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Aleksander Kwasniewski

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Poland regained its independence in 1918 only to be overrun by Germany and the Soviet Union in World War II. It became a Soviet satellite country following the war, but one that was comparatively tolerant and progressive. Labour turmoil in 1980 led to the formation of the independent trade union "Solidarity" that over time became a political force and by 1990 had swept parliamentary elections and the presidency. A "shock therapy" program during the early 1990s enabled the country to transform its economy into one of the most robust in Central Europe, boosting hopes for acceptance to the EU. Poland joined the NATO alliance in 1999.

Update No: 059

Many Poles are unhappy with the prospect of joining the EU and yet feel it to be inevitable. Opinion polls are still in favour even though a recession is on. GDP growth is barely above 1% this year after 1.5% last year. The farmers are worried that they will be undercut by more efficient EU producers, who are benefiting from subsides denied them for years. The rustbelt workers and miners fear being phased out. And everybody is scared of foreigners coming in and buying up Polish land.
The Poles have a long history of being afraid of encroachment by foreigners. After three partitions of Poland in the late eighteenth century by Prussia, Austro-Hungary and Russia they lost their very national identity. Then, after a brief spell of interwar independence, came the nightmare of the Second World War and the long occupation of the Soviets.
It is to make absolutely sure that nothing like this happens again that the Poles are accepting EU entry of course. And also because they hope it will eventually enrich them. 
The immediate prospects are none too good, with Europe's whole economy and especially giant Germany's economy next door in depression. But Poland is becoming seen as a major player in Europe and its voice is certainly heeded in France and Germany, whose leaders have annual meetings with the Polish president, a more than ceremonial figure. Aleksander Kwasniewski, the president, has called for 'a Europe of Fatherlands,' a very Polish vision, given the Poles' fierce patriotism, nurtured in the long nights of several occupations. The president told Poland in the Convention, a group of leaders from parliaments and governments that: "Polish experience…… speaks in favour of respect for the national factor, for building a Europe of fatherlands, for appealing to the fundamental values from which our civilisation arises." Scepticism about a 'superstate' and a vision of 'Europe des parties' were of course hallmarks of De Gaulle's policy towards the EU, or Common Market as it was then known. De Gaulle is a big figure for the Poles because he fought for them in 1920 with Weygand in defeating a Soviet invasion.
The president, speaking on February 18th, made it clear that as the natural leader of the accession states it expects to have a role in the unfolding future of Europe. It intends to form an 'eastern dimension' similar to Finland's 'northern dimension' for the Baltic states. Poland's views should carry weight in EU policy towards Russia, Ukraine and the whole region of Central Europe.
This, indeed is a new role for a country long marginalised in European history, justifying the president's claim that the debate was "one of the most important in Polish history." Poland will be the sixth largest EU state, but strategically so placed as to 'punch above its weight.' The president's remarks were addressed to the whole nation, not just its leaders, and were clearly designed to win the people over to the European idea, on which he has staked his career. The new former communist government is also deeply committed to it and its advent last year was welcomed in Brussels. One in five seats in the lower house went to anti-EU parties. But 71% of Poles intending to vote in a coming 2003 referendum are pro-EU, even if only 56% of all voters are.
Poland's place as a key European state, the natural gateway to the east across its flat plains north of the Carpathians, looks assured. Those plains carried Napoleon's and Hitler's armies into Russia. Now they carry natural gas and commodities from Russia in exchange for goods. Foreign investors are taking advantage of its excellent location and incentives to investment, with low wages and a well-educated multi-lingual work force, to come to town; over US$40bn has already been invested. More can certainly be expected. The Poles are on the map again.

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Economy Ministry gets two offers for Daewoo-FSO car plant

Two big investors have approached the Economy Ministry with offers providing for production of new car models on the premises of Daewoo-FSO, deputy Economy Minister Maciej Lesny said on 4th March, PAP News Agency has reported.
Apart from saying that one was a European sector investor, Lesny declined to disclose details.
"We hope to set up a new company in Daewoo-FSO plant in Zeran [near Warsaw] manufacturing a new car model. We hope that the Koreans with their shares will agree to become part of this company," he said.

Japanese car maker to invest 300m euros in Poland

The Japanese are to invest 300m euros [US$259m] in a special economic zone in Walbrzych [southwestern Poland]. Toyota is to open a plant which will manufacture engines and employ 700 people. The details, so far secret, concerning the investment were revealed by Economy Minister, Jacek Piechota, TV Polonia has reported.
Piechota said: "We are slowly rebuilding our country's good name, a country which is friendly towards foreign investments."
Engines manufactured in Walbrzych will go to a car plant which is being built in the neighbouring Czech Republic...

