Poland Today February edition

PRICE: 25 PLN / 7 EUR

photo: Tomasz Adamowicz (Forum)

Polish-Russian relations: overcoming complexities through trade and culture. pages 44-47

An in-depth look at business and travel opportunities in Mazowsze. pages 48-51

How eleven men raised the spirit of the nation in the midst of Martial Law. page 58

(02) feb 2013

Marek Belka Governor of theNational Bank exclusive interview on Poland’s economic future page 16

Magazine • Portal • Conferences • find out more at www.poland-today.pl

photo: Renata Kosińska / Marek Kosiński (Forum)

Białowieża Forest is the best-conserved lowland forest in the temperate climatic zone of Europe. It is the habitat of unique and endangered species such as the wolf, lynx and bison. For many years scientists and non-governmental organizations have striven to protect and preserve it. Thanks to actions by Greenpeace in the last two years, the number of trees cut down in Białowieża Forest has dropped by over 60%. Centuries-old growth forest stands are included in special conservation programmes. If you want to help to protect Białowieża Forest please visit: www.greenpeace.pl/puszcza and please think about donating 1% of your annual tax to Greenpeace.

table of contents

editorial

6

news round up

8

in focus

10

politics

14

Domestic squabbles

Katya Andrusz examines why Polish politics has become an incessant blame game between PO and PiS, and why these divisions could become detrimental to the country’s attractiveness as a stable country to invest in.

leader

16

Marek Belka: The perfect slowdown

In an exclusive interview by Jan Cienski, Marek Belka, the Governor of the National Bank of Poland discusses Poland’s healthy balance sheet, how central and eastern European economies weathered worse storms than the current crisis facing indebted eurozone economies, and why Poland should position itself at “the inner core” of Europe.

20

Marek Belka: expert comments

We asked five leading economists, among them Witold Orłowski – former Chief Economic Advisor to the Polish president, and Krzysztof Rybiński – former NBP deputy governor, to reflect on NBP Governor Marek Belka’s interview, and to offer own fresh predictions on where the Polish economy is headed in 2013.

business review

23 Voivodship focus: Mazowieckie. pages 48-51

A comprehensive 20-page overview, providing a detailed round-up of nine of the most prominent business sectors and a tech start-up business, written by journalists specialising in each sector.

country focus

44

Healing old wounds

The 2010 Smolensk airplane tragedy seemed to reinforce age old tensions between Poland and Russia. Krzysztof Bobiński examines the reasons behind that innate mistrust, but also looks at how the new visa free zone between the Russian oblast of Kaliningrad and northern Poland is reshaping the way both nationalities view each other.

46

From Russia with love

Following the viral success of a graffiti piece last summer welcoming visiting Russian football fans to Warsaw, Mladen Petrov speaks to Poles and Russians about their shared love of each others’ film, theatre and literature traditions.

food & drink

52

The tentative return of Bacchus

Polish wines were once the poor relation of vodka and beer. With increased spending power, and changing tastes, wine is in vogue and the country’s warmest region, Dolny Śląsk (Lower Silesia) is at the centre of this quiet revolution, writes Matthew Day.

history

54

’Greetings from Zygmunt’

A trip back to the twilight years of the Polish Peoples’ Republic (PRL), as John Borrell, ex-Time magazine bureau chief for Central America, recounts a bizarre proposition by Polish secret intelligence, and reflects on rumours over whether the late Polish writer Ryszard Kapuściński could have passed on information to state authorities.

voivodship focus

It happened in... February

58

Eyewitness: the summer of ’82

At a time when Poles lived under Martial Law and Moscow’s authorities were breathing down the necks of General Jaruzelski’s military administration, sports journalist Michał Pol tells Damien Moran how the performances of the Polish football team at the 1982 World Cup in Spain helped to inspire the nation.

sports

This month’s województwo in focus is Mazowsze, home to the capital Warsaw.

As Poland’s most populous province, it is responsible for attracting 23% of foreign direct investment. However, despite the presence of many big international companies and improved infrastructure, regional disparities exist, writes Liam Nolan.

Kowalczyk seals another victory

60

It has been a great start to the year for skier Justyna Kowalczyk, again winning the FIS Tour de Ski and pipping shot-put thrower Tomasz Majewski to the Przegląd Sportowy Sportsperson of the Year award, writes Marek Wawrzynowski, who also sums up life at the Polish FA (PZPN) post Grzegorz Lato.

50

Table of contents

Winter adventure, Mazowsze style

Yair Saragosti, an Israeli businessman, took up the challenge of touring around Mazowsze over the course of a chilly weekend in January. From sleepy country towns to winter kayaking on the Pilica river, Yair recounts the ups-and-downs of this alternative winter break.

Eyewitness: the summer of ’82. page 58

Marek Belka: The perfect slowdown. page 16

Domestic squabbles. page 14 The return of Bacchus. page 52

From Russia with love. page 46

table of contents

They had to overcome many obstacles, reaching the summit of the world’s highest mountain almost the least of their challenges.

Yet of course it was a monumental achievement. And they did it in winter. At short notice.

With a shoe-string budget. These unspoken heroes broke a seemingly impossible record and entered the annals of mountaineering legend.

48

Poland’s beating economic heart

5

56

Business review: Energy. page 30

We’re pleased to bring you the first of our monthly editions, now with a distinct business section. The idea is to give an informed monthly summary and take a quick look at what lies ahead in each sector. While we expect that seasoned professionals from each featured market will read about their own sector, the summaries are also very much for professionals - especially those who don’t speak Polish - who want to know what is happening outside of their business in order to keep up to date with issues and developments across the board. After all, no business is an island.

Poland Today is also well underway with our conferences, which are a strong element of our business profile.

Our first event, ‘Primetime Warsaw’ on 22 April at the Copernicus Centre, will focus on prospects for Poland’s capital, placing them in the wider economic perspective and looking at the different aspects that make up a successfully developing metropolis, including local planning, integrated transport and sustainable real estate in its broadest form.

We’re proud that the Mayor of Warsaw, Mrs Hanna Gronkiewicz-Waltz, wll set out her vision for Warsaw at the conference. In June we will turn our attention to the complexities of the country’s rapidly changing healthcare sector, specifically focusing on the areas where public and private providers meet and, potentially, can work together. In the weeks ahead we’ll reveal plans for several more conferences on a wide range of issues.

The next issue will feature a special focus on Poland’s real estate sector to coincide with that titan of global property fairs, MIPIM in Cannes. We will be distributing the magazine prominently around the Palais des Festivals, including the Warsaw and Poznan city stands.

If you’re a property company, you can’t afford not to be in it.

Richard Stephens

Publisher Poland Today

Publisher’s Note

4

6

editorial

’After years of continued growth, another year of deceleration, or the perfect slowdown as Marek Belka, Governor of the National Bank of Poland, describes it, suggests that the eurozone’s problems are finally knocking on Poland’s door.’

From the slowdown in the economy to the thorny issue

Liam Nolan

Editor’s Note

Guest Editor, Poland Today

of Polish-Russian relations and continued skirmishes at the heart of Polish domestic politics, this edition does not shy away from tackling some of the questions that currently stir the national debate at the start of 2013. Business news is high on our agenda too. Starting from this month, Poland Today features a comprehensive twenty-page review of all leading business sectors.

Ask Poles what worries them most these days and you will probably find that the economy is top of their list of concerns.

After years of continued growth, another year of deceleration, or “the perfect slowdown” as Marek Belka, Governor of the National Bank of Poland, describes it in his interview with Jan Cienski, suggests that the eurozone’s problems are finally knocking on Poland’s door. And yet, viewed from the outside, the country still maintains the status of a good student – estimated GDP growth of 1.6% this year looks a lot healthier than many western EU economies. The debt crisis facing the PIGS (Portugal, Italy, Greece and Spain – we should throw Ireland in there for good measure) is surmountable, according to Mr Belka, who points to the difficulties faced, and surpassed

by CEE countries during their years of economic transition twenty years ago. Greeks, take note.

Continued disunity across the floor of the Sejm, or the Polish-Polish war, as many commentators have referred to it, could tarnish Poland’s image as a stable place to invest, writes Katya Andrusz. And, Polish-Russian relations are not as forlorn as one might think. Increased trade along the border region with Kaliningrad – as Krzysztof Bobiński writes – and a number of grassroots movements in the arts (see pages 46-47) suggest that old antagonisms are being laid to rest by a younger generation.

Certainly, this issue covers more than hard politics and business news in order to provide our readers with a wideranging view of Polish life. We have complimented our business-focused overview of Mazowsze with a travelogue feature on the region’s hidden gems at this chilly time of year – winter kayaking on the Pilica river is not for the fainthearted!

Matthew Day’s feature on the country’s small, but blossoming wine industry should wet the palette of most readers, and John Borrell’s article on the shady dealings of the secret service in the days of the Polish Peoples’ Republic, combined with his reflections on the late writer Ryszard Kapuściński, will be of interest to both admirers and detractors of the acclaimed correspondent. Enjoy the magazine. If you would like to comment on anything in this issue please go to the Poland Today website. We welcome all comments and feedback.

Poland Today Sp. z o. o.

ul. Złota 61 lok. 100, 00-819 Warsaw, Poland tel/fax: +48 224648269 mobile: +48 694922898, +48 505006606 www.poland-today.pl

Publisher: Richard Stephens Financial Director: Arkadiusz Jamski Creative Director: Bartosz Stefaniak New Business Consultant:

Tomasz Andryszczyk

Guest Editor: Associate Editor: Real Estate Editor: www Developer:

Liam Nolan Hanna Kozłowska Adam Zdrodowski Alex Vladoiu

Contributors:

Agata Nałęcz Bartosz Kwiatek Damien Moran Jan Cienski John Borrell Katya Andrusz Krzysztof Bobiński Marek Wawrzynowski Matthew Day Michał Pol Mladen Petrov Konrad Majszyk Monika Rozlał Yair Saragosti

Photographs:

Polska Agencja Fotografów Forum Getty Images

Illustrator:

Jagna Wróblewska

Layout:

www.bartoszstefaniak.com

Printing House:

Zakłady Graficzne Taurus Kazimierów, ul. Zastawie 12, 05-074 Halinów tel. +48 227836682, fax +48 227836000 Poland Today Magazine is printed on Munken Print Cream ecological paper © 2013 Poland Today Magazine reproduction without permission is prohibited

7

8

current affairs

Did you get your heart-shaped sticker?

news round up

WOŚP, or the Great Christmas Aid Orchestra, a charity event held across Poland, raised 39.85m zł when it was staged across the country on 13 January. Now in its 21st year, all proceeds go towards life-saving equipment for children, but also for the care of senior citizens.

Tricky border crossing

A photograph of the Polish-German border, outside the village of Warnik, has gone viral.

The image shows a gleaming, black asphalt road on the German side, a border sign, and the road’s completely snowed over Polish counterpart.

Crucifix stays in Parliament

The liberal Palikot Movement (Ruch Palikota), petitioned to take down a crucifix from the wall of the Sejm, on the grounds of freedom of conscience. A Warsaw court dismissed the lawsuit, seeing no premise for the infringement of personal rights.

Polityka’s Prestigious Passports

The 2012 Polityka’s Passport cultural awards went to actor Marcin Dorociński, writer Szczepan Twardoch, the rock group Tres B., Russian director and playwright Iwan Wyrypajew, artist Julita Wójcik and the classical musicians of TWOgether Duo. The honorary “Creator of Culture” title went to composer and conductor Krzysztof Penderecki, and his wife, Elżbieta.

Polish troops may participate in Mali

As the crisis in the African state escalates, the EU has decided to send up to 400 troops to provide the Malian army with specialised training in an effort to combat enemy rebel forces. Defence minister Tomasz Siemoniak said that Polish troops could serve as part of the EU military training force.

Spotted: Spotify in Poland

Justice system widely mistrusted

New EU driving licenses

Spies of Warsaw: Death by dubbing

The popular music streaming service is launching in Poland. Unofficially, Spotify Poland is supposed to go on-line in late February or early March. Przemysław Pluta, previously CEE regional manager of PayPal, will run the Polish division.

The new plastic cards will be uniform for the entire European Union. Although they will start issuing the licenses in February, they won’t become mandatory until 2033, and will have to be renewed every 10 or 15 years.

Party like an ambassador

In 2007, 41% of Poles gave negative marks to the justice system. In 2012, it was 61%.

As many as 96% of those asked think that Polish judges are influenced by outside pressures in their rulings.

