Created: 5/28/1982

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POLAND: Economic Relations With the West

Some Polish economists are arguing that economic relatione ui'h the Ueet must be improved, but the Xetitethip seems unwilling to follow thie odvioe.

The economists have contendedecent series of press articles that Western sanctions are doing serious damage to the economy, that the government's response of depending on the East is unrealistic, and that Poland should take measures that would help persuade the Western countries to esse their sanctions. They argue thathave greatly reduced Poland*success to credits and have blocked economic recovery.

Poland has slashed imports from tho Westn the first quarter torade surplus and make Borne debt payments.esult, output ofgoods has continued to slump.

The articles also argue that reorienting trade toward the East isecause of Poland's heavy dependence on Wostern imports and the lack of substitutes in CEHA. overnment study claims that less thanercent of Industrial materials imported from the West could be replaced by the East. In addition, Poland is not receiving major assistance from CEHA partners, as had been hoped.

Commentt The experts exaggerate the positive effects of an end to Western sanctions,elief among many Poles that this wouldlood of new credits. Western lendersmore by Poland's bankruptcy than by sanctions.

Despite the poor results of their economic policies, there is no indication that anyone in the leadership is participating in the debate. Hardliners may believe that the regime went as far as it could to persuade the west to lift sanctions with its "grand gesture" of releasing political internees earlier this month.

Without some move toward improving economic ties with the West, however, Warsaw feces painful choices. The regime probably will be forced to expand its austeritypolitically risky approach when the population .tu already adjustingubstantial drop in living



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