Books on Poland
% of GDP
Update No: 111 - (25/08/06)
Premier hits back
Polish Prime Minister Jaroslaw Kaczynski and his twin brother, Lech, who is
president of the country, attract a lot of criticism, and indeed ridicule in
Poland from educated people for their 'mindless populism,' as one acerbic
commentator put it. 'Kaczynski' means 'duck' in Polish; and they are derided by
what they would no doubt brand as 'the chattering classes' as a pair of silly
One thing that they are not, unlike say Tony Blair and his deputy, John
Prescott, is a pair of lame ducks. They came to power only late last year
(although Jaroslaw to the premiership only in July) and are firmly in charge,
quite prepared to take on their critics. Kaczynski replaced Kazimierz
Marcinkiewicz then as head of a PiS-led coalition government with the smaller
populist Samoobrona farmers' party and the Catholic-nationalist League of Polish
The new prime minister on August 4th made the most important speech of his
premiership so far at a press conference. He slammed criticism that his
right-wing Law and Justice (PiS) coalition was undermining democracy and the
free market and dismissed it as 'completely divorced from realistic facts.'
PiS' radical coalition partners and the fact that Premier Kaczynski is also the
identical twin brother of President Lech Kaczynski, stirred concern that Poland
was in the grip of a volatile 'twinocracy,' which could damage the country's
young democracy and undermine its commitment to Western institutions.
Moves to disband military intelligence services, the creation of an
anti-corruption agency with wide-ranging powers and moves to create a
centralized agency supervising Poland's banking sector have sparked concern and
criticism both at home and abroad.
Speaking to the foreign press in Warsaw on August 4th, Kaczynski denied Poland
was in any danger of changing its chosen Western, democratic and capitalist
course. Poland had not and will not 'stray from the road of democracy,' the
market economy, the European Union or NATO, Kaczynski said.
Public comments by both Kaczynskis voicing support for the death penalty have
also stirred controversy. While he reiterated that both he and his brother were
advocates of capital punishment, Kaczynski insisted 'it is not the case we will
reintroduce the death penalty. This is not a real or practical issue.'
The Fourth Republic; De Gaulle returns
For anyone interested in politics, the phrase, 'The Fourth Republic,'
conjures up France and the events of 1958-59, when De Gaulle replaced the Third
Republic, that had presided over the debacle of 1940 and then the disastrous
Algerian War, with a new constitution and the Fourth Republic.
The Poles are very Francophile; it was Weygand and De Gaulle no less as a young
officer who went to their assistance in 1920 when they were attacked by the
Bolsheviks, who were duly repulsed. One remembers friends who helped one out in
need. French is still widely spoken in Poland.
Everybody in Poland knows what Kaczynski has in mind when he says that his
party's promise to build a fourth Polish republic replacing the third
established after the collapse of communism in 1989 was advancing full steam
ahead. 'If we are changing something in Poland it is the real shape of our
public life, our society,' he said. A Gaullist revolution is in the offing for
Poland no less.
When his greatest friend, the writer and man of action, Andre Malraux, asked De
Gaulle after his resignation in January 1969 when he would return, De Gaulle,
never at a loss for a good riposte, answered; "Always."
So it turns out in Poland.
Kaczynski maintains that despite the post-1989 reforms of economy and
political mechanisms, there was little, if any, reform of state and social
structures. This permitted former communists to retain power and influence in
key sectors, leading to endemic corruption and the 'degeneration' of public life
in Poland, he argues. 'Not so long ago gangsters used to come to this building,'
Kaczynski told journalists at the meeting in the prime minister's chancellery in
'We are doing away with these problems and this creates huge resistance and
sparks fears, but it serves Poles,' Kaczynski insisted. 'Nothing wrong is
happening in our country.'
He was obviously referring to the process of lustration, whereby former
collaborators and informants with the previous communist regime are to be
flushed out of offices and perks. He should be reminded that De Gaulle for his
part, a towering statesman in every sense, did not approve of the reprisals
against collaborators with the Germans in 1944-45 and did his best to curb them,
not instigate them. Quite a few had been double agents after all.
In an indication that he might realize this himself, Kaczynski confirmed he had
invited deposed finance minister Zyta Gilowska back into the government. 'I
think I'll manage to convince her,' said Kaczynski.
