Newsletter subject
Poland setting out to Europe

Head of Board's comment

News from & about Poland

Three centuries of Polish history in a pill
History & tourism: invitation to the mountains
Fishing: endangered sector
Business fighting for linear tax
Presidential veto on bio-fuel

Assistance from HEXACON Polska

Assistance from Hexacon

NEWSLETTER TOPIC
Poland setting out to Europe

Dear Readers,

Since the previous issue of Newsletter, the position of Poland on the European scene has changed a lot. On the 13th of December 2002 Poland received a chance to be incorporated into one of the biggest economical structures of the present world - the European Union.

Long-lasting negotiations, as well as the efforts of the Polish government on its way to meet the requirements of the European Commission were finally concluded at the EU Summit in Copenhagen. Yet, this is only the beginning of the road. Before Poland becomes a legal member of the European commonwealth and before Poles get the right to cross the gate “EU travellers only” (instead of “other countries”) they have to wait until May 2004. More information about the results of negotiations and expectations of both parties - to be found in our article.

With Poland heading for the European Union, we would like to take you back in the past to show you what it was like 50, 100, 150 years ago. We would also like to invite you to one of the most beautiful regions of Poland to tell you about winding paths of Polish tradition and the power of national feelings.

As usual, Newsletter is going to provide you with a choice of short news on politics, industry and economy.

Have a good time with our magazine.

With regards,
 
Jesper Floyd Kristiansen
Head of Board

DECEMBER 13TH , 2002 - SETTING OUT TO EUROPE
Poland to EU in May 2004.

EU Summit in Copenhagen - the history’s turning point

On December 13th, 2002, five-year-long negotiations about the conditions of Polish membership in the EU came to an end.

No doubt, this day will be remembered as one of the most significant days in Polish history. In the opinion of many Poles, this date must be compared with the recovery of Polish independence in 1918, and they are probably right. The incorporation in the structure of the United Europe is expected to be first of all an igniting spark to the Polish economy and a chance to create a mature, efficient and well organised state organism. This also stands for a civilisation progress and social rise, making Poland a respected member of the European family.

The Copenhagen EU Summit ended the long and stressful period of negotiations about the conditions of Polish membership in the structures of the European Union. Polish Prime Minister, Leszek Miller, and other leaders of candidate countries claimed that they would win the membership together with the full offer, while the opposite party, the leaders of the 15 EU countries, seemed to say: don’t even think about it! Fortunately for everybody, and especially for the new-coming EU members, all participants came to an understanding and shook hands eventually.

During the Copenhagen summit the representatives of the Polish government felt encouraged to lay down conditions, as Poland is presently the biggest country running for the membership in the EU. Furthermore, after entering the Union, Poland will be one of the biggest countries to participate in the most important events, coalitions and debates upon any changes in the EU. What makes Poland even more attractive partner within the EU, are its good relations with the United States.

Despite all its undeniable virtues, the following months are going to be really tough for the Polish government. First of all, it has to encourage foreign capital by creating better conditions to invest in Poland, beginning with lowering taxes. To compare with, in Hungary and the Czech Republic, our peer-candidates, companies pay 3% tax while in Poland it amounts to 28%! To enter the EURO zone Poland will also have to reduce the budget deficit to less than 3% of GNP, while today it is almost 5%.

Results of Polish negotiations in Copenhagen:

• a decisive voice in determining the destination of money granted;
• transfer of 1 milliard EURO from structural funds (total 8 635 million EURO) directly to the budget in years 2005 - 2006, which will be spent on the most urgent needs; Denmark has already promised to grant Poland 443 million EURO in 2004;
  (this transfer will help Polish budget to bear the burden of a membership fee and participate in the building of highways and purification plants);
• extra 108 million EURO for tightening Polish eastern border (total: 280 million EURO);
• surcharges for farmers: 50 (2004), 55 (2005) and 60% (2006) of what present members of the EU receive today and majority of which Poland will have to pay from its own budget;
• increase of wholesale of milk by 1,5 million tons within the limit of 8,9 million tons;
• 1250 EURO of yearly subsidies for small and medium-sized farms, willing to produce for market;
• 7% VAT for building services and new flats until 2007 (unfortunately, the EU did not agree to 7% VAT on farm machines - it will amount to 22%);
• recognition of qualifications of Polish nurses in the EU;

