Magazine
11:19 13 October 2021
Post by: Warsaw Business Journal

POINTS OF CONTENTION

Poland’s rapid economic growth and development is a success story, which could have not happened without the European Union’s support. However, latterly, the Central and Eastern European nation has been at loggerheads with the EU. BY ANNA RZHEVKINA

POINTS OF CONTENTION

For years, Poland has been among the biggest beneficiaries of EU funds. Since the CEE country joined the EU in 2004, it has received about €130 billion net, according to its finance ministry. The metro and the Vistula boulevards in Warsaw, renovated train stations in Kraków, Wrocław, and Łódź, developments of electric transport, the new building of Szczecin Philharmonic are just some of the projects, which were implemented with the EU grants. The Polish economy would be 12% smaller, and the value of Polish exports would be 32% lower if the country was not a member of the EU, according to a Polish Economic Institute report. Apart from the funds, EU membership gave confidence in Poland to foreign investors and access to the internal EU market for Polish business. “It is estimated that EU funds accelerate Polish economic growth by about 1.5-2% per year,” Prof Jacek Tomkiewicz, dean of the College of Finance and Economics at Kozminski University, tells the Warsaw Business Journal. The funds serve to finance investments, not ongoing expenses, helping Poland to catch up with more developed countries in areas such as infrastructure and public transport, Tomkiewicz said.

The number of finished and ongoing projects co-financed from the EU in Poland amounted to 288,346, and their value exceeded PLN 1.14 trillion, of which more than PLN 676 billion was co-financing from the EU, according to recent data from Grants Map published by the Ministry of Development Funds and Regional Policy. The biggest number of projects is in the Mazowieckie province, home to Poland’s capital Warsaw. It is followed by Śląskie and Lublin provinces. When it comes to the cities, Warsaw, Kraków, and Łódź were the main beneficiaries in 2014-2020. In addition, EU funds had a strong impact on the development of Polish villages and towns, according to private broadcaster TVN24.

In total, more than a third of EU funds were used for infrastructure development, such as the construction of roads and railways, one-fifth was invested in human capital, while investments in entrepreneurship and environmental protection accounted for 17% and 12% respectively.


TENSIONS FLARE

The tension between Warsaw and Brussels has steadily increased in recent years as Poland’s judicial system reform, media freedom issues, and human rights record attracted EU criticism. The European Commission (EC) in its annual report released in July named Poland and Hungary among those few member states continuing to carry out reforms that lower safeguards for judicial independence.

“The perception of judicial independence among the general public and companies is low and continues to decrease. Whereas in 2021, 29% of the general public perceives independence of courts and judges as ‘fairly or very good,’ only 18% of companies share the same perception,” the report says.

The Polish government argues that the reforms are necessary to make courts more efficient, however, the EU Court of Justice (ECJ) says that Poland’s new disciplinary regime for judges is not compatible with the EU law.

In part about media freedom, the Commission has expressed concerns about a new legislative proposal, which could limit the ownership of media companies in Poland to companies from the European Economic Area (EEA). Deputy Justice Minister Sebastian Kaleta argues that regulations similar to the proposed amendment are present in many large EU countries. Critics, however, see the new draft law as an attack on the US-owned TVN24 television channel, which has been highly critical of the government. If an owner from outside the EEA can hold up to 49% of a media company in Poland, as stated in the proposal, TVN24 would have to change the shareholder structure.

The Commission also drew attention to the acquisition of the formerly German-owned Polska Press by the state oil refiner PKN Orlen, seeing it as a potential threat to media market pluralism.

“Overall, the professional environment for journalists is deteriorating in the country,” the report emphasizes. The 2021 World Press Freedom Index reports that the Polish police has repeatedly failed to protect journalists during protests and instead used violence and arbitrary arrests.


FUNDS FREEZE

The concerns that Poland is back-sliding on the EU’s democratic standards led to the Commission’s withholding of approval of the national spending plan. The conflict deepened when the government recently asked the Polish constitutional tribunal to assess whether EU law has primacy over the national law.

