FEBRUARY 3, 1982
Nothing would delight the U.S. ruling class more than finding an easy way to economically and financially strangle the Polish socialist government.
Economic warfare is not a new weapon suddenly dragged out from the multiplicity of armaments the U.S. employs in its struggle against the socialist countries. The truth of the matter is that economic warfare against the socialist countries in general and the Soviet Union in particular has never really ceased since the October Socialist Revolution in 1917. The imperialist powers waged a total economic blockade against the USSR during the civil war intervention in the early 1920s. This was resumed again in the period immediately following the Second World War and reached a crescendo in the very early 1950s. It was relaxed during the 1960s to some extent.
A degree of normality in relations between the capitalist countries and the socialist countries developed in conjunction with the policy of detente. Detente however was understood altogether differently in the U.S. than in the USSR It was conceived by the U.S. ruling class as a weapon in the economic struggle in which the U.S. would penetrate the socialist countries economically and thereby subject them to imperialist domination.
The imperialists thought they had an easy victory on their hands in Poland, after their long-standing effort to destabilize it economically and politically. They thought they could achieve a peaceful restoration of capitalism using the organization called Solidarity as their principal weapon.
This process was halted, as we all know now, with the institution of martial law and the ensuing setback of the counter-revolutionary process in Poland.
The imperialists with the U.S. at their head grew hysterical threatening all sorts of punishments against Poland the USSR, and all who aided or cooperated with the socialist countries without first getting permission from Washington and Wall Street.
Unable to employ military force at the moment and finding their imperialist allies fearful of the consequences of carrying the struggle against Poland much further, American finance capital retreated temporarily to a secondary form of assault. It resorted to using its time-honored strategy of intensified economic warfare against Poland and the USSR.
It instituted sanctions of a very vicious type, including the food weapon, in the hope they would quickly bring the Polish government, if not the USSR, to its knees.
Meanwhile, a struggle opened in the ruling class over whether a weapon for further economic aggression against Poland could be found by declaring Poland in default for the huge debt which the Western imperialists had forced upon the previous Polish leadership.
Since the institution of martial law in Poland, extremist elements in the U.S. ruling establishment have been loudly demanding that the huge Polish debt to the Western banks be called in, so as to declare a default in case the interest and principal are not paid on the due date.
The loud cries for default were led by the Wall Street Journal in its December 23 1981 editorial entitled Communism in default." This was seconded by a well-known investment banker, Felix Rohatyn, in an op-ed article in the New York Times.
The so-called New Right has been most vociferous in demanding that the Reagan administration go beyond the economic sanctions imposed upon the USSR and Poland earlier this month by the U.S. government. The New York Times has also chimed in. And the Washington Post, which took a milder view, has also indicated its preference for the default measure "if it were practical."
But it was the Wall Street Journal, the traditional mouthpiece of big business and high finance, which led the parade. It gleefully proclaimed, "Declaring a default on Polish credit from the U.S. government would trigger a general default on the $27 billion in loans accumulated by Western governments and banks in the last decade."
"American banks," it went on to say, "which hold about $1.7 billion of this debt could absorb the loss since they have already made handsome profits on the loans." (Our emphasis.)
Unfortunately for the Wall Street Journal, it was slightly ahead of its masters for whom it generally speaks with authority Although the U.S. banks have made more than just "handsome profits," they showed less eagerness to plunge Poland into default than their faithful mouthpiece.
U.S. banks hold more than just the $1.7 billion. Through a variety of interlocking directorates and general financial and economic sway U.S. banks have more than an abstract interest in the 27 billion which the Wall Street Journal calculates is owed to Western banks as a whole.
Felix Rohatyn argued for default, presumably on behalf of the bankers, when he cheerfully asserted that "we should put the economic burden of the satellite states squarely on the Soviet Union and point up the bankruptcy of the communist system by declaring Poland, one of its units, bankrupt."
This rather extraordinary exaltation over the prospect of the bankruptcy of the communist system contrasts sharply with his dire forebodings of bankruptcy at home.
At the same time his piece on Poland appeared in the New York Times, which was calculated to raise the anti-Soviet hysteria to a new pitch, he was writing for another periodical on the economic and financial situation in the U.S.
