Senate to decide fate of sugar privatization
A heated battle will be waged in the Senate's agriculture committee this week over the long-contested sugar regulation bill.
Under the new draft, the government sale of mills to foreign investors would stop and all state-run factories would be grouped together to create the national Polski Cukier holding.
The outcome of the debates could not only determine whether the proposed law falls in line with European Union (EU) sugar production standards, but also seal the fate of the controversial national sugar holding.
The draft bill landed in the Senate following its surprise passage by the lower house of Parliament, the Sejm, two weeks ago. After years of divisive debate and delays, in a final tally of 345-55, the law won the overwhelming backing of deputies mainly due to an offhand alliance between the ex-communists grouped in the Democratic Left Alliance (SLD) and the right-wing Solidarity Election Action (AWS).
But the uncomfortable union between the two parties that led to the surprise result had more to do with politics in the countdown to parliamentary elections slated for this fall than about agreement over the content or quality of the legislation.
"This was a fortunate coincidence," said Roman Wierzbicki, chairman of the Individual Farmers Solidarity trade union, who lobbied hard for the bill's passage.
For Wierzbicki and the majority of Poland's right wing, the vote had less to do with sugar market regulation than it did with control over the fourth largest sugar sector in Europe.
"This is an enormous success, not just because Polski Cukier will be formed, but because it will consist of all unsold mills," Wierzbicki said.
For more than two years the Polski Cukier debate has been a centerpiece in national politics. The conflict surrounding the future of the sector not only halted the government's privatization program, but also played a part in toppling two treasury ministers, Emil Wasacz and Andrzej Chronowski.
Backed into a corner
SLD's support for Polski Cukier was accidental rather than out of conviction. "I am not a supporter of Polski Cukier, especially the way it has been included in this law," said Jozef Jerzy Pilarczyk, an SLD MP and deputy chairman of the Sejm's agriculture committee. Pilarczyk, along with other deputies like Jan Wyrowinski from the Freedom Union (UW), said the bill will require a major overhaul in the Senate before it meets EU requirements. "This is the worst regulation possible," Wyrowinski said.
According to Pilarczyk, the SLD backed the bill to expose fissures in the ruling AWS party and avoid being pinned with the blame for the downfall of the Polski Cukier initiative. Minutes before the vote, going against his own party, Prime Minister Jerzy Buzek urged the Sejm to vote against the bill. In the final vote, Buzek and other fellow AWS government cabinet members abstained.
"The government counted on SLD to throw out the bill," Pilarczyk said. "This was done to put us at odds with sugar beet growers (who support Polski Cukier)."
The outcome of the vote signals an hour of truth for the government, politicians and sugar sector, executives said last week. While the treasury has courted international investors during the past two years as a part of its official privatization plan for the sector, the government to avoid earning the ire of Polski Cukier advocates has failed to openly throw its support behind privatization deals to ensure their successful completions.
The drawn-out sale of the country's largest sugar holding, Slaska Spolka Cukrowa, to France's Saint Louis Sucre (SLS) serves as a case in point. Since signing a zl. 600 million ($146 million) agreement with the treasury last November to acquire 95% of the holding, SLS has been unable to finalize the transaction due to the refusal by the Interior Ministry to sign off on the deal.
Riding the fence
"Either there is a will to privatize and in that case it should not be that difficult to finalize the transaction, or there is no will to privatize and in that case it's the end of the story and we go back home and that's it," said Patrice Saintherant, international development director at SLS.
But SLS is not alone. With other European giants like Pfeifer & Langen, Nordzucker and Sudzucker waiting to complete deals long in the works, some politicians think the privatization process could be fast-tracked before the new law comes into effect. Failure to conclude the deals quickly will mean that all unsold mills will be absorbed by the national concern once the new law comes on the books as early as this summer.
"The government has a limited amount of time to make a decision and finish what it started," Pilarczyk said. "If it doesn't make a decision that means that everything it's done so far has been for appearances' sake and not out of a desire to privatize."
With the popularity of the ruling AWS party waning in the polls, such decisiveness might prove too taxing for the government in an election year. And farmers' trade unions have already made it clear that they are watching the government's every move. In a strongly worded statement sent to the prime minister following the Sejm vote, farmers' groups urged the government to halt all privatization deals immediately.
The controversy over Polski Cukier will not be the only hurdle facing senators this week. A bigger obstacle might be how to fashion the bill so that it meets EU standards, one of the central reasons why the bill was introduced in the Sejm in the first place. Prior to the Sejm's vote, the bill received low marks from the Committee for European Integration for failing to bring Polish law in line with EU legislation.
