Wasacz ouster may sour sugar sell-off
Saint Louis Sucre's (SLS) attempt to buy Poland's largest sugar holding could be derailed following the ousting of controversial Treasury Minister Emil Wasacz last week.
In the aftermath of the changes in the ministry, sources close to the privatization process said the sale of Slaska Spolka Cukrowa to SLS would most likely be discontinued.
"I don't think the (new) minister will be willing to continue negotiations with Saint Louis Sucre," said a source close to the privatization process who asked to remain anonymous. "He will most likely be against the privatization process as it is being (carried out) at the moment."
Others agree. "I don't hide the fact that I have lost hope," said another source who also requested anonymity.
The change in fortunes over the sale of Slaska was triggered by the sudden resignation of Wasacz, announced last week. Many observers said Wasacz tendered his resignation to avoid spinning the Solidarity Election Action (AWS)-led government into political crisis in the month prior to the presidential elections. Under fire from the opposition and members of his own party for alleged foul-ups in the privatization process, Wasacz faced a third no-confidence vote in Parliament early next month.
"Minister Wasacz is a victim of political fighting inside AWS," said Jan Wyrowinski, a Freedom Union (UW) deputy from Torun.
With the prospect of upheaval caused by the pending vote, Wasacz probably had to go to avoid putting the government under pressure in the months before the presidential elections scheduled for October. AWS party leader and presidential would-be Marian Krzaklewski lags behind his main rival, President Aleksander Kwasniewski, who commands upward of 60% support in recent OBOP polls. The potential upheaval caused by another no-confidence vote on Wasacz could be another blow to the AWS presidential ticket.
"Minister Emil Wasacz resigned. I think the decision resulted from political tensions around him," Prime Minister Jerzy Buzek was quoted as saying by Reuters earlier this week.
For its part, SLS is taking a wait-and-see attitude before it calls it quits on Slaska. SLS is waiting to hear what privatization course the new minister, Andrzej Chronowski, looks to be plotting. This week, Chronowski is due to reveal his privatization strategy, which will be a key to determining what direction the government's overall privatization program will take in the coming months.
Up to now, Chronowski has remained a little-known quantity. A member of AWS previous to his latest appointment, Chronowski served as deputy marshal of the Senate.
"We are waiting to hear what the (new) minister will say," said Leszek Podstawski, director of the SLS office in Poland.
Since April, SLS has been in talks with the ministry to acquire upward of 51% of Slaska, which is headquartered in the Opole voivodship. In its original agreement with the government, SLS was given until May 22 to close negotiations over the purchase of Slaska. Due to an ongoing deadlock in talks with beet growers supplying Slaska's mills, the government has prolonged negotiations over the past four months. The most recent deadline for closing negotiations passed on Sunday.
In the absence of a clear statement from the newly appointed treasury minister, many speculate that the changes at the top could also mean a slowdown in the privatization process altogether. "The resignation of the minister was caused by an anti-privatization group within AWS," Wyrowinski said. "I'm afraid that the speed of privatization will be slower than when Minister Wasacz was in charge."
Others argue that Chronowski is not likely to bring about any dramatic reversal in the current government privatization efforts. According to Krzysztof Dzierzawski of the Adam Smith Research Center, the government will continue to require heavy returns from the sale of state-owned companies to foot the bill of major reforms it introduced a year and a half ago.
"The basic direction of privatization for Minister Wasacz and his followers will be marked out by budgetary requirements," Dzierzawski said. "The introduction of four big reforms in Poland, especially retirement, condemns the Treasury Ministry to follow one (single) privatization direction."
If Slaska is not sold off to SLS, it could end up being included in the Polski Cukier project. In an effort to keep the sector in domestic hands, since last summer union leaders and some AWS deputies have been lobbying for a halt to the sale of sugar mills to foreign investors and have pushed instead for the industry to remain in Polish hands by creating a national cooperative, Polski Cukier. Earlier this year, the government scored a blow at Polski Cukier proponents when the cabinet voted to move forward with the rapid privization of the sugar sector and limit the creation of a national concern to 16 mills that produce roughly 400,000 tons of sugar, roughly one-quarter of total production in Poland.
According to AWS deputy Zdzislaw Pupa, work is underway on expanding the Polski Cukier idea. Now with Wasacz gone, the way is clear for the Treasury Ministry and the government to create a mass sugar holding out of all unprivatized mills. "For Polish sugar to function well and efficiently it should have about a 1-million-ton production limit," Pupa said.
Granting such high quotas to Polski Cukier would bring an end to the government's privatization plan. Under that plan, the Slaska holding would be sold off in its entirety to foreign investors. The remaining three holdings would be broken up and sold off to foreign or Polish investors in small, regional groups of mills.
This week, eyes will not only be on the newly appointed Chronowski, but they will also be directed toward Barbara Litak-Zarebska, deputy treasury minister in charge of sugar privatization. Her moves next week could speak volumes as to which direction the government's privatization program could take in the future. As the main engine behind the sugar privatization program, Litak-Zarebska has been an outspoken Polski Cukier critic.
"It will be very interesting to see if she keeps her position or not," Wyrowinski said. "It will be a very precise statement about what direction the privatization of sugar mills will take."