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British-Swedish firm signs deal with Polish aviation plant

The British-Swedish consortium Gripen International and an aviation plant in Mielec have signed agreements related to a tender on multirole aircraft for Poland's armed forces, the company said in a communiqué 18th February, PAP News Agency has reported.
The agreements cover manufacturing, design and technology, and are to be linked with the selection of Gripen in the tender.
The agreements include the clause that once the British-Swedish aircraft is complee the Mielec company will obtain new orders.
"The orders cover final assembly of Gripens for the Polish air force, including manufacturing of extra parts and sub-assemblies of airframe, wing assembly, mechanical and electric system tests, and flight clearance tests, the company said in the communiqué.

State Treasury sells off 85 per cent stake in aviation plant

The State Treasury Ministry has finalised the sale of 85 per cent of PZL-Rzeszow aviation plant for US$70m to United Technologies Holding, the ministry said in a communiqué on 11th March, PAP News Agency has reported.
"As all necessary approvals and permits were obtained, an 85 per cent stake in WSK [Transport Equipment Plant] PZL Rzeszow SA [Joint Stock Company] had been given to United Technologies Holding SA," the ministry said.
The privatisation agreement was signed by former Treasury Minister, Aldona Kamela-Sowinska in September 2001.
The new owner, a subsidiary of United Technologies Corporation, has pledged to invest more than US$70m in the Rzeszow-based company over the next five years.
Treasury Minister Wieslaw Kaczmarek said after the document signing ceremony that the new investor has guaranteed doubling PZL Rzeszow exports within a few years.
WSK PZL Rzeszow, employing 4,500 workers, has posted positive results since 1994. Its 200 revenue amounted to 354m zlotys, with exports accounting for 74.1 per cent of the sales total.
UTC is a public company listed on the New York Stock Exchange. Its 2000 sales revenues were over US$26.5bn, and net profit rose 10 per cent to US$1.8bn from 1999.

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Online banking to double in two years

Most retail and commercial banks with online services expect client numbers to more than double in the next two years, although Web services will continue to account for a minor share of their revenue, industry analysts said recently, Roseanne Gerin wrote in the Warsaw Business Journal.
The Polish Banking Association estimated that 526,000 online accounts were in operation at the end of January, most of which were retail. It said there were about 40,000 corporate online accounts at the end of last year.
The number of online retail accounts should increase to 750,00-1 million by the end of 2002, analysts said. Grzegorz Zawada, a banking analyst at Erste Securities in Warsaw, predicted there would be 3 million online banking accounts in 2004. Online bank accounts make up less than 10% of the banking sector's total accounts, assuming there are 10 million retail accounts and 1 million corporate accounts in the country, he noted.
Banking online has become increasingly popular in the last four years and the majority of Polish banks now offer some form of online services. Kredyt Bank recently announced the start of its online banking service. BIG Bank Gdanski is the only bank still devoid of an online banking service, although it plans to launch one this year according to a spokesman. Two purely virtual banks, BRE Bank's mBank and Banki Gesellschaft Berlin Polska's Inteligo Financial Services, are also up and running.
But the predicted rapid increase in the number of online accounts during the next two years could be a temporary phenomenon as a portion of Poland's 6.6 million Internet users respond to heavy advertising by banks urging them to get wired.
"It's easier to get an inflow of users at the first stage but Internet users are now growing and all are not sophisticated enough to use Internet banking," said Artus Szeski, a banking analyst at CDM Pekao Securities, referring to the slow growth in the number of Internet users, which only increased by 4.5% last year.
Brick-and-mortar banks can expect some revenue growth from their online banking activities depending on the quality of services they offer and their transaction and service fees, analysts said. But since these banks consider their Internet transactions as additional distribution channels for their products they are unlikely to realise any huge costs savings by closing down branches or laying off employees as their number of online clients increase.
"Online banking in normal banks does not give results immediately because the banks have to keep existing branches and employees," said Marcin Materna, a banking analyst at BIG Bank Gdanski. It would generate "almost no additional revenue," and would reduce operating costs only up to 10% during the next two to three years, he said.

