When President Bush last July declared in Poland and Hungary that "the Iron Curtain has begun to part," no one had any idea that a year later the United States would be spending more than $1 billion to back his pledge to help Eastern Europe "walk its own path" away from communism.
Since then, America's involvement with Eastern Europe has ranged from major international efforts such as organizing $14 billion in support from the world's 24 richest industrial countries to halt Poland's runaway inflation to smaller "nation building" ventures such as helping Poles and Hungarians fathom the intricacies of parliamentary procedure, voter registration and small-business management.
These efforts have far outstripped Bush's original, modest offer of $100 million in grants to Poland and $25 million to Hungary to nurture democracy and free enterprise. That was only 1 cent on the dollar of the $10 billion Poland's Solidarity leaders wanted.
Bush said then that the United States couldn't afford more. But, pressured hard by Congress, he had agreed to raise the figure by the end of 1989 to a total of almost $1 billion.
Critics insist that more is needed. R. Mark Palmer, a former U.S. ambassador to Hungary now heading a private investment consortium, recently told a congressional hearing that "the scale of the effort has been too small and the pace of implementation too slow."
"We are doing our share and then some," replied Robert L. Barry, a senior aide to Deputy Secretary of State Lawrence S. Eagleburger, who oversees the program that has made the United States -- along with West Germany and Japan -- one of the big three among Western governments aiding Poland and Hungary.
On the surface, the $1 billion U.S. contribution is a distant third behind West Germany's $4.3 billion and Japan's $2 billion. But while most of the German and Japanese aid, as well as those of most other contributing nations, is for debt relief and credits with stringent restrictions on how the Polish government can use them, 70 percent of the U.S. aid is in relatively unrestricted grants that do not require repayment. This puts Washington neck and neck with Bonn as the region's biggest financial angel.
And the U.S. program is still expanding. Although Bush remains reluctant to extend direct U.S. aid to the Soviet Union, the program is stretching beyond Poland and Hungary to Czechoslovakia and Yugoslavia and could also be extended to Bulgaria and Romania if the communist governments still in power show a genuine commitment to democratic pluralism.
And, as it did last fall, Congress appears determined to boost aid for Eastern Europe in the coming year well above the $300 million first proposed by Bush.
The Senate Foreign Relations Committee yesterday approved legislation that includes roughly twice as much direct aid as the administration had proposed, and also authorizes technical assistance to the Soviet Union. The action came after the $535 million bill was approved by 10 committee Democrats, in the face of a boycott by the committee's Republicans.
Similar aid legislation that does not provide for technical assistance to Moscow has already been approved by the House Foreign Affairs Committee.
The administration demand for what a senior U.S. official called "maximum flexibility" to shift money to deal with unexpected new events and circumstances reflects a strong administration feeling that the new Eastern Europe needs sums far greater than the Western allies can provide. Underscoring this worry, U.S. officials say, is disappointment over the apparent reluctance thus far of private U.S. firms to risk investment in Eastern Europe.
Henry Kaufman, a leading Wall Street economic consultant, agrees that private-sector contributions will be limited at best. He recently noted that "corporate investments will be moderately helpful, but no more." Eastern Europe, Kaufman added, must find its major sources of new funding elsewhere.
He pegged "an ambitious aid package today for Eastern Europe" at around $50 billion, but noted that Western countries "are not clamoring to fund such a consortium, and the United States is not in a position to spearhead such an effort. . . . It seems that the West, in dealing with the assistance to the East European countries, will be long on advice, technical help and moral support, but rather short on cash."
Said one U.S. official, "We were forced to jump into the deep end without really knowing what we were doing. We spent most of the first year learning how to swim." He noted that some 25 federal agencies are involved in aid-giving, "and had to have their duties and priorities sorted out."
So, the administration set up the "coordinating mechanism for Eastern European assistance" headed by Eagleburger with Michael J. Boskin, chairman of the Council of Economic Advisers, and John E. Robson, deputy Treasury secretary, as his deputies -- "the czar and the little czars," to others in the bureaucracy.
U.S. officials say it will be three to five years before most East European nations can effectively absorb massive aid for major structural changes in their economies.
In Czechoslovakia, President Vaclav Havel's new democratic government has not decided on the long-range economic direction to follow. Even in countries such as Poland and Yugoslavia, where the governments know where they want to go, there is an acute shortage of trained managers to help them get there.
For that reason, many U.S. officials favor a relatively small amount of aid -- up to $40 million -- earmarked for helping Eastern Europe end four decades of communism and move toward "democratization" of politics and "privatization" of economic life.
The agencies helping include the Peace Corps, whose volunteers are fanning out through the region; the National Endownment for Democracy, a federally funded private institution already helping Eastern Europe's fledgling democratic parties to learn the techniques of voter registration and education; the Agency for International Development, which has contracted with various American universities and think tanks to provide technical aid in business and municipal management; and the USIA, which is trying to expand greatly the limited cultural and educational activities it was allowed there before the collapse of communism.
The USIA has divided its activities into four broad areas. They are the Alexander Hamilton Program, for free enterprise, management training and entrepreneurship; the Samuel Gompers Program, free trade unionism and labor-management relations; the Noah Webster Program, for English teaching, educational curriculum reform and creation of a free press, and the John Marshall Program, devoted to the rule of law and legislative and judicial reform.
USIA and other agencies have a growing list of activities, from exchange programs to bring American experts to Eastern Europe and potential East European leaders here; to creation of an American chair at the Budapest School of Economics (formerly Karl Marx University); and the translation into Polish, Russian and Hungarian of seminal works on American democracy such as the Constitution and the Federalist Papers.
The administration expects shortly to name the director of the U.S.-funded media institute, to help create newspapers, magazines and broadcasting operations free of government control. To oversee things, USIA hopes within the next year or two to establish U.S. cultural centers in Warsaw, Prague and Budapest, and libraries in Bratislava and Leipzig.
The objective is to create cadres of younger, flexible, outward-looking people able to help their countries compete with the West through changed work habits, modernized industrial plants, improved environmental conditions, reduction of mammoth foreign debts and access to credit and investment funds.
These "big ticket items" will continue to absorb most U.S. aid. Congressional sources expect about $75 million to be earmarked for the recently created European Bank for Reconstruction and Development, which will lend money to overhaul the East European economies; most of the balance will go into direct grants for similar purposes, especially for a start toward cleaning up Eastern Europe's badly abused environment.