Books on Poland
% of GDP
Update No: 093 - (28/01/05)
Chequered, but colourful, political landscape
The Poles, despite many admirable qualities, are a turbulent, fissiparous and
fractious people. In times gone-by they operated a crazy system of allowing just
one member of the national assembly to exercise a veto over legislation. One bad
apple could rot the rest. It is hardly surprising that the nation then lost its
independence largely as a consequence. It was divided up by Russia, Prussia and
Austria in the course of the three great Partitions of Poland in 1772-95.
Poland won a belated independence again in 1918. But in effect a fourth
partition of Poland took place in 1939 between Nazi Germany and the USSR.
Towards the end of nearly five decades of communism (which Stalin himself said
fitted Poland as a saddle does a cow), the Poles staged a great revolt. A Polish
pope elected in 1978 and the rise shortly afterwards of Solidarity, the trade
union movement led by Lech Walesa, provoked the imposition of martial law in
1981. Stasis and stagnation once again.
But the Pope and Solidarity remained intact. Then came the emergence of Mikhail
Gorbachev in Moscow in 1985. This happy conjuncture brought renewed independence
in 1989. It is of course now highly cherished, although the Poles agreed to join
the European Union (EU) last year, in principle a derogation of independence
that ultimately safeguards it for good.
Solidarity proved better at fighting the communists than ruling itself. The pro-EU
and pro-NATO Democratic Left Alliance (SLD) has governed Poland since crushing
the Solidarity government in the September 2001 election. But the government,
which lacks a majority, has suffered from complaints over unemployment, budget
deficits and corruption. The country's unemployment rate was 18.4 per cent in
November, the highest in the EU.
Prime Minister Leszek Miller stepped down in May 2004 after Poland officially
joined the EU. Miller had administered the government since 2001, but lost his
majority after a split with the Peasants' Party (PSL) in March 2003. In March
2004, a year later a group of deputies bolted the SLD to form a new party,
forcing the resignation of Miller on May 2nd. SLD member Marek Belka was
appointed as acting prime minister by President Aleksander Kwasniewski.
Other main opposition parties are the free-marketeering Civic Platform, the
Eurosceptic PSL, and on the far right Samoobrona (Selfdefence), the League of
Polish Families, and the crime-bashing Law and Justice.
If the SLD fails as a minority government, new elections could unsettle the
political system. The next parliamentary election is tentatively scheduled for
Civic Platform is in first place in polls
Opinion polls indicate that a change of government is in the offing. The
opposition Civic Platform (PO) is the top political party in Poland, according
to a poll by PBS Sopot published in Rzeczpospolita. 25 per cent of respondents
would vote for the PO-led by Donald Tusk-in the next general election.
The Law and Justice Party (PiS) and the Self-Defence of the Polish Republic (SRP)
are tied for second place with 14 per cent, followed by the League of Polish
Families (LPR) with 12 per cent.
The governing SLD is only fifth with 11 per cent, followed by the Peasant's
Party (PSL) and the Labour Union (UP).
Poles, who were sceptical about the benefits of European Union membership, have
seen their economy thrive since the country joined on May 1st 2004. Poland
posted year-on-year GDP growth of 4.7 per cent in the year to November, the
latest figure available.
According to analysts from American investment bank Merrill Lynch, Poland's
ratings by international agencies will be heightened in 2005.
At the moment Poland has the lowest rating in credit credibility among main
Central and Eastern European countries. However, the economic indicators are
much better than country's ratings would indicate. Merrill Lynch suggests the
three major agencies, Standard&Poor's, Moody's and Fitch Ratings, are bound
to raise ratings during this year.
Outside of Poland, Hungary enjoys high marks from agencies while its economy
stands on risky ground, mainly because of a high budget deficit. Analysts claim
that the unstable situation will continue throughout 2005 and Hungarians must
expect lower rankings. Slovakia, as in Poland's case, was previously
underestimated in ratings, which was corrected by Moody's. A similar correction
is expected for Poland soon.
