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ULTIMATE OUTCOME OF UPHEAVAL IN EAST BLOC IS FAR FROM CERTAIN AMID EUPHORIA, THERE IS GROWING SENSE OF CONCERN, BORDERING AT TIMES ON ANXIETY, ABOUT THE FUTURE

[ U.S. Rep. John J. LaFalce, as chairman of the House Small Business Committee, recently led a congressional tour of the East Bloc nations of Europe.]

From Yugoslavia to East Germany, Central Europe (as I learned they prefer being called) is in the midst of a long-overdue transformation: from satellite countries captive under Soviet domination, to a community of free, yet interdependent societies. Long conditioned to viewing this region as an appendage of Soviet power, the United States must revise its traditional image and come forward with the appropriate policies, both regionally and bilaterally. This is the indelible impression I bring back after heading a 13-member congressional delegation trip to Yugoslavia, Hungary, Czechoslovakia, Poland and Berlin earlier this month.

The accelerating pace of this transformation can be understood by the crescendo of events: It took 10 years to achieve democracy in Poland; two years in Hungary, two months in East Germany, two weeks in Czechoslovakia, two days in Romania. Thanks in no small part to Mikhail Gorbachev's hands-off policy, Stalin's effort to impose a "monolithic unity" on Central Europe has been rendered null and void.

One joke making the rounds in these countries goes: Question, what is socialism? Answer, the period of transition from capitalism to capitalism. Perhaps. But waging a successful economic revolution in Central Europe will require much hard work, a much larger time frame, and the ultimate outcome is far from certain.

What were my immediate impressions? The sense of new-found freedom which permeates conversations with officials and citizens in these countries, for one thing. They act as if a burden has suddenly been removed from their shoulders. After four decades of communist rule and imposed uniformity, the region is bursting with long-suppressed individuality and hope. Its people can breathe freely again.

As it always does, though, freedom comes at a price. In Central Europe, the price has been a growing sense of concern -- bordering at times on anxiety -- about what the future will bring, especially unemployment and inflation.

Such concerns are most pronounced in Poland, which has just launched drastic reforms designed to transform this country into a market economy virtually overnight. "With the price of basic commodities virtually doubling over the past few days, there is a limit to how much sacrifice people can be persuaded to accept. The poor cannot be expected to get poorer without running the risk of instability," Labor Minister Jacek Kuron warned in a meeting with our delegation. Who would argue with him? Mastering this tension between a new-found sense of freedom and its accompanying anxieties promises to tax the energies of the new democratic governments taking power in Central Europe.

Fortunately, however, decades of struggle against tyranny has spawned a new generation of democratic leaders: from Czechoslovakia's Vaclav Havel to Poland's master political strategist, Bronislaw Geremek. They will be severely tested.

A few special words on Poland are in order. Just as Americans had their Washington, Jefferson and Paine, men of uncommon ability, so too does Poland have an array of intellectually gifted, battle-tested people who can be called upon to make the hard economic and political decisions.

One of them is Bronislaw Geremek, who is seen by many as the Thomas Jefferson of Poland. That imposing reputation rests on two pillars: Geremek's formidable intellectual and political talents, which he is putting to daily use in shepherding the Solidarity government's program through the Sejm (the parliament); and his close relationship with the George Washington of Poland, Lech Walesa.

Each country has its own problems. Conversations in Belgrade, for example, reinforced my concern that Yugoslavia's immediate future depended on the ability of its leaders to address the internal conflict, pitting one region against another. The primary question in Yugoslavia is whether it will be able to remain together as a nation-state.

In East Germany, the dilemma was reversed: how to stem the flow of its most able-bodied members heading to West Germany now that the Berlin Wall has been dismantled.

Poland finds itself confronted by equally daunting internal and external pressures: maintaining internal peace in the midst of far-reaching, radical economic reform, while addressing the specter of rising German power, economically and militarily, on its Western borders.

In contrast, Czechoslovakia's difficulties appeared to be more human than economic. The transformation of its internationally renowned author and playwright, Vaclav Havel, from prisoner to playwright reflects Czechoslovakia's dilemma. "Sometimes I feel more of a prisoner being president," he told me.

