European indigestion

While farmers and populist politicians rail against the European Union for the financial and competitive raw deal they believe membership will mean for Poland, they should keep one thing in mind: Their own government isn't even able to make much use of the pre-accession funding available now. As this week's cover story shows, years after the EU opened its purse strings to candidate countries, Poland is still having enormous difficulty assembling a competent national administration team that can even fill out the necessary paperwork to receive what is essentially free money. If not for the financial assistance from the ISPA, Phare 2000 and Sapard programs, it would takes years - if not the better part of a generation - for Poland to foot the bill for these crucial investments on its own. Unless the government redoubles its efforts to absorb the combined annual €920 million from these programs, which started to flow to Poland in 2000 and must be digested by next year, it risks losing a hefty chunk of the money. And unless no one believes the EU is serious about its deadlines, one only has to recall the case of Spain, which wound up being a net contributor for the first few years after membership since it failed to make use of its pre-accession funding.

But better organization and administration is only part of the problem with ensuring that the EU's structural, environmental and infrastructure investment programs work in Poland. The other troublesome matter is that they must be cofinanced. Although Poland is only required to put up about 25% of the investments, even this amount - about €3.5 billion over the next few years - will be difficult for the government to find. According to Jacek Szlachta of the Warsaw School of Economics, the only way Poland will be able to come up with this much money is to overhaul its public finances. Now there's an idea. Of course, that move wouldn't sit too well politically, especially with local elections just around the corner. But if Poland is serious about creating the conditions for long-term economic growth, it has to invest in development projects like these. And it simply cannot afford to lose out on having the bulk of them externally financed. That would be unthinkable. But in the case of the Sapard, or the Special Accession Program for Agriculture and Rural Development fund, farmers stand a good chance of saying good-bye to €170 million for modernization and local development. The reason? Poland's Agency for Restructuring and Modernization of Agriculture (ARiMR) has still not been able to prove that is up to the task of distributing the cash. And any money that is not contracted by next year goes back to the EU. Rather than insisting that the government negotiate 100% direct payments for Polish farmers, which is not going to happen anyway, the agricultural community and its champions would do better to insist that its leadership make full use of the EU money that is now available.