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Key Economic Data 
  2002 2001 2000 Ranking(2002)
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)

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

Update No: 084 - (04/05/04)

The Poles have a new prime minister, Marek Belka, the former finance minister. His predecessor, Lezsek Miller, announced some time ago that he would leave office on May 4th. He kept to his word.
Being premier of a transition economy is a pretty thankless task. No end of problems, especially in Poland, the largest, but also one of the poorest, of the new members of the European Union (EU). The new premier, nevertheless, has a new epoch to preside over, Poland in the EU.

There is an opposition
There has been an extraordinary turnover in Polish politics in the last fifteen years since 1989 and independence from the Warsaw Pact. The Solidarity bloc that was so brilliant in opposition to communism and formed the first post-communist government has bitten the dust, being excluded even from representation in parliament under the draconian rules that eliminate any party with less than 5% of the vote.
It was always an irony that the straightjacket of communism in which the Poles lived was called after their own capital, Warsaw. Actually it was Stalin himself who said many years ago that : "communism fits Poland like a saddle does a cow."
But capitalism does not seem to fit Poland that well yet either. This has given an opportunity to a political maverick if ever there was one, Andrzej Lepper, who is the scourge of the Warsaw elite. He is, indeed, regarded as a leper by the majority of the educated Poles, of whom fortunately there are many. 
Lepper is a provincial bruiser who appeals to the many who have lost out in the fifteen years of modernisation. He is fiercely anti-the EU and pro-Russia, encouraging nostalgia for the good old days of communism. His party, Self- Defence, tops the opinion polls on 29%.
But he has a rival in the popularity stakes, a veteran of Solidarity as it so happens, Jan Rokita, a lawyer and intellectual who heads the Civic Platform, a pro-Western party similar to the Christian Democrats in Germany. He is withering in his contempt for his populist opponent of course. "Is this man fit to be a politician?"
The two men represent different Polands. Rokita is the star of the young, the well-educated and the urbanly and urbanely successful. Lepper is backed by the elderly, the poor and those rural folk left behind by the modernising revolution, for whom it is worthwhile giving a thought. They are human beings and they are having a hard time of it. Revolutions come with a cost! 
The present government is not likely to last. The real choice for the Poles appears to be Lepper or Rokita. The West would naturally back Rokita. But what really matters is whom the Poles will back.

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New car sales up 21% in February

Polish new car sales continued to be buoyant in February, rising 20.9% to 30,340 units in the month, pushing the two-month result up 12.65% to 59,451 units, according to preliminary data released by car-market research firm Samar, New Europe reported recently. 
The February total marked 4.2% growth in month-on-month terms. "It seems that the current trend will be maintained in coming months, but the situation could change when Poland joins the EU," Samar said. Rising prices and expected change to VAT regulations were lifting sales as buyers decided to buy now rather than wait for even higher prices or negative VAT changes, Samar said. But those same factors were expected to lead to sales declines by as much as 10% in the second half of the year. "If this happens, sales will reach about 320,000 at the end of 2004," Samar said of the expected decline from the 353,680 vehicles sold in 2003. Sales could also fall because of the potential strengthening of the Euro to the zloty and the reopening of the Polish market to used cars from the EU, the agency added.

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Raiffeisen Bank Polska net 9 times higher profit

Raiffeisen Bank Polska, the Polish subsidiary of the Austrian bank, used 2003 as a chance to build up its business with small- and medium-sized enterprises (SMEs), begin a drive into retail banking and let profits swell, New Europe reported recently.
The bank is laying claim to 86.9m zlotys in 2003 net profits, a stunning gain from the 9.8m zlotys noted in 2002. The gain pushed performance, as measured by return on equity, to 15.7%.
"This was a very successful year for us," Raiffeisen President Piotr Czarnecki said. "Amongst the top 20 banks there was no other to note such an increase as ours," he said of the bank's 39% balance-sheet growth. Total credit volumes were up 40%, total deposits up 42%. The gain makes Raiffeisen an 8.78bn zlotys bank, Poland's 11th-largest by assets and 12th-largest by capital.
"We want at least 20% growth this year at all major positions," Czarnecki said. "On this market, we need to act ambitiously." The bank has been busy with SMEs, to which it directs much of its corporate banking offer. Credit volumes to firms with turnover of between 3.4 and 20m zlotys were up by 51% and deposits grew by 52%. The cost-to-income ratio came down to 75% in 2004 from 86% a year prior. The bank aims to reach a 60% level over the course of the next two years.

