Seeking to take the pulse of Poland’s coming generation of leaders, a pollster recently asked university students what they wanted to do with their careers. The answer was revealing. Fully half of the respondents said they wanted to leave the country for greater opportunity abroad.
Poland has known waves of emigration throughout its history, of course. But for a country that is in its 15th year of democratic transition -- and one that has enjoyed a greater rise in living standards than any other former Communist state in Eastern Europe and is about to enter the European Union -- the results of the poll by Warsaw-based Student News magazine came as a shock. Poland’s youth, the very generation that stands to gain the most from the country’s return to the European mainstream, seemed to be giving a vote of no confidence to their future at home.
“There’s a lack of belief that there is a greater picture into which they fit,” says Marek Szopski, a professor at the Warsaw College of Communication and Media who studies the impact of transition on social attitudes. “Students say, ‘I have worked hard, I have qualifications, I can do better.’ ”
The students are not alone in having doubts about Poland’s future. The country’s unemployment rate has advanced steadily in recent years to 20 percent, the highest of any of the EU accession countries. Foreign direct investment continues to lag as corruption, bureaucracy and poor infrastructure put off companies and cause Poland to lose major projects to Slovakia and other countries in the region. And lax budgetary policies by the government of Prime Minister Leszek Miller have shaken investors’ confidence, causing the Polish z?loty to fall by 17 percent against the euro and interest rates to spike up over the past year. The policy slippage forced the government last month to push back its target date for adopting the euro by one year, to 2009, and many analysts believe that Poland won’t be ready even by that date.
“This was a disappointment,” Christian Schilweck, who helps manage E2.5 billion ($3.2 billion) in emerging-markets bonds at Deka Investmentfonds in Frankfurt, says of the euro delay. “The problem is politics at the moment. There are negative headlines all day long.” Doubts about Poland’s convergence with the euro zone have caused the yield spread on five-year government bonds to soar to 330 basis points over German levels, compared with as little as 145 basis points last May. Deka has been underweight z?loty bonds by nearly 50 percent over the past year because of concerns about the currency and wants to see convincing measures to reduce the deficit before buying again, Schilweck says.
Now it’s crunch time for the Miller administration. With the national debt fast approaching a constitutional ceiling, the government is scrambling to address the fiscal and structural problems that it, and its predecessor, avoided for years. Jerzy Hausner, the deputy prime minister and Economy minister, has drafted a package of controversial budget measures designed to rein in the deficit by cutting popular welfare programs and reducing the indexing of pensions. The savings are relatively modest -- a total of 29.4 billion z?loty ($7.6 billion) over the next four years, compared with an expected deficit this year of 45 billion z?loty, or 5.3 percent of GDP -- but the plan finally begins to tackle many of the root causes of Poland’s economic underperformance.
Unfortunately for Hausner, the government’s ability to impose its will is fast crumbling. Miller’s Democratic Left Alliance, the former Communist party known by its Polish acronym SLD, has seen its popularity plunge during the past year because of discontent over its austerity plans and allegations of corruption. A string of defections by SLD and allied members of Parliament has cost the government its effective majority in the Sejm, the lower house, leading to a stunning defeat in January, when opposition parties overrode Hausner and passed a budget-busting 600 million z?loty increase in subsidies for Polskie Koleje Pa´nstwowe, the troubled state railway. Miller resigned as leader of the SLD last month, a sign of weakness that cast fresh doubt on the government’s ability to implement reforms. Now Hausner is pinning his hopes on winning the support of the main opposition party, the reform-minded Civic Platform, but with polls showing Civic Platform on course to win the next election, it’s not clear that its members will come to his aid.
Failure to enact the budgetary reforms could trigger a full-blown crisis of confidence in the financial markets, eroding the country’s hopes of prosperity just as it fulfills its decadelong ambition of EU membership. “The currency could take a hit” if Hausner fails to get his budget package through Parliament, says Deka’s Schilweck. That could cause Poland’s debt problems to snowball: Some 20 percent of the country’s debt is denominated in euros.
“The question is, Are we able to implement the fiscal consolidation plan and overcome the current crisis?” Hausner tells Institutional Investor in an interview (see box, opposite). “Whoever is voting against my plan is voting for financial crisis in this country. That would require much more radical measures than I am proposing to be taken. This is the real choice.”
