EAST EUROPE'S DEBT TO THE WEST: INTERDEPENDENCE IS A TWO-WAY STREET.

EXTERNAL debts; INTERNATIONAL trade; ECONOMIC demand; INTERNATIONAL economic relations; INTERNATIONAL relations; FREE enterprise; COMMERCIAL policy; INTERNATIONAL finance

The past five years have seen an explosion of East-West trade and West lending to Eastern Europe, including the Soviet Union, with Western governments, banks and exporters competing strenuously for East European business. In the atmosphere of detente, a wide range of political and economic forces generated opportunities for profits, which competitive capitalism exploited with characteristic alacrity and flexibility. The sum total of these diverse initiatives has been large-scale Western export of capital, both financial and real, to Eastern Europe. This new East-West economic interdependence now clearly demands the policy analysis, which ideally should have preceded it. The implications of the current situation are obscure even to many of the participants Central planners are in principle able to use their foreign trade monopoly and centralized banking systems to coordinate their international trade and payments, in the light of their political and economic objectives.