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Polish natural gas extraction rises

Polish natural gas extraction volumes grew by 5.7% in February 2004 to 482m cubic metres, a production report from the Central Statistical Office (GUS) showed on March 19th, New Europe reported recently. 
The February output levels helped create a year-to-date volume gain of 1.4% to 962m cubic metres from the same period last year. Domestic resources cover about 30% of the country's natural gas consumption. The majority of Poland's natural gas usage, over 60%, is supplied from Russia. The country, however, is looking to diversify. Poland's state gas-monopolist PGNiG is the lead entity on the natural gas and oil exploration and drilling scene in Poland, though it very often brings in foreign partners to help explore individual fields. During February, Poland drilled 78,700 tonnes of crude oil, bringing the year-to date total to 161,000 tonnes. While those figures are up 22% and 31% respectively from prior-year periods, the sum total remains a small fraction of Poland's crude oil needs. In 2003 natural gas production was down year-on-year by 0.9% at 5.21bn cubic metres.

Gazexport, POGC to ensure gas supplies to Poland

Alexander Medvedyev, director general of Gazprom subsidiary, Gazexport, and Polish Oil and Gas Company CEO, Mark Kossowsky, discussed current and future gas cooperation in Poland. Gazprom said in a press release that the sides also discussed the situation that arose on February 18th, when gas supplies were cut due to the unsanctioned siphoning off of gas on Belarussian territory, New Europe reported.
At the meeting the sides reconfirmed their commitment to observing current contracts and agreed to set up a number of joint working groups to develop solutions to ensure stable gas supplies to Polish consumers and to deal with future cooperation. A working group for a project to expand the capacity of underground gas reservoirs in eastern Poland will begin its work in April, as will groups to ensure gas supplies in emergency situations, to optimise supplies through current supply points and to study the gas market in Poland and in other European countries from the point of view of setting up new gas transport capacities.
Kossowsky said earlier that his company plans to demand compensation from Gazprom for losses caused by the halting of gas transit through Belarus. Medvedyev said "there was no catastrophe in Poland: on the first day the drop in supplies amounted to 30% of the maximum daily volume, and on the second day - 50%." "I do not think that based on these figures there are grounds to make claims. However, we are ready to look at the calculations submitted by Poland," he said. The country produces 30% of its gas requirements and imports from Russia make up most of the difference, as Russia accounts for 94% of gas imports into Poland.
Polish companies also have a number of contracts for gas supplies from Germany, Norway and Ukraine. POGC is one of the largest energy companies in Poland and owns the domestic gas pipeline network, which stretches about 16,700km.

PGNiG talking with Gazprom to build, rent gas storage

Polish gas monopolist, PGNiG, said it has started new talks with foreign companies that want to build or rent gas-storage facilities in Poland, as it pushes to expand its network of storage facilities, New Europe reported.
"We are interested in enlarging our storage base," PGNiG president, Marek Kossowski, said recently. "We've also had questions from foreign companies that are interested in renting or constructing their own storage facilities in Poland."
Russian gas monopoly, Gazprom, has already begun discussions with PGNiG concerning potential joint investments, Kossowski had indicated. The PGNiG president added that German, Czech, Slovak and Russian companies have expressed interest in gas-storage-facility projects.
One of the plans being discussed involves building a US$150m underground gas-storage facility, which would boost Poland's gas-storage capacity from 0.5bn cubic metres to 2bn cubic metres.
In December, PGNiG postponed a decision to choose a partner to build the underground facility. A new decision is slotted for June 30th, 2004. France's Sofregaz and Italy's Tecnimont (TCM); ABB Zamech Gazpetro with Elektrim-Megadex, ABB Zwar, ABB Centrum Automatyki, and ABB Elta; and a consortium led by Technologie Gazowe Piecobiogaz, which includes Germany's Hochtief, Elektrobudowa Konin and Gazomontaz Wolomin, filed final bids to build the new storage site.

