Andrzej Olechowski:
As part of its local election coverage, the WBJ is inviting candidates for Warsaw mayor to discuss their plans for the city. This week, the WBJ's Robert Wylot talks to Andrzej Olechowski. A former finance minister, foreign minister and one of the founders of the opposition Civic Platform (PO), the 55-year-old Olechowski is one of six announced candidates for the city's top job. Below he discusses his plans to raise additional money for Warsaw, issue municipal bonds and develop the capital's infrastructure. The following is a translated and edited version of their conversation.
Q: In your election agenda you say you'll win governmental and European money. How and how much? A: I will quote specific amounts later in the campaign, but I've set myself a task to increase the amount available for investment to more than zł. 2 billion ($488 million) annually, from the current zł. 1.3 billion ($317 million). This is the threshold that I know I'll be able to reach, and I can already show how I would do it, but I am still looking for even more possibilities.
Q: How do you want to raise the additional zł. 700 million ($171 million)? A: Now that the city is administratively consolidated, it has a greater combined financial potential than before. So we want to obtain a rating for the city and issue bonds. We'll probably do it only after the European Union accession, when the rating improves and loan costs fall. But before that we can negotiate better terms with banks. We can make a better choice of banks. Financial operations alone will give us additional revenue. The consolidation of city administration will also mean a drop in costs. The city is now spending zł. 600 million ($146 million) on administration and remuneration for officials.
Q: By how much can this figure be reduced? A: It's hard to tell today because we don't even have the figures to calculate it. Those gminas (districts) that oppose the new Warsaw administration system don't want to present all their figures. But I think a target of saving some 10% of this amount is definitely not overambitious, and 10% makes already some zł. 60 million. ($14.6 million) The city's property is in such a state that much of it cannot be booked as assets. Mortgage books haven't been kept properly, and ownership issues haven't been clarified. So when we've cleared this up, we'll have a group of assets here as well. We can leverage these assets for financial operations.
Q: How big can the bond issue after European Union accession be? A: I cannot say yet. But I think we could approach the project even prior to accession. We could do it after the negotiations are closed because this will already boost Warsaw's rating.
Q: If a goldfish gave you zł. 100 million ($24.4 million), what would you spend it on as president of Warsaw? A: I would spend it on a fast city railway. A new line could serve six gminas around the city - Wawer, Rembertów, Białołźka, Bielany, Ursus and Włochy. It would have parking lots at stations. It would be cleaner and more traveler-friendly than the existing system.
Q: Sounds great, but who would finance and operate it? A: We could combine the funds from the government, via PKP (Polish State Railways), municipal funds from the city and private money. We could form a consortium including PKP's local traffic subsidiary, the city and those people who would want to build and operate the parking lots and those who would want to operate the space at stations for advertising and other purposes. So we could have quite an efficient traffic project in place in a very short time for the zł. 100 million from the goldfish.
Q: You've just said you know how to raise an additional zł. 700 million ($171 million), which would be much more than needed for this rail project. Does it mean you want to launch this project soon? A: Yes, I've already discussed it with the new president of PKP, and he reassured me that if I am elected mayor of Warsaw, he'll offer me as much time as necessary to launch this project.
Q: But apart from his time, would he offer any funds from PKP? A: No, but it will be enough that he shows the required flexibility and commercial thinking and the project will kick off. The project would have to make business sense for any private investors involved, but the city will also partially subsidize it. Even in the version without commercial revenues, that is, provided that the project is built with public money only, we estimate the necessary annual subsidy from the city at some zł. 30 million ($7.3 million). The city is now subsidizing the city's transportation system with zł. 500 million ($122 million) annually, so you see that the zł. 30 million wouldn't be much.
Q: What about construction of the metro? Will this fade into the background? A: Definitely not. The future of the metro is determined and nothing is changing. The problem with the first line has been that it has only had budgets for one year, and it lacked long-term financial planning. But the second line will be built with the combination of public and private involvement. Then, you can have a longer, mid-term financial perspective. You can then buy better and faster drilling equipment and build the metro at a faster pace than is the case now.