Investors and analysts hope Hausner’s logic will persuade a reluctant Parliament to support the budget reforms. “From an external point of view, he’s doing the minimum -- not even,” says Micha?l Dobak, a senior executive at Deutsche Bank Polska. “But from an internal point of view, understanding how feeble the government’s mandate is, he’s probably doing the most he can. The plan has to work. This country can’t afford to see this program fail.”
The government also promises to court foreign investors more aggressively and to revive the long-stalled privatization process (see box, page 126). Both are desperately required to boost the economy. Poland needs to attract about $10 billion a year in foreign investment to sustain a 5 percent growth rate and raise living standards toward EU levels, but inflows have been running at less than half that in recent years. The government also has to raise 8.8 billion z?loty in privatization revenues -- more than double last year’s sales -- to meet its deficit target this year.
Last month Miller appointed a new Treasury minister -- his fourth in just 13 months -- to speed up the sale of remaining state holdings in the financial services and energy sectors, but investors remain skeptical that he means business. If the government files a proposal with the securities commission to float a state-owned company, “that will be a sign that something is going on,” says Wies?law Roz?lucki, president of the Warsaw Stock Exchange. “Everything before that is just talk. I’m dissatisfied with the process of privatization.”
There is no small amount of irony in Poland’s plight. The country stands ready to enter the European Union on May 1 with seven other former Warsaw Pact satellites, as well as Cyprus and Malta. The accession, the biggest expansion in EU history, will bring to an end the cold war division of Europe and provide an impetus to growth and trade across the Continent. It should be a time of unbridled celebration. But for all the great strides Poland has made over the past decade to prepare itself for membership -- strengthening democratic institutions, opening its markets to EU competition and entrenching private property rights -- the country has shied away from making many painful but necessary economic reforms. Unless the government takes urgent action, Poland could suffer the same fate as Hungary, which late last year saw its currency hammered and its bonds boycotted by investors concerned about its burgeoning deficit.
“We are paying the price for all those governments that were counting on EU membership solving all our problems,” says Henryka Bochniarz, president of the Polish Confederation of Private Employers, the country’s leading business lobby group.
Poland got a head start on its neighbors by embracing reform in the early 1990s -- liberalizing prices and privatizing state-owned assets under the shock therapy program designed by Leszek Balcerowicz, the former Finance minister who is now president of the central bank. The country’s real GDP today stands more than 30 percent above 1989 levels, a better record than any other Eastern European country can claim.
Poland’s relative performance has lagged badly in recent years, however, as reform has stalled, and the country’s absolute level of development remains low. Per capita income stands at a modest E4,830, or 20 percent of the EU average of E24,260. Even when adjusted for Poland’s lower prices, incomes on a purchasing-power basis are just 41 percent of the EU average, well behind the Czech Republic’s 62 percent.
Despite Poland’s relatively low wages and a domestic market of 38 million consumers, by far the largest in the region, foreign investors haven’t exactly flocked to the country. Per capita foreign direct investment has amounted to slightly more than $1,000 over the past 15 years, the lowest of any accession country. One of Poland’s biggest handicaps is its infrastructure. Of the 500 kilometers of road between Warsaw and the German border, only 60 are motorways. The government has begun work to build a network of highways by 2015, but that was too late for PSA Peugeot Citroën, which last year picked Slovakia over Poland for a new auto plant. Hyundai could make a similar decision when it selects the site for a E1.1 billion assembly plant in Eastern Europe early this year.
For all of its problems, though, the Polish economy does exhibit signs of strength. Growth recovered to an estimated 3.5 percent last year after running at barely 1 percent for the previous two years, and most private analysts forecast an acceleration to more than 4 percent in 2004. Exports expanded by more than 7 percent as companies took advantage of the weak z?loty to gain market share in the EU. Inflation remains subdued at 1.7 percent, slightly below the euro zone’s level. And the government has given business a boost this year by slashing the corporate tax rate to 19 percent from 25 percent, matching Slovakia for the lowest rate in the region.
To capitalize on those strengths and sustain growth, the government needs to get its deficit and debt under control. The government estimates that the deficit will rise this year to 5.7 percent of GDP, or 54.8 billion z?loty, from 4.2 percent in 2003. Half of the increase, ironically, stems directly from European accession, because the government must cut customs duties and other taxes to comply with EU norms and increase spending on infrastructure projects to obtain aid from Brussels under the union’s co-financing rules. The underlying deficit problem, however, is homegrown: continued government subsidies to keep ailing state-owned companies in sectors like mining and energy on life support and extensive welfare programs that encourage benefit dependence instead of enterprise.