Polish refineries to get Caspian oil via Odessa pipeline

As of May-June Caspian oil will be transported to refineries in south Poland via the Odessa-Brody pipeline and by rail from Brody, Oleksandr Todiychuk, from the pipeline-administrating UkrTransNafta company, said in Warsaw after a meeting of Polish, Ukrainian and Kazakh oil officials, PAP News Agency reported.
The meeting, initiated by Kazakstan, is devoted to the future of the pipeline. EC representative in Poland, Faouzi Bansarsa, who attended the meeting, reminded that in May 2003 Poland, Ukraine and the EC signed a political accord on the creation of a Euroasian Oil Transport Project for oil from the Caspian region.

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Polish president, Saudi leaders discuss cooperation, trade

Cooperation between Saudi Arabia and Poland is possible, (in reconstructing Iraq) Polish President, Aleksander Kwasniewski, said on 20th March in the Saudi capital Riyadh after talks with Saudi authorities and Crown Prince Abdullah, PAP News Agency reported.
Kwasniewski, in Saudi Arabia as part of a several-day tour of Persian Gulf countries, told reporters cooperation between Polish and Saudi firms in Iraq was a "very interesting idea" and suggested, "basing joint projects on the knowledge about Iraq possessed by Saudi enterprises."
The Polish president praised political relations between both countries but stressed the need for more economic cooperation, particularly boosting exports.
Kwasniewski also encouraged Saudi entrepreneurs to invest in Poland. Referring to Saudi complaints about Poland's over-bureaucratic investment laws, he stressed that improvements in trade rulings were being introduced, he also recalled that an October 2003-sealed cooperation accord between Poland and Saudi Arabia was coming into force soon and would make commerce between both countries easier.

Polish president discusses economic cooperation in UAE

President, Aleksander Kwasniewski, arrived in Abu Dhabi on 22nd March for a two-day visit to the United Arab Emirates (UAE). This is the third state, after Saudi Arabia and Kuwait, the Polish president has visited during his current tour of the Persian Gulf countries, PAP News Agency reported. 
At the start of his visit to Abu Dhabi, Kwasniewski held talks with UAE President, Shaykh Zayid Bin Sultan Al-Nuhayyan. The Polish president also made a call at the Trade and Industry Chamber. The talks and visit largely centred on economic cooperation. 
The president had a meeting with Poles living in the Emirates. He told them that Poland wanted the Persian Gulf states to be ever more present in its political and economic relations. 

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Iraqi delegation invites Polish firms to participate in tenders

Polish firms may win the majority of tenders worth in total close to US$550m that will soon be announced at the Iraqi province of al-Ambar, said province representatives during their visit to Cracow recently, PAP News Agency reported.
"We have long experience from cooperation with Polish firms that are well known in Iraq from contracts implemented in the past. Those were good quality investments for a reasonable price. We've come here to once again invite Polish firms to Iraq," Province Governor, Basal Manajd, said at a meeting with southern Poland businessmen.
He added that tenders would relate to different types of investments, from housing estates to mosques and the oil industry. The Iraqi representatives recalled that in order to take part in a tender a firm should be registered in Iraq, which takes about one week, and asked businessmen to come personally to Iraq without the mediation of other companies.
Polish businessmen's security concerns were assuaged with the Iraqi province officials statement that "the situation related to security has improved and it should stabilize after the withdrawal of foreign stabilization forces and the taking over of power by the Iraqis."

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LNM inks deal on Poland's largest steel business

