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NOW'S THE TIME TO INVEST IN EASTERN EUROPE
The new-won freedom of the peoples of Eastern Europe will be at risk until their economies can supply jobs, housing, and all the goods and services that underpin a decent life and a stable political system. Hungary, Poland, and Czechoslovakia have made an encouraging start (page 46). The best news is that a major self-engendered "Operation Bootstrap" is under way.
Entrepreneurs, tradesmen, and shopkeepers have started up businesses that are flourishing in a way that centrally directed operations never could. A locally grown private economy is creating output faster than it's being extinguished in the bankrupt state sector. But the region needs direct investment, cash on the line by foreign companies, and individuals making hardheaded decisions about viability and profits. In a couple of years, the three countries together could be getting $3.5 billion a year in such investment--triple what they received in the whole communist period.
This free-market process is far too slow for some people's taste. But they are probably mistaken. Throwing aid money at decayed state enterprises isn't the answer, as the former East Germany shows. Bonn is pouring $75 billion into the east this year alone, but the outcome there is deep resentment and an alarming resurgence of politically inspired violence. The assassins that murdered Detlev Rohwedder, head of Germany's Treuhandanstalt privatization agency, were killing the messenger. But they won't change the message: Reversing 40 years of communist misrule will be a long, hard, painful slog.
Of course, the Soviet Union is still an uncomfortably close neighbor. Turmoil there could still provide many more harrowing moments, if large numbers of refugees flee west. Eastern Europe is rebuilding cultural, scientific, and educational bridges to the west. But it's even more important to find a way of hitching the region's emerging entrepreneurs to the European Community and the world economy. That way, they will be capable of facing the full blast of international competition.