Books on Poland
% of GDP
Update No: 110 - (27/07/06)
President's Twin Wins Confidence Vote to Become Premier
On July 19th Polish lawmakers approved Jaroslaw Kaczynski as prime minister,
giving him and his identical twin, President Lech Kaczynski, control of the
country's two most important political offices.
Deputies in the lower house of parliament, or Sejm, voted 240 to 205 in favour
of the government. A simple majority of at least 50 per cent of all deputies
present was needed to win the vote, while Kaczynski's Law & Justice party
and its two coalition partners have 239 out of the 460 seats in the chamber.
Kaczynski said during a presentation to parliament that he wants his government
to be one of ''hope and optimism,'' citing rapid economic growth, strengthening
exports and rising productivity as reasons for optimism. Poland's US$301 billion
economy grew 5.2 per cent in the first quarter, the fastest pace in seven
quarters, while Economy Minister Piotr Wozniak said in an interview earlier in
July that the economy may expand by as much as 5.5 per cent this year.
Law & Justice formed a minority government following its surprise win in
last September's elections, after talks with top opposition party Citizens'
Platform on forming a joint government broke down. In May it formed a coalition
with two smaller parties that favour higher public spending and want to change
the mandate of the central bank.
Self Defence, another coalition party, filed a draft law in December to expand
the responsibilities of the bank to include boosting economic growth, a plan the
government backed. Central bank Governor Leszek Balcerowicz on July 18
criticized the project as unconstitutional and said threats to the bank's
independence could destabilize the currency and impede economic growth.
The government's long-term viability will be tested as the leaders of each party
may clash over spending and policies. ''The durability of the coalition is open
to debate,'' said Radoslaw Markowski, director of the institute for political
science at the Warsaw School of Social Psychology, in a phone interview ahead of
the vote. ''It depends on the behaviour of the junior coalition partners, and
also on polls -- if Law & Justice sees it has a chance of winning 40 per
cent support, it will do its best to get rid of its partners and call
Kaczynski reiterated his promise to continue the government's policy of keeping
the budget deficit at 30 billion zloty (US$9.3 billion) next year, while
economists have doubted the plausibility of this pledge as cabinet partners
including the interior, health, agriculture and education ministers have
demanded additional expenditures.
Platform Chairman Donald Tusk criticized Kaczynski's speech, saying it had
offered no concrete solutions to Poland's problems such as unemployment, which
at 16.5 per cent is the EU's highest.
''I had difficulty in finding anything specific in the prime minister's
speech,'' said Platform Chairman Donald Tusk. ``The prime minister didn't talk
at all about the fight with unemployment,'' he said, adding that a more
''liberal'' economic policy was needed in Poland.
According to Tusk, Kaczynski also devoted too little time to foreign policy in
his presentation, describing as ''odd'' the prime minister's decision in his
hour long speech ``to only devote 60 seconds'' to the topic of the EU.
President Kaczynski attracted criticism earlier this month, including a letter
of protest signed by all eight of Poland's post-communist foreign ministers,
after he called off a meeting with German Chancellor Angela Merkel and French
President Jacques Chirac at short notice. Political commentators speculated
Kaczynski made the cancellation after he took offence at a very insulting
satirical article in a German newspaper that described him as a potato.
Ambassador takes umbrage
Poland is "mishandling" relations with Germany, Warsaw's
ambassador to Berlin said on July 18, in a rare breach of diplomatic protocol
that reflects underlying tensions within the administration of President Lech
Speaking in a Financial Times interview in Berlin, ambassador Andrzej Byrt said
Warsaw's reaction to a controversial satirical article in a German newspaper in
which the Polish president was compared to a potato had been "too
Byrtt as a professional diplomat is concerned that the president is playing
politics by refusing to meet Merkel, performing to the gallery of anti-German
xenophobes, the core of his constituency.
For all its political difficulties with EU leaders, Poland is doing very well
out of its EU membership. It is going to do even better in the future, according
to a Financial Times report of July 14:-
Poland to replace Spain as the largest recipient of EU funds
Poland is to receive almost 60bn Euro, (much of which emanates in Germany),
of regional support over the next seven years, overtaking Spain as by far the
biggest recipient of "federal transfers" from the European Union
Danuta Hubner, EU regional policy commissioner, set out where money from the
EU's 308bn Euro (US$392bn, £213bn) structural fund programme will go, and how
she hopes it will be spent.
Ms Hubner wants Europe's poorest regions to focus on raising competitiveness,
with less emphasis on prestigious political projects such as new roads and
railways and more on laboratories and high-tech clusters.
The breakdown of the programme shows how money is being targeted on 10 new EU
members from the former communist bloc: the Czech Republic will get 23.6bn Euro,
Hungary 22.4bn Euro and Romania, expected to join the union next year, 17.3bn
Among older member states Spain will receive 31bn Euro, Germany 23bn Euro -
mainly in the east of the country - and France 12bn Euro.
