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POLAND


 

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 187,670 176,300 157,600 22
         
GNI per capita
 US $ 4,570 4,230 4,170 71
Ranking is given out of 208 nations - (data from the World Bank)

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: 080 - (01/01/04)

The Polish-Kuwaiti axis
The Poles are making a big impact in the Middle East. Cashing in on their new high-profile role in Iraq, President Alexander Kwasniewski and Premier Leszek Miller were due to visit Kuwait at the end of December to improve trade ties. Kuwaiti leaders were in Warsaw in October. Although the two countries see eye-to-eye on a great many matters, commercial ties are not yet strong.
Kuwait is the one Middle Eastern country, apart of course from Israel, where the war in Iraq was popular with the public, as well as supported by the government, for a very simple reason. The Kuwaitis feel a lot safer in a world without Saddam in power.

Poland in Iraq
The Poles were also generally in favour of his removal. They would have been grateful for an international coalition to remove communism in Poland not so long ago.
The major contribution of the Poles in Iraq, leading a 9,000 troop contingent in the south centre of the country, with over 2,000 troops of its own, is being supported too. This is so even though a Polish major was killed in early November, the first Polish combat fatality since the Second World War.
The removal of a vile totalitarian regime is enough justification for them for the war in Iraq, in which 200 special Polish forces played a role. As TV host on Polish evening news show, Tamasz Lis puts it: "Until 1989 we were the people who needed to be liberated. While aware of the dangers of WMDs in the wrong hands, most Poles were more convinced that the main reason for the intervention was to free the Iraqi people from the rule of an evil dictator."

The EU beckons
Important as the Iraq affair is to Poland's new-found standing in the world, an event of far greater importance impends, the adhesion to the EU in June. The Poles are setting the Brussels negotiators far more problems than the other nine involved in the ten-state enlargement.
Partly this is just due to its size, with a population bigger than that of the others combined. Its small-scale agriculture is a headache for the CAP and its subsidy policy. Poland has been criticised for dilatory progress in nine important issues, including the free movement of persons, agriculture, food hygiene and fisheries. It must cut government spending, speed up overhaul of old and ailing state-owned industries and prepare the farm sector for radical reform. All of which is a tall order for a bare six months' period of grace.
In reality it is unthinkable that Poland will not be an entrant, which h gives its negotiators great clout. A lot of things will have to be ironed out afterwards.
German Foreign Minister, Joschka Fischer, was in Warsaw on November 13th to mollify the Poles on the issue of the new draft EU constitution, proposed by the European Commission. It is opposed by Poland and Spain because of its stipulation that key decisions in an enlarged EU would be made by at least a simple majority of 60% of EU citizens. That would effectively mean that Germany, France, Italy and Great Britain could steam-roller decisions through over the heads of the smaller countries, Poland and Spain are not of course that small, both having populations of nearly 40 million.
Fischer suggested that the 60% threshold could be raised, thus making it easier for smaller countries to block the big four. "We can find a compromise here," he said." There are other points where we can find solutions ensuring Poland will not be discriminated against," he added.

Euro popular
The entry into the EU is popular for all that, and so is the idea of Poland joining Euroland soon. Some 57% are in favour, while only 33% are against the proposal, now planned for implementation in 2008.
The Poles are not so enamoured of the Zloty, nor of the independence of their central bank, chaired for long by the highly respected bur austere figure of Leszek Kalcerowicz, who was the main spirit behind Polish reform after independence in 1989 as finance minister. The central bank has been pursuing a tight monetary policy for years, meaning high interest rates and mortgage payments. An unpopular policy that is not likely to be abandoned by the European Central Bank either.