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Polish oil giant to set up joint venture with German-Dutch firm

The extraordinary general meeting of shareholders of PKN Orlen oil company agreed on 21st February to form a joint venture company with Basell Europe Holdings B.V., chairman of the meeting Jerzy Modrzejewski said, PAP News Agency has reported.
The setting up of the joint venture will make it possible to develop polymer production and increase the capacity of utilisation of propylene and ethylene. Production of propylene and ethylene at the Plock chemical plant would double.
Earlier PKN Orlen said that the value of the company's investment with Basell was estimated at US$600m. PKN Orlen will spend US$250m from current cash flows, and the joint venture will absorb some US$350m.
PKN will contribute a polymer block to the joint venture company.
The shareholder meeting resolved that the value of the part of PKN Orlen contributed to the joint venture company will not be lower than the zloty equivalent of 80m euros. In the new company both PKN Orlen and Basell will hold a 50 per cent stake each.
The shareholders decided that a resolution to form a joint venture company will be operative until 30th June 2002. If PKN Orlen fails to conclude relevant agreements by that time, including an agreement to set up a company, its statutes and licence agreements, then the resolution will be invalid.
Following a motion from Nafta Polska, it was resolved that agreements to form a joint venture company together with its statutes, require the approval by the PKN Orlen supervisory board.
According to documents prepared for the meeting by PKN Orlen, the joint venture is expected to post a 79.95m-zloty net profit in 2002, 102.57m in 2003, and will exceed 300m zlotys [US$71.9m] in 2008.

Bartimpex teams up with Rotch for 75% RG purchase

Bartimpex, Poland's biggest private gas importer, announced it will join forces with British investment group, Rotch Energy, to purchase Rafineria Gdanska (RG), New Europe has reported. The British firm is looking to purchase a 75 per cent stake in RG but has yet to receive approval from the Treasury. The latter claims Rotch does not have the required financing for the US$1bn deal.
Bartimpex's support for Rotch is in keeping with a new strategy recently announced by company president, Alexander Gudzowaty. In an interview with the Polish Press Agency, (PAP) Gudzowaty explained: "Our new activities will involve acting as an intermediary in attracting foreign capital. As a result we may bring in up to US$2bn or US$3bn by the end of 2003."

Poland to inject gas pipeline capacity with US$170m

Deputy Economy Minister, Marek Kossowski, following government delegation talks in Moscow, announced that Poland will spend US$170m to boost the capacity of the first phase of the Yamal gas pipeline, reports New Europe. 
The investment will increase transport capacity of the pipeline from 18bn to 28bn cmpy. Both countries declared an interest in building the second phase of the pipeline, a project that would depend on the demand for gas in Poland and Europe. The Moscow visit was chiefly meant to prepare for the talks Russian president, Vladimir Putin, will be holding during his visit to Warsaw.

Shell JV to take over DEA fuel stations

Shell is planning to assume Poland's network of DEA fuel stations. As a result, Shell will increase the number of its stations to 205, the biggest of all foreign fuel corporations operating in the country, reports New Europe. At the end of December, Shell received permission from the German Anti-Monopoly Office to set up a joint venture (JV) with RWE DEA fuel company on the German market. 
The new company, Shell & DEA Oil, which will commence operations following the granting of requisite permits from the European Commission, will become a leader in the German fuel-supply market with a 20% market share. The JV establishment with RWE DEA will result in the take-over by Shell Produkty Polska company of the DEA fuel station network in Poland. "Shell will take over 49 DEA stations in Poland after receiving permission from the ministry of internal affairs and administration," noted William Kozik, sales director at Shell Produkty Polska. "We hope to receive all necessary permits over the coming month." Shell operates in 28 countries around Europe

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CEDC continues with increased market share

Poland's biggest beverage distributor, the US-based Central European Distribution Company (CEDC), signed a letter of intent recently to purchase 100% of local distributor Agis, New Europe reported recently. The deal will be realised through a cash and stock transaction as the company seeks to control a bigger share of Poland's vodka market. The concentration of capital in the country's beverage industry means further consolidation is unavoidable in distribution and production, industry officials explained. Agis, recording sales of some US$76m and forecasting net profits of US$1.3m for 2001, will expand the CEDC distribution network by 13 regional centres in an area north-west of Warsaw. "We are looking to control upward of 30% of the vodka market by the end of 2003… I believe this will give us substantial leverage with our suppliers and in the retail trade," noted William Carey, CEDC chief executive officer.
CEDC, since its initial 1998 public offering on the Nasdaq, has acquired four regional distributors: Multi Trade Company (MTC), Polskie Hurtownie Alkoholu (PHA), Piwnica Wybornych Win and Astor. CEDC's expansion anticipates a pending increase in demand for imported beverages in the medium term, which will follow a reduction in import taxes on alcohol as Poland nears EU accession. CEDC commenced operations in 1997 and runs 20 regional distribution centres in major urban areas throughout Poland.