Previous achievements:

• EU countries can limit the employment of Polish citizens up to 7 years, but only Germany demands such a long protection period; England and Sweden impose no restrictions and the other countries will open their labour markets in 2 to 5 years;
• Poland has the longest transition stage: only after 12 years EU citizens will be able to buy Polish forests and agricultural land; Euro-farmers will buy land after an obligatory land tenure (7 years west and north of Poland, 3 years in the other districts);
• transport: protection period for the national railway company (until 2006); aviation: for the first 5 years Polish transport companies will not provide Cabot age services;
• Poland obtained many transition periods within the EU directives demanding large investments, such as:
  • reducing the amount of environmental pollutants emitted to atmosphere (2 years)
  • reducing water pollution with dangerous substances (5 years)
  • implementation of integrated protection and pollution control system in big factories (until 2010)
  • purification of municipal waste (6 - 10 years, according to the size of the town).

What does it all mean for Poland?

Many Poles believe that our EU membership will have a positive impact on the state’s affairs and lives of ordinary citizens. Expectations are high, i.e.:

• participation in one of the strongest economical and political blocs;
• raise of competition, hence reduction of prices, improvement of flexibility and efficiency of Polish companies;
• speeding up privatisation, breaking down monopolies;
• inflow of foreign capital, growth of investments in roads, waste management and environmental protection;
• modernisation of the state, healing public finances, improvement of law and administration;
• free access to European labour markets, high-tech goods, better services and legal protection;
• reduction of labour cost.

After the Access Treaty is ready, it will be voted on (April 9th) and undersigned by the EU members and candidate countries in Athens on April 16th. Afterwards, the treaty will be ratified in 25 countries, either in parliaments or, in case of the candidates, via national referenda. In Poland it is planned on June 8th, 2002.

News from & about Poland

THREE CENTURIES OF POLISH HISTORY IN A PILL
 

This article is meant for those who would like to learn something about Poland’s way to independence and those who complain about the rules of joining the European Union and a disastrous shape of the Polish state. Certainly, the world’s recession has not omitted our country, but in comparison with the fate of our ancestors our present situation seems quite comfortable. Let us have a few stops back in history.

If we make the first stop in the 1950s we would get to the heart of the gloomy era of Stalinism, when thousands of Polish citizens suffered in prisons for the daring dream of freedom and independence. Many disappeared and never came back, some other had to leave the country to avoid persecution. Since Big Brother had his sleuths everywhere, keeping mouth shut was the best way to survive. Iron curtain, skilfully tailored in Jalta, efficiently guarded the citizens against the hostile ideology of the West.

The beginning of the XX century was even worse. For over a century Poland had been partitioned between Prussia, Germany and Russia, and nothing augured a change. The invaders brutally applied the procedures of erasing Polish language and national identity in many spheres of life. Even the world war, whose inevitability became obvious at some point, was not able to raise the spirits. The oppressors represented the opposing parties of the conflict, so whatever the result of the war, one of them would anyway decide about the peace conditions, thus the future of Poland.

In 1850s, after the springtide of nations all hopes for regaining independence faded away.

In year 1795, after an unsuccessful insurrection, the rest of the Polish lands were divided between the three above mentioned powers, and the Kingdom of Poland eventually disappeared from the maps of the world. This was the third and final partition of Poland. In the same year, Stanislaw August Poniatowski, the last Polish king, was forced to abdicate.

Another fifty years back, in 1750s, Poland was theoretically independent, but the anarchy and total inability to take up any decision were slowly leading the country to ruin. Finally, in 1772 the first partition of Poland took place.

Although Poland stepped in the XVIII century as one of the biggest and richest European countries, the chaos and internal disintegration gradually deprived Poland of strength and exposed it to the external dangers. In 1702 Poland was involved in the great northern war, which lasted until 1721.

Isn’t it enough to cheer up and look in the future with more optimism? If not, see the history book for more data.

HISTORY & TOURISM: INVITATION TO THE MOUNTAINS
 

Standing at the door of the European Union, ready to cross the threshold, Poles try to find out who they are, what they believe in, how much they can win and how much the alliance with the EU can take away from them. Some of them have strong national feelings and are ready to protect their values, some do not feel attached to this land and cannot wait to fly away. But there is at least one group of Poles whose attachment to the mother land and tradition has become legendary, though it did not stop them from colonising the whole world. Today we would like to devote a while to this most distinctive part of the Polish society and an important element of the Polish culture.

