Jan Piotrowski

EDGE

June 5, 2003

 

Poland on the Eve of Ascension

 

            June 7^th, it seems, is the day Poles will vote on the future of their country.  That day’s referendum decides the nation’s entry into the European Union (EU), nearly two months after Poland was accepted as one of ten entering states in a landmark enlargement treaty.  The road to a decision, however, requires careful consideration about not only Poland’s current readiness and ability to join, but also the consequences the nation will face if it indeed becomes a member.  It is the purpose of this paper to examine Poland’s social, economic, and political arenas in contrast with the sweeping changes EU membership would bring.  More importantly, perhaps, this examination will yield the obstacles that must be overcome, or at least addressed, before Poles get a true sense of what they are deciding on June 7^th.  Finally, in light of the current social, economic, and political settings in Poland and the obstacles contained therein, I would like to offer a proposal outlining a short-term strategy for the country, both on the road to the referendum and a post-ascension strategy if that indeed becomes a possibility as well.                      The EU enlargement treaty signed in Athens on April 17^th opens Europe to ten states including the Czech Republic, Hungary, Lithuania, and Poland, to name a few.  This begs the obvious question: Why does this paper only consider Poland when the nine other countries must be in similar situations with similar problems?  The answer is that Poland’s circumstances are unique and will have the greatest impact.  Its population of 38.4 million people alone comprises nearly half of the combined population—76.1 million—of the 10 joining states.  Similarly, Poland contributes a GDP of 197 billion EUR (2002), and this number reflects roughly half of the 10 states’ combined 404 billion EUR GDP of the same year.  Clearly, Poland exists as a special case that would have substantial influence within the EU if it accepted membership.  Its entrance would certainly change the dynamic of power within Europe, and so deserves unique consideration:

            “In the EU Council, Poland, with 27 votes, will be the fifth strongest country, besides             Spain.  Germany, UK, France, and Italy have 29 votes each.  In the European             Parliament, Poland will have 50 out of a total of 728 deputes, compared with, for             instance, Germany’s 99, and France’s 72.”[1]        

 

ECONOMIC REALM

 

            Central to the issues surrounding Poland’s EU ascension are the economic consequences of integration within the common market currently formed by the member states.  Indeed, because popular opinion is most easily swayed by visible changes in the economic atmosphere, it seems Poland, in its efforts to promote support for integration, needs to address these issues first and foremost.  Closely tied with the financial effects of ascension are the perspectives of Polish farmers—who constitute a considerable segment of the population—and these views will be explored in more detail later as we analyze the issues existing in the debate leading up to the referendum. 

            It is our immediate concern, however, to address the problems facing Poland’s economy in the eve of possible ascension.  These problems include currently existing inefficiencies in the economic system, as well as troubles that will introduced upon joining the common market.  Specifically, we will examine Poland’s ability to conform with the EU’s Common Agricultural Policy (CAP) and its relation with the Polish farming sector, and next analyze the consequences of switching to the Euro. 

The CAP and the Future of Polish Agriculture

 

            To assess the impact of the restrictions to be placed on the Polish farming sector, it is first necessary to briefly examine the framework which the CAP imposes.  First introduced in 1960 to combat the possibilities of starvation in Europe by creating a guaranteed food supply, the CAP’s effectiveness is still a subject of debate.  Its mechanics include setting “production quotas, environmental standards, and paying subsidies.”[2]  These quotas will directly affect the amount of food farmers left in the Polish agricultural sector will be capable of producing.  While the goal of CAP’s policies is to ensure “reasonable pricing of food products, fair standard of living for farmers, [and] stable agricultural markets,”[3] Polish farmers find themselves mistrustful and apprehensive.  Furthermore, CAP’s subsidies, which are directly tied to production, have resulted in the massive overproduction of goods due to farmers attempting to take advantage of the system.  Consider the case of the olive farmers in southern Europe, for example, who have planted exorbitant amounts to produce oil regardless of existing demand.  In worse cases, forests have been illegally cleared to make room for more groves, and this has had disastrous environmental effects.[4]  Despite reform attempts at separating subsidies and production so that environmentally-safe farming and high quality are rewarded, these conditions still exist.