Poland has ducked those issues for the past five years, but Miller can’t afford to let it do so any longer. In a burst of pro-EU enthusiasm in the late ‘90s, Poland embraced part of the Maastricht criteria by setting a constitutional limit on the national debt of 60 percent of GDP. The law requires the government to take preventive action if debt exceeds 55 percent. This year’s budget deficit is projected to push the debt to 54.8 percent of GDP -- many analysts believe it will top 55 percent. Hence the urgency behind Hausner’s budget reforms.
The 54-year-old Hausner is more of a technocrat than a politician. A professor of economics and public administration at the Economic Academy of Cracow since 1972, he served as an economic adviser to the previous Socialist government in the mid-'90s. Notably, he helped design the country’s funded pension system, one of the landmark reforms of the decade. After Miller brought the Socialists back to power in 2001, Hausner was appointed minister of Labor while economic policymaking was concentrated at the Finance Ministry. Miller’s first two Finance ministers, Marek Belka and Grzegorz Kolodko, quit abruptly when they failed to win support for their budget proposals. Hausner deftly stepped into the void last fall, persuading Miller to make him deputy prime minister with control of overall economic policy. More important, Miller has given Hausner the political backing his predecessors lacked by stating bluntly that the government will fall if the reforms fail.
It remains to be seen whether Hausner can succeed, but he certainly enjoys the strong support of Polish business and foreign investors. “He’s quite an exception among politicians,” says Bochniarz of the employers’ confederation. “He knows what to do, but that is not the most difficult part. The question is, Can you make a program that is realistic and communicate what you are trying to do? He is very good at that. He’s also very loyal. If he says yes, he means yes. We just trust him.”
Hausner’s reforms are designed to rein in the social welfare spending that lies at the root of the government’s deficit problem. Welfare spending expanded in much of Eastern Europe during the ‘90s to cushion the social tensions caused by the transition from a planned economy. This expansion was particularly strong in Poland because welfare enjoys the strong support of many right-wing parties, which have their origins in the Solidarity union, as well as those of the left.
The sheer size of the welfare state today provides “perverse incentives” for Poles to stay unemployed or work in the black economy, contends the central bank’s Balcerowicz. Some 4 million people -- one in seven of the labor force -- claim disability benefits. Many of them were simply classified as unable to work after being laid off from industries that were restructured. The government also spends three times as much on preretirement pensions for laid-off workers as it does on training and other programs aimed at helping the unemployed find jobs. Only 52 percent of the labor force is currently employed, compared with 57 percent in Hungary and 60 percent in the Czech Republic. For every one of those workers, there is another person in Poland receiving some kind of social benefit -- a group that totals 14 million.
Hausner aims to trim these expensive social programs by reducing preretirement benefits, tightening eligibility criteria for disability, slowing the inflation-indexation of benefits and increasing government programs to help unemployed people 50 and older find work. In addition to saving money, these measures should have a positive impact on employment and growth, he asserts. “Without these changes, we will not be able to combat poverty and unemployment,” he says.
Many outside observers agree. “He really has got a program of significant structural reforms that will make Poland work better,” says Susan Schadler, a senior official at the International Monetary Fund who follows Poland.
First, however, Hausner has to get his plan through Parliament. The Sejm is due to begin voting this month on the 11 separate bills that constitute the budget plan, and getting them passed won’t be easy. After the government’s defeat on the railway bill in January, Hausner trimmed his proposed cutbacks by 10 percent to prevent any further defections from the ruling SLD. But Civic Platform, the liberal opposition party whose support Hausner needs, argues that the plan is not tough enough. The party points out that most of the cuts in the four-year plan won’t take place until after 2005, when it expects to be in power. It wants some cuts brought forward and demands that Hausner take a bigger knife to bureaucratic spending, beginning with state financing for political parties. “This is a question of millions, not billions, but it has a symbolic value -- that we are starting with ourselves,” says Janusz Lewandowski, one of the party’s senior members of Parliament.