Gilowska was forced out of office a month previously when allegations surfaced
that she had been a communist-era informant, but had failed to admit this in a
special vetting declaration mandatory for all senior politicians. She flatly
denied the allegations.
A special vetting court currently hearing her case is expected to clear her of
any wrongdoing, opening the way for her re-entry into government.
'A second wave of capitalism' needed
Gilowska is regarded highly by economists as a fiscal disciplinarian bent on
keeping Poland's deficit in check and revamping public spending.
With global financial analysts Merrill Lynch predicting Poland can expect near
7-per-cent growth in GDP in the coming years, Kaczynski was quick to point out
that economic growth was driven by the country's 'human capital.'
The first wave of Polish capitalism after the 1989 demise of communism crashed
by 1995 because entrepreneurs lacked skills and knowledge, the prime minister
said, who believes a new well-educated generation of Poles can create a 'second
wave of capitalism.'
But in order to encourage a new generation of Poles to set up shop at home
instead of seeking jobs in other EU states, reforms aimed at slashing red tape
for young entrepreneurs must be pushed through, he said.
The international scene
On the international front, Kaczynski focused on energy security,
emphasizing Poland's opposition to a joint Russian-German project to construct a
natural gas pipeline across the Baltic Sea floor and bypassing Poland and the
Baltic states of Latvia, Lithuania and Estonia.
All four countries have criticised the project and fellow EU member Germany for
compromising their vital energy security interests and threatening environmental
damage to the Baltic Sea.
Poland was considering its own foray into nuclear energy, Kaczynski admitted. It
was also reviewing an offer from Lithuania to partake in a project to build a
new nuclear reactor at the Ignalina facility in a joint project with Estonia and
Latvia. 'Now we are studying whether this is a mutually exclusive alternative -
if we have to decide on one or the other, we'll go for the Polish alternative,'
he told the assembled journalists.
Poland was also re-examining a deal first struck with Norway in 2001 for
additional natural gas deliveries. Part of an energy diversification plan, the
deal was shelved by an ex-communist government but Kaczynski's cabinet have now
reopened talks with the Norwegians. A decision on natural gas deliveries could
come in October, he said.
Recent diplomatic contacts with Russia showed 'an element of hope' for a meeting
between the Polish and Russian heads of state, Kaczynski said, although strained
relations over the historical conflict between the two countries demanded
On a personal note
At the end of his discourse Kaczynski began to unbutton. He admitted to
being a night owl and to spending a whopping 80 hours a week on the job. 'I
don't know how long I'll manage, I'm not a young person,' the 57-year-old prime
Once labelled by the media as the worst-dressed party leader in Poland,
Kaczynski has undergone a startling image makeover since becoming prime
minister. Worn-out shoes and too-tight clothing has given way to elegantly-
tailored dark suits and fancy footwear. He has even neatly tamed an unruly lock
of hair, which regularly drew media attention by famously standing on end.
Not all observers are embracing the premier's new look, however. Some pundits in
Warsaw complain it is even more difficult now to tell him apart from his
identical twin brother, President Lech Kaczynski.
Toyota invests 145 million Euro in gearbox factory
Japanese carmaker Toyota is investing 145 million Euro in a new factory to
produce gearboxes in Poland, a company spokesman said at a groundbreaking
Production of modern six-speed gearboxes is expected to commence in the summer
of 2008 when the plant is due to come onstream at Walbrzych in the province of
Lower Silesia. Poland has designated the region as a special economic zone in
order to attract foreign investors. Toyota, which has two other plants in Lower
Silesia that turn out diesel engines, has invested 600 million Euro in Poland,
creating 3,000 jobs, the news agency PAP reported.