The BBC and TVP, the Polish public broadcaster, have co-produced an Englishlanguage series about the international world of spies during World War Two in Warsaw.

The show features such stars as David Tennant of Dr. Who, and on the Polish side, Marcin Dorociński. Despite early good reviews, the dubbing on the Polish version makes for difficult viewing, according to many.

Poland’s ambassador to China, Tadeusz Chomicki is the latest diplomat to hop on the ‘Gangman Style’ bandwagon. He features in a Chinese produced re-make of the original South Korean viral hit. Over 49,000 viewers have viewed Chomicki’s youtube effort.

ECONOMY / BUSINESS

No more GMOs?

Two thirds of Poles are against the cultivation of Genetically Modified Organisms, or GMOs, on Polish soil. The Polish government, which previously allowed the growing of GMO corn and potatoes, but not the sales of modified seeds, recently legislated to prohibit cultivation, and permit sales. Each plant, however, has to be regulated separately, and the EU still has 26 GMOs on its approval list.

Justice Igor Tuleya, a 42-year-old Warsaw-base judge, caused a bit of controversy recently.

While delivering his sentence in the case of Mirosław G., a doctor accused of corruption, he compared the interrogation methods of the Central Anti-Corruption Bureau (CBA), to those used during the Stalinist period.

Defamation or freedom of speech?

Robert Frycz, the creator of antikomor.pl, a website making fun of President Bronisław Komorowski, was acquitted of defamation charges on 17 January. The contentious case resulted in many discussions about freedom of speech in Poland.

Slow down or say “cheese”

photo: Maciej Figurski (Forum)

News round up

Controversial judge

Poland suffers twice the number of deadly car accidents each year compared to the European Union average. Though the number of fatal road collisions is decreasing year on year, the government wants to drastically increase the number of photo radars, adding 560 to the existing 315.

1863 remembered

2013 marks the 150th anniversary of the January Uprising by Polish forces. The rebellion against Russian Imperial rule, although eventually defeated, lasted until April 1864. This year will see many official celebrations across the country commemorating the famous rebellion.

Growth declines

Glemp, Kaczyńska, Torańska pass away

Józef Glemp (pictured), Archbishop of Warsaw from 1981 to 2006 and Primate of Poland for two decades, Jadwiga Kaczyńska, the mother of the late President and his brother Jarosław, and Teresa Torańska, the famed journalist and author of the award-winning book ‘Them – Stalin’s Polish Puppets’ (’Oni’), all passed away in the first two months of 2013.

Sex, cash and rock and roll

The wife and daughter of a well known Polish rockstar were arrested for alleged pandering in a sex scandal that involved an elaborate operation spanning several years. The women arranged for young Polish models to go on various trips abroad where they would provide company and sexual services to foreign businessmen and members of Middle Eastern royal families, receiving hefty salaries.

New contemporary art gallery

The National Museum in Warsaw unveiled its collection of contemporary art on January 18th.

With over 220 pieces from the 20th and 21st century, the Museum is said to have the largest such permanent exhibition in Warsaw.

Kraków bids for 2022 Winter Olympics

With Kraków as the official host, Poland and Slovakia are hoping to bring the 2022 Winter Olympics to a number of their ski resorts. President Komorowski and sports minister Joanna Mucha have supported the bid. Lviv, St Moritz, Nice, Oslo and Barcelona are also contenders.

A World Bank report predicts that CEE economies will grow by 1.3% this year (1% in 2012), with Poland achieving 1.5% growth. Credit ratings agency Moody’s anticipates regional growth of 1.9% economic growth, versus an estimated 0.7% in 2012.

Dire December for production

GUS, the Central Statistical Office, declared that the end of 2012 saw a 10.6% decrease in industrial production in Poland. Production was down in 30 out of 34 sectors – export industries being the worst effected.

Dream on, Dreamliner

Majority government owned LOT Polish Airlines – already in serious financial trouble having asked the government for an end of year loan of 1bn zł – ran into more bad luck in January. After purchasing eight new Boeing 787 airplanes, one of its new fleet was grounded in Chicago, on the way back from its inaugural transatlantic flight, after American aviation authorities raised safety concerns over all Dreamliner planes.

Polish fertilizer companies team up

Despite Russian fertilizer giant Acron trying to acquire Tarnów-based producer Azoty in Tarnów, Azoty joined forces with a plant in Puławy. The new venture, Grupa Azoty, will now be one of the largest fertilizer and chemical companies in Europe.

More Poles beneath the poverty line

The gap between rich and poor is widening.

Latest data from GUS shows that 28% of Polish households fall below the poverty line with their income. The problem is especially acute in rural areas.

9

Voivodship focus

10 photos: Marcin Piasecki (Forum), Bartosz Stefaniak,

in focus

Where do Poles like to ski?

Płock is possibly

best known for being the headquarters of PKN Orlen, Poland’s largest refiner of crude oil. The group operates one refinery in the area. See this month’s voivodship in focus on page 48

Glamourous gems

by Tamara Łempicka Paintings by renowned Polish artist Tamara Łempicka (also known as Tamara de Lempicka), have been sold for a whopping $66m to date, making her the most expensive female artist in the world after Joan Mitchell and Natalia Goncharova. Łempicka, “Hollywood’s favourite artist,” is famous for her bold, elegant Art Deco portraits, inspired by celebrities of the Jazz Age. Her most expensive painting, “La Rêve” (The Dream) is worth $8.5m, and a recent, long-lost painting called “Nu adosse 1” was sold for $5.5m, at the same auction as the famed “Scream” by Edward Munch. Tamara Łempicka, born Maria Górska in Warsaw in 1898 to a rich Polish family, shuttled between bohemian Paris, glamourous Hollywood and artistic New York City, eventually settling down in Mexico, where she died in 1980. Other, more contemporary Polish artists, who although not as famous as the glamorous Łempicka – but for whose work you also have to pay a hefty price - include Mirosław Bałka, Jerzy Nowosielski, Roman Opałka, Magdalena Abakanowicz and Alina Szapocznikow.

Primetime Warsaw Developing a sustainable european metropolis

Warsaw, due to its history and significance at the crossroads

Warsaw Tree Wars

between East & West, is one of Europe’s great cities, the undisputed regional economic and political powerhouse.

Basking in the recent glow of hosting EURO 2012 and its status as capital of the European Union’s most dynamic economy, there has never been a better time for the city on the Vistula river.

Prime Minister Donald Tusk wasn’t The city of Warsaw is witnessing a fullspared by even his own political cir- on war over …trees. When city officials cle when he chose to go skiing in the decided to cut down a staggering 337 Italian Dolomites. Although President poplars, maples, oaks – most of them Bronisław Komorowski tried to be strong and healthy – in the historical subtle, everyone noticed his “hint hint” Krasiński Palace Garden, the silent vicremark about how his colleagues tims found vehement defenders among should try skiing in the Polish mountains, the Warsaw community. Nothing helps a instead of going abroad. The major- cause quite like a famous face – Olgierd ity of Poles would take the President’s Łukaszewicz, well known actor, most advice, perhaps not due to patriotic famous for his role of dorky scientist reasons, but economic ones. Although Albercik in utopian comedy “Seksmisja,” several years ago most Polish skiers was one of the most engaged tree activchose the Austrian and Italian Alps as ists from the very beginning. The twists their destination of choice, according to and turns of the tree struggle make for a poll conducted by ARC Rynek i Opinia, an interesting plot. After the logging a 88% of them spent their 2011 winter media campaign was launched, and on vacation at Polish resorts. The prices 11 January protesters came to light 200 for tickets and accomodation are sig- candles for the fallen trees. In what the nificantly cheaper in the most popular activists see as retaliation, the city put Polish ski resorts – Zakopane, Bukowina up a fence around the park one week Tatrzańska, Szczyrk, Karpacz and Wisła. afterwards. Łukaszewicz has finally This trend, however, is not merely informed the local prosecutor’s office a result of economic troubles, but the about a serious violation of regulations simple and positive fact that more on the part of city officials, who claim and more Poles are learning how to that the deed had to be done because ski. What used to be less than 10% of the tree crowns were suffering due to the population is now 19%, with half of a lack of growing space. The Krasiński the Poles polled confidently declaring Palace Garden was created in 1676 and that they are good or proficient ski- has witnessed centuries of Warsaw’s ers. Nearly 40% of Polish skiers enjoy tumultous history. Some of the trees the sport twice a year. Those who do that were cut down were over a 100 choose to go abroad usually go to years old, and saw the tragic fate of the adjoining Warsaw Ghetto, while providAustria, Italy and the Czech Republic. ing a natural barrier between it and the rest of the capital.

This, the first conference to focus on Warsaw in its entirety, brings you the opportunities and challenges that lie ahead.

patrons

by Hanna Kozłowska

Monday 22nd APRIL 2013 Copernicus Science Centre, Warsaw

partners

organizing partner

13

Primetime Warsaw Developing a sustainable european metropolis

Monday 22nd APRIL 2013 Copernicus Science Centre, Warsaw

Featured speakers: The capital in a historical and economic perspective.

While concentrating on the future, the conference will start with a nod to the past. We are honoured that the Mayor of Warsaw, Mrs Hanna Gronkiewicz-Waltz, will open the day by recalling the great exhibition of 1938 launched by her most renowned predecessor, the legendary Stefan Starzyński, entitled ‘Warsaw Yesterday, Today and Tomorrow’ (Warszawa wczoraj, dziś i jutro), and how his vision for the city can influence the present and inspire the future. We are also delighted that Professor Jerzy Buzek will take part in the debate about Warsaw's future.

Lars Christensen,

Chief Emerging Markets Economist, Danske Bank

The week before:

Professor Jerzy Buzek,

The Opinion Exchange Districts meet Investors

Former Prime Minister & President of the EU Parliament

Date and venue to be announced Sometimes when city district officials meet real estate developers or transport planners the goodwill is there, but understanding the other’s needs and requirements is lacking.

Both sides think they have an agreement – but nothing subsequently moves forward.

So Poland Today is providing the time, the day, the venue and the framework for both sides to meet and discuss issues important to them, even if they approach them from different angles.

Hanna GronkiewiczWaltz, The Mayor of Warsaw

The conference will be in Polish and English with simultaneous translation, as well as German.

Other languages can be catered for on demand.

patrons

• Hanna Gronkiewicz-Waltz, The Mayor of Warsaw • Professor Jerzy Buzek, Former Prime Minister & President of the EU Parliament • Michał Olszewski, Deputy Mayor of Warsaw • Lars Christensen, Chief Emerging Markets Economist, Danske Bank • Olga Grygier-Siddons, Chairman, PwC Poland • Tomasz Żaboklicki, CEO, PESA • Adrian Furgalski, Director, TOR Group of Economic Advisors • Leszek Ruta, Director of the Board, Warsaw Transport Authority (ZTM)

The conference will then turn to the wider context of Poland’s position and prospects in the global economy The event will be open to anyone with and how the new economic reality will a ticket to the Primetime Warsaw conference on 22nd April. Tickets are interchangeable affect city development, particularly in – one person from the company can attend terms of funding and resources. The the conference, another the Opinion Ex2nd part of the programme will focus on change. Watch this space for more details. particular topics and sectors, including a discussion on all the real estate sectors, integrated transport and urban planning & development, before rounding off with reflections on the unique city of Warsaw by leading opinion-formers.

partners

organizing partner

photos: Marek Skorupski (Forum), Chamlet Festival, flight001.com

in focus

No Country for Odd Names

Times they are a-changin’

The top kids’ names in 2012 held few surprises. Pick out a random playground in your area and you’re bound to hear Szymon, Jakub, Maciej, Marek and Mateusz as well as Kasia, Julia, Zuzia, Zosia and Magda. More and more parents have recently started to seek out unique monikers for their newborns, but any names deemed to breech article 50 of the Marital Status Act will receive a disapproving shake of the head. The Chamlets In Poland you are not allowed to give your kid more than two names; nor ones Recognising an all too frequent trend in which can be laughed at (Tupak), or marketing screw-ups, the third edition of obscene (Loki), nor diminutive forms (no ‘The Chamlets – Worst Advertisements Mela, Kris or Ula); nor gender-confusing Festival’ took place recently. Originally monikers (Bieber loving Moms watch established by social psychologist proout – Justin is too close too Justyna). fessors Michael Fleischer and Dariusz Foreign versions of names are not per- Doliński in 2009, the festival’s name is a mitted if there is a Polish version, so no witty Shakespearean twist on the Polish John instead of Jan, nor Kate instead word ‘cham’ (boor or lout). Among the of Katarzyna (Kate Middleton fans will 450 nominated adverts was an SLD be disappointed). Experts at Rady political candidate’s attempt to woo Języka Polskiego (Polish Language voters by doing a striptease, a dire idea Council) often give their opinions on by Manufaktura, a shopping centre parents’ name requests and their 550 in Łódz, encouraging clients to ‘Loot responses to date include some gems. the Collection’ during the company’s For boys: Pelé, Merlin, Montezuma, Neo ‘Crystal Night of Shopping’. Worst newsand Ozzy have all been rejected as have paper ad was given to ‘The Holocaust Legia, Truskawka (Strawberry) Attika, Victims International Memory Day’ Mercedes, Unka and Vanilia for girls. poster, showing a young model in a If you want to ensure that your new- Nazi uniform saying: “I’m Hans. I’m 25. borns lead a prosperous life, Andrzej or In December 1943 I killed 40 people in Warsaw. Remember me so it will never Anna, are considered safe bets. happen again.” All of the above pale into insignificance compared to Robert Surowiecki’s recent failed attempt to name his new bar ‘Piwnica u Fritzla’ (Fritzl’s cellar) on Warsaw’s Nowy Świat street. He may be neck and neck with Heyah mobile communications for a Chamlet in 2013. All the worst adverts can be seen on www.chamlet.pl

The dictum ‘you never step in the same river twice’ is certainly true for Polish bureaucracy and thankfully 2013 is ushering in some welcome changes.