A whiff of scandal
Not everything is rosy in the state of Poland itself. The population are disillusioned with the political class as a whole. They used the occasion of parliamentary elections last year to eject the Solidarity-led coalition government and replace it with the former communists, led by Leszek Miller, whose government has been having a sticky time of it. The reform achievements of Poland in the 1990s are not being built on in the new decade when GDP growth has been dismal. Even more galling is that corruption is still rife.
The Polish newspaper, Zycie Warszawy, reported on November 13th that many tenders for buying equipment for the Polish army in 2002 and 2003 were allegedly dishonest, including the procurement of gear for the Polish contingent in Iraq, of which the public generally feel proud. Conditions for the tender, according to the newspaper, were set so as to favour one company, which then paid a bribe to clinch it. Some 30 people have been arrested on charges of involvement in the affair.
The opposition Law and Justice (PiS) party has called on the defence ministry to report urgently on the matter to the Parliamentary committee for National Defence. "If the press reports are confirmed, the consequences should be borne not only by the accused, but by the high-ranking officials and politicians responsible for supervision at the Defence Ministry," PiS said in a statement. Heads will have to roll to appease the public. 

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ARMAMENTS

Poland counts on arms contracts in Iraq

Poland is counting on winning substantial military contracts to re-equip the Iraqi army, a high ranking Polish defence official said recently. The potentially lucrative deals should be awarded to countries with the largest military presence in Iraq, Polish Radio quoted Deputy Defence Minister, Janusz Zemke, as saying. 
Recently, a telecommunications equipment supplier became the first Polish company to win a contract, in the form of a US$7m civilian contract. Among the staunchest supporters of the US-led invasion and occupations of Iraq, Poland has made no secret of the fact that it wants its companies and access to Iraq's oil sector. 
During his recent visit to Iraq, local authorities told Polish Prime Minister, Leslek Miller, that they wanted Polish construction companies to help build some 2.5 million homes, develop the agricultural sector and supply rails.

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AVIATION

Budget airline to take-off in Poland 

Air Polonia is set to become the country's first budget airline to offer bargain no-frills flights between the Polish capital Warsaw and London, a company representative confirmed recently, reports New Europe.
The cheapest one-way fare will set travellers back 55.55 zloty (US$14 plus airport taxes which will raise the ticket price to 145.55 zloty (US$37). A round trip ticket could cost US$78. Air Polonia will begin with three flights per week. Another up-and-coming Polish budget carrier, the Silesian Air-owned GetJet, also plans for connections from Poland to London, Paris and Rome. 
European Union-bound Poland was required to liberalise its rules governing air travel with EU countries in October. The new measures allow carriers to fly any route and to choose arrival and departure destinations. Analysts predicted the move would encourage less-than-enthusiastic budget airlines to consider opening up operations in Poland, the largest country poised to enter the EU next May. High airport user fees deterred their interest in the past. Analysts predict Poland's flagship carrier, LOT, will be forced to reduce its fares. LOT recently became a member of the Lufthansa-led Star alliance global airline network.

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ENERGY

Polish, Hungarian oil firms ink letter of intent on merger

Polish fuel's giant Orlen and Hungary's MOL signed a letter of intent recently on a possible merger which could result in central Europe's largest fuels company, dpa reported.
Poland's Prime Minister, Leszek Miller, and his Hungarian counterpart, Peter Medgyessy, presided over the ceremony in Warsaw at which Orlen and Mol executives laid the foundations for closer cooperation.
In a joint statement, the companies declared they were reviewing several potential areas of cooperation.
Among others, these include: a possible 10-15% reciprocal share purchase, a full merger or the creation of a joint-stock company.
The move is being made as Russian oil giants are looking for new markets. Analysts point out that take-overs in central Europe could provide them with much-sought-after additional business.
As Poland's treasury controls 10% of Orlen stock and an additional 17.6% through the state-owned fuels conglomerate Nafta Polska, its approval id required for any fusion. With the Hungarian government also holding a stake in MOL, it must also agree to any future deal.