            What makes the CAP particularly pertinent, and potentially threatening, to Polish agriculture, is Poland’s unique composition of its population:

            “Almost 25 percent of Poland’s 39 million inhabitants are farmers, but they      produce barely five percent of the country’s GDP.  Only about half a million of             Poland’s two million farms are commercial operations, and only one in five of         these meets EU standards.”[5]

 

            These statistics are especially astounding when compared to the other nine countries party to the Enlargement Treaty.  The percentage of the labor force in the agriculture sector in these nine countries is commonly less than 10 percent, and as low as the Czech Republic’s 5 percent.  Similarly, the current 15 member states of the EU have an average farming population percentage of only 5 percent as well.  Even worse, of the 25 percent comprising Poland’s farmer population, 60 percent produce only for survival, and not commercially.  Furthermore, these are the least educated of the population, the majority of who have not even completed high school. 

            Despite the obvious dominance of agriculture within the Polish economy, the EU will not subsidize Polish farmers for the same generous amount member states currently receive.  Oppositely, because of the high percentage of farmers in Poland, EU officials in Brussels have deemed the option of offering them full subsidies a cost the member states are not willing to bear.[6]  Instead, the EU has offered the 10 enlargement states 25% of the level offered to western states—and this amount will eventually rise until all members are at equal levels.  Still, this is not the entire picture:  To ensure the ability to compete within the singles market, Polish grain producers would actually receive 70 percent, whereas milk producers would have to make do with 20 percent.[7]  Moreover, the subsidy system Poland has chosen will have a considerable effect on the farming sector.  Having chosen the system where all subsidies are to be paid out to all producers equally, and not depending on the size of production, small/medium farms will benefit more than they would’ve have under an alternate plan.  Also, the equal payment subsidy system will benefit those who would not have received any money under the normal system, such as the fruit and vegetable sectors. 

            It seems that even though the economic consequences of EU ascension will be harsh on many smaller farmers who do not produce for the market, Poland has, at the very least, made some effort to maintain the survival of its most important economic sector by lobbying hard for better entry terms.  Despite these nicer subsidy conditions, however, the reality of EU ascension will be hard, at least in the short-term, on many small farms and will put many out of business.  It is clear the government must find a more effective to way to modify its population makeup so that some of the farming sector is transplanted to other areas.             

The Zloty

 

            The question of adopting the EU’s common currency, the Euro, is a topic of debate among many analysts in Poland.  If it joins the EU, Poland must then weigh the consequences of joining the Eurozone, a monetary union utilizing the Euro for currency.  Many believe it is in the country’s best interests to join the Eurozone as quickly as possible, as this will result in immediate benefits such as economic stability and strong growth, which are essential to fight the Poland’s nagging economic problems like unemployment.  Sticking with the zloty, one analyst insists, is condemning the nation to weak growth and a possible currency crisis.[8]

            Much of the push for Eurozone ascension, ironically, stems from the markets’ high appreciation pressure on the zloty.  That Poland is very close to joining the EU has attracted large amounts of foreign investment and the expectations keep increasing.  While the strong zloty will no doubt help the competitiveness of Polish exports, its strong negative impact on the farming sector is an issue of worry, particularly if Poland does indeed integrate with the EU.  The farming purchase prides as well as the direct subsidies provided by CAP will be defined in Euros, thus a strengthening zloty will result in a proportionally lower domestic currency value.  A similar scenario was observed in the UK, where a strong pound led to a crisis in the farming sector.  Since measures implemented to slow zloty appreciation, such as central bank intervention, are slow and often pointless, the need to quickly join the monetary union becomes more imminent.  While early projected dates for possible Eurozone ascension were projected to be well after 2010, analysts emphasize Poland’s ability, and more importantly, need, to join much sooner.[9] 

            As a matter of logistics, too, Eurozone ascension is quite essential.  Because the EU is essentially composed of “core” and “periphery” members, it is important for Poland to assert its usefulness and power early.  Joining the Eurozone will not only make Poland a closer candidate for “core” status, but will also mean membership in the “Eurogroup,” the Economic and Financial Affairs Council (Ecofin), whose power is sure to grow in upcoming years.  Moreover, Poland will retain a healthy 27 votes in the Ecofin, effectively giving it similar power as other strong member nations like Germany.  Interestingly, it could be this fact, rather than the economic well being of the nation, that has Poland heavily considering joining the Eurozone and the EU suggesting that Poland should take its time.[10]                

A DIVIDED SOCIAL SETTING

 

            We continue our examination of Poland from a social perspective with obvious observations.  Because EU membership would entail such a variety of changes within different economic sectors of the country, popular opinion about ascension is mixed and often biased.  These opinions vary across occupation, gender, and age, and I will offer some examples of representative views.