Thanks to the new eWUŚ system, proof that your ZUS (social insurance) payments are up to date, stamped medical books are no longer a pre-requisite for public clinic and hospital care.

All passport-related issues can now be dealt with at the nearest public administration office, and to de-register from a district when changing your residence, you just need to sign up to your new Urząd (local council). VAT and Income Tax amendments include the obligation to reduce tax deductibles by the sum total of unsettled invoices.

Also, there are new rules for bad debt relief and the ‘taxable point’ (the date on invoices, which determines the rate of VAT), to be made payable by small taxpayers. Moreover, the requirement to issue internal invoices is a thing of the past. Maternity leave is now one year long while reimbursement of invitro fertilisation procedures come into effect from June. New theory tests for category B driving licences mean you no longer answer 18 from 500 questions but 32 from a pool of 3000 questions.

by Damien Moran

Yair Saragosti, an

Israeli businessman, recounts the fun and frolics of touring around Mazowsze on a chilly weekend in January. From sleepy country towns to winter kayaking on the Pilica river, Yair recounts the upsand-downs of this alternative winter break. see page 50

politics

Domestic squabbles Poland’s prospects could darken this year as political in-fighting rages unabated

Parliamentary bouts Challenger: Former Prime Minister Jarosław Kaczyński (PiS)

2005: 27% 2007: 32.1% 2011: 29.9%

Defending champion: Prime Minister Donald Tusk (PO)

2005: 24.1% 2007: 41.5% 2011: 39.2%

illustration: Jagna Wróblewska

14

If you watch a

debate in the Polish parliament without listening to what is being said (recommendations: muting your TV, wearing earplugs, or not understanding Polish), you gain the impression that it is quite a civilised affair.

MPs wait their turn to speak and nobody throws themselves on the person standing at the rostrum, as is still the case in some countries to Poland’s east.

Unfortunately, though, this impression is erroneous. In reality, politicians from different parties do not listen to each other, much less debate. Or to be more precise, they only listen to each other in order to collect ammunition for their next attack on their opponents.

This does not just make for unpleasant viewing: in the current situation, when economic growth is slowing and social inequality is growing, cooperation between the governing coalition and the opposition is vital to push through reforms, strengthen civil society, and improve trust in public institutions.

At present, though, such cooperation is seldom to be seen. Some old-time observers have pointed out that Poland would not have been in a position to achieve what it did after 1989 – NATO membership just a decade after the communist system collapsed and EU membership five years after that – had politicians from both ends of the spectrum not reached a consensus on common goals that were more important than their political differences.

Such cooperation currently appears to be practically impossible. The ruling Civic Platform (Platforma Obywatelska, or ‘PO’), competent but often a touch arrogant as it increasingly sees itself as saviour of the Polish economy and the last bastion of rationality in an emotionally charged political climate, is pitched against Law & Justice (Prawo i Sprawiedliwość, or ‘PiS’), the largest opposition party, whose leader Jarosław Kaczyński is a former prime minister who blames the government for the death of his twin brother, the late president, who was killed together with almost 100 other dignitaries in a plane crash three years ago. Meanwhile, his party is gearing up to bring a motion of no confidence in the government – to “show Poles that their problems haven’t just come out of thin air,” as the party’s spokesman recently said. Relations with the other opposition parties are scarcely better. Ludwik Dorn, a former interior minister, called last year on Mr Kaczyński to help block Croatia’s accession to the EU just to spite the prime minister and compromise him in the eyes of Germany, one of Poland’s closest allies in Brussels.

In the flurry of mutual recriminations, the real challenges facing Poland risk being forgotten. One of these is social apathy, a particularly danger-

ous phenomenon in relatively young democracies like Poland, as declining trust in public institutions creates fertile ground for populists. The proportion of Poles who think the parliament is doing a bad job has remained above 50% since 2008, while less than a quarter of Poles believe that courts are working well. Instead of seeking a solution to this problem, though, the parties seem to be engaging in a competition for the least realistic promises. Law and Justice has said it wants to annul a law raising the retirement age, introduce tax relief for families, extend maternity leave and increase spending on the jobless – all somehow without ruining the budget.

Janusz Palikot, a former Civic Platform member who left to establish his own party, is demanding the legalisation of marihuana, safe in the knowledge that the move is absolutely impossible in a country that is only slowly coming to accept condoms, nevermind joints.

Thou shalt not compromise

the great divide Following the catastrophic performance

of the SLD (Democratic Left Alliance) at the 2005 parliamentary election, PO and PiS have dominated Polish parliamentary politics.

Tusk’s government – favoured by many younger, urban voters – has embraced EU membership and developed closer ties with Germany, while domestically, it has encouraged further privatisation of state assets. Kaczyński and PiS, despite its traditional, Catholic conservative support base, favours more socialist economic policies. Divisions reached a head last November after a Rzeczpospolita article further developed the Smolensk conspiracy theory.

Despite the article’s retraction, Kaczyński claimed that his brother and his entourage had been murdered, and called for Tusk to resign from office. Tusk reacted angrily, saying that it was “unacceptable for an opposition leader to say things which are devastating for the state.”

’What Poland really needs now is a concerted effort by political decision makers, business leaders and the general public to put their differences aside’

In connection with the issue of social responsibility and engagement, a debate on the role of the Catholic Church in Poland is becoming ever more urgent. A recent report by the national statistics office shows that more than a quarter of Poles are living in some form of poverty, with the figure higher for the rural population. In many outlying areas, it is still the case that people turn to the local priest for advice and even for material assistance. But in this area, too, there is little dialogue and a great deal of hostility. Secularists such as star journalist Monika Olejnik and the small but tenacious group of Social Democrats in parliament complain that the Church has too much power and an unhealthy influence on Polish society.

And the other side is even more vociferous. “If we compared the contemporary ‘heroes’ battling the Church in Poland, who lampoon bishops, external demand; but as the crisis has priests and the faithful to the atheist progressed, the economy has been movement in the Soviet Union during put through an increasingly hard test. the 1930s or to Nazi ideology, we’d see The necessity of narrowing the budget how many similarities there are,” said deficit means that higher social spendArchbishop Stanisław Gądecki, who is ing is off the agenda (although more also the vice-chairman of the Polish efficient spending could arguably help episcopate, in his Christmas address. more people and cost the state less).

This year, a decision will be made on With unemployment high and set to whether a hardline Catholic television continue rising, sluggish wage growth station, TV Trwam, is to be granted a and abysmal business sentiment figdigital licence after being turned down ures, households and companies are once on technical grounds. The deci- spending and investing less, and ecosion, whichever way it goes, will give nomic growth slowed to just 1.4% in the third quarter of last year. The European both sides new ammunition.

Commission is forecasting 1.8% growth It’s the economy, stupid for 2013, and some analysts are expectNowhere can the necessity for coop- ing it to be much lower. This year it will eration be seen more clearly than in also become clear how much Poland economic policy. Poland held up well can expect to obtain in funding from at the outset of the eurozone cri- the European Union in its next multisis, as tax cuts and huge amounts of annual budget, which is due to take EU funding helped offset the drop in effect in 2014.

One of this year’s hottest topics will be plans for closer coordination in the eurozone to finally end the sovereign debt crisis and preclude similar problems in the future. The beginning of 2013 will see a parliamentary debate on whether Poland should ratify the fiscal pact – a move hotly resisted by Law and Justice – that commits countries to stricter budgetary rules but is also seen as an element of closer integration of the eurozone. Poland’s own decision with regard to euro adoption will also be high on the agenda. Although the country is obliged by the terms of its EU membership to switch to the common currency, there is no deadline.

Understandably, Poland became less enthusiastic about adopting the euro after the sovereign debt crisis took off in 2009. As markets have calmed down, though, Mr Tusk has returned to the subject and recently said that Poland needs to discuss its path towards euro adoption. His finance minister, Jacek Rostowski, seconded Mr Tusk, saying Poland needed to be “at the heart” of a more closely integrated Europe and “not at its periphery.”

Apart from the macroeconomic criteria that Poland has to fulfil to adopt the euro, the country will also have to make a technical change to the constitution. To make any change at all to the constitution, though, however minimal, a two-thirds majority in the lower house is necessary. And Law & Justice and its allies have already made clear that they would vote against the modifications.

Has there been any serious debate on the merits of joining the euro or the best date to target entry? No. Has anyone tried to explain to the Polish public, which is currently in favour of EU membership and against euro adoption, what the change in currency would mean for them or for the country? No. What Poland really needs now is a concerted effort by political decision makers, business leaders and the general public to put their differences aside.

This is also vital to ensure that foreign investors do not lose their trust in the country’s political stability and ability to take decisions that will put it in the right direction for the future. Poland has a lot going for it: a well-educated workforce, a large internal market and an economy that has proved more resilient to the crisis than most others in Europe.

2013 could be a good year, albeit with an economically slow start, if Poles forget their war and start talking to each other. Otherwise, things could just get worse. by Katya Andrusz

15 politics

Katya Andrusz is

a freelance journalist who has covered German and Central European affairs for more than a decade, working for Reuters, Bloomberg News, The Economist and The Guardian. She specialises in political and economic issues, reporting on Poland’s entry into the European Union and the region’s increasing weight in the EU from Warsaw and Brussels.

The perfect Slowdown

17 leader

In an exclusive interview, Marek Belka – the governor of Poland’s central bank – speaks in-depth to Jan Cienski about the Polish economy’s competitive edge, and the resilience of CEE countries in the face of the financial crisis

Świętokrzyska Street running

through the heart of central Warsaw divides the country’s fiscal and monetary authorities – one side of the street is dominated by the lowslung National Bank of Poland while on the other lies the socialist-realist Finance Ministry – and Marek Belka straddles both institutions.

Belka is currently governor of the central bank, and was twice finance minister, serving in 1997 and from 2001-2002, which means that when he says that Poland’s current economic slowdown is unlikely to last long, he bears listening to.

Speaking in an exclusive interview with Poland Today, Belka says that a recovery could begin as early as the second half of next year. “We’re seeing some signs of stagnation in consumption, of a slowdown in investments, but there is no dramatic crash in any area. We have a slowdown, nothing more,” he says, sitting at a small round table in the antechamber of his central bank office. He took over the bank in 2010, following the death of his predecessor Sławomir Skrzypek, who was killed in the air disaster that also killed Poland’s president and many other senior officials.

photo: Dominik Pisarek (Forum)

Less swagger, more pragmatism

putting a brake on investment plans while getting a sense of what the next year will look like. The country’s annual business and government get-together in the mountain resort of Krynica-Zdrój in early September was much more downbeat than usual. Executives talked more about contraction and how they were scrambling to try to win new contracts than the boasting about Poland’s economic prowess that had been a hallmark of earlier summits.