There is a place in the southern part of Poland, which is more than worth to visit - the Tatry Mountains (Tatras) - offering most picturesque views and most remarkable folklore in Poland. The main town and holiday resort in the region is Zakopane, situated right at the feet of the mountains. And there is a folk, Gorale (say: gooraleh, mountaineers), the hosts of this land, whose unity and national identity are as firm as the rocks that surround them.

Gorale started to form a separate group in the XIV century, which rose from a mixture of poor immigrants from different parts of Poland and other European countries. There were Romanians, who brought here the custom of decorating men’s hats with little shells, Slovaks, Hungarians, Germans, Jews, Russians and Gypsies. Their life on a rocky land was hard. Severe winters and months of isolation created a self-sufficient society, resourceful and always ready to help the neighbours.

Gorale are very much attached to their land, which they were granted by a king soon after their arrival in these parts. Up to the 1950s, nobody dared to take away the land from them. When the socialist government took over some of the pastries and flocks of sheep, Gorale were offered damages in return. The majority, though, refused to accept it, so still the money is waiting in the local court to be collected.

Gorale are famous for their conservatism and sympathising with right-wing parties. Not only are the mountaineers loyal to the Right, but also the attendance during elections is much higher here than in the other constituencies. In the era of socialism, Gorale refused to work in militia (former police) and breaking this rule was equal to a social suicide.

Despite their cosmopolitan origin, Gorale are proud to call themselves Poles. Trying to weaken Polish native monolith during World War II, Germans tried to make Gorale believe that they are a separate nation. One of the mountaineers replied this way: “Maybe I wear mountaineer’s trousers, but their contents is purely Polish.” The Nazis must have cursed every day of their service among those people, since Gorale were hardly controllable. The Goralische Division SS, where Gorale were incorporated by force, was dismissed before it was sent to the frontline due to massive desertions.

Gorale can take a good care of themselves. For ages they sought labour and happiness all around the world. Nowadays, every second mountaineer’s family has at least one of its members in America and, as men of initiative, Gorale are in the group of the richest Polish immigrants. Back home, they build pension houses, manufacture sheep cheese, woollen sweaters and traditional leather shoes, raise ski-lifts, organise trips and other seasonal attractions. With a big cherry of tradition on top of these modern services, they are bravely looking forward to the future.

For more than one hundred years, Zakopane and the neighbourhood have been a Mecca for artists of all kinds: sculptors, painters, actors, poets, writers and architects, whose traces are visible in many places. Even the distinctive style of the local houses, which dates back to the end of the XIX century, is the fruit of an artistic inspiration of a renowned Polish architect who lost his heart to Zakopane. Although it has almost nothing in common with the mountaineers’ traditional shelters, it has fitted in the surroundings as if it was meant just for this place and only waited to be discovered. Last but not least, Polish Tatras offer countless kilometres of hiking routes, climbing up the highest peaks (Rysy 2499 m. ...) and lazily descending to the valleys. A few hostels scattered in the mountains create a possibility of enjoying their beauty day and night.

Planning this year’s holiday, stop for a while to think about the little corner on the map of Poland, which has so much to offer. We have only touched upon the subject, leaving you space for surprise and your own discoveries. See the Tatras, meet the people, hear the music, feel the wind, dip your hand in crystal water and make your own discovery!

FISHING: ENDANGERED SECTOR
 

The catch of fish in the world has decreased by 50% and in Poland the fall has been even ten times higher. This must have influenced the prices all over the world: in Poland prices of fish have doubled in the last five years, while the other products went up not more than by 9%. As the result, fish is a rare guest on an average Polish table. Our yearly consumption of fish amounts to 6 kg annually, which leaves us far behind Western Europe (four times more) and Japan (ten times more).

To make up for the shortages, some countries created sea fish farms which provide with almost 20% of the total demand for fish and this figure will gradually grow to reach 50% in year 2020.

