Logo Polskiego Radia

Poland pays off communist debt

PR dla Zagranicy
Veronika Joy 30.10.2012 14:15
Poland has paid off the last of communism debt accumulated during the 1970s ‘golden years’, when western credits paid for a short-lived consumer boom.

/

Edward Gierek, Poland's communist leader for 10 years, fueled the boom while accumulating almost $40 billion in debt in the process from the ‘London Club’ of financiers.

“Before the maturity date, we will have bought the last of the bonds,” said Piotr Marczak, director of the Department of Public Debt in the Ministry of Finance. Poland was able to sell of its debt by selling government bonds to organizations of private creditors, such as the London and Paris Clubs.

In the 1970s, Gierek took advantage of foreign loans and raised Poles’ expectations of a Western consumerism lifestyle.

Gierek’s relatively reformist regime was described as the “human face of socialism” although the reforms came at a high price.

At the time, the Polish people were less concerned about when and how they would have to pay off the debt. Many decisions were made under the slogan: “For Poland to grow strong and the people to live prosperously.”

In the 1980s, when it came time for Poland to pay off the borrowed money, it didn’t have the means. Polish creditors went to organizations which help countries to pay off commercial banks. In the 1990s, Poland was able to make a repayment schedule and pay the Paris Club in three years. Up until yesterday, the last of the outstanding communism loans was to the London Club.

Edward Gierek rose to power in the 1950s and 1960s organizing communist control over coal mines and industrial plants. He soon became the recognized leader and in 1970 was the first secretary of the Polish Communist Party. Gierek replaced Władyslaw Gomułka, who was swept aside during food riots in which scores of workers were killed by the police.

Gierek promised the Polish people a higher standard of living. He kept good relations with Western politicians and was able to receive western aide. The country acquired the license to build Fiat cars and sell items such as Coca-Cola and Marlboro cigarettes from America. Warsaw was able to build the main train station and a major highway, the Wisłostrada.

Nonetheless, Gierek’s reforms were still bound to the Soviet Union, which had controlled Eastern Europe since the end of World War II. The economy started to shift in the 1973 and by 1976 price increases were inevitable. Protests broke out on the streets because store shelves were empty.

The credits given to the regime were squandered on consumer durables, and not investment, and soon ran out, paving the way for a rise in anti-communist sentiment and riots in 1976, which culminated in the foundation of the Solidarity trade union in 1980. (vj)

Print
Copyright © Polskie Radio S.A About Us Contact Us