Hausner’s bargaining room is limited. The SLD’s opinion-poll standing has slumped to a record low of 12 percent. In addition to the unpopularity of the reforms, the party has suffered from a debilitating series of corruption allegations, the most notorious of which involves Prime Minister Miller. Lee Rywin, a co-producer of the Academy Awardwinning films Schindler’s List and The Pianist, went on trial last month on charges of seeking a $17.5 million bribe from a newspaper publisher in return for getting a media law favorable to the publisher passed. Prosecutors say Rywin claimed to be acting on behalf of the prime minister. Miller denies any involvement, and prosecutors dropped an investigation of his conduct last year, but the case has fanned widespread suspicions of influence peddling and sapped Miller’s public support since the allegations first surfaced a year ago.
Even if Hausner succeeds in steering his plan through Parliament, he still has plenty of work to do. That’s because Poland, like the other accession countries, is obliged to strive to adopt the euro. Poland meets two of the five Maastricht criteria with its low inflation rate and its independent central bank. But its deficit exceeds the Maastricht ceiling of 3 percent of GDP, and investor concerns about that deficit have put Poland in violation of the two remaining criteria: low interest rates and a stable exchange rate against the euro.
So far the government has done little more than pay lip service to the euro. Unlike the Baltic states and Hungary, which have linked their currencies to the euro and made early adoption a key policy objective, Poland has let the z?loty float freely and sought to focus policy on promoting growth. Hausner underscored the policy of euro neglect last month when he pushed the government’s target date for adopting the single currency back to 2009.
Financial markets took that announcement in stride. Few analysts thought Poland would be ready for the euro in 2008, and many, such as Goldman, Sachs & Co.'s Eastern Europe economist, Erik Nielsen, believe that it won’t be ready before 2010 at the earliest. But if investors are relaxed about the timetable, they are counting on arriving at the destination.
Many investors, including German-based convergence funds, bought billions of government bonds in the expectation that yields would decline toward EU levels and that the z?loty would appreciate as Poland moved toward euro adoption. If euro adoption seemed to be receding indefinitely, however, investors could unwind their convergence bets, sending Polish interest rates climbing and the z?loty falling.
The National Bank of Poland’s Balcerowicz is the country’s leading advocate for adopting the euro as quickly as possible; he views the government’s lack of enthusiasm with dismay. Euro entry requires the kind of deficit reduction and structural economic reform that Hausner is attempting, so pushing for early entry would be “a win-win strategy,” Balcerowicz contends. “This should be a central part of the overall economic policy strategy, like it was with Greece and Spain. When you delay the targeted entry date, it usually means a delay of reform.”
Adopting the single currency also should help attract more foreign direct investment and foster the growth of trade with the euro zone, economists say. The IMF is expected to release a study this spring estimating that adopting the euro could boost growth between 0.5 and 0.8 percent a year for new EU members. “There’s pretty compelling evidence that moving into the euro area is going to accelerate the catch-up” of living standards, says the fund’s Schadler.
Both the IMF and the EU envisage a longer timetable for euro adoption than Balcerowicz does. At a conference on the single currency in Prague last month, the EU’s commissioner for economic and monetary affairs, Pedro Solbes, cautioned accession countries against entering Europe’s exchange rate mechanism -- a requirement before euro adoption that pegs local monies to the single currency -- until they had reduced their budget deficits.
In short, the advice for the near term is simple, says Goldman economist Nielsen: “Stay outside the economic and monetary union, get your fiscal reforms done, work on foreign direct investment. That would be much better for long-term growth.”
That’s no small task for Poland’s Hausner, but one he’s eager to tackle. As he puts it: “I do not believe in miracles. I believe in hard work and determination.”
He will need both in spades.
Hausner: Determined to lift Poland’s gloom Jerzy Hausner is a policy wonk with staying power. The 54-year-old economist served as a senior adviser to Poland’s previous Socialist government from 1994 to 1997, then was named Labor minister after the election of Prime Minister Leszek Miller in 2001. He gained control over economic and budgetary policy last year after Miller’s first two finance ministers failed to get a grip on the growing deficit. He recently sat down with Institutional Investor European Editor Tom Buerkle in his austere ministerial offices to discuss why his fiscal plan represents Poland’s best chance at reform.
Institutional Investor: What do you look for from the economy this year? How strong a recovery do you expect?
Hausner: The target is 5 percent annual growth, which is difficult but possible, given that last year the Polish economy grew by 3.7 percent. And unemployment should diminish by 200,000, to less than 19 percent at the end of the year.
The most important thing is to keep the pace of the Polish economy going up and to secure a safe macroeconomic framework. We would like to keep the ratio of public debt to GDP under the threshold of 55 percent. This threshold is built into our law on public finance. If we cross it, we would have to implement a very radical, austere fiscal consolidation program, much more severe than the one I am proposing.