Unfortunately, creating fish farms is a complicated task to perform in Poland. For the first thing, the waters of the Baltic Sea are relatively cold, hence creating favourable conditions for massive “production” of fish would be very expensive. Still, it is possible. A good solution could be instead stocking inland waters, but not necessarily in Poland, or at least not in this moment. The problem is that Poland is poor in water resources, and 60% of the existing reservoirs and rivers are contaminated. Yearly, Polish fishermen catch about 40 thousand tons of fish in ponds, lakes, rivers and dam reservoirs. The results could be twice as high, but this requires an investment of more than 5 milliard PLN.

Time is tough also for deep-sea fishing. The international policy of preserving the resources of cod and other fish, limited the catches drastically. This made the Polish deep-sea fishing unprofitable, and resulted in a slow decay of the fishing sector in the last ten years. In the times of prosperity, Dalmor, one of the three former potentates of fishing sector in Poland, used to catch 600 thousand tons of fish yearly. Today it hardly reaches 50 thousands tons and the fleet of 15 out of 120 trawlers left are getting rusty.

For the time being, only the fishermen operating on the Baltic sea do not have a reason to complain. It won’t last. Their catches are rich, but mainly due to an excessive exploitation of fisheries.

Who knows, maybe this is the beginning of a new era, when the profession of a fisherman will be replaced by a new one: a fish farmer? Hopefully, there would be at least a title of an honorary fisherman left to remind us that natural resources are not inexhaustible.

BUSINESS FIGHTING FOR LINEAR TAX
 

Business Centre Club and Polish Business Council submitted to the President a project of introducing a linear tax of 12, 19 or 20%. Unofficially, both the President and the Polish National Bank (NBP) favour this solution.

Business organisations are promoting the idea of linear tax on personal income, providing that all citizens pay the same tax rate, while reductions and deductions of any kind are cancelled. The authors of the project claim that the new system would make the tax procedures clearer and easier to follow. They say that even the introduction of the highest rate (20%) and simplifying the execution procedures would subsequently raise the income to the budget. The majority of economists also advocate the idea of accepting one tax rate, saying that it will help to reveal more income to be taxed. Certainly, the lack of tax progression favours the rich, but it will leave them more money for investments, creation of work places and for other activities aiming at economical development.

While economists are convinced that the system with one tax rate and no reductions is more efficient, the adversaries of the project in Poland, just like in other countries, claim that it is against the idea of social equality. Nevertheless, in Russia, thanks to 13% linear tax and reducing the cost of tax execution, the budget received 23% higher income. Linear tax amounting to 26% on personal income was also introduced in Estonia in 1992, while Lithuania settled the rate on the level of 25%.

The project is waiting to be considered.

Business Centre Club counts over 1200 companies, represented by 2 thousand entrepreneurs engaging about 500 thousand employees, while Polish Business Council is an elite kind of association with 54 members.

PRESIDENTIAL VETO ON BIO-FUEL
 

President Kwasniewski refused to sign the bill about bio-fuels, which provided that since July this year gasoline stations would sell only fuels with the content of 4,5% of bio-ethanol and rape oil, to be raised to 5% by the year 2006.

Many organisations gathering employers, businessmen and consumers say that this bill was another legislative trash breaking the Polish Constitution and EU directives. It is said that the project ignored the social and economical realities, like for example the fact that over 40% of cars in Poland are more than 10 years old and using fuels with mentioned additives would have fatal influence on their engines. Furthermore, the bill would be against the EU law within free competition and the agreement with other European countries which forbids to create commercial-kind of state monopolies.

Due to the big amount of bio-components in the fuels proposed to be introduced from the very beginning, the bill was seen as a remedy for saving Polish agriculture at the cost of an ordinary consumer. Meanwhile this was the skin of the latter which was saved once again by presidential veto.

Assistance from HEXACON Polska

Assistance from Hexacon

HEXACON Polska offers individual solutions for the needs of international companies on the Polish market.

We offer our services for all levels of business activities, starting from the first contact and interest for Poland and going to well-established international enterprises and Polish local companies. Due to the wide range of customers, our activities vary in each particular case depending on the customer's individual needs.

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MARKET INFORMATION

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HEXACON Polska in cooperation with a law firm offers consultancy in most of the cases related to running business.

HEXACON Polska is strongly connected with Scandinavia, especially in terms of trade between the two. Except from English and Polish, most of the employees speak Danish, Norwegian and Swedish.

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For further information please contact HEXACON Polska