The world's number two steelmaker LNM Holdings NV recently sealed a 4bn zloty deal on nearly 70% of Poland's leading steel conglomerate, the heavily indebted state-run Polskie Huty Stali (PHS), Deutsche Presse-Agentur (dpa) reported.
LNM representatives and Polish State Treasury officials finalised the transaction on March 5th in Warsaw, ranking as one of Poland's largest privatisations. LNM has agreed to inject more than 3bn zlotys (US$760m) into PHS by 2009 and pay off creditors immediately to the tune of 1.25bn zlotys (US$315m). The Treasury will retain a minority share in PHS.
PHS groups several major Polish steelworks including Huta Katowice and Dabrowa Gornicza, Krakow's Huta Sendzimir, the Florian steelworks and Celder with a combined workforce of 16,000 and another estimated 16,000 jobs in outside companies. With annual output of 34.8m tonnes of crude steel in 2002, analysts say that with its PHS acquisition, the Dutch Antilles-registered LNM could surpass global steel leader Arcelor. PHS currently produces 7.6m tonnes of steel per year, accounting for 70% of Poland's steel output.
The Polish conglomerate carried a heavy debt pegged at 4.8bn zlotys (US$1.2bn), of which some 1.8bn zlotys was owed to other state firms. The company was estimated to be worth 4bn zlotys. The acquisition of Poland's PHS means LNM will have operations in 13 countries around the globe with a workforce exceeding 120,000.
LNM is one of the leading suppliers of steel products to the automotive and consumer durables sectors. The company already has a strong presence in Central Europe with mills in the Czech Republic and Romania. Last July the treasury chose LNM over competitor the United States Steel Corp, for further negotiations on the PHS sell-off. This privatisation purchase can, however, mark another sore spot in the deteriorating relations between Warsaw and Kiev, as Mykola Derkach, the Ukrainian economics minister, said in Kiev he saw "dangers for Ukrainian-Polish cooperation" as a result of a failed bid by the Donetsk-headquartered Industrial Union of Donbass (IUD) for ownership of Huta Czestochowa SA, a major Polish metal mill.
The Polish government rejected IUD's offer recently in favour of a competing bid by LNM Group. Ukrainian officials quickly accused Poland's government of yielding to political pressure from the European Union. According to Kiev, the EU fears low-priced Ukrainian steel entering the bloc via a Polish metal-working firm.
Polish officials rejected the Ukrainian allegations saying LNM won the tender fair and square.
Derkach said his government was "concerned" with the decision, and with the Polish government's apparent unwillingness to review the winning LNM bid. Should the Polish decision on the sale be final, relations between Kiev and Warsaw would "definitely deteriorate", he predicted.
Joint economic projects, which could be affected by worsening links between the two countries, would include an ambitious project for a pipeline running across Ukraine and Poland to connect Russia's Siberian oil fields with European consumers, he warned.
Ukraine has already sent a diplomatic note of protest over the sale and would "continue all efforts both official and unofficial" to have the results of Huta Czestochowa reviewed, Derkach said.
IUD is one of Ukraine's most powerful industrial concerns, and is effectively owned by Rinat Akhmetov, Ukraine's richest tycoon.
His political parties are closely associated with the present government in Ukraine, controlled by President Leonid Kuchma, dpa reported.

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Polish shipyard to build ferry for Scottish island ferry operator

Gdansk Shipyard will build a river ferry for Britain's Caledonian MacBrayne. The deal is estimated at 8.75m pounds, PAP News Agency has reported.
The ferry will be used to connect the Scottish Wemyss Bay and Rothesay [Bute] on the Clyde river.

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TTComm offers connectivity to cash-strapped clients

TTComm, a telecommunications operator previously known as Telenor Polska, is planning to invest zl.28m over the next two years in the development and marketing of its products in the field of satellite data transmission, Warsaw Business Journal reported recently. 
The firm provides solutions in last-mile connectivity, linking individual subscribers to existing networks.
TTComm is wholly owned by a group of private US investors through a Netherlands-incorporated vehicle. Its infrastructure in Poland includes a satellite hub in Minsk Mazowiecki near Warsaw and more than 1,000 VSAT points across the country. The market for such solutions is estimated at zl.13.6bn ($3.5bn) worldwide, though it has not yet taken off in this country. The firm expects its market to grow three to four times over the next two years.
TTComm Chairman of the Board, Edward Mier-Jedrzejowicz, said that, "it is still going to be quite some time before Telekomunikacja Polska (TP SA) can reach huge parts of the country with its fibre." He points to the example of Spain, where TTComm's equipment provider, Hughes of the USA, recently signed a deal to provide 12,000 satellite access points in areas that the country's national operator, Telefonica, had failed to reach. Although the low level of fixed-line penetration, at around 30%, opens up an opportunity for alternative operators, the problem facing the company is the low level of income in remote areas, where the problem is most acute.
TTComm seeks to get round the problem by launching a new product, eGmina (for gmina - municipality), addressed at local government institutions that are likely to benefit from the inflows of EU structural funds following accession. The product offers Internet access, including facilities for video-conferencing, voice-over-the-Internet protocol (VOIP) and e-learning to public administration institutions.
Mier-Jedrzejowicz points out that the EU agenda for the creation of an information society envisages that all public administration units should have Internet access by 2006, thus increasing the likelihood that municipalities keen to take advantage of the product would be able to secure EU financial aid. The monthly fee for the service is estimated at around zl.1165 (€300) for a three-year contract, though it will be significantly lower should the client contribute to the initial costs of setting up the relevant infrastructure.
To date, the company has derived just over a third of its revenues from contracts with public-sector entities, though this share is expected to grow. TTComm is also targeting large corporate clients, singling out gas station chains as potential clients.
"The previous owners did not treat the marketing of the product as a priority, so we expect to grow the business by making great strides in this respect," says Mike Jarvis, a supervisory board member and one of the firm's owners.
Yet while there can be no doubt that many areas of the country could do with great improvements in their telecoms infrastructure, it is less clear whether the finance to put it in place will be readily available in the near future.

