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POLAND


 

 

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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 209,563 187,670 176,300 24
         
GNI per capita
 US $ 5,270 4,570 4,230 71
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 121 - (27/06/07)

The Polish-US axis
The Poles are not that enamoured of their Western European fellow states, for all their delight at being now in the EU. They remember well what happened at the hands of one of them, Germany, in September 1939. They also remember that France and the UK did nothing to prevent them falling into the clutches of the Soviet Union in 1945, despite having given them guarantees of their independence in March 1939. There was very little that the two Western powers could have done to stop it, as it so happens. But it rankles all the same.

The one people the Poles identify with unreservedly are the Americans, who include of course several million Poles. Actually they are also fond of Canadians. This explains the eager reception for US initiatives in Warsaw, especially when they are directed against the old enemy, Russia.

Poland is even stalwart about backing the US in Iraq, where it has more troops than any other US ally after the UK. President George W. Bush thanked Polish President Lech Kaczynski for sending troops to both Iraq and Afghanistan on a visit in early June. Poland has nearly 900 troops in Iraq, and Bush noted that the country had recently agreed to keep them there at least through the end of the year.

Okay to the US anti-missile shield 
Bush pressed his plan for a proposed European anti-missile defence on June 8th as he met with his Polish counterpart, who underlined his support for the system. Both Bush and President Kaczynski said the missile-defence system would not threaten Russia in any way, which of course means the exact opposite. The system has been an issue of contention between Bush and Russian President Vladimir Putin, as well it might.

"The system we have proposed is not directed at Russia. We would welcome Russian cooperation in missile defence," Bush said. He said a working group including the United States and Russia would "discuss different opportunities and different options, all aimed at providing protection for people from rogue regimes who might be in a position to either blackmail and or attack those of us who live in free societies."

The meeting came after Putin suggested alternative sites for the system designed to shoot down incoming ballistic missiles - including stationing part of it in Iraq, and another in Azerbaijan.

For his part, Kaczynski underlined his support for the proposed system, under which the US would install 10 anti-missile interceptors on Polish soil. Warsaw opened formal talks with Washington in May. Polish officials have said a final decision could come this autumn.

"Both sides are in complete agreement that there are no aggressive intentions tied to the system," Kaczynski said, with the usual smoothspeak. "It is a plan that is to strengthen Europe's security from certain dangers stemming from the fact that not all countries in this world are responsible - I'm not thinking of Russia here, but other countries." Of course this means that Russia is uppermost in his mind.

The system Bush envisions, aimed at defending against a possible future threat supposedly from Iran, would include a radar installation in the Czech Republic as well as the interceptors in Poland.

Putin complicates the plot
Putin has been a sharp critic of the US plan to base its anti-missile system in two countries that had been part of the Warsaw Pact after all, the security arm of the socialist camp.
But on June 7th, during a meeting with Bush on the sidelines of the G-8 summit, Putin softened his criticism by suggesting that the US include in the system use of the huge Soviet-era radar in northeast Azerbaijan. Bush said he would give the suggestion some thought, but indications are far more negative than that answer might suggest.

On June 8th, Putin suggested that U.S. missile defence interceptors could be located in Turkey, or even Iraq or on sea platforms. U.S. Secretary of State Condoleezza Rice said in an interview on the same day with The Associated Press: "One does not choose sites for missile defence out of the blue."

Germany mends fences
The German government said on June 21st that it would work to heal wounds ripped open at the European Union summit earlier in the month, where its row with Poland showed how far the two central European neighbours have to go to put World War II behind them. 

Poland, the biggest of the 12 mostly former Communist states that have joined the EU from 2004, had threatened to torpedo the summit unless changes were made to the new EU voting system which, it claimed, favoured Germany. Warsaw wanted the number of votes a country wields in decisions affecting the entire bloc to be calculated based on the square root of the country's population. Polish Prime Minister Jaroslaw Kaczynski had said Poland was "willing to die" to get its way. 