Clergy

 

            The results of a recent survey among parish priests indicate decreasing support for EU ascension.  While support was around 84% in 1998, this number has dropped to approximately 59% this year, in response to the same questions.[11]   This decrease suggests common apprehensions to EU integration despite the existence of relatively high support.

            A growing number of the clergy have concluded that ascension would benefit the present member states even as Poland bears the initial shocks it will undoubtedly encounter upon entering the single market of the EU.  This view reflects the familiar perspective of Poland’s small farmers, many of who are deeply religious and are regular churchgoers.  Further concerns of the clergy include the fear of liberalization in Poland’s anti-abortion, homosexual marriage, and euthanasia legislation.  While these statistics portray the admittedly right-wing bias of the clergy, it is important not to forget that a majority of the parish still supports ascension.

            EU integration, they believe, will bring tangible benefits to Poland, particularly on an international level where it is often sorely underrepresented.  Improvements will directly benefit “the country’s international security, strengthening the rule of law and democracy, reforming economic and political structures, as well as the state of the economy and the environment.”[12] 

 

            Another segment of the Polish population we will explore are the youth and students.  While many seem unaware of the true consequences behind EU ascension, the student opinion reveal careful thought regarding common questions.

Students and Youth

 

            The social import of the young is often overlooked in the realm of political policy.  In its bid for more popular support, however, the Polish government has been careful in educating its youth and students about the potential consequences of joining the EU.  Minister of European Affairs Danuta Hubner, in particular, has been constantly touring the universities gauging student support.  When confronted about the ability of Polish youth to compete successfully with their EU peers, she stressed the growing education standards of the country—statistics reflect students’ increasingly better knowledge of foreign languages and computer and Internet skills.  Moreover, heavy emphasis was placed on the fact that a growing number of Poles are graduating with more than one diploma.[13]

            The current situation of students is particularly relevant to the ascension referendum as they will be the new blood of the workforce, and are greatly concerned with job security.  With current unemployment levels at approximately 17.5%, and expected to rise, students’ confidence in the government’s ability to ameliorate the job market is fading.  Summarizes analyst Miraslava Grabowska of Warsaw University’s Institute of Sociology[14], “There is no trust in the government, that the government is able to cope with this [economic] situation, and [people believe] that joining the EU will not help us solve this problem.”     

            At the College of Management and Finance in Bydgoszcz, students organized a mini ascension referendum.   After listening to the debate surrounding integration, there were a total of 107 votes in support, and 11 against, reflecting a clear predilection of the student population for integration.[15]  This, however, is hardly indicative of the country’s popular opinion.  It is important to recognize that many of those who will directly feel the difficult economic consequences of entering a market flooded with cheap goods are not students, and are not as willing to support ascension without great argument.  Despite seemingly random pockets of support for EU integration, the true challenge for Poland will be motivating its population to vote, as a 50% turnout of the electorate is required to validate any final decision.[16]    

 

            It is obvious that EU ascension will bring consequences that cannot be categorized within simple social, economic, and political boundaries.  The majority of integration effects will spearhead complex changes across all three of these areas in a variety of ways.  Particularly interesting to examine is the farmer population’s attitude toward EU integration, as their perspective is heavily influenced by the economic conditions that joining the common market will bring.  Therefore, the following section details the agricultural sector’s perspective to the economic conditions imposed by the CAP described above.

Farmers

 

            The concerns of farmers seem to extend beyond the admittedly tremendous economic consequences outlined above.  To them, farming is not only a means to a living, but a way of life and culture.  Expressed one small cattle and crop farmer from Easter Poland[17], “We don’t want to join the European Union.  Our farms are very small and we cannot compete with the EU farmers.  We will lose our farms, our way of life, our culture.”  This is a common view, considering the statistic that 60 percent of the farmer population consists of small farmers producing food for their own survival while foregoing the commercial market.  While Polish farmers generally support anti-EU parties and legislation, some have voiced support for ascension on the condition that certain EU actions be changed, notably the decision to not fully subsidize Polish farmers at the level of member states.  “None of our farmers will want to join the EU because it is a big cheat for us,”[18] says one dairy farmer, “…they shouldn’t cheat us like this.  We want to join but not as second-class citizens.”  

