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poland

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POLAND


 

REPUBLICAN REFERENCE

Area (sq.km) 
304,500

Population 
38,633,912

Capital
Warsaw

Currency 
Zloty 

President 
Aleksander 
Kwasniewski 

Private sector 
% of GDP 
70% 

  

Background:
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: 074 - (19/06/03)

Positive outcome in EU referendum
The Poles have had a referendum on Europe and the result is positive. By 78% to 22% the vote went overwhelmingly in favour of EU membership. As important as the vote was the turnout, nearly 60%.
Had it not been over 50% the two houses of parliament would have had to decide the issue, only a two-thirds majority being enough. Had this had to happen the government of Premier Leszek Miller, consisting of ex-communists, would have fallen. Its rating in polls is as low as 16%, such are their problems.
It was not only Premier Miller, but President Kwasniewski who was mightily relieved on June 9th, the day after the weekend referendum closed. He has invested enormous political capital in the EU, where he already bestrides the stage, along with other European leaders. The Poles need to establish their European credentials well, having backed the US over Iraq, a move that was highly unpopular in Paris. Actually the government was far more favourable to Washington than the population, wary of war.

The Polish contingent in Iraq
Having had 200 troops fighting in the war, the Poles are needed to keep the peace. The government has even committed 2,000 troops as peacekeepers in a Polish zone in south-east Iraq. The full contingent will comprise over 7,000 troops from 20 countries under Polish command. 

Black Economy
It is just such an accession of responsibility as gives the Poles the feeling that they are back in the family of nations after fifty years in the freezer of the Warsaw Pact. Communism may not be popular, but nor is capitalism.
The economy is doing poorly, with little growth since the 1990s. Nobody thinks the EU is going to make much immediate difference. But it at least confirms Poland's European identity. Only when the EU itself picks up is there likely to be a rise in trade and investment from the EU, the two things Poland really stands in urgent need of soon. The ex-communists could well be out of power at the next elections, although with Solidarity destroyed at the last one it is not clear who would succeed.

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AUTOMOBILES

Fiat launches new model, targets renewed sales


Italian car maker Fiat plans to retake part of the Polish car market lost in recent times with the launch of a new model, named "Gingo," to be produced at the company's plant in Tychy, Fiat Auto Poland President, Enrico Pavoni, was quoted as saying by Interfax News Agency. 
Fiat has set its minimum plan for sales growth in 2003 at the same pace as the market, but it expects to retake one or two market penetration points, Pavoni said. "As we have seen market growth in first quarter of some 10%, we have set the minimum target for our sales to grow at the same pace, but our expectations are more optimistic and we want to retake one or two market penetration points," Pavoni said. The company, due to improvement on the market, will not schedule any production stoppages at its Tychy plant this year, unlike in 2002, when it was forced to stop production at times.

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ENERGY

EU commits to support Odessa-Brody pipeline extension

Ukraine and Poland received a highly-anticipated commitment from the European Union that it will support an extension of the Odessa-Brody pipeline into Poland. "There is a real commitment on our part on this project and hope that real soon it will be a reality and not just a project," EU Commissioner for Energy and Transport, Loyola de Palacio, said in her closing remarks at the pipeline presentation in Brussels on May 27th. "As chairman, I hope that out of this conference to develop this key project will be to the interest to the enlarged EU and out neighbouring countries," she said, New Europe reported.
De Palacio said the EU would appropriate two million Euro in the framework of Tacis and INOGATE Programme for a feasibility study to extend the pipeline to Plock. She also announced the decision to create a Joint EC-Poland-Ukraine Expert Working Group in charge for the development of the project.
De Palacio, Polish Deputy Prime Minister, MarekPol, and his Ukrainian counterpart, Vitaly Hayduk signed a joint declaration on the support of the project at the end of the conference Odessa-Brody-Plock Oil Transportation Project: Enhancing European Union Energy Security and Integrity.
De Palacio said that the project, once operational, "will increase the security of supply of the enlarged EU and Ukraine by transporting, in addition to the Russian crude oil from the Caspian Basin or from international markets towards Central Europe. The pipeline could thus contribute to the economic development of all countries involved."
The EU commissioner said, "The future enlargement of the European Union, which will become a reality as of next year, will require an important effort for acceding countries in terms of implementing the necessary reforms in their respective energy sectors. This process is irreversible. Ukraine, which will have a physical border with the enlarged European Union, will have to be fully associated with this process."
She praised Ukraine for taking important decisions regarding the reforms of the energy sector and in particular the gradual adoption of EU norms and standards for oil products. De Palacio also hailed Poland's decision to support the extension of Odessa-Brody to Plock and implementing the necessary conditions so that a consortium of private companies can further develop it.
JSC Ukrtransnafta Chairman, Alexander Todiychuk, said he hoped Russian companies would join in. "Russian companies see that unless the project is implemented, pressure on the Bosporus Straits won't be alleviated," he said, adding that the pipeline would broaden the market for some Russian companies, including YUKOS. "Maybe there is not real love here but certain sympathies we expect," he told the conference.
Todiychuk expressed his gratitude that the EU has supported this project. The Odessa-Brody-Plock project is recognised as a project of Pan-European interest, not just a project between two countries, and that sends a strong political message to all parties involved, experts say. Whether the support lasts remains to be seen.

