poles can take some satisfaction from the role of the United States in easing their debt. In the transition from communism to a free market, economic conditions were expected to get worse before they got better, and so they have. The debt forgiveness from the United States -- a debtor government itself that can ill afford such generosity -- rewards the good faith of the Polish regime in making painful but necessary reforms.
According to the State Department, the U.S. had been prepared to see all of Poland's $33 billion in government-to-government debt written off. But the United States was unable to persuade a reluctant Paris Club of creditor nations to write off 50 percent, collectively. Within that framework, President Bush greeted visiting President Lech Walesa of Poland with forgiveness of 70 percent of Poland's $3.8 billion debt to the U.S. government.
In doing this, Mr. Bush was keeping faith with what the U.S. seemed to stand for throughout the Cold War and particularly in the transitional year of 1989, when the fate of Eastern Europe was up for grabs. In a banking sense, it is perilous precedent to let a debtor think loans need not be repaid. But a political motive in debt policy cannot be denied, as in U.S. cancellation of Egypt's $7 billion debt when it rallied against Iraq's aggression.