Polish, Norwegian firms terminate contract for gas supplies to Poland

Polskie Gornictwo Naftowe i Gazownictwo (PGNiG) and Statoil resolved to cancel a contract on the delivery of 74bn cubic metres of Norway's gas to Poland, Statoil said on its website 2nd December, PAP News Agency has reported.
"PGNiG and Statoil are now negotiating reduced gas deliveries to Poland, sent in transit through new or existing infrastructure," the Statoil communiqué read.
The original 50bn zloty deal to deliver 74bn cm of gas to Poland in 2008-2024 was signed by PGNiG and five Norwegian companies in early September 2001. Norway's annual gas deliveries were set at 2.5bn cm in 2008 and at 5bn cm from 2011.
The management board of PGNiG said it will not be able to receive the contracted amount of gas as domestic demand for gas is lower than forecast.
Poland's annual demand in gas is at around 11bn cubic metres, of which 7bn cubic metres imported from Russia.

Poland, Ukraine sign joint oil pipe line agreement 

In a few weeks' time, Caspian oil is going to reach Plock. At first it will come in rail tanker wagons but eventually along an oil pipe line. This is envisaged in a Polish-Ukrainian agreement on joining the oil transport systems signed in Brussels. This concerns developing the Odessa-Brody-Plock oil pipe line. On behalf of Poland and Ukraine, the declaration was signed by Deputy Prime Ministers Marek Pol and Vitaliy
Hayduk, with Commissioner Loyola de Palacio signing on behalf of the European Commission, Polish Radio 1 has reported.
Loyola de Palacio emphasised that this was one of the most important infrastructure projects which is to guarantee oil deliveries to the European Union while keeping high technical standards. It also increases Poland's energy security since until now oil came to the country along two channels; now it is going to arrive along three. Poland could also make money on transit. How much? This will depend on the numbers of recipients.
The joining of the Polish and Ukrainian oil transport systems is an entirely commercial operation on which no budget resources will be spent.
According to Prof Wojciech Gorecki of the Academy of Mining and Metallurgy, the next step after the signing of the Polish-Ukrainian agreement on joining the oil transport systems should be to ensure oil supplies from the Caspian basin. The agreement itself is no guarantee that oil is going to flow along this pipe line at all times, Prof Gorecki notes.
Gorecki said: "We should secure for ourselves supplies of oil from the Caspian area. We should sign an agreement with Azerbaijan and possibly sign an agreement with Turkmenistan, that is with countries somewhere in that basin, so that then we can get oil flowing across the Black Sea, to terminals in Odessa and then to Brody, because if we secure for ourselves only the Brody-Plock sector and even sell oil on to Western Europe, at some point we could find ourselves in a difficult situation. So all of these components have to play together, all of these components have to be covered by agreements, not just Brody-Plock."
Prof Gorecki added that the work on the project should be speeded up as much as possible. This is required by the competition prevailing in the oil transport industry, the expert believes. According to Wojciech Gorecki, the project completion schedule, which experts most often estimate at three years, could be shortened.

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FOREIGN ECONOMIC RELATIONS

Warsaw and Moscow to boost bilateral ties

Russian Foreign Minister, Igor Ivanov, began a rare visit to the Polish capital, Warsaw, recently, focused on the future of Polish-Russian political and trade relations following Poland's 2004 entry into the European Union.
The uncertain future of bilateral trade was expected to top the agenda, Polish Foreign Ministry sources said. Talks were expected to attempt to defuse a possible tariff war which could erupt after Poland joins the European Union in May 2004. Poland wants bilateral trade relations with Russia to automatically come under the same terms as with older EU states. "Up to now our Russian partners have certain reservations," PAP News Agency quoted Polish Foreign Minister, Wlodzimierz Cimoszewicz, as saying. Ivanov was scheduled to meet with Cimoszewicz, Prime Minister Leszek Miller and President Alexander Kwasniewski.

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FOREIGN LOANS

World Bank US$200m loan

The World Bank, following the breakdown of talks with the government, seems as though it will not be forthcoming with a much publicised US$200m (zl782m) loan to restructure the mining sector. The Bank will make its final decision on the issue in the first half of this year, the Warsaw Business Journal reported.

