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POLAND


 

 

In-depth Business Intelligence

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)

Books on Poland

REPUBLICAN REFERENCE

Area (sq.km) 
312,685

Population 
38,626,349

Capital
Warsaw

Currency 
Zloty 

President 
Aleksander 
Kwasniewski 

Private sector 
% of GDP 
70%



Update No: 102 - (27/10/05)

The Poles are free at last
Poland has just held elections to both its parliament and its presidency. The fact that they took place in an open and fair manner is as important as the results.
For Poland has had a troubled and turbulent history, which is here summarised. It was dismembered by Russia, Prussia and Austria in three great partitions in 1772 -95. An independent Poland was established at the end of World War I, with Marshall Jozef Pilsudski as the country's first head of state. Pilsudski remained in charge of the government until his death in 1935.
In 1939, Germany invaded Poland, marking the start of World War II. The occupying Nazi forces built concentration camps, enacting the systematic extermination of all Jews and Gypsies under a policy denominated as the "Final Solution." Official figures estimate that six million Jews and two million Gypsies were killed during the Holocaust. The global conflict ended in 1945, and saw Poland losing some of its traditional territory to the Soviet Union, while gaining some from Germany.
In the 1947 elections, which were deemed undemocratic by the Western powers, the Polish Workers' Party (PPR) became the dominant political force, and established a communist regime under Wladyslaw Gomulka and Boleslaw Bierut. Edward Gierek took over as the de-facto leader in 1970.
In 1978 a Pole was elected pope, Pope John Paul II. His visit to his homeland the next year, organized by a joyous people, presaged the end of Polish communism, indeed of communism itself. In 1980, a dispute in a Gdansk shipyard led to the formation of the Solidarity trade union. Leader Lech Walesa was imprisoned one year later-along with many other Solidarity supporters-after the country imposed martial law. Gierek was replaced by Stanislaw Kania as party leader, and in 1982, Wojciech Jaruzelski took over with the backing of a military council.
Solidarity's leaders were released in 1985, and three years later, the government formally acknowledged the trade union. In 1989, negotiations between Solidarity, the Catholic Church and the Polish government established a timetable for democratic elections. Following the ballot, Solidarity's leaders joined a coalition government headed by Tadeusz Mazowiecki. Walesa won the presidential election in 1990.
In 1993, the Democratic Left Alliance (SLD) became the largest party in the Diet, and formed a coalition administration with Waldemar Pawlak of the Peasant's Party (PSL) as prime minister. In 1995, Pawlak was replaced by the SLD's Jozef Oleksy.
Former Communist leader Aleksander Kwasniewski defeated Walesa in the 1995 presidential election. Kwasniewski went on to win a second consecutive term in the 2000 ballot.
The 1997 legislative election was dominated by the Electoral Action Solidarity (AWS) and the Freedom Union (UW), resulting in a government headed by Jerzy Buzek. In September 2001, the Democratic Left Alliance-Labour Union (SLD-UP) emerged victorious with 41 per cent of the vote and 216 lawmakers in the lower house. SLD leader Leszek Miller headed a new government with the Peasant's Party (PSL).
In March 2003, the coalition split after PSL members refused to support the government on a tax proposal. In June, Polish adults voted in favour of accession to the European Union (EU). After the country officially joined the EU in May 2004, Miller stepped down as prime minister.
SLD member Marek Belka was appointed as prime minister by Kwasniewski, and was ratified by the Diet in June 2004. 
In 2003, Poland joined the United States-led coalition effort in Iraq. In May 2005, the country had 1,700 soldiers in central Iraq, as part of a multinational force of about 4,700 troops. In all, 17 soldiers from Poland have lost their lives during the conflict.
In March 2004, Kwasniewski said Poland was "misled" into the war, but added that Iraq today "is a much better place than Iraq with Saddam Hussein." In April 2005, defence minister Jerzy Szmajdzinski said Poland would withdraw its troops from Iraq at the end of the year, when the current mandate expires. Szmajdzinski added that the mission could be extended if the United Nations (UN) Security Council or the Iraqi government request Poland to keep the troops in place.
Poland renewed its legislative branch on Sept. 25, 2005. Two centre-right political organizations-the Law and Justice Party (PiS) and Civic Platform (PO)-secured more than 280 seats in the 460-member Diet. Final results gave the Law and Justice Party (PiS) 26.9 per cent of the vote, and 155 seats, followed by the Civic Platform (PO) with 24.1 per cent, and 133 seats. The Law and Justice Party nominated economic expert Kazimierz Marcinkiewicz as its candidate for prime minister.
On Oct. 19, SLD member Marek Belka tendered his resignation as prime minister. President Aleksander Kwasniewski asked Marcinkiewicz to assemble a new administration.