            Another cause for fear among the Polish farmers is that upon entering the EU, the richer Germans will take advantage of the open border to buy up large amounts of farmland belonging to Germany before the war.  While Poland won a restriction on land-purchasing by non-Poles until 12 years after Poland becomes a member to assuage this concern, the cheap cost of land there in relative to German land remains an enticing offer.  Still, Polish officials insist that a land grab by the Germans would be highly unlikely, and this would be worth something if it wasn’t for the vast mistrust Polish farmers have for what their government says.  

            This type of situation is precisely what the Polish government needs to address in its quest for referendum support.  While the Polish farmers have clearly voiced their concerns about the consequences of EU ascension, officials have done little to emphasize the merits of reunification.  While addressing concerns with compromise is certainly a short-term tactic for support, the Polish government can no doubt do a better job outlining the benefits of integrating with the EU to quell farmer dissent. 

POLITICAL REALM

            In the political realm, too, exist obstacles the Polish government must address before any possibility of EU ascension.  Notably, the main considerations are the weak structure of the government and a recent political scandal, both of which reinforce the general populace’s mistrust in those ruling.  

An Unprepared Government

            What presumably needs to be the strongest driving force behind the preparations for possible EU ascension, the government, is actually quite unprepared to handle many of those tasks.  However, in fairness to current regime under Prime Minister Leszek Miller, the many deficiencies representing an unprepared government actually stem his predecessor, Jerzy Buzek.  Buzek’s government, which left office in October of 2001, “paid obsessive attention to Poland’s joining date but neglected pre-accession homework.”[19]  As a result, Miller and his officials have been forced to accelerate preparations despite a sluggish economy and thin state budget.  Further confusions have been caused by the recent US bribes for Poland to enter the Coalition of the Well in exchange for future say in the direction of the Middle East.  It is clear that deficiencies in government preparation must be addressed immediately before the referendum date if EU ascension is to have any support from the electorate. 

Rywingate

            An uncovering of political corruption this spring in the Polish government is not helping the EU ascension cause.  Not only do these scandals take away valuable attention from the real issues concerning the consequences of integration, but they also further the mistrust of the people in the Polish government.    

            The most recent scandal, dubbed “Rywingate,” involves the Polish Prime Minister Leszek Miller, the well-renowned co-producer of the Oscar film “The Pianist” Lew Rywin, and a prominent figure in Poland’s media, Adam Michnik.  The impact of this corruption was so tremendous, in fact, that support for the government has fallen to 10 percent, the lowest of any ruling Cabinet since 1989.[20]  Moreover, close to 2 million viewers tuned into the televised hearings of the proceedings, clearly indicating a concern that is universal across the population. 

            Lew Rywin, the Polish filmmaker, is accused of trying to solicit a $17.5 million bribe from Poland’s leading newspaper, the Gazeta Wyborcza, in exchange for lobbying Parliamentary to pass particular legislation that would heavily favor the newspaper’s parent company, Agora SA.[21]  Allegedly, Rywin claimed he would lobby for a media law that would give Agora SA ownership of a popular nationwide TV station, though the current push of the government is to separate the print and television industries.  Shady references to Prime Minister Miller’s involvement and knowledge of the actions being taken by Rywin and Michnik work to further discredit his legitimacy in an already mistrustful political environment.  This has done the irreparable damage of confirming what many critics call the ties of corruption that link Poland’s political and business elites.[22]  Furthermore, there is no doubt these events have a negative effect on the June referendum concerning EU ascension.  Perhaps analyst Kolarska-Bobinska sums it up best: “People know there is a scandal, there is corruption at the top and EU integration is perceived as a matter for the elites, for ‘them.’  They feel apathy, even a greater distance towards the ruling class, distaste.”         

