Statement by Press Secretary Fitzwater on Economic Assistance for Poland and Hungary
Annotation
After Poland formed a new coalition government in August led by the noncommunist Catholic intellectual and longtime Solidarity adviser Tadeusz Mazowiecki, factions within the Bush administration hotly debated an aid policy to help stabilize the faltering Polish economy. The new government faced a foreign debt of $40 billion and hyperinflation running at nearly 1,000 percent. The rising budget deficit in the US similarly had become a major political and economic concern, as fears of recession spread. Bush especially was hampered with regard to new spending initiatives due to a promise he had made during his election campaign never to raise taxes. The US Congress, controlled by the Democratic Party, proposed greater amounts of aid to Poland than Bush had offered and charged the administration with failing to provide the support necessary to insure that the fragile Polish government would survive. In response to a Polish restructuring plan that called on the US to put together a $1 billion currency stabilization fund with grants and loans from Western countries, the Bush administration—spurred on by the competing congressional proposals—offered Poland a $200 million grant, pending approval by the International Monetary Fund (IMF) of the complete plan, as indicated in the following statement, and coordinated efforts at raising the additional 80 percent from European countries. By January 1, 1990, the $1 billion was raised and Poland’s economic restructuring program began.
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Statement by Press Secretary Fitzwater on Economic Assistance for Poland and Hungary
October 4, 1989
The world has watched with wonder as Poland has moved -- swiftly and peacefully -- to form a
new government under Prime Minister Mazowiecki, the first non-Communist government in
Eastern Europe in more than 40 years. We salute Prime Minister Mazowiecki, President
Jaruzelski, Solidarity leader Lech Walesa, and so many other distinguished Polish leaders for
their courage and wisdom in helping bring about a new beginning for Poland.
From the very start of this administration, President Bush has taken the lead in supporting reform
in Poland and Hungary. At Hamtramck, Michigan, in April, on the day of the signing of the
roundtable agreement in Poland, the President announced a set of measures to open U.S. markets
and encourage private sector loans and investments. In July, he visited Poland and Hungary and
spoke before the Polish Parliament, as well as to a massive gathering at the Solidarity monument
in Gdansk. He announced a further comprehensive package of assistance measures to support
Poland's economic and political regeneration, a package which took account of the fact that
Poland did not yet have its new government or its new economic policies in place. He announced
a similar program during his visit to Hungary, which is also embarked on a promising path of
political and economic reform. A few days later, at the Paris economic summit, the President
proposed and our summit partners agreed to a plan for concerted Western action to encourage
and assist economic reform and democratic change in Poland and Hungary.
In early September, the administration submitted to Congress a comprehensive legislative
proposal that would create a 0 million enterprise fund for Poland and a million fund for Hungary,
as well as a labor initiative and an environmental initiative together totaling million. In addition
to this 5 million proposal, and other initiatives taken by reprogramming existing resources, we
have offered 0 million in emergency food aid to Poland in the coming fiscal year, in addition to
million in FY '89. In dollar terms, this total package already involves over 0 million.
We have also moved to encourage new trade and investment by proposing that Congress grant
both Poland and Hungary access to the U.S. Generalized System of Preferences and that it
authorize the Overseas Private Investment Corporation (OPIC) to operate in both countries. On
September 18, the President announced that he would grant Hungary permanent most-favored-nation status,
contingent upon passage by the Hungarian Parliament of new emigration legislation, which has since occurred.
We have engaged the resources and creativity of the private sector, recognizing that the U.S.
Government alone could not and should not render all the support Poland and Hungary require.
On the eve of his trip to those countries in July, the President hosted a White House symposium
in which he urged leaders from the American private sector -- labor leaders, businessmen,
educators, and others -- to be actively engaged in supporting economic and political change in
Eastern Europe. Labor Secretary Dole visited Poland in August and signed an agreement
providing for U.S. technical assistance and bilateral exchanges in the labor field. In mid-September,
Commerce Secretary Mosbacher led a U.S. investment mission to Poland and
Hungary, where he and American businessmen developed concrete proposals to encourage new
private investments, joint ventures, and other forms of expanded U.S. business involvement in
redeveloping these two economies.
The dramatic changes in Poland over the past 2 months have lent new urgency to our efforts.
What Poland is doing is historic, in the largest sense of the word. It holds the promise not only of
a peaceful transition to democratic rule in Poland but also of the beginning of the end of Europe's
division -- toward a Europe whole and free. It is also unprecedented: never before has a country
attempted a successful transformation of a state-controlled economic and political system into
one of political pluralism, democracy, and a market economy. The new Polish Government
under Prime Minister Mazowiecki has a chance to consolidate the public trust that is needed for
the difficult economic steps ahead, but it faces major economic problems.