Centertel to quadruple net earnings this year

Poland's second mobile operator Centertel, two thirds of which is controlled by the nation's dominant phone operator TPSA, intends to quadruple earnings to close 2004 with a net profit of about 100m zlotys, company President Slawomir Skrodzki said recently, Interfax News Agency reported.
In 2003 the cell phone operator posted its first net profit since 1997, earning 23m zlotys on sales of 4.53bn zlotys. Centertel, which became Poland's second-biggest operator during the year, raised its client count to 5.702m zlotys at the end of 2003 versus 4.480m zlotys a year earlier. That gave the company 33.0% of the market, up from 32.2% the year before. "We plan to improve our net financial results," Skrodzki said. "We want to get really close to three-digit results; we could even say 100m zlotys."

Netia seeks merger in bid for rival Dialog

Poland's largest independent telecom Netia, bidding in an ongoing tender for rival Dialog, is seeking a full merger with the firm, but would accommodate alternative options should Dialog owner KGHM Polish Copper insist on retaining a stake in the firm, Netia CEO, Wojciech Madalski, said, Interfax News Agency reported.
Netia is one of five companies short-listed to buy a stake in Dialog, but KGHM officials surprised with word that they did not seek sale of their full 100% stake at this time. Instead, KGHM vice-president, Andrzej Szczepek, said the company hoped to first sell a portion in a move to strengthen the asset before a full sale down the road.
"Doesn't make sense," Madalski said of the plan, while conceding that his company can bend to meet the seller's needs. "A merged entity is the most reasonable solution," Madalski said. His company has declared itself the consolidator of the Polish alternative operator world and already managed to eke out synergies in early acquisitions. Should KGHM wish to retain some telecom holdings, Madalski proposes an equity deal with KGHM for Netia shares. A decision on the sale is expected within two months. KGHM has not specified whether it would sell a majority or a minority stake.
Netia's president also wouldn't rule out joining with another bidder for the investment in Dialog. In contract with KGHM officials speaking recently, Madalski believes that a merged operator could post growth without excessive capital expenditures. He called KGHM estimates of 1bn zlotys in annual CAPEX too hefty to finance, as they would total 80% of Netia's and Dialog's joint revenues. Netia officials have said that their clean balance sheet will allow them any form of purchase of rival telco Dialog and additionally allow for pursuit of several smaller acquisitions. Netia most recently bought smaller rival El-Net in a 96.5m zlotys deal which Netia expects will bring 115m zlotys to 2004 revenues. Netia has set its sights on bringing El-Net up to Netia profitability levels by Q4 2004. Following a strategy based primarily on acquisitions, Netia hopes to double its top line by 2008.

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Budget hotels to set up shop in Poland

Taking a cue from Poland's new budget airline, a Polish hotelier group is planning a network of no-frills hotels across the country as it joins the European Union on May 1st. "Cheap Hotels, Restaurants and Conferences," is the slogan the hotel-owners Polska Grupa Marketingowa (PGM) plan to use to attract custom. The hotel network also intends to cooperate with no-frills airline "Air Polonia" to offer "a weekend in Poland for €100" hotel-and-airfare package for visitors from abroad, a PGM official said, Poland's Gazeta Wyborcza daily reported recently. 
Hotel reservations will be available online as early as May or June, the official said.

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