The Iron Curtain has been drawn back, and the environmental devastation of Eastern Europe is proving even worse than feared. Uncontrolled heavy industry has blackened entire regions. By some accounts, seven of Czechoslovakia’s eight major rivers are dead or dying. Children in sooty sties like Bitterfeld, East Germany, suffer chronic bronchial infections. Companies that specialize in waste management and pollution control smell an opportunity to clean up; estimates put an East Germany fix-up alone at about $200 billion. Says editor Stuart Anderson whose Bloc magazine reports on East-West deals, “The U.S. companies that aren’t looking yet should be.” While no one can say where all the money will come from, many experts agree that change is coming. “If they want to become part of the greater European community,” observes banker Jeffrey Malakoff of Security Pacific Trade Finance, “I don’t see that they have much of a choice.”
Many firms are about to go to work. Alaska-based Martech USA, whose “soil washing machine” separates oil from dirt, has announced it will clean up contaminated military sites in Hungary and Czechoslovakia Clean-Flo Laboratories, a small Minneapolis company that pumps oxygen into lakes, rivers and reservoirs to revive aquatic life, has been asked for proposals by the -Polish government. These days, Clean-Flo founder Robert Lainge is buying Polish language tapes to listen to while driving to work. “Here we complain about weeds and algae interfering with water-skiing,” he says. “There. it’s a matter of life and death.”
Industry giants are readying their march Eastward. General Electric wants to sell clean, energy-efficient power plants that will reduce dependence on dirty brown coal. For old plants, GE and others offer equipment like smokestack scrubbers to clean up emissions. Waste Management, Inc., of Oak Brook, Ill., has been buying up businesses throughout Western Europe, both to be ready for the 1992 economic unification of Europe and to be in a better position to deal with Eastern Europe. Being on the ground gives companies an edge, says Hyfantis, who has European venture partners. “The Western Europeans have a closer bond with the East Europeans than the Americans do. They’re neighbors … They understand each other.”
Not all U.S. business leaders are so preoccupied with the East bloc. On Capitol Hill, financier David Rockefeller recently reminded members of the Joint Economic Committee that America has vastly more money invested in Latin America. “The contrast is dramatic,” he said. “I believe it should give a clue as to where our relative policy emphasis should be.” Many companies also doubt the" rewards match the" risks yet. “Everybody knows the need is there,” says Don Couchman, an executive for the NUS division of Halliburton. “But in order to have a market you’ve got to have the need and the money.”
Money is in short supply in the East bloc. For some countries, the only way to pay may be through barter deals. In a typically byzantine arrangement, International Technology Corp. could sell equipment to some Eastern European nations, which would then sell electricity to Italy; the Italians then pay ITC, says ITC executive E. Brian Smith. Some hard cash will come from outside. The West German government has already awarded about I $356 million to just one company for 14 cleanup projects. The Export-Import Bank of Japan is making loans to Japanese companies. The World Bank is also pitching in; $18 million has gone to Poland for environmental study and planning. Much of the other $800 million in recent Eastern European development loans comes with green strings attached: new projects are expected to include pollution controls.
Considering the cash squeeze, some U.S. firms find that their potential clients’ eyes are much bigger than their I treasuries. Desperate to show constituents quick progress, East-bloc leaders are looking for dazzling high-tech solutions such as massive waste burners. Browning-Ferris is promoting basics like landfills to handle the large portion of waste that can simply be buried. That kind of master plan, says executive Bill Johnson, can put nations on the road to cleanliness “without having them spend the millions they don’t have.”
American companies face another challenge in opening the Eastern European market: global competition. West Germany has spent great sums to clean things up behind the former wall. “Our policy has been to invest in our neighbors so that they stop polluting us,” says Rainer Elsasser, business director of a Stuttgart environmental firm. As the cleanup expands, West Germany’s 4,000 environmental companies will already be familiar faces. And unlike American companies, with their focus on short-term profits, patient capitalists in Europe and Japan could easily prove more willing to spend money now that might not see a return for several years. Some environmentalists also say that America is losing the technology race. “I fear we’ve conceded some of the cutting-edge technologies,” says Michael Oppenheimer, senior scientist for the Environmental Defense Fund. Wheelabrator Technologies, famous for its trash-burning power plants, must sheepishly refer inquiries to Zon Roll Ltd. of Switzerland, from which it licenses the technology.
Lower prices: America does have advantages–mainly, the bottom line. In pollution control, Made in America often means relatively low prices; fancy German technology can come with a fancy price tag, says analyst Kenneth Leung of Smith Barney. Mercedes-Benz quality might be nice, Leung says, but “whether you can afford a Mercedes is something else. These guys [in Eastern Europe] can’t even afford a Volkswagen.” U.S. companies have worked to contain costs because they already spend so much for pollution control–a whopping $90 billion annually.
No matter what the impediments, Eastern Europe unquestionably needs help to clean up. With the lessening of superpower tensions, people worldwide are beginning to see a greater threat in environmental hazards than political ones. They are pressuring their leaders to shift their attention–what Oppenheimer calls “beating swords into solar cells.” Progress will certainly be slow, but environmental progress usually is. The cost may be high. Yet as America’s environmental consultants will be only too willing to tell the Eastern Europeans, the price of doing nothing may be even higher.
PHOTOS (COLOR): Barter deals: Smith of ITC
PHOTO (COLOR): A toxic waste dump in Czechoslovakia
American companies could make handsome profits helping the East bloc deal with its disastrous environmental problems.
Air Pollution: Several firms are ready to provide smokestack “scrubbers” and “baghouses”–devices that take ash out of emissions.
Toxic Waste: A veteran of the Exxon spill is preparing to decontaminate soil at abandoned Soviet bases in Hungary and Czechoslovakia.
Alternative Energy: GE hopes to reduce dependence on polluting brown coal by selling clean, energy-efficient power plants.
Garbage Disposal: Firms like Waste Management, Inc., and Browning-Ferris are helping build landfills that won’t pollute ground water.
Water Treatment: Wheelabrator wants to provide treatment plants for communities that still dump chemicals and don’t process sewage.
