Oh what a circus
Gerhard Schroeder's flying visit to Warsaw last week was notable for a couple of symbolic acts. One was to kneel at the memorial to those who died in the Jewish ghetto, echoing Willy Brandt's historic visit 30 years ago. The other was to once more emphasize Germany's support for Poland's early European Union (EU) accession.
The German chancellor again talked of Poland being among the first wave of Central European countries to join the EU, but shied away from any firm dates for joining. When European ministers met at Nice shortly afterward, no doubt a more realistic timetable of events was being drawn up by hardheaded Eureaucrats who tend to replace political platitudes with realpolitik.
They'll be well aware that the Polish tiger is not a healthy beast at the moment. Unemployment is hovering close to the 15% mark and the budget deficit is stuck around 7-8%. At the same time, high interest rates are crippling companies that also face a cumbersome tax burden.
The fiascoes surrounding the sale of the universal mobile telecommunications system (UMTS) licenses and state insurer Powszechny Zaklad Ubezpieczen (PZU) certainly haven't helped. With the UMTS tender which the Communications Ministry annulled this week after receiving only three bids from the domestic mobile operators the Polish government ended up with egg on its face in front prospective foreign investors.
In its greedy haste to grab an expected O3.25 billion from the sale of five licenses at O650 million a piece, the government botched the tender from the start by setting a short timeframe for its completion and providing hastily constructed and controversial terms that it changed several times.
Furthermore, the ministry's opaque, tight-lipped responses during question-and-answer sessions with prospective foreign bidders revealed it to be an unreliable and untrustworthy dealmaker. In the end, the government alienated major global telecom players, including Spain's Telefonica, Canada's Telesystem International Wireless and Hutchinson Whampoa of Hong Kong, all of which had the capital, experience and technical know-how necessary to undertake the rapid development of UMTS services in Poland during the next several years.
Meanwhile, the standoff between the Netherlands-based insurer Eureko and the treasury over the sale of state insurance giant PZU has also sent the wrong signal to strategic investors looking at Poland. Since Eureko bought a slice of PZU, the privatization of the insurer has descended into open warfare between the Dutch firm and Treasury Minister Andrzej Chronowski. With the treasury's move last month to annul the zl. 3 billion ($65 million) deal, the stage is now set for a lengthy court case amid accusations of political dirty tricks by Eureko and boardroom scheming by the Poles. Regardless of the outcome, or who is in the right, the episode is very bad for business.
Back in Nice, Eurocrats will also voice their concerns that necessary economic reforms will be stalled indefinitely as the minority Solidarity Election Action (AWS) government lurches to its demise. All foreign investors and local business people want to do is trade under good conditions. At the moment, those conditions are turning from a muddle to a mire.