His dilemma, and that of his society, is to deliver Czechoslovakia from its prisoner status and identity, from the time warp that was created by 50 years of imposed isolation, first by Nazism and then by communism, to its own identity again. That's why Czechoslovakia wants, not financial assistance, but maximum Western acceptance, including educational and cultural exchanges.

Hungary's foremost task is to find a way of grappling with the fact that after 20 years of applause from the West for path-breaking economic reforms, it is confronted with far-reaching decline.

And so it goes. The waning of Soviet power in Central Europe will, if anything, contribute to an accentuation of long-suppressed national differences. On a larger canvas, I came away with the sense that its leaders and citizens must close the gap between reality and fantasy which continues to hobble economic reform. They must come to recognize that, in the words of one Czechoslovak intellectual, "We can no longer be treated like 5-year-olds by the authorities."

Poland's Labor Minister Kuron said: "Up to now, the people pretended to work, and the state pretended to pay us for that work." Such behavior reflected the passive resistance of unwilling subjects. But after four decades and the bursting forth of democracy, the time has come for Central Europe's liberated citizens to take control of their own lives. These will not be easy times.

As the United States surveys Central Europe's revolution, it must come forward with major initiatives for promoting democratic stability and economic reform. My firsthand exposure to its problems and potentials has reinforced my views on this. But where to begin?

The answer is evident: on the "people-to-people" front, from vastly expanded sister-city programs to more targeted exchanges among teachers, students, scientists, doctors, writers and entrepreneurs. Again and again, I was told that our most important contribution is our willingness to help these countries become full-fledged members of the Western intellectual, social, economic and cultural community.

As Central Europe shelves compulsory teaching of Russian, the demand for English promises to grow by leaps and bounds. One major U.S. initiative should be the export of hundreds, if not thousands of Peace Corp volunteers to teach English. There will be more than enough takers. In Vaclav Havel's haunting words, "For over 40 years, the soul of each and every Czech was imprisoned." America has the keys to unlock those souls.

A related step involves the export of technological and modern business skills. Central Europe needs to go back to school if it is to succeed in becoming an effective partner in the global community. Nowhere is this need more pronounced than in Poland, where it is easier to reach Warsaw from car phone in the United States than for the U.S. ambassador to reach the U.S. Embassy from his residence across town. Similar, if less dramatic, problems plague all of the other countries we visited. We can help change that.

As chairman of the House Small Business Committee, I will try to ensure a leading role for U.S. small businesses in the rebirth of free enterprise in Central Europe. These societies are already beginning to adapt themselves to the demands of the marketplace. Ambition and entrepreneurship are in ample supply. But they can't make up for years of officially imposed isolation from the world of Western business and marketing practices. Central Europe's potential small business community urgently requires a crash course in those fundamentals.

Another jumping-off point is the natural environment. Few situations hold greater irony than the by now discredited dictum that "socialism provides the means for a more humane way of life." Forty years of bureaucratic planning and mismanagement has not only bankrupted most Central European countries, it has turned the region's forests, lakes and air into veritable disaster areas. No country is better positioned to fill this void in environmental management than the United States. We must do so.

There are other steps that should be taken on the economic front. The time has come for us to extend most-favored-nation treatment to Czechoslovakia and East Germany, as we have to Poland, Hungary and Yugoslavia. This would give both countries a leg up in applying for membership in the International Monetary Fund and the World Bank. And both institutions would profit from East German and Czech membership.

On a larger canvas, the United States should push hard for expanded multilateral assistance programs to all five Central European countries. Special consideration should be extended to Poland, which is in greatest need. After World War II, we created a Marshall Plan for Western Europe. Because of our economic illiteracy and political timidity in the past decade, we have structural budget deficits that have emasculated our capacity to respond meaningfully to societal problems or opportunities. But there are other approaches, particularly multilateral ones. After World War II, we created the International Bank For Reconstruction and Development, commonly referred to as the World Bank. Then we created regional affiliates, the Inter-American Development Bank, the African Development Bank and the Asian Development Bank. It's time for creation of a Central European Development Bank, financed by all the industrialized nations. The United States should either lead the effort to create such a facility or strongly support the efforts of others.

Helping Central Europe to find its way will not easy. But we owe it to ourselves, to them and to the cause of freedom to make a supreme effort. As I looked at the remains of the detested Berlin Wall on the final day of our journey, I realized its destruction on Nov. 9 had indeed put a final nail in the coffin of communist suppression of these nations.

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