There is no disagreement that both Poland and Hungary need, and will have, strong U.S. support.
There is no disagreement that the U.S. needs to play a leading role in developing a concerted
Western approach to Poland's economic recovery. The question is how best to achieve our goal.
We believe, as do our Western economic partners, that Poland can best go forward by reforming
its economy and becoming creditworthy again by reaching early agreement with the IMF on an
economic reform plan. We also support a prompt and generous Paris Club rescheduling of
Poland's international debt. This, along with agreement with the IMF, will make Poland eligible
for IMF and World Bank loans totaling hundreds of millions of dollars annually. It will also give
confidence to official and commercial lenders and to investors, whose participation in Poland's
recovery is vital.
Poland is taking important steps toward reforming its economy. The administration had a series
of meetings last week with key ministers in the new Polish Government and reviewed the
outlines of their economic reform program. It is an ambitious and bold plan, calling for radical
economic reform and rapid movement toward agreement with the IMF. An integral part of the
plan is an urgent request for Western economic assistance in helping to stabilize the Polish
economy as reforms are implemented. In the context of an agreement with the IMF, the Poles
seek, in addition to IMF and World Bank support, billion in stabilization funds from the Western
industrialized countries.
In response to Poland's request, the President has decided on two major new steps. He will ask
Congress to approve a 0 million grant for stabilization purposes, which would be the U.S.
contribution to the billion in Western assistance the Poles have requested. The grant would be
contingent upon conclusion of an IMF agreement, and upon the recommendations of an experts
mission that the President will send to Poland soon. The U.S. will be working closely with the
summit seven and its other allies to make certain that the entire billion is available to Poland for
this stabilization fund since the concept can be effective only if the fund is fully financed. A
program for use of the 0 million U.S. contribution will be developed with the Polish Government.
The President wants to work with Congress to develop a strong bipartisan approach toward the
common goal of providing prompt and effective support to the Government and people of Poland.
It is important to complete development of a strategy to assist Poland's recovery. Toward that
end, the President will send to Warsaw within the next few weeks a Presidential mission
including senior U.S. officials, business leaders, and experts to discuss with the Polish
Government its economic plans and evaluate its needs. This mission will make recommendations
to the President based on their own findings and their deliberations with experts from the 24-
nation Group for Economic Assistance to Poland and Hungary as to the most effective use of the
billion stabilization fund.
This mission will also focus on those economic sectors where U.S. expertise and experience can
be of greatest assistance -- agriculture, business management, financial services, and others --
pinpointing areas for reform and for productive use of assistance resources. The Congress can
certainly be helpful in this endeavor. This initial mission will be followed by experts missions in
key economic sectors. In addition, administration economists will examine urgently the
structural economic challenges Poland will face now and in the years ahead so that we can
provide the most effective help possible to the Polish Government.
As the President has said, the futures of Poland and Hungary depend on concerted and sustained
Western action. These efforts must be complementary, not duplicative, and must be coordinated
with the efforts of the IMF and World Bank. That is why the President called on our G - 7
economic partners at the Paris economic summit to establish new mechanisms for coordinating
our efforts. The resulting 24-nation group has already met 3 times under the chairmanship of the
EC [European Communities] Commission. The EC on October 3 committed itself to 0 million in
additional assistance, over and above the 1 million in emergency food aid already pledged by the
United States, the EC, and other donors. It has also begun to develop a common assistance
strategy for Poland and Hungary, along with working groups on food aid, environment,
manpower training, and other specific areas of assistance. The goal is to set clear priorities, avoid
redundant efforts, and assure maximum aid effectiveness.
West Germany, France, Britain, Japan, and several other countries have already announced their
intention to provide substantial bilateral assistance. The IMF has indicated it will move quickly
in assisting Poland to develop an overall economic stabilization and reform program; and the
World Bank is prepared to extend promptly major new credits, once an IMF program is in place,
and to develop additional loans.
Finally, in order to continue the dialog with Poland's leaders that he began in July, the President
is inviting President Jaruzelski and Prime Minister Mazowiecki to visit Washington at times
convenient for each of them.
These are steps the administration has taken and will be taking in support of democratic change
in Poland and Hungary: economic assistance conditioned upon real progress toward reform,
business and technical assistance, the opening of investment and trade opportunities, and
concerted Western action in conjunction with other industrialized democracies and the
international financial institutions. These combined measures constitute an international recovery
program that provides broad and substantial Western support for the historic changes now
underway in Poland and Hungary.
Credits
Marlin Fitzwater, "Statement by Press Secretary Fitzwater on Economic Assistance for Poland and Hungary," speech, Washington, D.C., October 4, 1989, Bush Presidential Library, Documents and Papers, Bush Library (accessed May 14, 2008).