Polish oil company wants access to Iraq's oil deposits

The Polish oil company, PKN Orlen, wants to gain access to Iraq's oil deposits, PKN Orlen head Zbigniew Wrobel said on 2nd June, PAP News Agency has reported. "We hope to be able to seek a concession for Iraq's oil fields", Wrobel said.
Foreign Minister, Wlodzimierz Cimoszewicz, said recently that the Polish government will support a bid of Polish treasury-owned companies to gain access to the oil deposits in Iraq.

New tender for Unipetrol, PKN Orlen and Argofert sign Letter of Intent

PKN Orlen, the dominant fuel refiner and retailer for Poland will form a consortium with Argofert Holding to bid in a fresh tender for Unipetrol, the Czech petrochemical firm, Interfax News Agency reported. Both sides have signed a letter of intent.
PKN Orlen stated that in early April it could form a bidding group for Unipetrol with MOL, the Hungarian oil and gas company, which is one of its main central European fuel-sector rivals.
Having long had designs to extend its regional presence, PKN Orlen had taken part in the first Unipetrol tender, in partnership with Argofert.
Argofert was the winning bidder in a tender originally issued in December of 2001. But the group was unsuccessful at coming up with €361m and the bid fell through. The tender was cancelled in October of 2002.
A possible PKN Orlen/Agrofert group could be up against the Russian oil company, Surguneftegaz, a Czech daily reported in mid-May. Russian oil giant Yukos, which recently merged with Sibneft to form one of Europe's biggest oil companies, could also be in the hunt. MOL is reported to be on the list, as well as Austria's OMV. The Czech government plans to sell its stake in Unipetrol this year or early in 2004. Analysts say the government could raise 8-10bn crowns on the sale

Treasury to decide RG's fate

The treasury ministry will decide in the near future whether Rafineria Gdanska (RG) will be acquired by a strategic investor or remain independent and consolidate with southern refineries, the Warsaw Business Journal reported.
Pawel Olechnowicz, RG's president, met with treasury minister, Piotr Czyzewski, recently to try to persuade him to keep RG an independent company, rename it Lotos Group and have it acquire several smaller cash-strapped refineries in southern Poland.
"His arguments must have been strong since everybody seemed to be satisfied after the meeting," said Janusz Kwiatkowski, a treasury ministry spokesman. "As a result, the minister will take into consideration arguments supporting the creation of Lotos Group and the development program worked out in Gdansk." Kwiatkowski added that the final decision on topics discussed at the meeting would be made in July.
Olechnowicz and Gdansk-area politicians back the idea to create Lotos Group, which would use RG as its cornerstone and consolidate small refineries in Trzebinia, Krosno, and Jaslo. Petrobaltic, a company specialising in oil extraction form the Baltic Sea, would also reinforce this new corporate entity.

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EU ACCESSION

Poland lags behind in some areas of integration - EU Commission

Poland ran into serious delays in 8 areas of integration that require "urgent attention" and has some work to do in 7 more areas, according to lists compiled by the EU Commission, PAP News Agency has reported.
The lists were published on 2nd June by a specialized bulletin, Agence Europe. The first of them includes the following areas: free flow of people, companies law, taxes, customs and monetary union, energy, telecommunications and environment protection.
The second list covers these areas: free flow of goods, free offering of services, agriculture, fisheries, social policy, audiovisual policy, customs union and financial control.
This means that Poland has problems with timely discharging of its obligations in 15 negotiating chapters of 30th. The Czech Republic and Latvia have 4 areas of serious delay each, but they also have 10 and 12 minor importance areas to catch up in. Slovakia has 3 and 4 areas, respectively, Estonia has 2 and 5, Hungary has 2 and 4.
Lithuania and Slovenia have no serious delay areas, and 7 and 10 minor importance problem areas.