Even the lavish alcohol-fuelled parties sponsored by the largest state-controlled companies like insurer PZU and copper miner KGHM were toned down – although that did not shield the CEO’s from some pointed criticism from Mikolaj Budzanowski, the treasury minister, who stressed the unseemliness of spending money on booze and bands at a time of economic melancholy. But Belka is pretty confident that Poland will shake off the current slump and continue to be one of the EU’s better performers as the country catches up to west European living standards, something it has been doing for the last two decades. “We aren’t dancing with joy but I can say that this is just a ‘perfect slowdown’.

We aren’t seeing any kind of a collapse,” says Belka, adding that a technical recession is “improbable” in the only EU country to have dodged such a contraction over 20 years. “Of course 2013 will be difficult, but we think that during the year the economy will start to revive.”

Part of that revival is linked to a turnabout at the central bank’s interest rate setting Monetary Policy Council, which last spring was the only EU central bank to raise rates, trying to stamp out persistent inflation, which had been above the bank’s target rate of 2.5 % for more than two years. That decision was blasted by critics, who felt that the Council was ignoring the risks of a slowdown. But Belka has long followed a careful policy of balancing between the Council’s hawks, who were in the ascendant in early 2012, and the doves, who now take the lead.

Belka is not keen on Rostowski doing much more belt tightening, worrying that the economy could slow even more.

Belka’s vote of confidence comes amid a growing sense of gloom in Poland, as the country sheds its earlier reputation as the “green island” of the European Union – an economy which stubbornly continued to grow in 2009 during the first wave of the economic crisis while the rest of the EU fell into a recession, and then continued to have one of the fastest growth rates in the EU. Poland’s bubble burst in the second half of 2012, when the ongoing slump in the eurozone finally filtered through, hitting exports at a time when domestic demand started to slow as well. The bullish confidence that had been the hallmark of Polish business for the last few years has since largely evaporated as growth stalls and unemployment inches upwards.

In the third quarter of last year growth came to an annual 1.4 %, much lower than analysts had forecast, while unemployment in November was up to 12.9 %. Big businesses like Fiat, with a factory in Tychy in southern Poland, are announcing cutbacks and layoffs, while many Polish companies are

A matter of common interest Jacek Rostowski, the finance minister who was an enthusiastic advocate of Belka becoming the central bank chief and ending the constant conflicts from Skrzypek’s time,

Jan Cienski is the

Warsaw and Prague correspondent for the Financial Times. He has been in Warsaw since 2003. Prior to that he spent five years as the Washington correspondent for the National Post, a Canadian newspaper. He also spent several years in the US working for the Associated Press.

From 1992 to 1995 he worked in Moscow for the German News Agency DPA. Jan has a degree in international relations from the University of Toronto.

’I am a left-wing extremist among liberals and a liberal extremist among left-wingers.’

Difficult to typecast

“I am a left-wing extremist among liberals and a liberal extremist among left-wingers,” Belka has quipped. Indeed, the central bank governor has always been difficult to pigeon-hole ideologically. During communism he was the head of the Party committee at the University of Łódź, but battled to keep colleagues from being fired under martial law. Stefan Niesolowski, a firebrand MP from the ruling Civic Platform party and a raging foe of communism, has said Belka was a “decent man”. He first came to prominence as an economic advisor to President Aleksander Kwaśniewski, before being promoted to finance minister.

But his relationship to his political masters in the ex-commu-

Belka is much more sanguine about the depth of changes needed by the Polish economy compared to Balcerowicz, who continues to advocate root and branch reforms to social spending, privatisation, taxation and the budget deficit. The central bank governor is also not as allergic about seeing a role for the state in the economy. For example, he is quite positive about the Treasury Ministry’s new scheme to set up an investment vehicle called Polskie Inwestycje which would be fuelled by the proceeds of selling off shares in companies held by the state and used to kick-start investment in big infrastructure projects like highways, power generation and shale gas exploration. Balcerowicz worries that the programme will “lead to an increase in the role of the state

in the economy” and will push out private sector investors, while Belka wants it to get moving quickly in order to provide a boost to the economy in 2013. “I’m not worried about crowding out – instead it could provide an impulse for private capital,” he says. Belka is also much more relaxed about government spending, pointing out that Poland has already undertaken one of the sharpest budget contractions in the EU, seeing its deficit fall from 7.9 % in 2010, as government spending shot up because of the crisis, to an estimated 3.4 % in 2012. Belka is not keen on Rostowski doing much more belt tightening, worrying that the economy could slow even more.

“The pace of budgetary consolidation is slowing, which I hope will give the economy some breathing room. We are not encouraging the finance ministry to further excessive fiscal consolidation at this time,” he says, batting the ball back across Swietokrzyska and reflecting a pragmatism that shifts according to the circumstances – 15 years ago he was a renowned deficit hawk. Although Polish government spending did soar a few years ago, Belka is unruffled, saying that there were special circumstances, which meant that the deficit increase did not pose much of a danger to the economy. The extra spending was needed to absorb a flood of European Union structural funds, which have helped transform Poland with new highways and airports.

photos: Adam Chelstowski (Forum), Grzegorz Jakubowski (Forum)

18

blames some of the economy’s weakness on the Council’s nist Democratic Left Alliance (SLD) was always complicated. “unneeded” decision to increase its benchmark rate to 4.75 %. Belka pushed through a 19 % capital gains tax, still known as “I expect further rate cuts and effects in the second half of “Belka’s tax” in 1997, and his condemnation of an enormous 2013,” Rostowski said in December, adding, “We await a con- budget deficit prior to the 2001 elections enraged the SLD, leader tinuation of the rate cutting cycle in the first half of 2013 and which felt his blunt criticism cost it crucial votes, forcing it into that should bear fruit first in the stabilisation and then with an unstable coalition government. Brought in as a technoan acceleration of growth.” The Monetary Policy Council cut cratic prime minister in 2004-2005 to save the SLD following rates twice at the end of 2012 by a total of half a percent- an enormous corruption scandal he cut himself off from the age point – the benchmark was 4.25 % at the beginning of party and ended up joining a short-lived centrist party while 2013 – and more cuts are expected. “We see a change in still relying on SLD votes to stay in power. Since 2005 he has approach on the part of the MPC and a deepening conviction rivalled Balcerowicz as Poland’s best known economist, trythat there is continued space for further ing for the top job at the OECD and being suggested as head cuts,” says the central bank governor. of the International Monetary Fund (a post that eventually Belka brushes off the criticism from went to France’s Dominic Strauss Kahn) before becoming the Rostowski. That sort of a blast from Fund’s European Department director, where he had a front the other side of Swietokrzyska Street row seat in rescues of countries like Bulgaria, Hungary and is familiar to bank governors and to Latvia – giving him a crucial insight into the kind of strategies Belka – he was the author of similar that can work to haul an economy out of collapse. Many of missives when he headed the finance those views put him at odds with Balcerowicz, one of Poland’s ministry and the bank was led first by most doctrinaire economic liberals.

Hanna Gronkiewicz-Waltz, the current mayor of Warsaw, and then by Leszek Collective memory as Balcerowicz, and Belka worried much a powerful economic tool more about goosing growth than about In a recent interview with The Wall Street Journal, Balcerowicz rising inflation. However, he always bat- held up central Europeans as an example for recessiontled to ensure that the central bank plagued western Europe. He claimed Bulgaria, Estonia, Latvia remain independent of political interfer- and Lithuania (countries he terms the “BELLS”) got no EU ence, something which made him an ally bailout and were forced to slash public spending by much of Balcerowicz, the architect of Poland’s more than Portugal, Italy, Spain and Greece (PIGS). The result, shock therapy economic reforms in the says Balcerowicz, was a steep and deep recession followed early 1990s. “I treat Rostowski’s criti- by a return to vibrant growth, while the PIGS have been codcisms philosophically,” Belka says with dled by the European Central Bank’s loose money policies a grin. “For us the main criterion of suc- and remain trapped in stagnation. Belka is a lot more cautious on whether the BELLs provide a useful model, and the cess is in fighting inflation.”

Belka carefully declines to join in reason has more to do with sociology than with economics.

“The scale of adjustment in Latvia was even larger than the condemnation of last May’s rate increase, but it is clear that he has Greece needs today. But Latvian society remembered differMarek Belka changed track and supports a contin- ent times,” says Belka, who had to defend the Latvian rescue ued easing of monetary policy as long programme before a sceptical IMF board. “Their collective Marek Belka was born in Łódź in 1952. Graduas interest rates remain positive, that is memory remembered the Soviet Union. When we asked ating from the University of Łódź in 1972 with above Poland’s slowing rate of inflation. them: ‘How are you doing in the crisis?’, they would respond: a degree in economics, he went on to receive his doctorate in 1978 before completing Prices in November rose by an annual ‘We’re having difficulties but for us a crisis was when the scholarships at Columbia University, 2.8%, a sharp slowdown from the 3.4% Russians were deporting people to Siberia.’ But what collecthe University of Chicago and the London noted in October. “We would like to tive memory do the Greeks have? They have been living well School of Economics. In 1994, Belka became a professor of economics. retain what we think is very valuable, for decades – albeit on credit.” That comparison also places that our monetary policy is still con- Poland in a good light.

After working as a consultant for the World “All of us in central Europe - Poland, the Czech Republic, ventional, that we do not have to move Bank, Belka served as Polish deputy prime to ultra-low interest rate levels,” says Hungary, as well as the BELLs - went through the hell of minister from 1997 to 2001, and as minister of finance from 2001 to 2002. In 2003, he worked Belka. That sort of a pragmatism has transformation. The economic contraction in these countries in Iraq as economic adviser for the coalition’s been the hallmark of Belka’s long politi- at the beginning of the transformation was much deeper interim administration. President Alexander cal career, dating from when he was a than Greece today. Societies have survived this,” he says.

Kwaśniewski appointed him as prime minister member of the Communist Party in the “These countries have never really lost competitiveness, and in May 2004, a position he held for 17 months. waning years of People’s Poland, but the PIGS lived too long on credit.” That historical memory of Belka then served as Executive Secretary of the UN Economic Commission for Europe and was also a student of Milton Friedman tough times means CEE countries have the resilience to conas Director of the IMF’s European Departat the University of Chicago, later writ- tinue tackling reforms which are much more difficult to push ment. In June 2010, Belka became Governor ing his doctoral thesis about Friedman’s through in the richer countries of the eurozone periphery. of the National Bank of Poland after the Sejm “socio-economic doctrine”. (parliament) voted to approve his nomination

by President Bronisław Komorowski.

Not the time for further belt tightening

Waiting out the European storm Belka’s unorthodoxy also conflicts with the teachings of Friedman, who had been a leading sceptic of Keynesian economics. In the current environment, many of Friedman’s apostles continue to insist that government spending should be slashed, arguing that the resulting fiscal contraction could spur faster economic growth by reducing the government’s need to borrow. Belka scoffs at the idea. “In these times of very low interest rates, no one believes in non-Keynesian effects of fiscal tightening. That is intellectual dilettantism.

What is supposed to happen? That interest rates go still lower? They can’t be lowered any further,” he says.

The idea is to carefully wait out the crisis in the eurozone, about which Poland can do nothing. “Poland’s economy is free of any serious imbalances – indebtedness is not too high, either in the private or in the public sector. The economy is competitive – I would even say remarkably competitive compared to the rest of Europe,” he says. “We have a stabilisation in public finances, we do not expect a dramatic continued tightening of fiscal policy. Monetary policy, is slowly - some would say too slowly – being loosened.

It’s hard today to be a total optimist, but there is no question of the Polish economy falling into some sort of a downward spiral.” That cautious optimism also applies to the euro.

“I think that today betting that the eurozone will collapse is simply a mistake,” says Belka.

While Skrzypek had been an open sceptic of joining the common currency, Belka has been more nuanced. Here he agrees with Rostowski, that it makes no sense to rush into joining the common currency at a time when the euro’s architecture is being reconfigured, but that Poland should get its economy prepared for eventually adopting the euro when conditions are right. “We aren’t separated from the eurozone by the English Channel,” he says, taking a jab at British scepticism towards the euro. “We can’t isolate Europe from ourselves, as the English think they can. We are a part of continental Europe and we want to and have to – also for political reasons – be part of the inner core.” And that means Belka’s balancing act is set to continue. by Jan Cienski

’All of us in central Europe went through the hell of transformation. The economic contraction in these countries at the beginning of the transformation was much deeper than Greece today. Societies have survived this.’

Marek Belka

served in 2003 as Chairman of the Council for International Coordination for Iraq (responsible for international aid coordination) and later as Director of Economic Policy (responsible for the preparation of economic reforms in Iraq).