2005 Presidential Election
Democratic Left Alliance (SLD) member Kwasniewski has been Poland's head of state since 1995. Having served two five year terms, he was unable to stand again. Kwasniewski urged voters to take part in the next presidential election, saying, "We should profit from the opportunity that democracy has provided us.  Those who choose not to go to the polls should be aware that they in effect have a real say on who will be elected president."
On Oct. 9, Donald Tusk garnered 36.33 per cent of all cast ballots in the first round of the presidential election, with Lech Kaczynski, the Mayor of Warsaw, finishing second with 33.10 per cent. Since no contender received the backing of more than 50 per cent of all voters, a second round was scheduled for Oct. 23, which Kaczynski won by 54% to 46%.
He will be sworn in as Poland's new head of state on Dec. 23. 

Fall-out among the two conservative front-runners
Poland's two leading centre-right parties met on October 24th to begin talks on forming a coalition government, a task made more difficult by the populist promises offered by Lech Kaczynski, winner of the October 23rd presidential election.
During the election campaign Lech Kaczynski attacked liberal PO policies such as a flat tax, expressed scepticism over privatisation of key state assets and promised subsidies and benefits to farmers and miners. He also promised not to reappoint Leszek Balcerowicz, architect of Poland's economic reforms, as national bank president.
In a country where many people are afraid of what the future holds and rely on government help to survive, the potentially costly social promises were the key to Mr Kaczynski's victory. Mr Kaczynski is likely to devote much of his energy to radical constitutional reform aimed at strengthening the presidency and overhauling what he views as a corrupt and ineffective state. But Mr Marcinkiewicz will have to figure out how to pay for all those promises.
It is a truism of politics that the real enmities exist within the same part of the political spectrum rather than between the obviously different camps. The party leading Poland's new conservative government found that coalition talks with another possible coalition partner, the pro-business Civic Platform, collapsed in acrimony. It won support, however, on October 27th from populist and anti-Europe parties after Civic Platform said that there was little chance it would become the junior partner in a government led by the Law and Justice Party. "Based on our experiences, there is no clear possibility that Civic Platform will be in the coalition, even though we deeply hoped to join it," said Lukasz Pawlowski, a spokesman for Donald Tusk, the party's leader. "We have been overruled by Law and Justice on several issues," Pawlowski added. 
The League of Polish Families, a nationalist, conservative and Roman Catholic party led by Roman Giertych, and Self-Defence, another Catholic party led by Andrzej Lepper, both supported Kaczynski during the second and final presidential round, and they quickly moved to take advantage of the political vacuum. They said they could support a minority government whose sceptical policies toward Europe and its strong Catholic roots are shared by these two parties. 
The League of Polish Families, which won 34 parliamentary seats, and Self-Defence, which won 56 seats, have been consistently opposed to the European Union, even though farmers who form the backbone of Lepper's party have gained financially since Poland joined the EU in May, 2004. 
It had been widely expected that the Law and Justice Party and Civic Platform - the two largest conservative parties in the Sejm - would find enough common ground to form a government. But after the presidential election, the mood between the camps soured when Law and Justice decided not to support Civil Platform's candidate for speaker of the Sejm and also insisted that the larger party control the powerful Justice and Interior Ministries. 
Both Kaczynski and his twin brother Jaroslaw, who leads the Law and Justice Party, promised during the parliamentary and presidential election campaigns to stamp out corruption and also rid the bureaucracy and administration of former Communists. They claimed previous governments had not carried out a thorough overhaul of the public sector, either on the national or local levels. Control of the Justice and Interior Ministries would give them a freer hand to pursue that program. 
Civic Platform was offered the Treasury, as well as the Finance, Economy and Infrastructure Ministries - which are powerful positions and appear to be plum assignments. "They seem beautiful," Pawlowski said, "but we don't want to find ourselves in a situation that we have to cover their promises." 
Law and Justice promised to increase pensions and family welfare payments, in addition to building three million new homes and spending more on health services. It said some of the expenditure would be financed from sharp cuts in the state administration. 
Eugeniusz Smolar, director of the independent International Relations in Warsaw, said Civic Platform was faced with the difficult choice of being compromised or marginalized, depending on whether they joined the coalition or stayed in the opposition. "The party believes it could be manipulated if they were part of the coalition," said Smolar. He added that "Law and Justice made a lot of big promises for which Civil Platform could be blamed if the government did not deliver on them. On the other hand, if it remains in the opposition it runs the risk of being marginalized." But Pawlowski said Civil Platform "was used to being in opposition." 

