Taking Advantage of Summits: Eastern Europe's Last Chance?

TAKING ADVANTAGE OF SUMMITS: EASTERN EUROPE'S LAST CHANCE? Carol Rae Hansen lästern Europe is foundering, and the Soviets are worried. For the first time since the late 1940s the states of Eastern and southeastern Europe face severe economic decline. Food and wage riots have erupted with increasing frequency in Romania since 1985, rounds of price rises have repeatedly led to social unrest in Poland, and in Hungary, many people work several jobs just to pay newly instituted taxes. Market-oriented reforms and austerity packages dictated by indigenous planners and the International Monetary Fund (IMF), together with the proclaimed goals of Mikhail Gorbachev, have shaken Eastern Europe. More disruptions will occur if obsolete enterprises are closed in an effort to boost productivity , and as labor and capital are shifted to export-oriented sectors. If present trends continue, several East and southeastern European states face a precipitous slide into the ranks of the lesser developed states. Eastern Europe does have at least one chance to reverse its descent into economic and political decline. There is a shot of gamma globulin within reach, one that could boost prospects for most of Eastern Europe. The successful summit in Washington, a fruitful follow-up meeting in Moscow, and a ratified INF treaty offer Eastern Europe a historic opportunity to turn its fortunes around. With the superpower gridlock broken, the countries of Eastern Europe must seize this long-awaited chance to expand trade and cultural ties with the West, for it is unlikely that their crumbling fortunes can endure the wait for another cyclical upturn in U.S.-Soviet relations. Ironically, Gorbachev "the Reformer" Carol Rae Hansen is a Council on Foreign Relations International Affairs Fellow conducting research on U.S. policy toward Eastern Europe. She is also a fellow at the Foreign Policy Institute at SAIS, where she is conducting a roundtable series on U.S. -Soviet Trade. From 1985 to 1987 she was responsible for East European and Soviet issues at the U.S. Senate Committee on Foreign Relations. 229 230 SAIS REVIEW offers no panacea for Eastern Europe's problems; indeed, he has encouraged his allies to turn to the West for investment and capital. In the coming months it will be up to Eastern Europe to seize the rare opportunity the summits afford to take charge of their own futures. What can Eastern Europe hope for? Historically, whenever there has been an improvement in relations between the United States and the USSR, particularly when an arms control agreement has been signed, an atmosphere of détente builds. Whether the result is a "mini-thaw" or a sustained effort to build superpower cooperation, the impact on Eastern Europe has been generally positive. East-West trade increases, and a variety of social and cultural exchanges expand ties between the East Europeans and the West. In fact, it is axiomatic that the East European states cannot have better relations with the West than the Soviets have with the United States. Unless a "thaw" occurs in U.S. -Soviet relations, East European states (even the German Democratic Republic [GDR], which has special privileges) are generally constrained from building a wide variety of contacts with the West — economic, political, cultural, and diplomatic — and their societies suffer as a result. How could the East European states benefit as a result of the trends symbolized by the Washington and Moscow summits and the INF treaty? If they play their cards right, they are likely to reap substantial benefits in four main areas: economic, military, political, and social/cultural. Economic Reform and Trade: A Two- Way Street Eastern Europe eagerly awaits the improved economic relations with the West that are likely to result from two successful Reagan-Gorbachev summits. The volume of trade may not necessarily grow rapidly in the short-term, but the range of contacts, the types of ventures, the ease of business efforts, and the flexibility of financing arrangements should expand due to a pent-up desire by certain East European governments to accommodate the West. These new initiatives will have important ramifications for progress in other areas of the East-West relationship as well. In the freer political atmosphere stemming from the summits, the...