Foreign Policy Briefing No. 15

Washington’s Iron Curtain against East European Exports

By James Bovard
January 7, 1992

Executive Summary

In the late l940s the Marshall Plan poured millions of dollars into Denmark, the Netherlands, and other European nations to help them rebuild their dairy industries. Then, in l95l, when Europeans were getting back on their feet, Congress bushwhacked aid recipients by imposing quotas that slashed European cheese and butter imports.[1] Today, Washington has developed a similarly hypocritical policy—government aid, but not free trade, for the new democratic nations in Eastern Europe.

Western government aid to Eastern Europe is proliferating. The International Monetary Fund disbursed approximately $5 billion throughout the region in 1991, and the World Bank plans to lend $3 billion to Eastern Europe over the next three years. The United States provided almost $2 billion in aid to East European governments in 1990 and 1991.[2] Washington has created Enterprise Funds (with a total capitalization of $360 million) to promote the development of the private sector in Poland, Hungary, and Czechoslovakia. The U.S. Export-Import Bank is financing export sales of American goods and services through loan, guarantee, and insurance programs; and the Overseas Private Investment Corporation is subsidizing U.S. private business investment in the region with direct loans, loan guarantees, and political risk insurance. Eighteen separate federal agencies are conducting assistance programs in Eastern Europe.

Unfortunately, America’s trade policy has made a mockery of those efforts to “aid” Eastern Europe. While Washington is donating billions of dollars to governments in the region, it is maintaining pervasive trade barriers that will prevent significant increases in East European exports to the United States. While President Bush publicly proclaims the generosity of the United States toward Eastern Europe, those trade barriers are stifling the chances of Eastern Europe’s 130 million citizens to build better lives.

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James Bovard is a Cato Institute associate policy analyst and the author of The Fair Trade Fraud (St. Martin’s Press, 1991).