Prof. Witold Orłowski

Chief Economic Advisor at PricewaterhouseCoopers (PwC), and former chief economist to the former President of Poland Lech Kaczyński

Expert comments

photo: Tomasz Adamowicz (Forum)

The economy is in quite a good condition, without major disequilibria Marek Belka’s interview touches many important questions about the Polish economy, both of a short-term and a long-term character. The most important short-term issue is whether the economy is adequately prepared to cope with the current economic slowdown. The slowdown, already clearly visible in the published data, has its roots in the eurozone recession.

Given the scale and the depth of the West European problems, eventually cumulating in the major slowdown of the German economy, a painful slowdown in Poland – or even a recession, if things get worse - is obviously unavoidable. The real question is whether Poland is facing a relatively short period of problems, with faster GDP growth returning over 2013, or a much more serious economic crisis. Belka’s view, which I tend to share, is relatively optimistic, expecting the acceleration of growth in the second half of 2013.

On the one hand, one can assume that the worst part of the eurozone crisis is over. On the other hand, it is true that the Polish economy is in quite a good condition, without major disequilibria that could lead to a financial collapse. The only unknown factor is how deep and persistent the deterioration of the business sentiment is. If the current wave of pessimism continues, both the fiscal and monetary authorities of Poland will have limited room for maneuvre in their policies to stimulate growth. by Witold Orłowski

Consumers and businesses are more pessimistic about the economy Prof.

Krzysztof Rybiński

Professor and rector of Vistula University in Warsaw and a former deputy governor of the National Bank of Poland from 2004 to 2008

The consensus view today is that the Polish economy will have two weak quarters in 2013, and will start recovering in the second part of the year.

Fiscal consolidation will be temporarily halted to avoid too much drag on economic growth, and monetary policy will be relaxed with inflation falling below the central bank target of 2.5%.

In 2014, Poland will again be on the path to joining the Eurozone a few years later, which is Poland’s key strategic priority given historical experience and geopolitical factors. There are, however, several risks to this consensus scenario.

The crisis in the Eurozone may deepen, as indicated by exploding public debt in Greece, Spain and Portugal, and by growing pains in France. EU financing of public investments in infrastructure, which has added 1-2% annually to Polish growth in the past few years, is coming to an end. Consumers and businesses are more pessimistic about the economy than after the collapse of Lehman Brothers. Poland is facing its own fiscal cliff with public debt approaching the constitutional limit of 60% of GDP. Breeching this limit will invite massive fiscal tightening that will throw the economy into deep recession. If these risks materialize, and Polish economy does fall into recession, authorities will have very few options available. Interest rates can be reduced but fiscal policy will remain heavily constrained by legal debt brakes. And this is just the beginning of tough times ahead. In just a few years time, the post-war baby boom generation will retire. And the pleasant tail wind from EU funding will be replaced by a devastating demographic tsunami. by Krzysztof Rybiński

21

nazwa działu

The economic recovery is to get underway in the second half of this year. But it will not come quickly enough to prevent overall economic growth this year being weaker than in 2012.

Agata Urbańska,

photo: Tomasz Adamowicz (Forum)

Economist for Central & Eastern Europe, HSBC

Like Governor Belka, we expect Poland’s economic recovery to get underway in the second half of this year.

But it will not come quickly enough to prevent overall economic growth this year being weaker than in 2012. We are forecasting 1.6% GDP growth in 2013 down from 2.0% in 2012 and 4.3% in 2011. We have not yet seen bottoming out in the activity data. December’s economic data was surprisingly weak, both activity and inflation data surprised on the downside in the last quarter of 2012, making it more difficult to categorically reject the possibility of a technical recession in Q4 12/Q1 13.

The leading indicators point to more labour market weakness in Q1 13 and accordingly no recovery in consumer demand and weak inflationary pressure. This continued deterioration is in line with our forecast for more interest rate cuts in H1 2013. Indeed, after three cuts of a cumulative 75 basis points between November and January, we are forecasting a further three cuts by the end of the first half of this year.

by Agata Urbańska

Austerity measures are needed and now is as good a time as any to do it Lars Christensen

Chief Emerging Markets Economist at Danske Bank

Marek Belka’s message is threefold: Firstly, the Polish economy is slowing down, but there is no reason to panic; secondly, there is only so much the central bank can do about it; thirdly fiscal austerity can be counterproductive. I do not disagree lightly with Marek Belka - after all he his one of Europe’s most respected and experienced economic policy makers and a wellrespected academic, and I certainly do agree with Mr. Belka that the Polish economy is slowing. Unfortunately I am putting some – maybe even a lot – of the blame on Marek Belka for how sharp a slowdown we are seeing in the Polish economy. Belka on the other hand is pointing a finger at Finance Minister Rostowski’s moderate austerity measures. I, however, think that austerity measures – or at least fiscal consolidation - are needed in Poland to secure the long-term sustainability of public finances, and now is as good a time as any to do it. In fact I think the Polish government has done too little to ensure fiscal consolidation. However, contrary to Belka, I believe that monetary policy is the “last equation” in the economy in the sense that monetary policy can always counteract any contractionary impact of fiscal consolidation. So if you tighten fiscal policy you can fill any “hole” in the economy with easier monetary policy. Hence, I would have liked to see both finance minister Rostowski and central bank governor Belka do more – Rostowski more (fiscal) tightening and Belka more (monetary) easing. That would have been a better policy mix and would have returned the Polish economy to stable high growth.

I am sure that both gentlemen know this in their hearts, but that political considerations force them to advocate something else. by Lars Christensen

BusiNess revieW

Pasquale Diana

Economist, Emerging Markets, Morgan Stanley

23

table of contents

warsaw stock exchange insider

A cautious start to 2013

Poland is indeed free of major imbalances, and is competitive within the EU. Poland is indeed free of major imbalances, and is competitive within the EU. These are important reasons to be optimistic about Poland’s convergence prospects from a structural point of view. From a cyclical standpoint however, recent data suggest there are reasons to be worried. The December data showed pronounced weakness in industrial production (-10.6%Y), an increase in the pace of corporate layoffs (-0.5%Y) and nominal wages barely keeping up with inflation (2.4%Y).

We think that corporate behaviour will be crucial in the coming months: should job losses intensify and household consumption start to contract on a sequential basis, one cannot rule out the economy going into recession for a short period. The inflation data will continue to slow, partly due to soft growth and partly due to regulated price changes. We think that inflation is set to fall to the low end of the target range (1.5%) by 2Q13, almost a percentage point lower than it is today.

Within this background, we think it is premature to expect rate cuts to come to an end. True, the Governor of the National Bank of Poland, Marek Belka, sounded more cautious with his recent comments, and even signaled that there might be a pause ahead. We think however that the recent data flow will persuade the NBP to cut again in February, and to follow up with more rate cuts in 2Q. We think rates will reach historic lows (3.25%). If the economy enters recession (not our current base case) they may well go sub -3%.

by Pasquale Diana

After a flurry of activity at WSE towards the end of 2012, analysts have predicted a more cautious start to 2013. see page 26

Banking & finance

Financial rollercoaster ride not over yet Following last year’s wave of consolidations in the banking sector, the start of this year will see a number of mergers come to fruition. see page 28

energy

Shale gas: not an easy bet after all As the new year begins, we take a look at some of the most significant trends and developments that could have a major impact on the Polish economy in the upcoming months. The Warsaw Stock Exchange, the largest securities exchange in Central & Eastern Europe, now has a new CEO and is set to implement a new trading system in mid-April, but how will its indexes perform after a first few weeks of 2013 marked by a selling trend?

The financial sector is expected to see a new wave of bank consolidations, but also a number of new challenges later this year. The future of shale gas extraction in Poland will continue to be hotly debated in 2013, as will the country’s recent problems with the development of its transport infrastructure. The Polish real estate market will also be in the spotlight this year – there have been no shortage of new projects and deals announced in all of its sectors in recent months, yet at the same time there is considerable caution in the air. Last but not least, 2013 will see important reforms in Poland’s healthcare system, including the ongoing process of its digitalization.

According to Andrzej Sikora,

Director of the Institute of Energy Studies in Warsaw, the government needs to appoint someone “who is responsible for the energy sector in Poland.”

see page 30

Developer Skanska Property Poland has sold

its Nordea House and Green Corner office buildings in Warsaw to two RREEF property funds for a total of €94.6m.

see page 32

Limited drilling results to-date have cast doubts over whether Polish shale gas can become commercially exploitable in the coming few years. see page 30

office

Tenant activity continues to drive Warsaw office sector Sales of property in Warsaw and Wrocław were notable last month while the capital continues to attract high tenant demand for office space. see page 32

residential

No shortage of potential development deals in Warsaw

The government expects economic

growth to slow down to 2.2% this year from a projected 2.5% in 2012.

Economists, however, mock this forecast as overly optimistic, estimating that GDP growth will be about 1.5%, writes Monika Rozlał. see page 28

Despite predictions that 2013 will be a difficult year for the sector, a number of lucrative building permits and development projects have been announced for the Warsaw area. see page 34

retail

Steady flow of shopping centre acquisitions Acquisitions of old market halls in Warsaw and Wrocław, and a planned new shopping centre in Olsztyn reflect consumer demand for modern shopping centres. see page 36

warehouse & logistics

Investor interest in warehouse sector rising Some 1.8 million square metres of warehouse space were leased in Poland in 2012, but caution and stability will characterise the logistics market in 2013. see page 38

transport

Motorways, Modlin Airport and Koleje Śląskie

A post-script on last year’s disastrous GDDKiA motorway tenders plus what went wrong with Modlin Airport and railway company Koleje Śląskie. see page 39

healthcare

Got your ID? Welcome to the doctor’s office The new e-WUŚ system means less red tape for patients. Also a look at the Ministry of Health’s plans to reform the National Health Fund (NFZ) from 2013. see page 40

start up

Bridge to revolution Virtual tech company Bridge discuss how their cutting edge coding techniques can aid traditional manufacturing techniques. see page 42

The change of CEO at the WSE

will not have a large impact on the market. “The influence, if any, could be considered in terms of the long-term strategy of WSE as an institution,” says a Warsawbased analyst.

see page 26

24 business review

25

1522

general statistics

1444

Poland for beginners

1344

business review

1275 1175 1057 980

Geography: Poland, officially the Republic

of Poland (Polish: Rzeczpospolita Polska), is a country in Central Europe, bordered

by Germany to the west; the Czech Republic and Slovakia to the south; Ukraine, Belarus and Lithuania to the east; and the Baltic Sea and Kaliningrad Oblast, a Russian enclave, to the north.

Population:

38,501,000 6th in the EU 34th in the world (2011 national census)

Internet: .pl Phone: +48 Drives: on the right

Currency exchange rates:

Currency:

Polish Złoty (zł)

EUR: 4.20 (y/y+0.08%) USD: 3.07 (y/y -3.79%) GBP: 4.86 (y/y -3,88%) CHF: 3.39 (y/y -2.50%) JPY: 3.33 (y/y -20.63%) (Feb 1, 2013, National Bank of Poland)

Interest rate:

Dec 2012: 4.25% Nov 2012: 4.5% Oct 2012: 4.75% Sep 2012: 4.75% (National Bank of Poland)

Density:

123/km2 (320/mi2) 83rd in the world (2011 national census)

pln billions

Working time:

Average salary:

Workforce productivity:

Minimal salary:

$26.2/hour (2011, OECD)

PLN 1600 gross (Jan 2013, Ministry of Employment)

Nominal GDP growth: free float of the national currency helped the country maintain development even in the middle of the global crisis. (National Statistics Office)

Total employment:

Main tax rates:

GDP per capita in relation to EU average:

Oct 2012: 10.1% Sept 2012: 10% Aug 2012: 9.9% Jul 2012: 9.8% (Eurostat)

885

av. 1937 hours per year 7th place in OECD 3rd place in EU (2011, OECD)

814 772 685

721

617 524

551

97 98 99 00 01 02 03 04 05 06 07 08 09 10

Total area:

312,685 km2 120,696.41 mi2 69th in the world

Time zone:

CET (UTC+1)

Main river:

Vistula (1047 km) Oder (854 km)

Coat of arms:

The White Eagle symbol appeared for the first time on the coins made during the reign of Bolesław I (9921025), initially as the coat of arms of the Piast dynasty.