Ms Hubner, a Pole, recently published her guidelines on how the money should be
spent, focusing on the EU's economic priorities of raising competitiveness,
fostering innovation and creating hubs. Her figures reflect the deal struck by
EU leaders at a summit last December.
A total of 62 per cent of all money spent should be "earmarked" for
projects directly linked with the EU priorities of creating jobs and growth, the
first time such an approach has been used.
Ms Hubner says this marks a shift to spending priorities in the 2000-06 regional
programme, where 44 per cent of structural funds were spent on infrastructure
projects, including ambitious road and rail schemes in Spain.
That package, which expires this year, was agreed before the EU's Lisbon summit
of March 2000 which rather recklessly vowed to make the Union the world's most
competitive, knowledge-based economy.
Many new members have studied how countries such as Ireland and Finland turned
largely agrarian economies into high-tech centres, by investing in education,
skills and clusters.
But Ms Hubner points out that transport infrastructure projects still play a key
role, highlighting the chronic traffic problems around Dublin, the Irish
"This is not a one-size-fits-all approach," she said. "These are
policies which must be driven from the bottom up. There will be some poor
countries where investors will simply not go unless there is a decent
Nevertheless, the EU's regional policy over the last decades is littered with
"vanity" political projects with questionable value, a problem
particularly visible in parts of the Italian south.
New member states are not officially required to earmark money for core economic
projects but she expects them to set high targets.
Last December's EU summit also allowed new members to use European funds to
renovate decrepit housing stock, something which Ms Hubner opposed on the
grounds that the money should be used to create sustainable economic growth.
She is also pushing for more projects to be funded jointly by the European
Investment Bank, using financial instruments and venture capital to stimulate
small and medium-sized companies.
The EU budget, including regional policy, comes up for review in 2008-09 but Ms
Hubner will resist proposals from some - such as British chancellor of the
exchequer Gordon Brown - to axe EU regional programmes in rich countries in
But she admits that Brussels and national politicians need to explain better why
money spent in poor regions, particularly eastern Europe, will bring benefits
for everyone by opening up new markets. "This is not a policy for the
poor," she says.
New leader vows to guard Polish 'morals'
By Judy Dempsey International Herald Tribune
Poland Prime Minister Jaroslaw Kaczynski, in his inaugural address, set Poland
on a collision course with the European Union on Wednesday by declaring that he
would do everything to protect the country's "culture and morals" from
In a defiant speech to legislators in Warsaw before a vote of confidence,
Kaczynski said that Poland wanted to belong to the EU, but added: "We
differ. There is no reason to hide this."
The twin brother of President Lech Kaczynski, the new prime minister gave a
broad overview of domestic and foreign policy during his hour-long speech,
making his battle against corruption and organized crime the cornerstone of his
He pledged to reduce Poland's dependence on Russian energy by buying gas from
Norway and possibly building nuclear power stations. And he promised the United
States, one of Poland's closest allies, that Warsaw would remain a loyal
Although he did not refer directly to the future status of Polish troops in
Iraq, which the former center-left government had vowed to withdraw, Kaczynski
said: "There can be no desertion. Poland is not a nation of
But it was the EU, which Poland struggled so hard to join in 2004, believing it
would finally give Warsaw an opportunity to exert its influence in a united
Europe, that bore the brunt of Kaczysnki's foreign policy remarks.
"We want to be in the European Union - I want very strongly to emphasize
this," Kaczynski said. However, he added, "we are also going to work
so that Poland can retain its full sovereignty in culture and morals."
He won applause when he vowed to defend traditional marriage, defining it as
"a union between a man and a woman" - a jab at the EU countries that
have legalized gay marriage. Poland has also crossed swords with other EU
countries on the issues of abortion and women's rights.
"We won't let ourselves say that black is white," said Kaczynski, who
was sworn in on Friday - half a year after his brother took office as president
- making the twins the first in the world to hold a nation's two top political
jobs. "We are going to protect this foundation of social life."
The Kaczynskis' conservative Law and Justice Party, which they founded in 2000,
relies on the support of the ultraconservative Roman Catholic League of Polish
Families, which is widely seen as anti-Semitic and anti-homosexual, and the
populist, Eurosceptic Polish Self-Defence party.
But although those parties have roots in Poland's rural heartland, the prime
minister's speech did not go down well with many in Maczkow, a rundown village
in western Poland, where the communist cooperative farm was dismantled in the
early 1990s, leaving people without work.
"This government should be fighting to keep the young people here by
creating jobs," said Edwardj Pioro, 66, who owns a small construction
business with a German partner. His recipe: Introduce a transparent taxation
system and phase out bureaucracy to encourage investment. "But what has
Kaczynski's party done about that since it was elected last October?