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IRAQI RECONSTRUCTION

Polish Chamber of Commerce to send mission to Iraq

The Polish Chamber of Commerce (KIG) was organizing a mission to Iraq on 7th-11th December 2003 as part of Iraq's reconstruction programme, the chamber has said in a statement, PAP News Agency has reported.
The mission will be made up of representatives of the Polish government and firms interested in cooperation in Iraq. KIG also plans a visit of Iraqi businessmen seeking Polish firms' assistance to meet reconstruction purposes.
Meanwhile, the Coalition Provisional Authority of Iraq on 25th November announced a tender for the implementation of major reconstruction contracts, the KIG wrote.
According to the chamber, contracts will cover several sectors including transport, communication, power-generating, construction, health protection, security and judiciary, water supply and sewage system as well as the fuel sector.

Technology opportunities in Iraq

Polish telecom and information technology companies are gearing up to win business, rebuilding Iraq's communications infrastrucutre, just as the number of awards of reconstruction contracts in the war-beaten country is increasing, largely in oil and defence-related sectors, the Warsaw Business Journal reported.
Warsaw-based OPTO was the first telecom supplier to announce success in the country. The telecom systems and accessories supplier was awarded two contracts with the combined worth of US$7m (zl28m) - and it expects to win future business in Iraq out of its recently opened office in Baghdad, according to Andrzej Polowniak, deputy president.
And Gliwice-based WASKO appears to be hot on the heels of OPTO's success as it expects to be awarded a contract later recently for IT. Damian Pustelnik, vice president at WASKO, kept mum on specific details of the contract, which will include the aid of an all-Polish IT and telecom consortium, because the deal has not been finalised.
"I could say it's a software contract," he notes, before declining to comment further.
WASKO, which is a part of a larger holding company, WASKO Capital Group, began targeting Iraqi-based business in recent months, Pustelnik says. By using this initial deal as a stepping stone he predicts that Iraq business would provide the company's with 15-20 per cent of revenues in the future. Last year, WASKO recorded zl30m in profit on revenues of around zl200m.
Pustelnik said one reason why WASKO opted to go to Iraq in search of riches is because of the increasing competition at home. The IT and telecom market is crowded, he said.
"Our local market is full of companies and we find that there are opportunities in Iraq," he says.
But he is aware that WASKO won't have it so easy in the country.
"It's difficult to be there because of the violence," he notes. "It's been tough - a lot of companies are also looking for income in Iraq."
However, he adds, the company is in it for the long haul. "We think we've developed local relationships. Right now we are established there," he said. And points out that in at least one area, Polish companies might have an advantage over their western counterparts: "Of course we are cheaper than the American companies and the Western Europeans." He said that while employees will fly back and forth between Gliwice and Baghdad, the company will maintain some sic people there on average.
OPTO is also looking to cooperate with Polish companies to win future business. At present the company is participating in bids to supply cable storage cabinets and billing systems among others.