The eagle’s graphic form has changed throughout centuries. Its recent shape, accepted in 1927, was designed by professor Zygmunt Kamiński and was based on the eagle’s form from the times of Stefan Batory’s reign (1576-1586).

state is often identified with the adoption of Christianity by its ruler Mieszko I in 966, over territory similar in size to that of present-day Poland. The Kingdom of Poland was formed in 1025, and in 1569 it cemented a long association with the Grand Duchy of Lithuania by signing the Union of Lublin, forming the Polish–Lithuanian Commonwealth. The Commonwealth ceased to exist in 1795 as Polish lands were partitioned between the Kingdom of Prussia, the Russian Empire and the Austrian Empire.” Poland regained its independence as the Second Polish Republic in 1918.

Two decades later, in September 1939, World War II started with the Nazi Germany and Soviet Union invasion of Poland (Molotov–Ribbentrop Pact). Over six million Polish citizens died in the war. The People’s Republic was declared in 1952 although Poland was a client state of the Soviet Union from 1944. During the Revolutions of 1989, the communist state was overthrown and democratic rule was re-established in the form of the “Third Polish Republic”.

Despite the vast destruction the country experienced in World War II, Poland managed to preserve much of its cultural wealth. There are currently 14 heritage sites inscribed on the UNESCO World Heritage list in Poland. Since the end of the communist period, Poland has achieved high rankings in terms of human development.

Higher education rate: 88,7% of adult population (2010, Eurostat)

Gini coefficient: 31.1 12th in the EU (2010, Eurostat)

Life expectancy at birth:

men: 71,3 years women: 79,8 years (2010, United Nations)

Fertility rate: 1,38% (2010, World Bank)

Human Development Index: 0.813

39th in the world (2011, United Nations)

GDP (PPP):

Total: $814 bn 19th in the world Per capita: $21,261 45th in the world (2011, World Bank)

researched and edited by Bartosz Stefaniak

GDP (nominal):

Total: $514 bn 22nd in the world Per capita: $13,463 51st in the world (2011, World Bank)

Main cities:

Kraków (0,76 mn) Łódź (0,74 mn) Wrocław (0,63 mn) Poznań (0,55 mn) Gdańsk (0,46 mn) Szczecin (0.4 mn) Katowice (0,3 mn)

Key dates:

Christianisation: Apr 14, 966 Kingdom of Poland: Apr 18, 1025 Polish-Lithuanian commonwealth: Jul 1, 1569 Partition of Poland: Oct 24, 1795 Duchy of Warsaw: Jul 22, 1807 Congress Poland: Jun 9, 1815 Reconstitution of Poland: Nov 11, 1918 Invasion of Poland, WWII: Sep 1, 1939 Communist Poland: Apr 8, 1945 Republic of Poland: Sep 13, 1989

Ethnic groups:

98.1% Polish 0.6% Ukrainian 0.2% German 0.2% Belarusian 0.1% Lithuanian 1.8% Other (2011 national census)

Official language:

National bank governor:

Polish

Law: legal system has been developing since

state. After the 1999 administrative reform, it is now divided into 16 voivodships (provinces), 379 districts and 2479 local government communities.

National defense:

Foreign direct investment in Poland:

1994-2011: €139.1 bn 2011: €10.9 bn (National Bank of Poland)

2011: €5.1 bn (National Bank of Poland)

Bronisław Komorowski

Next presidental election: 2015

Army: 100,000 (professionals) Yearly defense budget: $10 bn (2013) Scheduled equipment purchases: $41 bn Foreign deployment: Afghanistan (2900 pers.)

Memberships:

UN, United Nations (1945) EU, European Union (2004) NATO, North Atlantic Treaty Organization (1999) WTO, World Trade Organization (1995) IMF, International Monetary Fund (1986) Schengen Agreement (2007) G6, Group of Six (2006) Council of Europe (1991) OECD, Organisation for Economic Co-operation and Development (1996) OSCE, Organization for Security and Co-operation in Europe (1994) Visegrád Group (1991) Weimar Triangle (1991) EEA, European Economic Area (2003) CBSS, Council of the Baltic Sea States (1992) IEA,International Energy Agency (2008) IAEA, International Atomic Energy Agency (1957) ESA, European Space Agency (2012)

Sources: National Statistics Office, National Bank of Poland, Min. of Finance, Min. of Economy, Min. of Employment, 2011 national census, Warsaw Stock Exchange, Eurostat, World Bank, United Nations, OECD

of constant economic growth, Poland with a nominal GDP per capita of $13,463 is recognized as a high income economy. It is the biggest economy in Central Europe, the sixth largest in the EU and, according to different sources, 19th to 21st in the world. It is also one of the most dynamic economies on the globe.

According to the United Nations Statistics Division, Polish nominal GDP rose from $64,5 bn in 1990 to $514 bn in 2011. After China and Vietnam, it gives Poland 3rd place worldwide in long term development rate. During the ongoing crisis, Poland was the only member country of the European Union to have avoided a decline in GDP, meaning that in 2009 Poland created the largest GDP growth in the EU. Poland is also home for the biggest and most dynamic stock exchange in Central Europe. According to Deloitte’s CE TOP 500 survey, four of the 10 biggest companies in Central Europe are from Poland.

Polish direct investment abroad:

President:

Prime Minister:

WIG20 stock index: 2012: +20% (2582 pt) 2011: -22% (2144 pt) 2010: +15% (2744 pt) 2009: +33% (2388 pt) 2008: -48% (1789 pt) 2007: +5% (3456 pt) 2006: +24% (3285 pt) 2005: +35% (2654 pt) 2004: +25% (1960 pt) 2003: +34% (1574 pt)

Donald Tusk (PO)

Ruling coalition: PO-PSL

Next parliamentary election: 2015

National parliament:

460 members

Political parties:

PO: 207 seats (45%) PiS: 157 seats (34,13%) RP: 40 seats (8,69%) PSL: 28 seats (6,08%) SLD: 27 seats (5,86%) (female deputies: 24%)

Number of Polish deputies in the European Parliament:

51 seats (6,76% of total)

Nov 2012: 2.8% Oct 2012: 3.4% Sept 2012: 3.8% Aug 2012: 3.8% Jul 2012: 4.0% Jun 2012: 4.3% May 2012: 3.6% (National Statistics Office)

Economical overview: after 20 years

Fitch: A- (stable) Moody’s: A2 (stable) S&P: A- (stable) (Jan 2013)

Political system: a parliamentary representative democratic republic, whereby the Prime Minister is the head of government of a multi-party system and the President is the head of state. Executive power is exercised by the Council of Ministers. Legislative power is vested in both the government and the two chambers of parliament, the Sejm and the Senate. The Judiciary is independent of the executive and the legislature.

Administrative order: Poland is a unitary

Jan 2013: €82.5 bn Jan 2012: €75,7 bn Jan 2011: €70.2 bn Jan 2010: €60.9 bn Jan 2009: €46 bn Mar 2008: €63.4 bn (National Bank of Poland)

International rating:

the first centuries of Polish history, over 1,000 years ago. In 1791 Poland became the first country in Europe (2nd in the world) to adopt a Constitution as supreme law on its territory.

Constitutional Tribunal is the highest jurisdiction in today’s Poland. Court decisions can be appealed to the European Court of Justice in Strasbourg. The Republic of Poland recognizes also the International Court of Justice.

Inflation (y/y):

National bank reserve:

prof. Marek Belka

photos: tomasz adamowicz (forum), adam chełstowski (forum), rafał siderski (Dziennik / forum)

History: The establishment of the Polish

Capital city:

Warsaw (1,7 mn pop.)

imports (€ billions): 53

56

58

60

71

81

100 120

142

107

131

150

exports (€ billions): 34

40

43

48

60

71

88

102

116

98

117

136

00

01

02

03

04

05

06

07

08

09

10

11

Foreign trade balance: Poland’s economy plays an important role in the chain of supply of many global companies. A significant part of imports are capital goods needed for industrial retooling and for manufacturing inputs, rather than imports for consumption.

Poland is also highly dependable on external fossil fuel suppliers. The current economic slowdown in Europe combined with the free float of Polish currency is exerting a major influence on Poland’s foreign trade.

11

51% (2004, EU accession), 51% (2005) 52% (2006), 54% (2007), 56% (2008), 61% (2009), 63% (2010), 64% (2011) (Eurostat)

16 035 000 (2011, OECD)

Unemployment:

percents (Y/Y)

7.1 6.2 5.0

5.3 4.5 4.3

3.9

PIT, personal income: 18% (below zł 85k/y) 32% (above zł 85k/y) CIT, corporate income: 19% (flat tax) VAT, value added: 5%, 8%, 23% (Ministry of Finance)

Minister of finance:

6.8

Jacek Rostowski, awarded ‘Best European Finance Minister 2009’ by The Banker magazine.

5.1 3.9

3.6

4.3

10 year bonds interest rate:

1.7

1.2 1.4

PLN 3780 gross (y/y +2.7%) (Nov 2012, National Statistics Office)

3.72% (Dec 2012) 97 98 99 00 01 02 03 04 05 06 07 08 09 10

11

GDP growth rate: Poland’s GDP figures since

Public debt:

Warsaw Stock Exchange:

Balanced budget amendment:

the mid-90’s have varied greatly but, crucially, they have never gone into negative growth.

In 2009 the country, was the only EU economy not to. While serious challenges remain, the figures are a testament to those who set the course of the economy during and immediately after the transition from communism to a freemarket economy.

listed companies: 438 (43 foreign) capitalization of Polish companies: €129 bn capitalization of foreign companies: €52 bn number of IPOs: 34 (2010), 38 (2011), 19 (2012) number of investment accounts: 1.5 mn 2012 total stock sales: €49.6 bn 20120 average stock sale per session: €200 mn (Jan 2013, Warsaw Stock Exchange)

Exports by destinations:

Imports by origins:

Exports by branches:

Imports by branches:

Developed countries: €114.2 bn (84.2% of total) Developing countries: €21.4 bn (15.8%) European Union: €105.6 bn (77.8%) Eurozone: €73.3 bn (54.1%) Germany: €35.4 bn (26.1%) United Kingdom: €8.7 bn (6.4%) Czech Republic: €8.4 bn (6.2%) France: €8.3 bn (6.1%) Italy: €7.3 bn (5.4%) (2011, National Statistics Office) Automotive: €19.1 bn (14.1% of total) Chemical industry: €18.7 bn (13.4%) Mechanical equipment: €16.7 bn (12.3%) Consumer electronics: €15.3 bn (11.3%) Metalurgy: €16 bn (11.2%) Food products: €15.1 bn (11.1%) Furniture: €6.5 bn (4.6%) Clothing and textiles: €4.9 bn (3.6%) Shipbuilding: €3.6 bn (2.6%) (2011, National Statistics Office)

2011: 56.4% GDP 2010: 54.8% GDP 2009: 50.9% GDP 2008: 47.1% GDP 2007: 45% GDP 2006: 47.7% GDP 2005: 47.1% GDP 2004: 45.7% GDP 2003: 47.1% GDP (Eurostat)

Budget deficit:

2011: 5% GDP 2010: 7.9% GDP 2009: 7.4% GDP 2008: 3.7% GDP 2007: 1.9% GDP 2006: 3.6% GDP 2005: 4.1% GDP 2004: 5.4% GDP 2003: 6.2% GDP (Eurostat)

Poland’s constitution (adopted in 1997) caps public debt at 60% of GDP - the government cannot take on any financial obligations that would cause that limit to be exceeded.

To ensure this level is never breached, Poland has a self-imposed debt threshold of 55% of GDP, and the government must take action to balance the budget once this level is exceeded.

Developed countries: €99.8 bn (66.4% of total) Developing countries: €50.6 bn (33.6%) European Union: €89.1 bn (59.3%) Eurozone: €69.5 bn (46.2%) Germany: €33.5 bn (22.3%) Russia: €18.3 bn (12.2%) China: €13,2 bn (8.8%) Italy: €7.9 bn (5.3%) France: €6.3 bn (4.2%) (2011, National Statistics Office) Chemical industry: €26.4 bn (17.5%) Fossil fuels: €19.2 bn (12.7%) Mechanical equipment: €18 bn (12%) Metalurgy: €16.3 bn (10.8%) Consumer electronics: €15 bn (10%) Automotive: €12.1 bn (8.6%) Food products: €12.5 bn (8.3%) Clothing and textiles: €7.4 bn (4.9%) Medical & scientific devices: €7.4 bn (4.9%) (2011, National Statistics Office)

Exports dynamics: Developed countries: +11.8% Developing countries: +18.3% (2011/2010, Ministry of Economy)

Imports dynamics:

Developed countries: +10.7% Developing countries: +15.1% (2011/2010, Ministry of Economy)

26 business review

27

warsaw stock exchange insider

A cautious start to 2013

business review

The Warsaw Stock Exchange

will implement a new trading system, the Universal Trading Platform (UTP) this Spring.