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Polish Treasury extends credit guarantee on EBRD loan for state railways

The government decided on 5th March to extend credit guarantees on a 130m euros loan to PKP state railways from the European Bank for Reconstruction and Development [EBRD], the Government Information Centre [GIC] said, PAP News Agency has reported.
"The guarantee agreement will cover the loan and interest on it as well as ancillary costs, all in all the amount of up to 150m euros," the GIC said. "The agreement expires on 20 August, 2008."
The government decision means that PKP can now sign the loan agreement with the EBRD.

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Anti-virus software companies seeing a boom

Heightened demand for anti-virus software from major corporations has inspired network security company Network Associates to establish operations in Poland this year. The American company has found success with sales of McAfee online security applications and Sniffer network monitoring technologies to Polish corporate clients, the concern said in a statement, New Europe has reported.
It now intends to concentrate on small- and medium-sized enterprises (SMEs) and will also set up offices in the Czech Republic and Hungary, reported. Network Associates' average revenue from sales in Poland almost doubled last year. Anti-virus makers are seeing an increased demand for their products in the former communist nation. A Symantee Polska spokesperson noted that more international anti-virus software companies are also looking to establish themselves in Poland. Over the last four years, the distributor of localised versions of Norton anti-virus software has enjoyed its own sales increase of some 35% each year. However, corporations are not the only concerns turning to the assistance of anti-virus programmes. IT specialists inform that as the number of viruses traversing the Internet increase, more individuals in Poland are buying legitimate versions of anti-virus software rather than using pirated copies.

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Polish insurance firm to take controlling stake in Lithuanian company

The PZU SA [insurance company] will take over 66.67 to 76 per cent of the capital of the Lithuanian Lindra insurer by the end of the first quarter of 2002, the PZU said in a communiqué, PAP News Agency has reported.
PZU concluded a deal whereby it committed itself to buy back the company's shares from its to-date shareholders and to raise the company's capital to increase its holding to 66.67-76 per cent of the capital.
The transaction to buy shares will be closed by the end of the first quarter.
While buying a majority stake in the Lithuanian company, the PZU SA will also take over control over a life insurer in which Lindra owns a 90 per cent stake.
Lindra was set up in 1993.

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PSE to establish competition with TPSA

National power grid Polskie Sieci Elektroenergetyczne (PSE) has announced plans to establish a telecoms group in competition with incumbent operator, TPSA. All of PSE's telecoms interests are to be merged for the creation of one large telecoms group, the Warsaw Business Journal reported citing
PSE's present interests include a 16% stake in optical fibre network operator Tel-Energo. PSE President, Staanislaw Dobrzanski, declared that he would not rule out the possibility of a merger with a strategic partner.

Netia investors agree on new share issue

Shares of independent telecom operator, Netia, shot up in early February on the Warsaw Stock Exchange (WSE) as its two biggest shareholders, Swedish Telia and investment fund Warburg Pincus, finally came to an agreement over the issue of 600 new shares. The two parties did not agree to recommendations by the ailing company's management, with Warburg opposing the plan. Shares were to be bought by Netia's creditors, who would thereafter assume control of the company, Poland AM reported. The price sought by Warburg was seen as too high, thus convincing Telia that it was better to declare Netia bankrupt.
Although the Swedish firm's Investor Relations Department head, Tobias Lenner, confirmed that an agreement was signed, he would not reveal further details. "The solutions we have undertaken will help us save Netia without having to invest any additional funds," he told Gazeta Wyborcza. 
According to Wyborcza's sources, the creditors are still reluctant to accept Telia's share conditions, which appear far worse than those negotiated privately several weeks earlier between the creditors and minority shareholders. Marcin Sojka, a SM BGZ broker house analyst, finds it worrying that Telia constantly refused to inject Netia with new funds when it is sore in need of an active sector investor.

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Hilton in final stretch for Warsaw conference centre construction

As Hilton gets ready to construct a hotel and conference centre in Warsaw, industry analysts have noted that Poland's economy must at least grow in line with expectations in order to support the capital's increasingly burdened luxury hotel market. "We should have at least three per cent GDP growth in 2003, and rising, for the demand to complement the current supply and that under construction," explained Adrian Karczewicz, hotel analyst at property consultancy, Knight Frank Nieruchomoaeci. 
The Democratic Left alliance-led (SLD) government's rescues package for the country's ailing economy projects GDP expansion at three per cent in 2003 and five per cent the year following that, the Warsaw Business Journal has reported. Hilton Hotels is about to finalise the terms of a package for the development of a 1,800 sq.m lot. Tricia Fields, Hilton spokeswoman, stated, "We are in advanced negotiations on several projects, but nothing has been signed." Jacob Goldzak, vice president of Grzybowska Centrum, the project's hopeful developer, said his company was awaiting signatures on a 20 year operator's agreement with Hilton, the US-based global chain.

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