Poland's unemployment rate stands at 18 percent. Here in Maczkow, where the main
street needs repaving, talk about protecting the country's culture and morals
has little relevance, local people said.
The Kaczynski brothers promised back in October to build houses and roads but
also to have Poland play a greater role in Europe.
But intellectuals like Krzysztof Wojciechowski, director of the Collegium
Polonicum, a Polish-German university perched just above the river Oder, which
divides Poland from Germany, say the twins have spent too much time on power
struggles within the Law and Justice party and not enough on improving Poland's
relations with the EU.
One of the best ways for Poland to influence the EU, Wojciechowski says, would
be to establish a strong relationship with Germany, the largest of the 25 member
states but historically a foe of Poland.
Over the decades, and particularly since the collapse of the Berlin Wall in
November 1989, the countries have tried to improve ties. But a recent satirical
article in the leftist German newspaper Taz, which upset the Kaczynskis by
describing them as "Polish new potatoes," exposed the fragility of the
"The Kaczynski twins completely overreacted," Wojciechowski said.
"You must understand that this administration knows very little about
Germany or foreign policy, and until now the twins have rarely travelled outside
Both he and Pioro remarked on the absence of seasoned foreign policy experts
under the Kaczynskis.
Several top Foreign Ministry officials have resigned upon being demoted or
determining that they could not work with the new administration, among them the
former foreign minister, Stefan Meller, and the director of the European
Integration department, Pawel Swieboda.
"Instead of implementing policy, they spend their time fighting inside the
party," Wojciechowski said.
Outside in the blistering noonday heat, some students were making final
arrangements to work in London during the summer vacation. They had no kind
words for the Kaczynski twins.
"Stuffing the cultural values and morality stuff down your throat is
stupid," said Jadwiga Cywinska, 20. "I thought that was what the
Communists used to do."
Revamped coal sector is bedrock for energy security
It was synonymous with the sooty, grey gloom of communist Poland, but 17 years
after the regime's collapse, the coal industry is revitalised and in the pink
with capitalist vigour.
Poland's estimated 150-year reserves of comparatively clean - burning, hard,
black coal set a solid foundation for energy security for the European Union
newcomer amid anxiety over the reliability of energy supplies from Russia,
energy experts point out. A massive cash injection of more than US$ one billion
into Poland's once-bloated coal sector has played a crucial role in streamlining
and priming it for profit. "We've sponsored the government's restructuring
drive aimed at making the coal sector work on market principles," World
Bank official Roman Palac told Deutsche Presse-Agentur (dpa).
Poland, in fact, is a European leader in modernisation and restructuring that
are key to the future of the coal industry, which produces 40.1 per cent of the
world's electricity, according to the World Coal Institute's 2003 figures.
Since 1988, the World Bank-sponsored "Coal Mine Closure Project" has
loaned the Polish government a total of US$700 million, including US$600 million
for "social mitigation" - mainly cash pay-offs for redundant miners -
while the remaining funds were used for mine closures.
In addition, the Polish government has pumped about US$600 million into
restructuring programmes to stop it draining public coffers.
At present, the right-wing Law and Justice (PiS) government of Prime Minister,
Kazimierz Marcinkiewicz, is formulating plans for further reform, aimed at
defining coal's role in Poland's long-term energy strategy, a treasury ministry
spokesperson confirmed. Under communism, the country's nearly-half-million coal
workers were regarded as the heroic, creme de la creme of the proletarian class,
and thus received generous benefits.
However, since the 1989 collapse of communism, some 50 mines have been shut,
leaving around 120,000 miners and surface employees working in 30 mines. Some
20,000 more jobs need to be cut in order to meet profit targets.
Professor Andrzej Barczak of the Katowice Economic Academy says it is
"vital" to complete reforms and build up market mechanisms. "We
can't leave this road," he says. "Now the sector once seen as excess
ballast is looking like a really solid foundation for Poland's energy
strategy." "Now we're speaking of coal as a fuel of the future, not as
a dirty, polluting old ball and chain," agrees Zbigniew Madej, spokesman
for Kompania Weglowa. With some 70,000 workers operating 17 mines and an annual
output of more than 52 million tonnes, it is the European Union's largest coal
conglomerate. Based in southern Poland's Katowice coal basin, Kompania is fully
owned by the Polish State Treasury and has been turning a profit in recent
With a quarter of its production destined for market in Germany, Scandinavia and
Austria and a booming coal market, it earned nearly US$140 million profit in
2004. This year's profit forecast has been scaled back to some US$30 million,
but Madej is convinced the future is bright.