This piece pointed up not the bankruptcy of the communist system but rather that of the capitalist system. It is worth taking note of what he wrote in the January 21, 1982, New York Review.
"For the last two decades," Rohatyn woefully admits, "every recession has progressively eroded our economic and social structures." No truer words could be said! Several capitalist recessions have devastated the living standards of the majority of the working class and oppressed people and have indeed, as he well put it, broken down the social benefits which years of working-class struggle have made possible.
"We entered this recession," Rohatyn continues, "with many of our largest companies in weak financial condition, several on the brink of insolvency." How true, how true! Some analysts include among those on the brink of insolvency such luminaries as ITT, RCA, Ford Motor Co. and others not counting such small corporations as International Harvester and Chrysler.
Furthermore Rohatyn continues, "Our savings institutions [he means the really big savings banks — SM] with portfolio losses in the hundreds of billions rely on an FDIC Federal Deposit Insurance Corporation I with less than 1 0 billion in present capital." In other words, the bulk of the savings banks in this country are on the verge of bankruptcy and the $ 1 0 billion in insurance from the FDIC, which is a drop in the bucket could scarcely save them in the event of an emergency which seems to be impending.
To add to the woes, Rohatyn says that "the [imperialist] international banking system is strained by a recession throughout the West and the Third World. " Thus, concludes Rohatyn, "for the first time in two decades Europe and the U.S. are simultaneously in recession."
Japanese imperialism, which for a while seemed immune to and insulated from the capitalist crisis has finally succumbed to the inexorable process of capitalist degeneration; unemployment and inflation are beginning to take their heavy toll.
So while fuming about the alleged bankruptcy of the communist system the Wall Street Journal in its rage over the suppression of the counter-revolution in Poland conveniently overlooked the real bankruptcy of the capitalist system.
The Polish indebtedness should be seen in the perspective of the world capitalist crisis and measured against it in order to be able to properly assess the current situation with respect to Poland.
Henry Kissinger, who speaks for the Rockefellers, is now attempting to play super-hawk on the Polish crisis. He has virtually called for the break-off of diplomatic talks and contacts with the Soviet Union as a way of punishing both Poland and the USSR But it is significant that for all his new right-wing posturing Kissinger steered clear of calling for a default and confined himself merely to urging that Poland's debt to Western banks be used as economic and financial leverage in the overall political struggle against the Soviet Union and Poland.
The position of the Rockefeller empire on the question of default is also the position of Citibank, Bank America, Morgan Guarantee Trust, Chemical, Chase Manhattan, Marine Midland, First National Bank of Chicago, First Wisconsin National Bank, and the Girard Bank of Philadelphia.
The position of the bankers was authoritatively laid down on January 24, 1982, on CBS's Face the Nation by none other than Walter Wriston chairman of the board and chief executive officer of Citibank and Citicorp which have traditionally been keystones in the Morgan financial empire.
Jacqueline Adams of CBS News asked, "You indicated earlier that we should try to keep Poland in the larger [imperialist — SM] world community by continuing to loan money to them. Can we use that money, that debt, as a weapon to influence events in Poland in any way?" Wriston replied: "In my view, if someone were to call a default on that debt you will then illustrate very clearly to the Poles that they had only one friend which was Russia-it doesn't seem to me to be too productive." (Official transcript, CBS News, pages 123.)
There you have it straight from the horse's mouth. The largest and most powerful banks in the U.S. had made a decision not to throw Poland into default at this time.
Why? Because this would tend to consolidate the socialist fraternal relationships between Poland and the Soviet Union and the whole socialist bloc.
Unlike the Wall Street Journal, which has to be demagogic for its own constituency, and Felix Rohatyn, who is grooming himself for public office, Wriston can speak very plainly and clearly, at least on these matters.
Unquestionably this is what Reagan himself was told when he visited New York City January 14, 1982, to attend a festive occasion sponsored by the Rockefellers at which Wriston was conspicuously present. It was around that time that the Polish government was expected to pay 71 million it owed to U.S. banks.
The recommendation, undoubtedly made by the bankers in New York City, was that the Reagan administration repay the $71 million that Poland owes to the American banks. The, U.S. government, which guaranteed these loans, would thus not require the banks to declare Poland in default.