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FINANCIAL NEWS

Poland hopes rebuilding Iraq will aid economy

What is the best cure for Poland's anaemic economic growth and skyrocketing unemployment? Many are hoping the solution will be found in Iraq, reports the International Herald Tribunal.
Nearly one in five Poles is out of work, and then the nation's economy grew by a paltry 1.3% last year. But with potentially lucrative contracts on the horizon for Polish companies to rebuild Iraq's devastated infrastructure, hopes are rising that the Polish economy will strengthen.
Due to its strong support for Washington on Iraq, Poland has already reaped some handsome rewards, including the prestige of commanding a peacekeeping force in Iraq and a visit by president George W Bush.
Poland - which approved a referendum recently to join the European Union - now hopes the country will get what it needs most of all: a share in Iraq's reconstruction. Analysts say that could help the country's faltering economy.
Miroslaw Zielinski, deputy minister of the economy, labour and social policy, was quoted by the English-language newspaper The Warsaw Voice as saying he hoped that "when Polish companies apply for contracts, their bids will meet with more favourable treatment than those from other countries, though it's necessary to remember that business criteria are more important."
Washington has asked non-American companies hoping to participate in re-building Iraq to form consortiums with American counterparts. Hundreds of Polish companies are preparing bids including some of the nation's biggest oil companies.
"Our companies need a bigger presence abroad," Marek Kloczko, secretary-general of the Polish Chamber of Commerce, said in an interview. "If Polish companies can contribute to the reconstruction of Iraq, this will have a big impact on our economy."
Just how big is open to debate. Admitting that his assessment is optimistic, Kloczko says helping rebuild Iraq could increase Poland's economic growth by as much as 1.5 percentage points, which would more than double the country's growth over the total last year.
Kloczko's optimism is widely shared among ordinary Poles. According to a recent public opinion poll, two-thirds of Poles say they will be better off because of the reconstruction contracts and half the nation maintains that Poland will get access to cheap oil.
Analysts and politicians there say Polish companies would bring valuable expertise and experience to Iraq. In the 1970s, about 80,000 Poles worked in Iraq as oil industry technicians, engineers and doctors.
Kloczko says Polish companies would be particularly skilful in road and bridge construction, health care, light industry and food processing.
The most high profile and potentially most lucrative bids are coming from Poland's fuel and energy industry.
Officials in Warsaw announced that the state-owned fuel company, Nafta Polska, had formed a joint venture with Kellogg, Brown & Root, a Texas-based subsidiary of Halliburton Co, where Vice President, Dick Cheney, worked as chairman until his election in 2000. KBR has been awarded contracts to assess damage to Iraq's oil fields.
Citing sources close to the deal, Reuters reported that the new venture also included the Polish gas monopoly PG-NiG, the construction company Prochem, the state-owned chemical maker Police, and the fuel company Lotos.
"We want to build several consortia around Nafta which will have more say and the ability to break through and win contracts," Reuters quoted Jerzy Hausner, the economy minister, as saying.
Poland's largest oil producer, PKN Orlen, is also hoping for a share in Iraq's reconstruction and is seeking to form its own joint venture to bid for contracts.
Poland is also poised to receive US$6.3bn in investment over the next 10 years from US companies as part of a so-called offset deal connected to the government's recent US$3.5bn purchase of 48 F-16 fighter jets from Lockheed Martin Corp.

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FOOD & DRINK

Heineken eyeing larger piece of Polish beer pie

Dutch beer producer, Heineken, will substantially increase its share of the Polish beer market after the takeover of Austrian BBAG for €1.9bn, reports New Europe. Heineken controls Zywiec, El Brewery, Warka and Lezajsk beer producers. Brau Union, which is the central European subsidiary of BBAG, owns Browary Warszawskie, Van Pur and a local brewer in Bydgoszcz. 
After the transaction Heineken will control roughly 40% of the market, as its Zywiec brand holds over 32% of it, while Brau Union about 5%. In this way, the company would be well ahead of its largest competitor SABMiller, which owns Kompania Piwowarska, holding 32% of the market.