Many economists believe that that 55 percent will be breached this year. There seems to be a credibility problem with the fiscal plan.
I have heard some people publicly say it would be a miracle not to cross this threshold. Of course, I do not believe in miracles. I believe in hard work and determination.
I declared this target to create greater tension for everybody. The whole cabinet now has a real obligation to support my efforts and those of the minister of Finance. What is the ultimate resort? Blocking spending. So if things go wrong and we are not able to fulfill all our commitments, we will simply block public spending.
You talk about the political and social opposition to your plans. This seems to be a continuing feature of Polish politics. Is there reform fatigue, and if so, why?
The general mood has changed completely. If I remember 1997, people were quite optimistic. People were supportive of privatization, people were very open to foreign investors, and the social climate was positive. Now it’s a gloomy mood all around the country. We are approaching the European Union, and more people concentrate on their fears, not on their chances.
You may say that 20 percent of the population is losing, and in objective terms they are losing. They have less and less. This is a question of poverty, of marginalization and exclusion. Still, 80 percent of the population is doing better. But the mood is quite opposite. It’s very difficult to explain. People do not trust politicians. They do not believe that the proper response can come from politicians.
The liberal opposition party Civic Platform says that your plan is pushing all of the pain on to the next government because most of the deficit reduction takes place in 2006 and beyond. Why should they support it?
If you would like to say that it’s late, I agree. It’s also to a certain degree a fault of this government that we are starting late. But it’s not too late. It’s better to start late than not to start at all.
We have a scheme of preretirement benefits, which was introduced in 1997. Each year we have 100,000 more people who receive those benefits. The average retirement age is 57, and we have a preretirement benefit. We spend three times more for this type of benefit than for active labor market measures for combating unemployment. So we are paying a lot of money to have people outside the labor market. And I’m saying to my colleagues, “Look what happens.” There are 14 million people in the labor market, and approximately 14 million people are on various benefit schemes. One to one. The employment rate in Poland is 51.7 percent. If we had the employment rate of Hungary or the Czech Republic, our GDP would be much, much higher -- by approximately $25 billion. And we would not have the problem with our deficit.
Foreign direct investment has been declining. You have met with investors overseas; you’re aware of their skepticism. What do you tell them?
Our system of working with investors is not as successful as our neighbors’. Therefore we are going to create a better investment agency and work better with investors. We have new leadership at our agency. We are creating a better legal framework for the agency, and I think this will give results.
We are losing because the infrastructural development in Poland is not sufficient. So now we give a lot of our attention to how to improve the situation. One should remember that Poland is not a centralized country. We have local government, and they have a lot of power and autonomy. In the longer run it’s a better system for us because of the size of the country, but the cooperation between different levels of administration is not sufficient.
Banking on privatization? The privatization of PKO BP, Poland’s largest bank, ought to be a cakewalk. The former state savings bank during the Communist era today boasts more than 1,200 branches and roughly one quarter of the country’s retail deposits. Earnings rose 17 percent last year, to 1.2 billion z?loty ($310 million). And bank president Andrzej Podsiadlo is itching for the state to do an IPO so that he can use his financial firepower to expand in Ukraine and other nearby countries.
Unfortunately for Podsiadlo, the Polish government can’t seem to set him free. The Treasury held two tenders for investment banking advisers to handle the sale of a 30 percent stake in PKO last year but canceled both on technicalities. Bankers see a lack of political will in the Democratic Left Alliance (SLD) government of Prime Minister Leszek Miller, which has raised less than half of its budgeted goal of 14 billion z?loty in privatization revenues over the past two years.
“It’s almost a never-ending story. It seems like pure politics,” says Wies?law Roz?lucki, president of the Warsaw Stock Exchange. He believes that a flotation would give a much-needed lift to activity on the exchange. Poland hasn’t had a major IPO since the government sold off a 45 percent stake in the oil company PKN Orlen in 1999.