Agata Nałęcz is

an investor relations specialist. She was previously a Reuters correspondent for four years, covering equity markets, the Warsaw Stock Exchange and Initial Public Offerings of domestic and foreign companies.

Adam Maciejewski has taken over from

CDM Pekao SA, DM PKO BP SA, DI BRE Banku SA, Millennium DM SA, wse.pl, nbp.pl

The Warsaw Stock Exchange (WSE) is the biggest securities exchange in Central and Eastern Europe. As well as the regulated market of shares and derivative instruments supervised by the Polish Financial Supervision Authority, it also operates the alternative stock market, NewConnect, which is designed for startups and developing companies, especially from the new technologies sector. Moreover the WSE runs bond and energy markets. On many occasions in recent years the WSE made its mark on the European map as a bourse with the biggest number of Initial Public Offerings (PwC IPO Watch Europe quarterly reports). In 2012, 40% of all European debuts took place in Warsaw and the WSE finished the year as in 2011 with the largest number of IPOs in Europe, leaving behind even the London Stock Exchange Group (LSE). Last year was not an easy one. Similarly to other global exchanges, the WSE reported a lower value of shares traded than in previous years. The average turnover per session on the Main Market was 753m zł, down by almost a quarter on a record-breaking year in 2011. At the same time the WSE continued to grow its share in the value of trading among CEE exchanges in 2012, beating most of its competitors such as bourses in Prague, Budapest, Vienna and Athens. Trading in shares on the WSE accounted for over half of trading in Central and Eastern Europe.

Trading Platform (UTP) is a trading system acquired by the WSE from NYSE Technologies. It is currently used by NYSE Euronext Group exchanges in New York, Paris, Lisbon, Amsterdam and Brussels. International traders, using a system that is familiar to investors and brokers on the world’s biggest markets, will gain easier access to the market in Warsaw. Last but not least is the challenge that the Warsaw Stock Exchange faces in the form of a new President of the Management Board and CEO, Adam Maciejewski. Ludwik Sobolewski, in charge of the WSE from 2006, was suspended in December, at the request of Treasury Minister Mikołaj Budzanowski, and subsequently sacked in mid January.

He has been accused of using his position to lobby a number of listed companies to sponsor a film production by Patryk Vega called ‘Klątwa faraona’ (The Curse of Pharaoh), in which his girlfriend played a leading role.

The Extraordinary General Meeting of the WSE on 17 January adopted resolutions concerning changes in the Exchange Management Board. Sobolewski was dismissed and Adam Maciejewski named as president. Maciejewski, responsible, among things, for the organisation of trading, has been a member of the WSE Management Board since 2006.

“I wouldn’t expect the change of CEO to One of the upcoming highlights for the have any bigger impact on the market.

WSE will be the implementation of a The influence, if any, could be considnew trading system, to start operating ered in terms of the long-term strategy in the middle of April. The Universal of WSE as an institution, which investors

are familiar with,” says one Warsaw-based analyst. Despite unfavourable conditions prevailing for much of 2012 on the financial markets, the main WSE indices closed the year with the strongest percentage growth since 2009. The blue-chip index WIG20 grew by over 20% and the wider market’s WIG gained more than 26%, according to figures from forsal.pl.

The beginning of the calendar year usually favours the indexes, but not this time.

After a year-end rally, January saw lots of selling and a high degree of cautiousness.

This contrasts with the mood in other key global markets, which have taken advantage of the upswing in investor mood.

“The last two months of 2012 were surprisingly good for the WSE. It visibly outperformed other stock exchanges and globally it has been one of the strongest. Now the profit taking has started,” says Jarosław Antonik, Member of the Board at KBC TFI SA. The global appetite for equities has been stimulated lately

by European Central Bank (ECB) chief Mario Draghi, who was speaking about the symptoms of stabilisation in the eurozone. “Luckily, the risk of eurozone collapse is receding, which, combined with the low interest rate policy, makes investors look for assets considered to be more risky but more profitable,” says Antonik.

On many occasions in 2012 analysts emphasised the attractiveness of investing in Polish equities because of their solid foundations, even though the symptoms of a slowdown were already visible.

photo: mateusz Dąbrowski ( fotorzepa / forum), Grażyna myślińska (forum), mariusz szacho (forum)

Sources:

reports by

They still had in mind the fact that Poland The inauguration of the Gas Exchange was the only EU economy to have avoided on the Warsaw Stock Exchange trading floor a recession at the beginning of the 2008- took place on 20 December 2012. From left right: Marek Waszczyk, CEO of the Energy 09 global financial crisis. Unfortunately, to Regulatory Board, Treasury Minister Mikołaj the ‘green island’ is decelerating at a faster Budzanowski, former WSE CEO Ludwik pace than expected and analysts think Sobolewski and President of the Polish that the following weeks won’t bring a Energy Exchange, Ireneusz Lazor. significant improvement. Indeed, some expect that data released by the Poland’s national statistics office (GUS) will be disappointing.

75 bp since November 2012. The reference rate is now at 4%. Latest comments by the Polish domestic macro data are rarely MPC chairman Marek Belka and some predominant (the WSE mostly follows of the MPC members suggest that there swings in the global mood, Wall Street may be a pause in cuts (please see the indexes and key European markets), but exclusive interview with Marek Belka on if their outcome isn’t good, this, - com- pages 17-19). “We need low interest rates. bined with the lack of a significant recov- This pause in interest rate cuts is negative ery in the German economy (Poland’s for the market. It would be better if they biggest trading partner) - may influence drop further,” says Buczak.

Polish GDP expectations in 2013, say analysts. This of course doesn’t look good According to analysts and brokers, the to foreign investors, whose cash flow is most probable scenario over the next few the biggest motor to WIG20, and doesn’t weeks – given the situation – is a consolicreate favourable conditions for the fur- dation of indexes close to present levels ther growth of the rest of WSE indexes. or their further decrease, while volatil“The situation has changed and it is visi- ity may increase. There are several comble that money doesn’t flow to Poland any- panies on the WSE to keep an eye on, more but it is redirected to other emerging including: PKO BP S.A – Poland’s treasury markets. The slowdown in the Polish ministry, together with state-controlled economy, which will probably hit a low development bank BGK, sold approxiat the end of the first quarter, discourages mately 5bn zł worth of shares, or 11.75%, investors a lot,” says Marek Buczak, Fund in the country’s largest bank. The sale Manager at Quercus TFI SA. Dealing with took place through an accelerated book the problem, the Monetary Policy Council building process. BRE Bank S.A – the (MPC) decided during its January meet- bank’s net profit for 2012 could be close ing to cut interest rates by 25 basis points, to last year’s result of 1.1bn zł, announced continuing the easing cycle established CEO Cezary Stypułkowski, adding that since the end of last year – a total cut of there is a chance that the company will

photo: mateusz Dąbrowski ( fotorzepa / forum)

Ludwik Sobolewski as the new president of the management board and CEO of the CEE’s biggest stock exchange.

pay out a dividend for 2012. BRE hasn’t paid dividends in recent years and the soonest expected date is 2013.

KGHM Polska Miedź S.A – in February, the copper giant is expected to release its forecasts for the year while the company’s updated strategy until 2020 will be announced probably in the second quarter, Dorota Włoch, the company’s Executive Vice President responsible for Business Development, informed the market.

JSW S.A – the coal producer’s net profit in 2012 could reach about 1bn zł, said company CEO Jarosław Zagórowski. After the first three quarters of 2012, net profit was over 1bn zł, so the result for the fourth quarter is assumed to be close to zero or negative. Energa S.A – the Treasury Ministry has started preparations for the stock market debut of the energy supplier and has stated that a new share issue could accompany the initial public offering of the utility. The IPO is scheduled for 2013. PHN S.A – the state-owned real estate company is also waiting in line to be listed, with the Treasury Ministry expecting to sell up to a quarter of existing shares.

by Agata Nałęcz

Jonas Barbaravicius,

board member of Inter Rao Lietuva.

The Lithuanian electricity supplier joined 42 other non-Polish companies on the WSE in mid-December.

business review

29

Banking & finance sector

Financial rollercoaster ride not over yet

business review

Austrian financial group’s Raiffeisen

Monika Rozlał

Bank Polska took over Polbank EFG, part of Greece’s EFG Eurobank, to create another Raiffeisen Polbank. The merger is only the latest in a series of high-profile mergers in Poland’s restive banking sector

is a freelance journalist covering Polish economy and stock market.

Previously worked for 12 years as an economy reporter for Bloomberg News in Poland.

White knuckle ride: with an eco-

nomic downturn gathering pace in the 2nd half of 2013, banks can expect some dips and turns ahead.

Whoever said finance is boring probably changed their mind in 2012, which was one of the most interesting years for Poland’s financial sector over the past decade. A wave of consolidation swept through the Polish banking industry again (following in the footsteps, in recent years, of Santander’s takeover of AIG Bank Polska and Bank Zachodni, Unicredit’s purchase of part of Bank BPH (when it bought the bank’s Austrian owner), Allianz Bank by Getin and Lukas Bank by Credit Agricole), with the Spanish giant Santander taking yet another bite of the market and adding Kredyt Bank to its collection of Polish assets. Top insurance brands AIG and Prudential came back into the game in the EU’s largest CEE economy. Poland’s No. 1 lender PKO BP’s advances were rebuffed by national postal operator Poczta Polska and its banking unit Pocztowy when the postal company decided to go it alone with its own ambitious strategy. Domestic pension funds, which started the year with grim forecasts, unexpectedly generated the best financial results in six years in no small part due to the unanticipated boom on the bond market, which helped them make robust return rates on debt

Michał Modrzejewski of

Euler Hermes warns that payment gridlocks in the financial sector may hit other industries.

known as Bank Zachodni WBK. The first effects of cost cuts are expected in the second half of the year. With the takeover of Kredyt Bank’s assets, Zachodni has become Poland’s third largest lender by assets, loan and deposit portfolios, while the number of customers has grown to 3.5 million and 900 branches. The WSE has already suspended trading on the former’s shares, which will be delisted portfolios. The spectacular collapse of later this year. At around the same time Amber Gold, the gold-based investment the legal merger of Raiffeisen Bank Polska Ponzi scheme, has hit thousands of Poles and Polbank EFG was completed. The and shaken confidence in the financial Austrian financial group took over the supervisory system, triggering a nation- Polish unit of Greece’s EFG Eurobank to wide debate on shadow banking. At the create Raiffeisen Polbank, which now has very end of 2012, the insurance industry around 900,000 customers and nearly was rocked by news of the resignation of 400 branches. These are not the only two Allianz Polska’s longtime helmsman Paweł banking brands that will disappear from Dangel, while capital markets were taken the Polish market this year. BRE Bank aback by the dismissal of the bourse’s plans to combine its three brands, BRE CEO Ludwik Sobolewski amid scandal. Bank, Multibank and mBank, into one: It didn’t stop it finishing on a strong note, mBank, betting on the strongest arm of its though, as Alior Bank went public with group. Poland’s fragmented banking sector the biggest IPO of a private company in may also face another wave of consolidathe Warsaw Stock Exchange’s history. tion. In January the press resumed speculation about the sale of Bank Millennium, Finance watchers won’t be bored this year and even though its Portuguese owner either. The WSE opens a fresh chapter Millennium BCP denied it was probing with a new CEO – albeit an interim one the market ahead of an intended sale, – in the form of Adam Maciejewski, who suspense remains. Finally, BNP Paribas is will run the CEE’s biggest stock exchange tipped to buy a stake in LaSer, which owns until the middle of 2014. January started Sygma Bank, a leader on the Polish conwith the legalization of Bank Zachodni sumer finance market.

