Sugar sector teams up on Wasacz
While Treasury Minister Emil Wasacz was under attack from several fronts last week, one of the most brutal charges came from Solidarity Election Action (AWS) deputies supported by the sugar sector, who threatened the minister with dismissal if he did not cave in to their demands on the industry's impending privatization.
Wasacz faced a no-confidence vote in the Sejm last Saturday. While his fate looked uncertain a few days earlier, by the end of the week many expected the minister to keep his job as trade unions, deputies and sugar executives had managed by then to forge an agreement on the sector's privatization. Sugar supporters, which included a key camp of AWS deputies, were fighting for Wasacz to abandon his plan of privatizing the sector through sales of sugar mills to foreign strategic investors.
The deputies, and the industry itself, have spent the last year pushing for a "Polish" solution the creation of a cooperative-style company called Polski Cukier that would group all state-owned sugar mills, trade unions, politicians and foreign investors said last week.
Wasacz had opposed that plan, saying that it would not bring necessary capital into the sector. The treasury minister had also started discussing possible sales with foreign investors, and did not want to lose credibility. In the face of that opposition, trade unions and sugar mill executives rallied support among deputies and pushed for a no-confidence vote, saying that the minister was willing to sell Polish industry to anyone and any price.
"They became convinced that they weren't going to be successful (on the privatization), so they decided to (move) to dismiss Minister (Wasacz)," said Kazimierz Kobza, office director of the national office of beet growers trade union.
There have been many attempts in recent years to keep the Polish sugar sector the third largest in Europe from falling into foreign hands. That desire rallied much of the sector, and many AWS deputies, behind the Polski Cukier plan. In July, the Polski Cukier concept was introduced in legislation updating the 1994 sugar law. The reworked bill was designed to put Poland's sugar laws in line with European Union (EU) standards.
In early autumn, Polski Cukier also got a boost when AWS deputies pitched their support behind a farmers' trade union idea to create a national sugar company a direct blow to Wasacz's privatization program.
The government is a coalition between AWS and Freedom Union (UW), although AWS is highly fragmented and has much opposition within its ranks.
At the time, the deputies' move, led by AWS representative Gabriel Janowski, was highly criticized by agriculture analysts, foreign investors and even some sugar mills. Janowski would later lead the action to dismiss Wasacz.
"If Polski Cukier had been created in 1990, I would have thought that it was a good idea," said Zygmunt Smolenski, a researcher at the Institute of Agriculture and Food Economics. "But today when all sugar mills that are not privatized are very much in debt, such an idea is surrealistic it's not realistic, it's fantasy."
Despite the criticism, AWS deputies and trade union leaders pushed the idea of Polski Cukier and pressured the government to halt the privatization process.
Impervious to this movement, the Treasury Ministry stepped up talks to foreign investors and tried to keep Polski Cukier supporters at bay. "It was a question of not saying 'No' (to the Polski Cukier concept), but at the same time going about their own business," said Jan Wyrowinski, a Freedom Union (UW) deputy from Torun and a deputy chair of the Sejm's agriculture committee.
He said that in reality, the ministry was trying to sell off as many mills as possible, keeping down the number that might go to Polski Cukier.
Although late, the government was finally moving forcefully on the sugar front. The government's privatization concept was to sell off one holding company, Slaska Spolka Cukrowa in the Opole voivodship, in its entirety to an investor or a consortium of investors. The remaining three sugar holdings would be broken up and sold off in small groups of mills. By grouping together four to five mills for privatization, the government wanted to avoid selling off only healthy mills while weaker mills would be left to perish.
With the reincarnation of the Polski Cukier concept, the ministry was having to reassure potential investors that it would make good on its side of the deal. The drawn-out privatization process and the ongoing tug of war between the trade unions and the Treasury Ministry over how to bring about change in the beleaguered sugar industry had caused waning interest on the part of foreign investors, who have long been hankering to enter the market.
"Investors started becoming worried about the collapse of the sugar market in Poland," said Jan Oledzki, director of Lindacorp Engineering, a company specializing in design work for the sugar industry.
At the end of December, the passage of a non-binding AWS-sponsored resolution calling for the formation of Polski Cukier upped the heat on an impervious Wasacz. With their campaign fizzling on Polski Cukier, AWS deputies moved at the beginning of January to force the issue. "The minister's indecision (on Polski Cukier) was the last straw," Wyrowinski said.
In a pitch to save Wasacz in Saturday's vote, AWS deputies and the government entered high-level negotiations last week, trying to reach a compromise on many things, including a guarantee for Polski Cukier. "From what I know, the deputies who are demanding that are in the prime minister's office every day," Wyrowinski said. "Many deputies are making their vote dependent on what will happen with Polski Cukier. It's close to the heart of the issue."
By press time it looked as though the government had its stance ready. According to Stanislaw Lubas, chairman of the sugar industry trade union, who participated in negotiations between Prime Minister Jerzy Buzek, Minister Jerzy Widzyk and Wasacz, the government had agreed to hand over a total of 16 mills, largely from the Lubelsko-Malopolska Spolka Cukrowa holding in Zamosc, to Polski Cukier.
In turn, those 16 mills would be granted the right to produce 400,000 tons of sugar annually, a little under 25% of the total sugar production the government allows. The government regulates how much each mill, or grouping of mills, can produce to keep sugar prices stable.
In addition, Wasacz had agreed to give 30% of the proceeds from sugar privatization to pay for investments in mills owned by Polski Cukier. "That is a sizeable amount and would allow these factories to regain financial liquidity," Lubas said.
That offer helped to soften the deputies' position slightly, although they were still standing firmly in opposition both to Wasacz and the privatization plan. But Lubas said that union members had said they were willing to agree to the deal if the government upped the quota to 800,000 tons of sugar.
While Wasacz's future in the government looked brighter by week's end, nobody was quite sure whether he would actually muster enough votes to stay. Another big question was whether Deputy Prime Minister and Finance Minister Leszek Balcerowicz would sign off on all the compromises sugar being just one of them needed to keep Wasacz in the government, said Krzysztof Mularczyk, executive director of the Foundation for the Development of Polish Agriculture. "It's whether Balcerowicz will think it's worth making the deal or not," he said.