The reflections of a past leader
Lech Walesa, former head of Solidarity and former president of Poland,
visited the Institute of World Politics in September, where he gave a personal
view of the implosion of the Soviet empire and an optimistic view of his
country's future as a staunch American ally within a united Europe.
Reflecting on his days under communist military rule when, as a shipyard
electrician, he led the Solidarity movement that organized and mobilized
millions of Polish citizens in non-violent resistance, Walesa warned of danger
from totalitarian Belarus, increasingly authoritarian Russia, and a corrupt and
collapsing Ukraine (but this was before the Orange Revolution).
Much work remains to be done, Walesa said to prevent those countries from
falling into a permanent netherworld of neo-Soviet dictatorship. He predicted
that Poland would play an increasingly important role in European and
trans-Atlantic affairs. Poland, for example, currently has 2,350 soldiers in
Iraq, the fourth largest contingent of the coalition after the United States,
Britain and Italy.
Lotos clinches 340m zloty credit for retail development
Lotos Group, Poland's second largest refinery, signed a deal to borrow a total
of 340m zlotys from Poland's two biggest banks, PKO BP and Pekao SA, to develop
its retail network in southern Poland, Interfax reported recently.
"According to the deal, Lotos Group will get 340m zlotys to realise its
retail network development programme, which includes reaching at least a 12%
share in fuel market by 2010 and enlarging the network to 500 gas
stations," a statement released on December 17th said.
The two banks are splitting the loan equally. "Our share in the loan is
equal and guarantees for the loan are good but they do not include the company's
shares. This is a large and ambitious development project, which in our opinion
is real," Pekao SA President Jan Krzysztof Bielecki said. "It is
visible now that investment recovery is beginning in the Polish economy."
Poland's central bank said it expects investment to replace export as the main
economic growth driver in Poland in 2005. Investments rose 4.1% year-on-year in
the third quarter, up from the revised 3.6% in the second quarter. Analysts had
expected investment growth to exceed 6%. Economists said a delay in the
distribution of EU funds for small- and medium-sized enterprises, as well as
tighter fiscal policy, both cut into investment. The loan marks top Polish
retail bank PKO BP's efforts to work more with corporate clients.
Japan wants Polish energy
Some 23 Japanese energy and steel enterprises have formed a group of potential
investors in energy production in Poland, according to Warsaw Business Journal
recently. Businessmen from the land of the rising sun hope to produce renewable
sources of energy in cooperation with Polish companies, most of them
state-controlled. The cost of preliminary projects is estimated at US$140m (440m
zlotys). Energy producer and distributor J-Power will fund windmill energy and
the Mizuho Financial Group is in a joint venture with the National Sugar Company
to produce energy from biomass.
PKN Orlen ready to offer more shares to investors
Nafta Polska President Krzysztof Zyndul recently announced that Poland is likely
to commence a process to sell an additional stake in its leading fuel maker, PKN
Orlen, in 2005, once the company prepares its development strategy and Poland
prepares its energy security strategy.
The government agency is responsible for the privatisation and restructuring of
Poland's fuel and chemical sectors. The government currently owns a 27.5% stake
in PKN Orlen.
In 1999 and 2000, the government listed over 70% of the company's shares on the
Warsaw Stock Exchange and in the form of global depositary receipts traded in
London and New York.
Top Hungarian oil and gas concern MOL and Austria's biggest oil company OMV have
both discussed with the Polish government on and off over the past several years
about purchasing a stake in PKN Orlen. Orlen is also expected to finish its
takeover of top Czech oil company Unipetrol in 2005.
"There is a chance to perform the third stage of PKN Orlen privatisation in
2005, but under several conditions," Zyndul said, Interfax News Agency
He added, "These would include preparation of a national energy security
strategy, as well as development strategy from the PKN Orlen itself."