In September, EU’s Economy Commissioner Paolo Gentiloni said that Poland's challenge to the primacy of EU law over national law is partly holding up the approval of the recovery plan. Like other countries in the bloc, Poland needs this approval to receive large grants and cheap loans from the EU to rebuild its economy after the decline caused by the coronavirus pandemic.

The commission has approved18 national recovery plans but not those of Poland and Hungary so far. Poland’s €58-billion plan includes measures for improving air quality, energy efficiency in buildings and the development of renewable energy sources.

EU Justice Commissioner Didier Reynders said in an interview with the Financial Times that it was logical that the EU would not wish to disburse any of the €36bn Poland has applied for under the bloc’s Covid-19 recovery package, which is awaiting EC approval, without a “real change” to its disciplinary regime for judges. In September, the Commission took its infringement procedure against Poland over judicial independence one step further and asked the ECJ to impose daily fines on the country. “It’s quite difficult [for the commission] to approve a financial plan without a real condition concerning the disciplinary regime of the judges because we are at the end of the process and we [asked] for financial sanctions before the court,” Reynders told FT.


HUMAN RIGHTS ISSUES

In addition to the delay of recovery plan approval, the EU threatened to block the payout of funds to five Polish provinces that introduced anti-LGBTQ zones.

“The Commission would like to stress that declaring LGBTIQ-free/unwelcome territories, workplace or services constitutes an action that is against the values set out in Article 2 of the Treaty on European Union,” the EU Commission letter published by Polish LGBT+ activists states.

The total amount of frozen funds linked to LGBT+ rights issues exceeds €126 million, according to Polish daily Gazeta Wyborcza. The region of Małopolska is likely to lose more than €33.5 million, Łódzkie province will be €26 million poorer, Lubelskie can lose almost €26 million, while the Podkarpackie region risks losing as much as €24.6 million.

The family and social policy ministry has dismissed concerns of discrimination, saying that the declaration does not legally limit the right of people to live or work in a particular area. “Such resolutions do not constitute acts of local law and do not impose any obligations on citizens,” the ministry asserts.

Meanwhile, Warsaw and Brussels relationships were also soured by a near-total ban of abortion, which Poland introduced early this year, despite waves of protests. The court justified its ruling on the grounds that "an unborn child is a human being" and therefore it deserves protection under Poland's constitution which ensures the right to life.

The ruling, welcomed by Poland's conservative government, which has strong ties to the country's powerful Catholic Church, provoked outrage from pro-abortion supporters. Thousands of protestors gathered on Warsaw streets, defying the coronavirus restrictions.

European Commissioner for Equality Helena Dalli has criticized the Polish government's decision but admitted that the EU has no legal control over how member states regulate abortion.

The Council of Europe, the continent's top human rights group, in its recent report says Poland needs to take urgent steps to combat sexual violence and change its definition of rape to move away from a force-based definition to one covering all non-consensual sexual acts. “While initiatives against domestic violence show promise, urgent steps needed to respond to other forms of violence against women,” the new report highlights.


CHALLENGES AHEAD

The risk of Poland not receiving the funds at all is relatively small, Tomkiewicz claims. “It would be too much of a political row that no one in the EU wants,” he adds. Still, even if Poland does not lose funds, it can receive a reputation of the country which does not want EU integration and will not be able to take part in strategic decisions about the shape of the EU economy, the economist warns.

The Polish government, however, stays firm. Poland’s Justice Minister Zbigniew Ziobro has accused the EU of engaging in a “hybrid war” against Poland and pledged to continue “far-reaching reforms that will not please EU bureaucrats.”

Even though there is no compromise on the horizon so far, it looks like one has to be found as the vast majority of Poles want the country to stay in the EU. The survey, conducted by researcher United Surveys for the Polish newspaper Dziennik Gazeta Prawna and private radio broadcaster RMF FM, shows that pro-EU support rose to 94% in large cities. It also shows that 57% of Poles do not regard the possibility of “Polexit” as a realistic scenario. “We should rather expect concessions from the Polish authorities,” Tomkiewicz concludes.



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