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AVIATION

LOT finally admitted that it is purchasing Boeing airplanes 


Polish flagship airline company LOT finally admitted that it is purchasing Boeing airplanes to replace its long-haul fleet, Warsaw Business Journal reported recently.
The airline's supervisory board accepted the recommendation of the company's management and the carrier will purchase seven Boeing planes for US$500-900 million. "LOT will be the first European airline to receive 787 planes," said Marlin Dailey, deputy president of Boeing Commercial Airplanes. "The replacement of the 767 with the 787 will allow more innovative solutions in terms of travel comfort for passengers on transatlantic routes. It will have a key importance in launching new connections with Asia. The 787 perfectly fits into our cost-cutting strategy," said Marek Grabarek, president of LOT. The new planes will be delivered in mid-2008, while the purchase rights will be executed between 2011 and 2019. Details related to the Boeing offer are confidential.

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ENERGY

PGNiG opens tender for LNG feasibility study 


The management board of Polish Oil and Gas (PGNiG) announced a tender for the creation of a feasibility study of a Liquefied Natural Gas (LNG) terminal project, the Warsaw Business Journal reported on October 7th. 
The project will have a strategic meaning for national power security, as it will enable Poland to become much less dependent on gas supplies from Russia. The price of LNG in Europe oscillates between US$117 to US$146 per 1,000 cubic metres, while the price of gas imported from Russia is US$200 per 1,000 cubic metres. The deadline to submit offers is November 7th. 
PGNiG did not want to reveal the value of the tender. The company estimates that the construction of the terminal will be anywhere between 200 million Euro to 600 million Euro. It will enable the transportation of 3-5 billion cubic metres of gas to Poland a year. The completion for the construction works has been scheduled for 2010.

Thermal power plant Kozienice up for grabs 

Poland's State Treasury will negotiate the sale of an undisclosed stake in Poland's Kozienice, one of the largest thermal-power stations in Europe, with all six investors that submitted binding offers, the treasury ministry said, Interfax News Agency reported. 
The interested investors are: Czech CEZ, Spanish Endesa, Polish power distributor group Enea, Spanish Iberdrola, German PCC and Swedish Vattenfall. 
The size of the stake on offer has not been revealed but, according to earlier reports, it could be 40-50 per cent of Kozienice's share capital. Kozienice, which is profitable, also plans to offer 15.75 million shares, 35 per cent of share capital, during an initial public offering (IPO) scheduled for November. Kozienice is the largest thermal-power station in Poland and one of the largest in Europe. It complies with all EU criteria and has an installed capacity of 2,845 MW. The net profit of Kozienice dropped 40.5 per cent year-on-year to 25.6 million zlotys in the first half of this year as revenues rose just 1.22 per cent to 880 million zlotys from 869.4 million zlotys.
During the second quarter the plant's net profit was up 44.7 per cent year-on-year to 16.4 million zlotys. 
In the first quarter the power plant recorded a 9.2 million zloty net profit on sales revenues of 464.7 million zlotys.