Germany, with the European Union's biggest economy and a population of 83 million, is twice as big as modern-day Poland. Before World War II, Poland had 35 million inhabitants. Six million perished in the war, including three million Jews. Its current population is 38 million. 

Premier Kaczynski later stunned Germany, which holds the rotating EU presidency until June 30, by invoking the carnage wrought in Poland by the Nazis, saying that without the war Poland would today be a country of 66 million people. 

Poland's demand to boost its European Union voting rights at Germany's expense had tempers flaring, leading Chancellor Angela Merkel to threaten to push ahead for a deal without Warsaw at the summit in Brussels. 

The ugly spat exposed tensions that still lurk just below the surface, six decades after the Nazi occupation of Poland. German Foreign Minister Frank-Walter Steinmeier acknowledged that Berlin felt it must now "turn to strengthening German-Polish relations." Germany "has the duty to patiently seek a dialogue with Poland, especially in difficult times," given the fact that both countries were linked by "a terrible 20th century history," Steinmeier told public television. 

With the summit's success in charting a way forward for EU institutional reforms, German government spokesman Ulrich Wilhelm stressed that Berlin would now extend a hand to its neighbour. "I believe we can continue seamlessly in tending to German-Polish relations-that is also our intention," he told a government news conference. "Poland is a big, important partner," he added. 

In the end, Merkel ceded some ground, brokering a deal that allows a small group of countries with almost enough votes to block a decision to have that decision re-examined. 

Warsaw and Berlin have locked horns on a number of other issues in recent years, including German plans to build a gas pipeline with Russia bypassing Poland. Then there are claims to property by Germans who were forced to leave Poland after the war, and a German bid to erect a memorial centre for the expelled in Berlin. 

European Commission vice president Guenter Verheugen, a member of Germany's Social Democrats who make up half of the governing coalition in Berlin, made the rare move of criticising his country's political leaders before the summit for underestimating Poland's fears of German domination. "The German political elite have never understood how much German-Polish relations are sensitive and fragile," Verheugen, the EU's industry commissioner, told the Berliner Zeitung newspaper. He said they should show more understanding for Poland's situation, which requires "solidarity, above all." 

The German press, however, roundly blasted Poland's nationalist leaders, calling Kaczynski and his twin brother, President Lech Kaczynski, "poison dwarves" who were exploiting the war for their own aims. The Welt am Sonntag newspaper described the haggling that preceded the deal as "torture" and predicted that relations between Berlin and Warsaw were heading for an "icy spell." "Poland has failed to understand that the point of the European Union is to bury the hatred we inherited," it said in an editorial. 

Jan Techau, an analyst at the German Council on Foreign Relations, said that despite the responsibility Germany still bears for the horrors of the Nazi period, it was right for Merkel to put her foot down with the Poles. "Otherwise the summit would have spun out of control," he told AFP. "The past inevitably frames policy between Germany and Poland but a compromise requires sensitivity and sober approach. Acting like a superpower would be damaging for Germany."

Poland, Romania hosted CIA jails: says Swiss Senator Marty, of the Cof E 
A European investigator says he has proof Poland and Romania hosted secret CIA prisons under a post-9/11 pact to hunt down and interrogate "high value" terrorist suspects wanted by the US. Swiss senator Dick Marty said Poland housed some of the CIA's most sensitive prisoners, including Khalid Sheikh Mohammed, who says he masterminded the September 11, 2001, attacks on the US that killed almost 3,000 people. 

"There is now enough evidence to state that secret detention facilities run by the CIA did exist in Europe from 2003 to 2005, in particular in Poland and Romania," Marty says in a report for the Council of Europe (C of E) human rights watchdog.

Marty accused the former Polish president and the current and former presidents of Romania of having known and approved of the secret CIA operations on their soil. In a preliminary report last year, Marty said 20 mostly European countries colluded in a "global spider's web" of secret CIA jails and flight transfers of terrorist suspects stretching from Asia to Guantanamo Bay.

EU members Poland and Romania have repeatedly denied the existence of secret prisons on their territory.