The recommendation to Reagan, if carried out, would also mean that the administration would repay a further $395 million of U.S. guaranteed debt that Poland is obligated to repay by the end of this year. The guarantee was made by the Agriculture Department to the banks on behalf of the U.S. government for the purchase of wheat, soybeans, and other agricultural commodities by Poland.
Reagan's visit to New York City took place almost two weeks ago. When the extreme right-wingers got wind of what the bankers were up to, they raised a hue and cry that the Reaganites were becoming soft on communism while covering themselves with bold anti-Soviet rhetoric.
But Secretary of State Haig and Treasury Secretary Regan, each of whom has banking connections with Chase Manhattan and Merrill Lynch respectively knew well what the recommendation of the bankers was. They both urged Reagan that the U.S. make its decision public, which naturally would shock the ultra-rightists on both sides of the Atlantic.
It should not be thought that the banks, despite their key and central role in the capitalist economy, can arbitrarily make any and all recommendations to the capitalist government and automatically have the issues decided their way as in this particular case.
Even here it should be noted as was reported in the February 2 1982 New York Times and Washington Post the decision was reached on the basis of consensus between the State Department and Treasury Department, on the one side, and the Defense Department (Weinberger and his deputy Ikle) and the military-industrial complex, on the other.
The big banks are a fundamental pillar, along with Big Oil and the military-industrial complex, of the infrastructure of contemporary monopoly capitalism in the U.S. These three pillars are intimately connected, interwoven, and virtually fused with the capitalist state.
However each maintains its own separate mode of existence and independently operates within the framework of its respective function. They collaborate here and there but more frequently collide with each other, the internal strains and stresses multiplying and becoming more aggravated with the deepening of the capitalist crisis and the inability to achieve a stabilization of the rotting social system.
In the debate which has been raging in the capitalist press about the U.S. repayment to the bankers with regard to a default, it was not made clear whether Poland had actually defaulted or had merely conveyed a message to the U.S. bankers and government that it would not pay.
Although it cannot be said for certain, it is probably the latter which forced the hand of the Reagan administration in rather hastily declaring that it would pay the banks the money Poland owed in order to avoid a default.
Could it be that in refusing to pay interest, the Polish government declined to turn the other cheek and deliberately withheld payment because the U.S. had flagrantly promulgated harsh economic sanctions including the use of the food weapon, against Poland?
Were this the case it would be indicative of real independence and fearlessness in the face of tremendous economic burdens. Poland would be saying in so many words, "You can't starve us to death. Poland will survive and strengthen its real political independence in the renewal of socialist reconstruction regardless of U.S. attempts to strangle us economically and financially."
That's more likely what threw Wall Street and Washington in o consternation and helped the decision to avoid default. The ultra-rightists were therefore left hanging in midair and the Reagan administration was roundly attacked for its alleged softness toward Poland and the USSR.
Human Events, an ultra-right wing supporter of the Reagan administration, attacked Haig on this issue as a pussycat. " By implication it was an attack on Reagan as well. The New York Times, which in recent weeks has spoken from both sides of its mouth on Reagan's foreign policy, attacked, the Reagan administration on the default proposal. It asserted that the Reagan administration has come perilously close to confessing that all its fulminating about Poland is bluster.
The thrust of the capitalist press as a whole, so far as the Polish crisis goes, is to push the Reagan administration further to the right. This is not likely to let up, regardless of the immediate exigencies of the Polish financial crisis.
While the Reagan administration's decision to repay the banks to avoid a Polish default seems like a retreat from its earlier position, it does not at all foreshadow a softening of the generally bellicose and extremely aggressive struggle against the USSR, Poland, and other socialist countries, as well as other oppressed people throughout the world. Witness El Salvador! The apparent retreat by the Reagan administration has to be seen in the light of the overall struggle of imperialism against the socialist countries and the oppressed peoples of the Third World.
If the bankers have decided that default was not an appropriate instrument in the struggle against the socialist countries at this time, it is based on their predominant fear that forcing Poland into default would trigger a worldwide capitalist financial crisis, it would have a domino effect throughout the entire capitalist world.
