Another crack in the hull

The Gdańsk shipyard - the home of the Solidarity movement - and two other Polish shipyards risk collapse, after the European Commission decided their current restructuring plans do not fulfill criteria for allowing state aid.

EU regulations permit governments to grant state aid to failing firms only if they also provide plans for ensuring the companies' long-term viability. In a statement, the Commission said Poland's restructuring plans for the shipyards, prepared in September, "do not fulfill any of the crucial criteria for allowing state aid." It added that the plans did not define any cuts in capacity which the shipyards should undertake, and did not go far enough towards privatization.

The survival of the shipyards, which have long suffered from financial woes, is at stake. The issue is sensitive in Poland, as the Gdańsk shipyard was the birthplace of the anti-Communist Solidarity trade union and is the former employer of Nobel Peace Prize winner Lech Wałęsa.

However, the Commission made clear that it would no longer abide the handouts that had kept the firms afloat over the years.

"The yards have been surviving over the years only due to repeated state support. This has been creating serious distortions of competition and calls now for urgent decisions," the Commission's statement said.

Competition Commissioner Neelie Kroes met with Prime Minister Jarosław Kaczyński last week, and told him that the Commission understood how sensitive the topic was to Poles. The two agreed to continue cooperation on the matter. (Reuters)