Ignalina nuclear power essential, says PM 
Poland and Lithuania were once conjoined in the Union of Lublin, formed in 1569, against of course Muscovy. 

They are being drawn together again by a common fear of Russia. A good deal of the antipathy is about energy. Polish Prime Minister Jaroslaw Kaczynski, not to be confused with his identical twin brother, Lech, the president, has said that the construction of a nuclear power plant in the eastern part of Lithuania will greatly consolidate relations between Poland and Lithuania and will have a considerable impact on energy security, code words for freedom from dependence on Russia. 

Premier Kaczynski and his Lithuanian counterpart Gediminas Kirkilas, on a visit to Poland in early June, met with the executive board of Poland's oil giant PKN Orlen in the central city of Plock earlier today. Orlen has a majority stake in the Mazeikiai Lithuanian oil refinery.

Jaroslaw Kaczynski said the construction of a new Ignalina power plant, which is to come on stream by 2015, will change the situation in the region. The plant will cost 5-6 billion euros. The project will be realized jointly by Poland and three Baltic States - Lithuania, Latvia and Estonia.

Premier Kirkilas said that the Lithuanian government had approved a bill on the spelling of names, which enables ethnic Poles who live in Lithuania to write their names in Polish. "This solution will serve the consolidation of mutual trust", Kirkilas said. The spelling of Polish names in Lithuania has been one of the most sensitive problems in bilateral relations.

Poland is prepared for Russian Druzhba oil pipeline shutdown - PM Kaczynski 
Poland is prepared in the event that the Russian Druzhba oil pipeline is shut down, as it can import oil via other routes, Polish Prime Minister Jaroslaw Kaczynski, together with Lithuanian counterpart Gediminas Kirkilas, told a press conference, following the visit to top Polish fuel firm PKN Orlen."Regarding the Druzhba pipeline, there is the possibility that it will be shut down slowly or less slowly," Kaczynski said. "We are considering this, and this was the topic of our talks with PKN Orlen's management board."

"Poland has the technical capabilities to import oil through other routes," he added.

Baltic seabed gas pipeline project: far from a done deal 
Leaders of Estonia and Lithuania have publicly joined the growing ranks of critics and sceptics regarding Nordstream, the Russo-German Baltic seabed pipeline project for Russian gas. With Nordic countries along the proposed pipeline route raising environmental and security concerns, its commercial rationale increasingly questioned, and Russia's capacity to supply the projected gas volumes doubtful, this pipeline project seems far from a done deal, says Vladimir Socor. The European Union's initial approval of it looks overtaken by events as well as hardly making a practical difference.

Opening an international energy forum in Tallinn on May 14, Estonian President Toomas Ilves cautioned the European Union that over-reliance on Russian gas is "simply not rational" and that overall dependence on Russia's energy systems "involves high levels of risk." Estonian Economics Minister Juhan Parts, in turn, told the forum that the Nordstream consortium's recent proposal to lay the pipeline through Estonia's maritime economic zone "arouses serious concern."

On May 21, Lithuanian Prime Minister Gediminas Kirkilas told an international conference on energy security in London that the Gazprom-led consortium has not responded to his government's request for an independent environmental assessment to be undertaken regarding this project. Moreover, he noted, the project's cost is excessive and likely to outrun the consortium's already high estimates. Alluding to Germany's apparent assumption that it "would be stronger by dealing with Russia on a bilateral basis," Kirkilas called for EU solidarity in negotiating with Gazprom.

The Nordstream consortium estimates this project's cost at $6.6 billion. According to energy expert Alan Riley of London's City University, speaking at the same conference, that estimated cost exceeds by a factor of three the cost of building an overland pipeline of equivalent capacity. Moreover, the project's actual cost seems likely to escalate beyond that initial estimate (BNS, Reuters, May 21).

Thus, the choice of a seabed pipeline over alternative options means high prices of gas to end consumers in Germany and other European countries. The consortium would enjoy wide latitude to dictate prices to consumers if Gazprom and its German partners -- Ruhrgas and Wintershall -- lock in those markets thanks to the Nordstream pipeline. 