This is not because of the Polish debt as such. By imperialist standards it is not great at all It's that the world capitalist monetary crisis has now reached such an explosive point that it is literally waiting for any match, even one like Poland's financial indebtedness, to ignite it into a conflagration.
During the Kania administration in Poland, before the situation had reached the point of near economic collapse, we had urged a repudiation of the corrupt and extortionate loans and interest, which were the result of false policies of previous administrations-primarily that of Gierek and his predecessor Gomulka. Such a repudiation would have been in the classical Bolshevik tradition of the Soviet government under Lenin which repudiated the Czarist debts. To this day the Soviet government has never paid them.
But in the course of these weeks and months of capitalist destabilization and outright sabotage, Poland has become more dependent economically on the West than it was earlier when the repudiation would have been more appropriate as a revolutionary measure.
At the present time, however, repudiating the debt would be too difficult, particularly in the light of the fact that it would strengthen the more right-wing and extremist elements in the Reagan administration to push for a complete break of all economic relations if not a virtual blockade of the socialist countries.
It should be noted that while the indebtedness of Poland to the imperialist West, if measured by the needs of socialist construction for Poland within the framework of the narrow possibilities of taking advantage of the worldwide capitalist market, was exorbitant and ill conceived, it is nevertheless not at all abnormal by imperialist standards.
According to Walter Wriston, who should know, "There are very few instances in history when any capitalist government has ever paid off its national debt. In the United States we sell Treasury bills every week and those bills cannot be paid except by selling another Treasury bill of like amount." (CBS transcript cited above.)
In other words the U.S. government merely pays the interest on its national debt by rolling it over continuously in the capitalist money market. The banks theoretically can throw the U.S. government into bankruptcy by refusing to roll over this debt, unless the capitalist government asserts its legal authority by issuing new money to pay it back. In practice however the principal is never paid just the interest.
What is different with Poland is that the imperialist powers' cannot stand to settle for merely the interest. They want the whole principal as well.
If the U.S. had not been intent on utilizing the indebtedness and its economic penetration of Poland generally to destabilize the economy in order to ease the way for a so-called peaceful counter-revolutionary takeover the Western bankers would have easily rolled over the Polish debt. They would have merely accepted the interest due, as is done in ordinary international banking transactions.
In other words, there would have been no problem at all in merely rolling over the Polish debt if it were not for the political objective of the U.S. in seeking a counter-revolutionary takeover through the medium of economic destabilization and sabotage.
However, as a result of the deliberate processes of economic destabilization of both a political and economic character, the imperialist private banks were as is admitted in a revealing article in the February 3 1982 New York Times induced "to withdraw more than $1 billion in short term deposits from Poland's central bank, making it impossible for the country to make the interest payments and perhaps speeding the Polish economic collapse which was followed by the military takeover.
So you see, at the root of the current problem is not just the normal economic processes of international banking, which resulted in the Polish debt problem. It was the political effort to pull the rug out from under the Polish economy by withdrawing suddenly and without cause the deposits in the Polish central bank so as to create the economic condition for a collapse.
How would the U.S. central bank, the Federal Reserve, feel if the European and Japanese banks suddenly withdrew their deposits from the Federal Reserve Bank. That would certainly cause a financial crisis in the U.S.
The Western deposits in the Polish central bank were there for the purpose of paying for the normal imports from the West. They were suddenly withdrawn by the banks in October 1981 (when Solidarity was continually pushing for further and further political concessions which, if carried to their logical conclusion could only end up with a capitalist restoration).
As Poland's finance minister Marian Kracz explained to the New York Times at the time, "Withdrawal of the balances made it difficult to halt the industrial decline [induced by economic sabotage — SM] because we had no foreign currency for imports."
The decline was of such dimensions, according to this Times article, that it constituted a 300 percent drop in industrial production.
Clearly this called for a political solution-either a counter-revolutionary takeover which would solve the economic situation by making Poland an imperialist satellite or a suppression of the counter-revolution and the beginning of reconstructing the country in accordance with a socialist perspective.
The latter perspective is what the ruling class as a whole and the Reagan administration in particular did not anticipate and were not prepared for. They had believed in their heart of hearts that the military would stand by and allow the country to return into the Western imperialist orbit.
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Last updated: 13 April 2018