Some politicians have speculated about a linkup between PKO and PZU Group, the state-owned insurer that is Poland’s largest institutional investor. The idea of a national financial champion is attractive in a country that has seen all of its other big banks pass into foreign hands in recent years. Krzysztof Janik, a Miller ally who leads the SLD in Parliament, calls the two firms “parallel concepts.” Podsiadlo is fanning the merger speculation, telling Institutional Investor that PZU is “our natural partner.” But the insurer is itself mired in an ownership struggle. Eureko, a Netherlands-based financial services company, owns 22 percent of PZU but has been stymied from exercising an option granted by Poland’s previous government to raise its stake above 50 percent. Eureko is pursuing an international arbitration case to enforce its claim and vows to resist any government attempt to merge the two firms. “Without us, they can’t do it,” says Fred Hoogerbrug, a Eureko executive who serves as deputy CEO at PZU’s life insurance arm.
Prospects for a PKO flotation appeared to improve last month after Miller sacked ineffective Treasury minister Piotr Czyzewski and the government called a fresh tender for advisers (Citigroup, Credit Suisse First Boston, Deutsche Bank and HSBC are competing). Bankers believe that Poland’s deficit woes may have finally prodded the government into action. “It looks like there is a strong commitment from the government for practical reasons -- they need the money,” says one Warsaw investment banker seeking to advise on the sale. He estimates that a 30 percent stake in PKO would fetch about $1 billion, or 3.9 billion z?loty, nearly half of the government’s target of 8.8 billion z?loty in privatization revenues this year.
But just when bankers were getting their hopes up, the new Treasury minister, Zbigniew Kaniewski, announced that the PKO sale might be delayed until early 2005. Few investors would bet that Kaniewski, the fourth minister in 13 months and a former high school geography teacher and trade union activist, will finally sell PKO. -- T.B.
Poland throws its political weight around Poland is determined to flex its political muscle as it enters the European Union, but whether it can exercise real influence remains to be seen.
Prime Minister Leszek Miller blocked agreement on a new EU constitution at the bloc’s summit meeting in Brussels in December. Miller -- egged on by Spain’s prime minister, José María Aznar -- objected to a German-backed proposal to require EU legislation to be passed by a majority of member states representing at least 60 percent of the union’s population. Such a double-majority system would strengthen the influence of the four most populous states -- Germany, France, the U.K. and Italy. By contrast, Miller wants to retain a voting system being introduced this year under the EU’s Nice Treaty, which gives midsize countries like Poland and Spain almost the same voting power as the big four.
The issue has tremendous emotional resonance for Poles, who have no desire to submit to EU diktats after struggling for decades to break free of Soviet domination. Jan Rokita, a former Solidarity union activist who is likely to become prime minister if the opposition center-right Civic Platform party wins the next election, captured the public mood best with the presummit rallying cry, “Nice or death.”
Miller’s uncompromising stance won plaudits at home, but the prime minister alienated allies that Poland needs to finance its development. Chancellor Gerhard Schröder of Germany and President Jacques Chirac of France vowed last month to limit the union’s annual budget to the current level of 1 percent of EU GDP rather than increase it to aid the bloc’s new Eastern members, as proposed by the European Commission, the EU’s executive agency. As a result, EU aid to Poland will grow very slowly from the current E4 billion a year, or 1 percent of Polish GDP, well below the 3 percent of GDP that Ireland received in the 1990s.
Despite his strong position on voting rights, Miller hinted at flexibility on voting rights when he spoke recently with Irish Prime Minister Bertie Ahearn, who holds the EU’s rotating six-month presidency and is seeking to unblock the constitutional negotiations. But Foreign Minister W?lodzimierz Cimoszewicz argues that any voting deal should retain elements of the Nice formula because it demands compromise among large and small states, and he insists that Germany will need to make concessions. “To reach an agreement, everybody must be open and flexible,” he says in an interview.
Poland has strived to balance its EU interests with its close alliance with the U.S. The government joined Spain and Italy in supporting the invasion of Iraq last year, angering Germany and France and prompting U.S. Secretary of Defense Donald Rumsfeld to attempt to exploit the divisions between “old” and “new” Europe. Poland currently has 2,350 troops on peacekeeping duty in southern Iraq, and former Finance minister Marek Belka serves as director of economic development for the Coalition Provisional Authority, the interim governing body in Iraq. Much to Warsaw’s disappointment, however, that support has won no quick payback from Washington. President Aleksander Kwasniewski met with George W. Bush at the White House in January and requested expedited visa screening for Polish visitors to the U.S. and contracts for Polish companies in rebuilding Iraq but came away empty-handed.
Still, Poland is confident that it can balance its new EU membership with a continued close strategic alliance with the U.S. “We do not need to make any choice,” says Cimoszewicz. -- T.B.