Politically, the Nordstream pipeline would "draw a new border across Europe," according to the Polish Sejm's [parliament] foreign policy committee chairman Pawel Zalewski. In Warsaw's view, the seabed pipeline would cut off the EU's new member countries, Poland and the Baltic States, from the old EU countries, particularly Germany: "The latter would be connected directly to the Russian valves while the others would be left alone [in a crisis], hoping for Russia's mercy" (Financial Times Deutschland, May 18).

The Nordstream pipeline was designed to carry 27.5 billion cubic meters of Russian gas annually starting from 2010 in the first stage and another 27.5 billion starting in 2012 in the second stage, for a total of 55 billion cubic meters over a 25-year period. Those projections, announced in October 2005 and not officially revised since then, look unrealistic by now. The time frame is being stretched out, investment is not lined up, and Russia itself faces a probable deficit of gas from 2011 onward, relative to its supply commitments internally and externally. The Yuzhno-Russkoye gas field in western Siberia -- which was touted to the German public in 2005-2006 -- can only supply a part of those projected volumes in the early years. Recognizing this fact, the Kremlin then defined the Shtokman field as the main source for Nordstream, but seemed to reverse itself again by announcing plans to assign Shtokman's early output primarily to liquefaction. All this is tentative and hypothetical, as Russia's exclusion of Western stakeholders from Shtokman is delaying by some years the field's development.

A series of recent developments have cast heavy doubt on Russia's reliability as an economic partner generally, not just with respect to gas. Russia is conducting several politically motivated commercial "wars" concurrently: agricultural produce and wine embargoes against Moldova and Georgia, interdiction of meat imports from Poland, cut-off of crude oil supplies by pipeline to Lithuania, and most recently the cyber-war launched from Russia against Estonia -- a novel form of economic warfare.

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ENERGY

PKN Orlen hopes Mazeikiu will become profitable


PKN Orlen CEO, Piotr Kownacki, is certain that Lithuania's Mazeikiu Nafta, which is now controlled by the Polish oil company, will begin turning up a profit by the end of the year. "I am certain that Mazeikiu Nafta will be profitable by the end of the year. As yet it is hard to say whether the balance sheet will be positive. This depends on whether insurers will pay," Lietuvos Rytas newspaper quoted the CEO in an interview on May 29th.
A fire occurred at Mazeikiu's refinery last October, reducing the company's output. This mainly explained why Mazeikiu Nafta ended the first quarter of 2007 with net losses of 135 million litas. It is expected that the second quarter will end with a loss for the company as well.
Kownacki said that he was optimistic that Mazeikiu Nafta will eventually become profitable, because a five-year plan envisaging an increase in the value of the Lithuanian oil company through the attraction of some US$1 billion in investment had been developed, together with PKN Orlen. An increase in output is expected. Moreover, measures to increase the quality of products will be taken.
PKN Orlen's CEO said that a pipeline from Mazeikiu Nafta to Klaipedos Nafta will be built. A working group headed by Lithuanian Economy Minister, Vytas Navickas, has been created to discuss the issues of selling Klaipedos Nafta to PKN Orlen.
"The issue of laying a pipeline to Klaipeda is linked to the issue of Klaipedos Nafta's shares. We are rather flexible at talks and we can accept various proposals; however there is one condition: Mazeikiu Nafta's interests should be taken into account," Kownacki said.
The CEO made no forecasts regarding oil deliveries from Russia to Lithuania. "I cannot believe that such an experienced Russian pipeline operator as Transneft cannot settle these problems on time," Kownacki said, adding that "there could be political reasons behind this fact." Mazeikiu Nafta includes the Mazeikiu refinery, the Butinge oil terminal and Lithuanian pipelines. YUKOS International sold PKN Orlen a 53.7 per cent stake in Mazeikiu Nafta for US$1.492 billion on December 14th.