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SHIPPING

Polish ports looking to grow

Since their privatisation in 1991 the ports of Szczecin and Swinoujscie have been fighting to achieve the status of leading commercial centres in the western Pomerania region. If they are successful in their recently-publicised hunt for zl75m in new investment earmarked for upgrading port and logistics infrastructure, they could take a major step toward achieving that goal, the Warsaw Business Journal reported.
In their freshly-minted development plan, which outlines facility improvements and investment opportunities through 2015, port owner and administrator, Szczecin-Swinoujscie Seaports Authority SA, envisions improvements to storage and handling facilities at a number of locations, as well as the possibility of enhanced road access to the sites.
"The favourable geographical location of the port is one of its greatest advantages," said Seaports Authority Investment Manager, Roamn Pomianowski, Szczecin and Swinoujscie are situated at the intersection of major transportation routes from Scandinavia to the south and west of Europe, and from Eastern Europe to the west of the continent.
And Poland's accession to the European Union in May of next year can only mean good news as far as Pomianowski is concerned: "Once EU borders are shifted in 2004, the huge agglomeration of Berlin, which presently constitutes the eastern border of the Union, will be the port's closest neighbour," he said. He is hopeful that others share his optimism over the port's future. "It has the potential to attract investors, and the best time to invest is now."
The development strategy attempts to take into consideration significant current trends associated with cargo traffic, as well as forecasts for international trade in the Baltic region. Among these are falling demand for coal exports and a rising need for container and small freight loadings.
The total amount of approximately zl75m (€16.2m) in investment would focus on multiple projects slated or proposed in the short- to medium-term. These would include nearly zl29m (€6.3m) in infrastructure improvements at the West Pomeranian Logistics Centre, zl32m (€6.9m) for developing port infrastructure at the container base on Ostrow Grabowski Island, and zl10m (€2.2m) for upgrades at the port on the Katowice peninsula.
Also on the Port Authority's wish list is improved road access to the ports, a part of the development plan that hinges on the construction of the A3 motorway.
As for where the money will come from, that is where the waters begin to turn a little more murky. The Port Authority scored a significant victory with an agreement by the World Bank for a loan of €11.5m (zl53.1m). European Union funds have proven harder to secure, but negotiations are still underway.
The Szczecin-Swinoujscie Seaports authority is keen to stress the domestic and international investors that it already has on board. The Port Authority has long-term contracts with investors from Holland, Great Britain, Spain, Finland, the Czech Republic, Norway and Sweden. Some of the results of this cooperation can be seen in recent developments at the ports, among them the construction of specialised terminals over the ports' lands. NCC, DEZA and Partek Nordkalk are some of the biggest investors who have agreed to cooperate with the Port Authority.
The Szczecin-Swinoujscie Seaports Authority has also tried to make itself more visible to potential investors in the hopes of raising awareness of investment opportunities. They have launched a broad media campaign touting favourable lease conditions at the port facilities and publicising investment opportunities there. And on September 3rd the ports took a step toward opening a wider communication channel with the mainland, establishing a Warsaw branch of their information and promotions office.

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TELECOMUNICATIONS

Higher revenues for TPSA on the cards

Polish telecom giant, Telekomunikacja Polska SA (TPSA), controlled by France Telecom, is expected to post a good third-quarter operating result, though its net profit will be hit by unfavourable currency rates, Interfax News Agency has reported.
TPSA has already published limited third-quarter results that showed it lifting nine-month group revenue by two per cent to 13.63 billion Polish zlotys from 13.38bn zlotys a year earlier. The market-disappointing figures saw fixed-line sales fall five per cent to 10.77 billion zlotys versus 11.27 zlotys the year before, but mobile sales jump 30 per cent to 3.28 billion zlotys from 2.51 zlotys.
"Despite the lower-than-expected revenues, the operating results are going to be in line with expectations, although we must remember the weak zloty will hit the net result," DI BRE analyst, Michal Marczak, told Interfax. Operating results are expected to be strong as the company is near the end of a huge employment restructuring process, thereby positively influencing the company's costs. In addition, Centertel, TPSA's mobile wing, is expected to post positive operating results, in a further strengthening of TPSA's operating profit. 

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TRANSPORT

Premier opens new section of motorway

Prime Minister Leszek Miller has opened a section of the A2 motorway between Wrzesnia and Poznan. The section of nearly 40 kilometres was built in just a year, Polish Radio 1 has reported. This is another fast-road part of the Warsaw-Swiecko route.
The Wrzesnia-Konin section was commissioned a year ago. Including the Poznan ring road, the A2 motorway is now 100 kilometres long.
Until 1st December, travel along this section of the A2 was free. After that the cost will be the same as for going along the existing section between Wrzesnia and Konin, that is 10 zlotys for a car and 37 for an articulated lorry.

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