            Some aspect of the scandal, however, does provide some comfort for the future.  The openness of the proceedings dealing with case, which were televised, suggest to Poles that there will be less of a divide between what happens between the elite and lower strata of society.  Allowing people to observe the facts and make conclusions from what they see and hear fosters trust.  And with the increasing trend of mistrust in the government, this is surely the best route.  Says one teacher who said she watched all of the first 14 hours of testimony: “It’s very important that the hearings are public, because the investigation is more trustworthy this way.  People have less and less confidence in the officials in power, [now] you can get a firsthand impression of the proceedings and have your own opinion of it all.”[23]  If anything, analysts point out that the televised hearings are a good lesson in political education, surely something that is needed among average Poles.  Finally, the knowledge that scandal hearings could potentially have countrywide media attention is a strong preventative measure for such future action.        

PROPOSALS: A TWO-PRONGED APPROACH

           

            Poland is in the midst of two stages: one in which it is quickly approaching the referendum date deciding the outcome of EU integration, and another which presents all the challenges needed to addressed if it indeed does join.  Here, I hope to address both.  These are two separate stage—of course, the second is contingent on the first—and thus deserve different, creative solutions.  

Referendum Proposal

 

                In the first scenario, Poland has only a limited time until the day of voting arrives.  Political scandals are causing mistrust in the government, unemployment is relatively high, and the general populace is either apathetic or apprehensive about the consequence of EU ascension.  I believe Poland has assessed this situation similarly—and has begun taking necessary steps for improvement, however this needs to be done in a more aggressive fashion.  While I laud the government’s efforts to answer questions and allay concerns, it has not been enough.  The farming population, in particular, is still largely ignorant and mistrustful of the intention of officials.  Perhaps their fears are warranted, since not much action has been taken to transplant business from the farming sector to other areas.  It is absolutely imperative that Poland immediately devise, and publicize, a strategy for how it will accommodate the farmers upon EU integration.  It might perhaps gain a small amount of trust back if the government televises this agricultural plan so that they can be held accountable and to their word.  In general, the education of the pros and cons of EU integration should become a primary focus.  While Minister of European Affairs Danuta Hubner is doing her part by traveling around to various universities and cities to answer the populace’s concerns, a more universal approach should be taken.  This hefty goal of educating the people should be evenly distributed among many government officials dedicated to the cause of EU integration. 

Post-Ascension Strategy

 

            To properly suggest a Polish strategy post-ascension requires a brief analysis of the current state of the EU itself.  It is important to note that the EU is not in the best of condition.  The modest financial offers made to the ten joining states—representing as little as 4 percent of the EU’s budget—reflect an uncertainty in the financial future.[24]  Furthermore, the EU’s blurry vision for the future of Europe and hesitation in detailing the future of European government and economy reveal yet another uncertainty of its strength.  Finally, its insufficient defense spending and resulting reliance on the US in this area reflect poorly on its position within the world community.          

            With the EU in a relatively weak state, the opportunities for Poland to capitalize are numerous.  These opportunities can be divided into long and short-term strategies.  In the short-term, Poland “should be aggressively taking advantage of the existing EU member states’ declining investment attractiveness and attracting as much as possible direct foreign investment.”[25]  While the investment climates in most of the EU states are dwindling, Poland represents a fresh new alternative with much potential as a member, and should use this angle to garner foreign investment.  Poland, to this end, has a lot that is marketable to investment—a strong entrepreneurial spirit, an ability to learn, adaptation skills, and still rising education levels.  The long-term strategy requires a bit more luck, and initiative by the Polish government.  “From day one of its membership, Poland should strongly argue for deregulation and liberalization, for removing all visible and invisible barriers of economic activity, for restricting public aid, and against further raising the technological, social and environmental standards.”[26]  This would hopefully allow greater amounts of Polish business to survive and succeed even within the EU.  It is of course important for the Poles, as a nation, to not relinquish the adaptive skills and entrepreneurial spirits that attracted investment in the first place.    

 

            The Poles are in an enviable position.  They hold the future of their country in their hands come voting on June 7^th.  At the very least, joining the EU is certainly a monumental decision for a country, and it requires careful cost-benefit analysis.  Analyzing the consequences of EU ascension across the economic, social, and political realms reveals much that is needed to be addressed by the Polish government, both before the referendum, and in the case that it becomes a member of the EU.  Still, intelligent minds will no doubt take advantage of this momentous occasion to put Poland on the path to becoming an integral part of not only the European Union, but also the global community.