PKN Orlen is expected to present the strategy sometime in January-February 2005
period. The Polish government was expected to discuss energy security strategy,
due to include details on the government's control over the sector and its
Zyndul said it would rather sell a stake in the country's biggest oil company to
a strategic investor, rather than float another stake on the Warsaw Stock
Exchange. The agency wants to link PKN Orlen to an investor, who would also
participate in the search for the oil fields and their extraction. "It
would be the best solution for an oil-field exploration partner to become the
strategic investor for Orlen, but it's not obligatory," Zyndul added.
In 2004 Polish treasury Minister, Jacek socha, said that statute changes
reducing the Treasury's shareholder privileges would have to precede further
privatisation of PKN Orlen.
Poland wants to repay all of Paris Club debt
Poland plans to pay off up to 12.3bn euros it owes to the Paris Club creditors,
the Ministry of Finance said recently, PAP News Agency reported
The actual scale of repayment is still not known: it hinges on the readiness of
individual creditors to accept early repayment.
"The whole operation of early repayment will be financed from foreign bond
issues staged gradually over the next 12 to 18 months," the ministry said.
"Financing to the tune of 6bn euros has already been secured."
Poland's debt to the Paris Club now stands at 12.3bn euros. This year's planned
instalment is 2.1bn euros.
The planned early repayment of the entire debt is meant to improve the public
debt to GDP ratio and influence Poland's ratings, the ministry added.
FOREIGN ECONOMIC COOPERATION
Libyan leader, Polish premier discuss cooperation
Prime Minister, Marek Belka, met the Libyan leader, Col Mu'ammar al-Qadhafi,
recently. This was the first official visit at this level since 1985. The head
of the Polish government conveyed to the Libyan leader a letter from President
Alexsander Kwasniewski inviting him to Poland, Polish Radio 1 reported.
The meeting between the Polish prime minister and Mu'ammar Qadhafi lasted nearly
an hour. The Libyan leader received a delegation at his residence of Bab al-Aziziyah.
According to the prime minister's colleagues, the talks mainly concerned the
return of Polish business to Libya. Col Qadhafi told Polish journalists after
the meeting that there were great prospects for cooperation between the
countries. He emphasised that at one time the contacts had been very close. He
added that now they could renew them.
Netia teams up with Dialog
Poland's telecom incumbent TPSA, controlled by France telecom, will face tougher
competition from operators Netia and Dialog, which both plan to join Swedish
Tele2's Polish unit in offering a local-call to TSPA's clients, Interfax News
"We are currently negotiating an annex to our deal with TSPA to extend our
prefix functionality," Netia spokesperson, Jolanta Ciesielska, said
"The service will be likely launched in the first half of 2005."
Dialog has similar plans, and also hopes to launch the new service in 2005, the
company's spokesperson, marta Pietranik, said. The Polish unit of Tele2 launched
the service on December 3rd 2004.
TPSA predicts 2% revenue growth
Dominant Polish telecom TPSA, controlled by France Telecom, maintained its
forecast of 2% year-on-year revenue growth for 2004, TPSA president, Marek
Jozefiak, said recently, Interfax News Agency reported.
"We maintain our view that the 2% growth year-on-year is very, very
ambitious, but we want to achieve it," Jozefiak said. In October TSPA said
it planned to grow 2004 revenue 2-3% year-on-year, aiming for 18.65-18.84bn
zlotys in full-year sales. After the second quarter, the company decreased its
guidance from 3-5% revenue growth. TSPA outperformed market expectations as
third-quarter revenue, pushed by data-transmission and mobile operations,
bolstered the company's net profit. The company increased consolidated revenue
by 2.5% year-on-year in the third quarter to 4.678bn zlotys, while nine-month
revenue increased by 1.86% to 13.88bn zlotys. Third-quarter net profit rose
33.9% year-on-year, boosted by the sale of a stake in French satellite operator
Eutelsat, to 596m zlotys, beating most analyst expectations, which had ranged
from 420 to 719m zlotys.