Odessa-Brody-Plock key for Ukrainian-Polish relations

The Odessa-Brody-Plock oil pipeline project will help stimulate the development of Ukrainian-Polish relations, Hazeta 24 newspaper quoted Polish Foreign Minister, Anna Fotyga, in an interview on May 23rd. 
The Polish authorities continue to view this oil pipeline as a good project, she said. "We need to diversify energy delivery routes. At the same time, we will have to explain to our Russian partners that they will lose nothing when this pipeline is built. Paradoxical though it may seem, but it is this project that can make energy relations in our part of Europe more civilised," Fotyga said. 
Definite projects are needed to promote real cooperation between Ukraine and Poland, the minister said. "The Odessa-Brody-Plock pipeline has been talked about for many years, but it is still early to speak about the completion of construction," she said. The Odessa-Brody pipeline was built in 2001 to transport Caspian oil. It was not used for several years. At the end of June 2004 the Ukrainian government permitted its use in reverse to transport Russian oil. A contract to transport oil to Ukraine's Yuzhny terminal, signed on June 8th, 2004, deals with the transportation of up to nine million tonnes of Russian Urals oil per year. However, in the first half of 2006 only 1.8 million tonnes were pumped in reverse. Ukraine plans to extend the Odessa-Brody pipeline a further 490 kilometres to Plock and to transport Caspian oil to Europe. To implement this project Ukrtransnafta and Poland's pipeline operator PERN set up the Sarmatia joint venture in July 2004 to prepare a budget for the project, attract investment and carry out construction work.

ZA Pulawy in negotiations with 3 companies project

Nitrate producer ZA Pulawy CEO, Krzysztof Lewicki, told a press conference on May 17th that the company is negotiating with three companies on potential supplies of coal-gas gasification technology for a two-billion-zloty project, Interfax News Agency reported. 
The three are: Shell, General Electric and German UHDE. "We would like to get involved in the coal-gas gasification project, which will allow us to cover 50 per cent of our gas needs and 100 per cent of our electric power needs," Lewicki was quoted as saying, adding: "We are cooperating (talking) with three companies on the gasification technology. These companies are Shell, GE and UHDE." ZA Pulawy currently use 900 million cubic metres of gas and 160-170 megawatts per hour (MWh) of electric power annually, while it has installed power capacity of 117 MW. "This is a big project which we cannot afford on our own, so we are looking for potential partners," Lewicki said, adding: "Currently, we are conducting talks with coal mine Bogdanka. Our financial participation in the project will depend on other projects we are considering and on the number of partners we manage to find." Lewicki added that up to 50 per cent of the investment could be covered from European Union funds. The feasibility study of the project is expected to be completed by the end of the year. The coal-gas gasification project is part of ZA Pulawy's strategy until 2017, which includes diversification of gas supplies. ZA Pulawy is conducting talks to buy gas in the Middle East and also considering a joint project with Polish gas monopolist PGNiG to set up a gas extraction installation on a Polish gas source, it was reported.
"All of these projects are large so they are alternatives," Lewicki said, adding: "We will not be able to carry them all out at once." The strategy also includes investments of 482 million zloty by 2010 in increasing production capacities, reducing nitrous oxide emissions and energy projects concerning bio-mass, among others. The company also plans to invest in both foreign and domestic acquisitions and in expanding its product portfolio, although the total value of these investments has yet to be decided.

KGHM to acquire PAK group of power stations

Poland's copper miner KGHM Chief Executive, Krzysztof Skora, told a press conference on May 29th that the company plans to spend up to 1.4 billion zloty on the acquisition of the PAK group of power stations, Interfax News Agency reported. 
"That money includes the acquisition of the PAK stake we are interested in," Skora was quoted as saying, adding: "We are interested in both the purchase from Elektrim (a listed conglomerate that holds a 45.93 per cent stake), as well as the whole, that is including the part owned by the state treasury," which holds the remaining shares. The acquisition of PAK, which requires significant investment outlays that Elektrim has been unable to finance, would help the copper company to save on energy costs.

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