Q: But if private investors are to get involved in the project, they will have to have the prospect of a return on the investment. A: Yes, the project's feasibility study prepared by PricewaterhouseCoopers envisages that a private entity would build it and own it for a defined period, and the city would pay an annual fee for the use of the line.
Q: When could the project start? A: In 2006.
Q: That's four years from now. A: By then we'll be finishing the first line. And preparing the second line from the legislative, planning and financing perspective will take time.
Q: As for bus transport, are you in favor of increasing the number of private bus line operators? A: Yes, definitely. I want more competition here. In today's system, it's the city that sells tickets and buys the service from either the (dominant state-owned operator) Zarząd Transportu Miejskiego or a private company, if it can provide a cheaper and better service. It would require talks with trade unions, but this isn't an obstacle. We want more competition. Fares will probably have to rise; they're too cheap now.
Q: You want to close down the open market on the Decennial Stadium (the Russian market). What will replace the market? A: This part of Warsaw has been considered by Varsovians as a sports and leisure area. As the project around the Legia stadium should succeed, there will be no point in developing another big center there. But I want to keep this area for a leisure development in a more distant future. But let's face the fact that the amount of investment that can flow to Warsaw is limited. And there are enough other locations to which we would like to put money. Take the very heart of Warsaw around the Palace of Culture and Science. We want to see developments there. Take plac Piłsudskiego, which we'd like to fill with buildings. Take Port Praski and the area opposite Port Praski, which will open in the fall after the Wisłostrada is covered and channeled into a tunnel.
Q: Do you want commercial projects around plac Piłsudskiego? A: Obviously not directly at the Tomb of the Unknown Soldier, but why not on the opposite side or nearby? These will be the most prestigious locations, but for this we need to reach an agreement with the military, which has its buildings there. Plac Teatralny is not completely developed yet. Plans envisage underground developments there.
Q: The election campaign is only beginning, but you've already announced an outline of your agenda. What are the key differences between you and your rival from Law and Justice (PiS), Lech Kaczyński? A: My trust in the private sector is much stronger than that of Kaczyński. I also believe in people, and I think they can perform well in a fair system, while Kaczyński sees dishonest people everywhere. I believe in the concept of the civil servant, while Kaczyński says that administration staff should be politically nominated.
Q: You're proposing a system of "entrepreneurship centers" that are to provide small entrepreneurs with free advice. Isn't this going to be another inefficient institution for administration officials who will get paid for doing nothing? A: My answer is that not a single official will work in these centers.
Q: Who will? A: The centers will help with networking. They will provide information and advice, which is otherwise extremely expensive. I will turn to Warsaw's corporate citizens and ask them to provide their employees' time. I have talked to the presidents of two major consulting firms and each of them has offered to provide 100 hours of their workers' time, free of charge. Technically, it will be a database system that will create networking opportunities so that people who are looking for contacts can find them. Small enterprises look for loans, and the system will offer access to Poland's micro-lending system and contacts to people who have already used these micro loans and can share their experiences. I also want to launch a scholarship fund of some zł. 5 million ($1.2 million) to help people that, for instance, learned a wrong profession, cannot find a job and have no money for new training.
Q: Of all the taxes Warsaw pays to the national budget, only some 10-20% returns to the city. Are you going to lobby to change that? A: In its latest draft law on local government finances, the Finance Ministry even wants to intensify the distribution of funds from the richer gminas to the less affluent ones. Should this bill be adopted by the Sejm, Warsaw would lose an estimated zł. 320 million ($78 million) annually. We cannot allow this to happen.
Q: But what can you do? A: We'll lobby in the Finance Ministry and in the Sejm.
Q: If you, as a Civic Platform leader, are elected mayor of Warsaw, the government coalition may be even more inclined to pull out money out of Warsaw. A: But there will still be a major number of SLD (Democratic Left Alliance) members in the city council. SLD also has many MPs representing Warsaw, and even MPs that represent other constituencies live here, and I don't think they wouldn't want to get involved in our campaign. And I don't think the central government will want to openly discriminate against Warsaw.