Active mines in Poland have a 60-year or five-billion-tonne supply of black coal
- but Poland, as Europe's leading producer of what the Poles call "black
gold" has an estimated total reserve of 150 years when untapped veins are
counted, coal industry experts say. "Poland can be the reservoir for the
European Union's energy security," Madej said. "It's quite obvious we
are a much more stable country than the majority of oil- producing states, not
to mention there's also only 40-60 year's worth of crude oils left
Estimates of the world's remaining accessible crude oil range from one trillion
barrels according to OPEC to two trillion barrels by international oil giants
like ExxonMobil, but world experts expect oil production to peak - or level off,
then drop - by the mid-century at the latest due to physical limitations on
extraction. With Poland relying on coal-fired plants for about 91 percent of its
electricity, the domestic supply is more than secure for the next century. As
more coal-fired generators are fitted with modern carbon emission controls,
coal-generated electricity also poses less of an environmental threat than
potentially lethal nuclear power generators, its advocates say.
Kompania Weglowa is also optimistic that plans in Germany to build eight new
coal-fired generators by 2011 could also provide new markets for cleaner-burning
Polish black coal, Madej adds.
The EU-sponsored "Clean Technology Clusters" project in Katowice is
just beginning to study new technologies aimed at tapping into the country's
abundant veins of black gold to produce natural gas or petroleum in the not so
distant future when crude oil will be a thing of the past.
Record foreign investment in Q1 of 2006
Poland saw a record US$3.3 billion in foreign direct investment (FDI) in the
first quarter of 2006, a top Warsaw official said. Adam Zolnowski, chief
executive of the Polish Information and Foreign Investment Agency (PAIiZ) said
it could signal US$10 billion worth of FDI inflow by the year's end.
Last year Poland saw some US$7.7 billion in FDI.
Investments by global players in the electronics, automotive, IT, service centre
and accounting sectors were most common, Deutsche-Presse-Agentur (dpa) reported.
With PAIiZ currently facilitating 80 investment projects from around the globe,
the revved-up investment trend is expected to continue. Companies from the
United States, Japan and the European Union continue to be the most eager
investors in Poland.
Poland ranks as the fifth most attractive investment destination according to
the fresh "Attractiveness Survey" report by global consultants Ernst
It is ranked behind global leaders the United States, China, Germany and India
and stands ahead of Japan and EU members Britain, the Czech Republic, France and
Interest in Baltic nuclear option
The decision of a Polish Parliament speaker to visit Lithuania's only nuclear
power station on June 14th signals a new stage in the two countries' energy
relationship, Deutsche Presse-Agentur (dpa) reported.
"This is the wind of change. Poland and Lithuania recently failed to reach
agreement on building an energy bridge, but Poland has now stepped into the
Lithuanian energy market," Baltic Sea region analyst, Mindaugas Jurkynas,
told dpa. The Lithuanian town of Ignalina is home to a Soviet-era nuclear power
plant, due for closure in 2009. The national energy monopolies of Latvia,
Lithuania and Estonia are currently discussing the possibility of building a
replacement at the same site. Marek Jurek, speaker of the Polish Parliament,
said his country was interested in cooperating in the project.
He was expected to visit Ignalina on June 14th. "Discussions on it are
under way. The Polish power grids are interested and willing to start
cooperation with Ignalina in this field," Jurek said, according to the
Baltic News Service BNS.
Ignalina, which is the only nuclear reactor in the Baltic States, supplies the
three countries with much of their electricity. Its closure was one condition of
Lithuania's EU accession. Future energy needs were to be met by power stations
run on Russian natural gas.
However, since the "gas war" between Ukraine and Russia nuclear power
has returned to the agenda. "A nuclear plant would grant the shareholders
guaranteed electricity, increase energy independence and yield potential
exports," Jurkynas explained.
Poland has also expressed concern over its energy dependence. "I think that
Poland and Lithuania face a certain danger, that they can be subjected to an
attempt at gaining political domination over them by means of energy
supplies," Polish President Lech Kaczynski said in a speech to the
Lithuanian Parliament in March.
"We have not yet received any official documents confirming Poland's
interest," said Orijana Jakimauskiene, spokeswoman for the Lithuanian
Economics Ministry, which handles energy issues.
If Jurek's statement receives governmental confirmation, it will signal a
further strengthening of the growing strategic energy alliance between Lithuania
and Poland. The Lithuanian state recently permitted Poland's largest oil refiner
PKN Orlen to buy a controlling stake in Lithuania's only oil refinery, Mazeikiu
Nafta. Poland's status as a fellow-member of NATO and the EU is thought to have
been one factor in the decision. "In terms of energy resources, both
countries are looking for alternatives to Russia," Jurkynas said. "The
power station and an energy bridge would be a long-term investment which would
guarantee energy for the Polish market, too."
Lithuania was occupied by the Soviet Union during the period 1944-1991, while
Poland was ruled by a Communist government loyal to Moscow during the period
1945-1990. Both countries have now joined the EU and NATO and are often critical
of Russia's stance in Eastern Europe.