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INDUSTRY

Philips shines on

Philips Polska has been enjoying a buoyant export market for its light bulbs and television sets and making a profit, despite the deep losses of its Dutch parent company, the Warsaw Business Journal reported.
Bogdan Rogala, president of Philips Polska, expects another year of profitability, though he believes 2003 will be an easy one due to the ongoing economic downturn, especially in Europe and Russia where the firm exports most of its products.
The company recorded sales of €1.6bn (zl. 6.8bn) and a net profit for both home and export market sales in 2002, though Rogala declined to state the specific amount of profit. Philips Polska's total export sales amount to roughly about €876m per year.
Meanwhile, the parent company continues to be plagued by heavy losses, recording a €69m loss for the first quarter of the year compared to a €9m profit in the first quarter of 2002. For the entire year 2002, Philips had racked up a record net loss of €3.2bn, due to a huge loss in its semiconductor division, its lack of a global lead in a strategic industry large enough to withstand the economic meltdown and impairment charges as well as write-downs of the firms outside investments.
While the parent company undergoes continuous restructuring and downsizing to try to return to profitability, Rogala doesn't expect any cost-reduction measures here since the operations are in the black. He also believes that there is little possibility that the parent company will follow the trend and move its Polish production plants to cheaper locales in Asia.
"Its not a black-and-white issue, that it costs, for instance, six cents to produce a light bulb in Poland and four cents in China," said Eric de Graff, equities analyst at ING Barings in the Netherlands. "Its about the quality of staff, existing facilities and the support of the government in the form of tax breaks."
Poland is an important industrial base for Philips, which globally is the number-one maker of lighting products. The company has invested a cumulative total of about €351m (US$400m) in the country since it established operations there in 1991. Today it has six factories around the country employing 6,500 workers. About 70%-80% of the company's core products manufactured there, including light bulbs, TV sets, coffee makers and electric kettles, are exported, Rogala said. Lighting products account for 40% of the company's production activities and are the firm's main revenue generator.
De Graff points out that one reason why Philips Polska is doing well is that the parent company absorbs substantial costs for research and development of new lighting technologies, which are not borne by the Polish operations.
Rogala added that the strengthening of the zloty in previous years had a negative impact on the company's results, whereas the weaker zloty last year had helped lift the company's bottom line.

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INFORMATION TECHNOLOGY

Polish computer market estimated at more than US$3bn 

In 2002 the computer market in Poland was worth US$3.1bn (12.8bn zlotys), up 7 per cent on the 2001 figure, according to an annual report issued by the Computerworld TOP 200 weekly, PAP News Agency has reported.
The telecommunications market was worth 30bn zlotys, of which Telekomunkacja Polska SA group accounted for 18bn zlotys.
The authors of the report estimate the value of computer services in 2002 at US$819m; software was worth US$587m and hardware - US$1.7bn. In line with the world trends, computer services were the most dynamically developing sector.
HP Polska remained the biggest computer firm on the Polish market. After a merger with Compaq Computer last year its revenues exceeded 1.78bn zlotys. The company was followed by Action, ABC Data, Prokom Software, Tech Data Polska, IBM Polska, Microsoft, Incom Group, LG Electronics Polska and Techmex.
IT services brought biggest revenues to Prokom (547m zlotys). Computer systems' integration brought biggest earnings to ComputerLand (145m zlotys).
The Computerworld TOP 200 report presents detailed data on 400 computer and 100 telecommunications firms operating in Poland.

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MINERALS & METALS

PHS privatisation - the heat is on

The state treasury is to decide in the near future who it will negotiate with in the privatisation of Polskie Huty Stali (PHS), the consolidated steel mill group that accounts for some 70% of steel production in Poland, the Warsaw Business Journal reported. Following the withdrawal of Luxembourg-based Arcelor from the tender, two major steel manufacturers are left in the race to take control of PHS: Dutch consortium LNM and US Steel.
Under the terms of the tender purchase prices and other details are confidential, but it is widely expected that PHS will go for €230m-€690m (zl1bn-zl 3bn). Last year the consolidated steel mills group recorded a loss of €160m (zl690m). The state treasury delayed its initial deadline for choosing a partner for negotiations from May 21st to the week beginning the 26th May, as LNM had not made its official bid presentation as of the earlier date. Representatives of US Steel, who have been pushing for a fast decision on privatisation, expressed hope that the delay would be the last one.

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TOURISM

Phone line to assist tourists, make Poland more accommodating

"Take a trip to Poland, your car's already there" - so goes the popular German joke about Poland and its reputation as a less than friendly tourist destination, dpa reported. But the Polish Tourist Organisation (POT) and National Police Headquarters (KGP) hope to transform the unflattering image by providing the 15.6 million tourists who visit Poland each year with a sense of security in the knowledge that help is just a phone call away. For a second year in a row, the National Tourist Emergency Line (TEL) is open daily form 8 a.m. to 10 p.m. daily until the end of September. In addition to English and German consultants on the line, tourists speaking Russian can also count on help this year.
Police say the hotline was deluged with calls last year. Germans were the most avid callers, ahead of Frenchmen, Italians and Ukrainians.
Despite the strong response, police say relatively few calls were made to actually report crime. The cast majority of callers were interested in basic tourist information, including accommodation, visa requirements and reports on road conditions and queues at border points.
Police from across Poland also used the hotline as a translation service to ease communication with foreign visitors.
Flyers with the cheerful greeting "Welcome to Poland" in English, German and Russian detailing the TEL access number (0 800 200 300 - free of charge for land lines inside Poland and +48 22 601 55 55 charges apply for mobile phones) are available to visitors at most points of entry to Poland and are easily accessed worldwide via the main police website at http://www.policja.pl.

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