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FOOD & DRINK

Hochland targets new market and doubles its capacity 

Hochland Polska, the number one company on the processed cheese market (with a 54 per cent market share) and the second largest domestic blue cheese producer has ambitious plans of becoming the leader among hard cheese producers, the Warsaw Business Journal reported on October 7th.
To achieve this end, the company has just opened a new cheese factory at a cost of 45 million Zlotys. "Over the next five years we would like to gain control of 30 per cent of the hard cheese market," declared the president and director general of Hochland Polska. He added that the company will try partly to increase its share in the market at the expense of its competitors, such as Mlekpol and Mlekovita. 
The company will soon increase its production from 6,000 to 10,000 tonnes of cheese a year, which also means that its demand for milk will grow by a fifth. "We are getting close to the production limits established by EU for local farmers. Now we need to negotiate the largest possible reserves, so that we do not lack milk," said Jerzy Mrozowski, production director.

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FOREIGN COOPERATION

Poland to cooperate With Kyrgyzstan 

Poland is interested in active cooperation with Kyrgyzstan, the Ambassador of Poland in Kyrgyzstan, Vladislav Sokolovsky, said at the opening of the recent international exhibition "Bishkek - 2005", Interfax News Agency reported.
Sokolovsky said that Polish businessmen arrived in large numbers at the Bishkek exhibition. The entrepreneurs were acquainted with opportunities in the country and how to plan ways of cooperation. According to the Ambassador, Poland joined the European Union one and half years ago. In turn this is a good opportunity for Kyrgyzstan to introduce new technologies together with the Polish enterprises in manufacturing and to develop industry. "Kyrgyzstan is the country with which it is possible to cooperate and work. The Polish businessmen in your country are interested in stability and the investment climate," Sokolovsky said.

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INDUSTRY

Whirlpool opens Wroclaw factory 

American Whirlpool on September 9th opened a factory producing cookers in Wroclaw, the value of which was not disclosed, but it is an element of a larger project worth 100 million Euro, Warsaw Budapest Journal reported. 
Last year the company decided that this was the budget to launch the production of cookers, develop existing production of fridges and expand its Wroclaw excellence centre. The enterprise expects that it will complete all the projects by 2008, which will further develop its 20 per cent market share.

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INFORMATION TECHNOLOGY

IT company ATM is planning a turnover of 108m zlotys 

IT company ATM is planning a turnover of 108m zlotys and a net profit of eight million zlotys in 2005, Warsaw Business Journal reported recently, citing a company statement. 
During the first half, ATM managed to secure 50 per cent of the revenues figures, but only five per cent of the net profit. ATM operates in the telecommunication and IT sector, which is strongly influenced by the season and usually the second half of the year is better in terms of results.

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PHARMACEUTICALS

Polfa hammers out deal with PHF 

The management boards of Polish Pharmaceutical Holding (PHF) and three Polfa companies, which constitute the holding, finally reached an agreement concerning how to finance the holding, Warsaw Business Journal reported. 
According to Andrzej Kleszczewski, the head of PHF, this is a very important step in the process that will shape the future activity of the entity. "Until now PHF functioned thanks to a dividend from the Polfa companies. But due to taxes this solution is not good from the financial point of view. Apart from that, the agreement also describes some other elements of our cooperation."

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TELECOMMUNICATIONS

Comarch-In&phone pact ups exports 

IT solutions provider Comarch signed a contract with a Swiss telecoms operator, In&phone, to implement billing and network management systems, Warsaw Business Journal reported on September 16th. 
This is yet another mobile network from western Europe which chose to work with a Polish company. The value of the deal was not revealed. "In&phone's choice confirms the very high quality of our services," said Christophe Debou, member of Comarch's management board. Exports have become a very important source of the Krakow based company's revenues. In 2004, it constituted a 20.8 per cent share of its revenues and amounted to 68.8 million zlotys.

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TOURISM

Foreign tourism on the rise 

This summer was among the record years in terms of the numbers of foreign tourists visiting Poland, according to businessmen from the tourism sector, Warsaw Business Journal reported on September 19th. 
It was also the first year for some time that the number of domestic tourists did not decrease. The number of foreigners who will visit Poland in the entire year is estimated at around four million. The largest number of foreign visitors comes from Germany, but Italy and France are not far behind. There was a clear increase in the number of those visiting not only the tourist hotspots, but also the countryside.

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