Pekao to be more active in retail market
Pekao and BPH are the largest banks of Poland. Pekao intends to be even more
active in the retail market and on July 17 the company revealed which areas it
would develop, in particular, following its merger with BPH, New Europe
"We want to be one of the most serious players in the field of mortgage
loans. Moreover we will develop consumption loans and credit cards as, according
to forecasts, they will be developing quickest. We also intend to be a leading
player in the investment fund market," Paolo Iannone of Pekao's managing
Analysts are not enthusiastic about this announcement, as all market players now
employ a similar strategy. Pekao also hopes to become the leader of mortgage
loans denominated in zloty. Iannone said "I think that I can cope the task
of running a business as large as retail banking will be in Pekao following its
merger with BPH. I would like to stay, but this depends on the owners,"
commenting on the information that he would be transferred to another branch of
Premier wants Poland to build nuclear reactor
Lithuania's new Prime Minister, Gediminas Kirkilas, has invited Poland to
participate in the construction of a strategic third nuclear power reactor at
Lithuania's existing Soviet-era Ignalina facility. Although no concrete
decisions were announced, energy policy dominated talks between the visiting
Kirkilas and Poland's new Prime Minister, Jaroslaw Kaczynski, in Warsaw, New
Lithuania, Latvia and Estonia have initially agreed to push ahead with the
construction of a third reactor at the Ignalina station. Should Poland join, it
would be its first involvement with nuclear energy.
Kirkilas reiterated the need for a so-called "energy bridge" to link
electrical power grids between Lithuania and Poland, thus hooking the Baltic
state into Western European electrical power grids.
Both leaders expressed opposition to German-Russian plans for the construction
of a natural gas pipeline across the Baltic Sea floor. The leaders of the two EU
newcomer states concurred the project should not receive funding from the
The Baltic states and Poland have condemned EU partner Germany for striking the
energy deal over their heads with Russia and allege that it poses a threat to
their energy security. Such important decisions concerning energy strategy
should be made in consultations between EU partners, the four states insist.
In a move which recently strengthened economic and energy ties between the two
states, the Lithuanian state recently permitted Poland's largest oil refiner PKN
Orlen to buy a controlling stake in Lithuania's only oil refinery, Mazeikiu
Poland's status as a fellow-member of NATO and the EU is thought to have been a
significant factor in the decision to sell to Orlen. The trip to Warsaw was the
first foreign visit of Kirkilas. There are 3300 workers at the Ignalina power
plant and the Japanese ambassador visited there recently. Ignalina NPP has
produced 966 million kWh and has sold 894 million kWh of electricity.
Polish telecom TPSA profit 25 per cent
Poland's largest telecommunications operator, Telekomunikacja Polska SA (TPSA),
said that its second-quarter net profit rose 25.5 per cent on the year, due to
lower costs and a strong performance in its mobile telephony operations. The
company also reiterated its guidance for a decline in group revenues of one per
cent to 1.5 per cent for the full year.
Group net profit at the company, which is 47.5 per cent owned by France Telecom
SA (FTE), rose to 571 million zloty in the second quarter from PLN 455 million a
year ago. It has been mentioned by the website www.wbj.pl that the figure beat
analysts' forecasts for second-quarter net profit of PLN560 million.
Second-quarter sales rose 0.9 per cent to PLN4.64 billion, also ahead of the
PLN4.61 billion average analyst forecast. TPSA earnings were driven by the rapid
growth of its mobile arm Centertel and its data-transmission business, which
outpaced erosion at its core fixed-line business. In addition, costs fell 76 per
cent to PLN81 million in the second quarter. Fixed-line revenues fell 11 percent
to PLN2.21 billion, while mobile revenues jumped 18 per cent to PLN1.69 billion.
Centertel had 11.13 million subscribers at the end of June, up 30 per cent on
the year and almost meeting the company's full-year target of 11.5 million
Revenue in the data-transmission business increased to 5.3 per cent in the
second quarter to PLN557 million and broadband revenues surged 18 per cent to
PLN292 million. But TPSA shares were weaker early on the Warsaw Stock Exchange
as investors looked to the longer-term picture at the company. Pawel Puchalski,
an equities analyst at BZ WBK brokerage house in Warsaw said that "TPSA
delivered, but that could be the last good quarter for the company. The strong
bottom line resulted from hedging policy and subsequently lower financial
costs." Other analysts added that TPSA did not address the most important
issue, the group's long-term strategy for dealing with the market's
deregulation, rising competition across all business segments, and the spread of
new technologies such as Voice over internet Protocol.
In the statement following the release, TPSA only said that its main goal was
"to maintain the leading position on the telecommunications market by
focusing on the most prospective areas, like broadband internet access and
mobile telephony, while sustaining profitability."