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Why There's Blood In Poland's Streets Again


International -- Intl' Business: POLAND

WHY THERE'S BLOOD IN POLAND'S STREETS AGAIN

It is Poland's fiercest labor confrontation since the early days of Solidarity: Beginning in mid-May, angry trade unionists from state-owned tractor maker Ursus started taking to Warsaw's streets, igniting tires, splashing red paint around the city, and even burning an effigy of Prime Minister

Jozef Oleksy. On May 26, the unrest erupted into violence, as coal miners and steelworkers joined the tractor workers for a 10,000-strong rally that left 51 protesters and police injured.

The battle lines are familiar: Solidarity vs. the communists. But unlike the days before martial law, embittered workers now are trying to force a breed of reform-minded communists to ante up cash to help restructure ailing state industries. With more than 60% of the economy in private hands, less than half of all workers are unionized, and only 15% work for state companies. But state workers are increasingly angry as they watch former communist nomenklatura snatch good jobs in privatized companies and rapidly accumulate wealth.

At the center of the conflict are the policies of Finance Minister Grzegorz Kolodko, a former communist. Unionized workers in state factories such as Ursus are pushing for debt relief to bail out their factories and to pay for modernization. So far, Kolodko has reacted inconsistently. While talking a tough line on inflation, Kolodko earlier caved in to demands of power industry workers for debt write-downs. Then he stood firm against the tractor workers as they pushed for similar bailouts.

One result of the zigzag is a 20% inflation rate, compared with the 16% Kolodko targeted for this year. Even so, Poland's growth is chugging along nicely at 5%, and foreign investment for the first quarter of 1995 reached $700 million--exceeding half the 1994 total. Now, pressure is growing on Kolodko to attack the next big target: the bloated state sector. Reformers want to reduce massive pensions and health spending and shrink dinosaurs like Ursus.

With popular support for the labor protesters thin, Western advisers and investors are urging Kolodko and his reform communist partners to move faster. They want him to scrap a controversial program that would "commercialize" thousands of state enterprises without really privatizing them, leaving them on the state books indefinitely. They urge a speedup of steps to de-monopolize the telecommunications industry and allow foreign investors to help finance technological improvement of the electric-power, steel, and coal-mine sectors.

Observers such as Neil R. Balfour, chairman of the newly created Polish Investment Fund, think Kolodko will take a tougher line. "The government realizes there has been a stalling, and I think some change is occurring as a result," he says. With backing from the European Bank for Reconstruction & Development, the fund will soon be managing the privatization and restructuring of state enterprises.

SUMMER OF DISCONTENT. In any event, tensions are sure to rise as the campaign for this autumn's presidential elections heats up. Despite the popular disdain for the labor actions, union leaders vow to renew their strikes after the big Polish holiday of Corpus Christi on June 19. The protests may also give pensioners, people lacking housing, and workers in financially strapped privatized companies the chance to air their grievances.

With Kolodko and Oleksy on the hot seat, President Lech Walesa seems to be cheering on the strikers as a way to embarrass the ex-communist government coalition and boost his own rating in the polls. If strikes become the focus of the presidential campaign, Poland may be in for a long, hot summer.By Peggy Simpson in Warsaw and Karen Lowry Miller in Bonn


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