WBK and Kredyt Bank’s merger after Santander bought the latter a year ago. Yet the outlook for the domestic sector is While the operating integration proc- far from rosy. The economic downturn ess will take about two years, the brands is gathering pace and financial institutions will marry by the autumn and will be have already had a foretaste of what is to

come, as the share of overdue payments estimating that GDP growth will be about lending because the financial market owed to banks, insurers, leasing and fac- 1.5%. The unemployment rate is projected watchdog KNF eases restrictions in this toring companies grew to 17.9% through to be 13% at the end of this year, however sector as of this year. Still, an increasing September from 16.3% in January 2012. Deputy Labour Minister Jacek Męcina levy burden is likely to keep banks from “If the situation does not improve in 2013 admitted in the middle of January that expansive lending, according to him. and the financial sector still has to strug- it may top 14% temporarily. The rising gle with payment gridlocks, it may nega- number of Poles without a job is likely to The Gdańsk Institute for Market tively affect the condition of other sectors, deteriorate further the quality of credit Economics (IBnGR) sees the consumer as financial institutions will block capital portfolios, forcing banks to boost reserves finance market rising by 5.8% a year until flow and reduce investment financing,” on bad loans. Other than the unhappiness 2016. At the same time, while write-offs said Michał Modrzejewski, head of finan- shared by all businesses – perhaps except on consumer loans will fall, banks will cial sector analysis at Euler Hermes. for debt collectors – banks are facing spe- have to set aside larger reserves on mortcific risks which will take a toll on their gages and corporate credits, says Artur Macroeconomic forecasts are probably earnings. The series of interest rate cuts Szeski of Fitch Polska. The combination robbing bankers of their sleep. The gov- launched by the Monetary Policy Council of all these factors means that the bankernment expects economic growth to (RPP) in November to give a boost to the ing sector’s profit may slump by 10-15%, slow down to 2.2% this year from a pro- economy, will continue, squeezing bank- according to Paweł Borys, head of strategy jected 2.5% in 2012. Economists, however, ing interest income as net interest mar- and corporations at PKO BP. He predicts mock this forecast as overly optimistic, gins fall. At the same time, the reduction that revenues in this sector will rise by no of interchange fees as of January 1 will more than 4-5% a year. He also shares the trim income from fees and provisions. concern over the risk related to corporate Moreover, lenders will be forced to pay a debt, particularly that of the construcnew levy for the first time - the so-called tion industry, which owes about 60 bn zł precautionary fees - which is estimated to to domestic banks. Wiesław Thor, depstrip the banking sector of about 700 mil- uty CEO of BRE Bank, admits that lenders may want to fuel the income gap with lion zł a year. margin hikes.

The main challenge faced by Polish banks – apart from the likely fall in bor- Insurers should not count on a bonanza rowing costs projected by JP Morgan of this year, either. The Polish Insurance half a percentage point by the middle of Association (PIU) forecasts a severe slow2013 – is income source, amid waning down in premium collection, as the life business activity and aversion to invest- insurance business will be determined ments, which kills appetite for borrowing. by the financial situation of Polish houseMortgage lending has already started to holds, while the corporate insurance secdrop, even before the government ended tor will depend on the condition of the its refund programme “Rodzina na swoim” entire economy. Experts say the economic in 2012. Andrzej Topiński, chief economist recovery, expected at the end of this year, at credit information company BIK, says should help the financial sector rebound the number of mortgage loans granted quickly in 2014. The growth potential is dropped by about 9-10% in 2012 from the still there, as Poland lags behind other Artur Szeski of Fitch Polska says that consumer loans are safer, but mortgages previous year and the trend will continue countries in the region in terms of bank and corporate loans can be a problem as uncertainty on the labour market dis- accounts per population, according to for banks this year. courages people from taking long-term Deloitte. Polish economic growth is still risk. Krzysztof Pietraszkiewicz, head of faster than in Western Europe and midthe Polish Banking Association (ZBP), dle class aspirations keep expanding. also expects the value of mortgage lend- Financial companies will probably spend ing to shrink by several percent this year, this year shaping up ahead of another but predicts a slight growth of consumer wave of expansion. by Monika Rozlał

The biggest IPO

on the Warsaw Stock Exchange in 2012 was that of Alior Bank. At EUR 511 million, it was also the biggest private placement in the history of the Polish exchange, the fifth biggest European IPO in Q4 and the biggest offering of a bank in 2012.

(Source: PwC, IPO Watch Europe)

photo: steve Day (aa / topfoto) , robert Gardziński (fotorzepa / forum), andrzej fabisiak (otc)

28

business review

Liam Nolan

covers Polish current affairs for the Irish press, RTÉ Radio and NPR news.

He has also contributed to The Atlantic, The Financial Times, CNBC Magazine and other international publications.

From 2004 to 2011, Liam directed and produced television programmes for Irish national broadcasters RTÉ, TG4 and Setanta. He holds a Masters degree in Communication from Université Lumière Lyon II, and a B.Sc in Communication from DIT, Ireland.

31

energy sector

Shale gas: not an easy bet after all Less than two years ago, shale gas seemed to be the dauphin of the Polish energy sector. Heady predictions about the country’s potential reserves – chiefly, the US Energy Information Administration estimated that Poland held 5.3 trillion cubic metres of shale gas reserves – attracted a string of international exploration companies to drill deep below the surface. As the ministry of environment happily dolled out drilling licences (111 to-date), it seemed that Poland would, at last, be able to wean itself off Russian gas imports and become a self-sufficient producer, and potential net exporter of gas. Now however, those early estimates are looking more like wild guesses than accurate figures.

business review

San Leon (currently merging with Aurelian Oil & Gas) and others are still

photo: Jacek szydłowski (forum)

30

It’s not all bad news though. If the Polish Geological Institute’s calculation that shale gas reserves measure between 346 A shale gas drill in Wierzbica in Lubelskie and 768 billion cubic metres – about a voivodship run by Orlen Upstream. The countenth of the original cast away figure try’s environment ministry handed out many licenses to companies from around – turns out to be true then Poland still drilling the world, each hoping to strike it lucky. looks set to have enough reserves to last between 35 to 65 years. The government has pegged its immediate hopes on developing both shale gas and nuclear energy to reduce the country’s dependence on polluting coal and Russian natural gas, and meet the criteria set out by the EU’s gas at the ministry of environment, Piotr carbon reducing 2020 climate and energy Woźniak has taken a realistic stance.

He believes that shale gas will become package. commercially exploitable by 2016.

This two-pronged safety net strategy appears however, to be undergoing a sub- “The government is still waiting for big tle revision of late. Prime Minister Donald questions to be answered on whether it is Tusk has stated that both shale gas and profitable to pour long-term investments nuclear remain priorities. Yet, there was into shale gas, under specific Polish cona telling absence of any reference to the ditions,” says Łukasz Cioch from Krakow planned nuclear energy programme in his based Tischner Centre for Energy Studies, exposé last October to the Sejm. “You can- adding that, “2013 is going to be critinot invest in both”, says Paweł Puchalski, cal to finding those answers and bring senior equity analyst with Warsaw based far more legislative, organisational and, BZ WBK Brokerage. “The nuclear project most importantly, strategic clarity about should not be abandoned, but the priority the energy sector’s long-term horizon.” should be given to shale gas if it is there”, Companies too, are showing signs of gethe added. The construction of the first ting cold feet. Exxon Mobil packed up its nuclear power plant – to be operational machinery last June after test drilling by 2025 and capable of producing 3GW – provided lacklustre results, and has since could cost a hefty 50bn zł, whilst a second relinquished all but one of its six concessions. And, in early December, rumours plant is planned for 2035. seeped into the Polish press that Canadian The shale versus nuclear debate is gaining oil and gas exploration group, Talisman prominence. PGE’s president Krzysztof Energy was weighing up its options in Kilian (the group’s sibling entity, PGE Poland.

Energia Jądrowa is overseeing the creation of the Polish nuclear programme) “I think the opportunity (on shale gas) is described investing in both shale gas and closing now and that major companies nuclear as akin to having “left and right- will be pulling back from Poland,” says hand sided traffic on the same street”. Grzegorz Pytel, from the Warsaw based Problematically for advocates of shale Sobieski Institute. Pytel maintains that gas, test drilling on concessions has not government proposals to place a 40% provided companies with much to shout tax on future shale gas profits is “way about. Of the 111 licences granted by the too risky” for private companies who ministry of environment, ten compa- have committed large resources at this nies have drilled only 31 wells to-date early and uncertain stage of explora– only two of which have been horizon- tion. Yet, the race is still on. International tally fracked. Junior minister for shale firms ConocoPhillips, Chevron, 3Legs,

digging deep across the Baltic Basin, the Danish-Polish Marginal Trough, the Podlasie Depression and the Lublin Trough (north-east and eastern Poland in everyday parlance). State controlled oil and natural gas monopoly PGNiG, appears unfazed by recent concerns about dwindling estimates of the actual reserves of shale. PGNiG plans to drill as many as ten more wells in 2013, a sign perhaps that the state company is not under the same duress as its private competitors.

According to Andrzej Sikora, Director of the Institute of Energy Studies in Warsaw, the government needs to appoint someone “who is responsible for the energy sector in Poland” in order to convey a clear message on energy policy. Moreover, Sikora suggests that the ministry of economy’s 2009 energy strategy be updated – it currently makes no reference to shale gas as part of the country’s future energy mix.

For the sake of future investment in Polish shale gas, both exploration companies and the government will be hoping to obtain concrete answers this year on whether shale can become commercially exploitable. If the guessing games continue, Polish dreams of creating energy self-sufficiency could start to ebb.

In other energy news, despite talk of nuclear energy being quietly sidelined by the government, the decision making process regarding the location of the country’s first nuclear energy plant is developing pace. In January, PGE Energia Jądrowa (PGE Nuclear Energy, the body established to construct and manage any future plant) hired Australian provider WorleyParsons Nuclear Services to conduct “characterisation, licensing and permitting services” on potential locations. The contract is worth 252 m zł. Kompania Węglowa (KW), Europe’s largest coal producer, sold 5% more coal in January, compared to previous years.

The recent cold snap was responsible for increased sales, company spokesperson Zbigniew Madej told reporters.

KW, which currently has stocks of about 5 million tonnes of unsold coal, plans to reduce production this year to 36.5 million tonnes, down from 39.3 million tonnes in 2012. And, PGE is going green.

PGE Obrót (PGE Trading) has announced a new scheme called ‘Eko PGE Energia’, which offers small and medium sized firms energy supplies produced entirely from renewable energy sources.

Companies that sign up can benefit from a fixed price until the end of 2014, but the offer closes at the end of March.

by Liam Nolan

32 business review

Adam Zdrodowski

previously worked for five years at the Warsaw Business Journal, first as a journalist and then as the editor of the paper’s real estate section and real estate newsletter.

33

office sector

Tenant activity continues to drive Warsaw office market Real estate investor Griffin Group has Another major real estate company active unveiled its plans for the former Meble in the Polish market, Immofinanz Group, Emilia store building in downtown recently launched construction on its first Warsaw which it acquired in September office project in Warsaw. The Austrian 2012. The prime site is located between company already owns a number of office the InterContinental hotel and the facilities in the Polish capital, but the Warsaw Financial Center skyscrapers new scheme, called Nimbus, will be the and could, according to the company, first office investment the company will house an office tower with approxi- develop on its own in the city. “Our develmately 41,000 sqm of space. However, opment activities are an important part the planned investment is facing major of our business model, not necessarily difficulties as the existing building cur- dependent on the asset class. We review rently houses the Museum of Modern Art, possible opportunities on a permanent which is expected to remain there until basis and Poland is included in the core mid-2016. It is also not clear whether the countries where we focus on developplanned skyscraper would obtain all the ment activities – together with Germany necessary permits as it could potentially and Russia,” said Eduard Zehetner, CEO block sunlight to an existing residential of Immofinanz Group. “Warsaw itself building standing nearby. In December, serves as a financial hub for Central and Griffin Group offered to accommodate the museum in the planned skyscraper, informing Warsaw City Hall that it is ready to lease out around 6,000 sqm in the tower for that purpose at a preferential price. The company said it would be able to provide the new premises within three and a half years if the municipal authorities agreed to the investment. In mid-January, Warsaw City Hall rejected the offer saying it needs more space for the museum. Municipal authorities did Patrick Van Den not rule out the possibility of building a Bossche, a managskyscraper in the location. Griffin Group ing director at Liebrecht & wooD. With president Przemysław Krych has said the BBI Development company is continuing preparatory work NFI, the company on securing permits for a building stand- is constructing an office building at Unii ing 160 meters tall.

business review

Eastern Europe and that’s why its office market will definitely remain appealing to international tenants,” he added.

The Nimbus development is located on Al. Jerozolimskie in Warsaw’s Ochota district and will comprise 19,000 sqm of leasable space. It is valued at approximately EUR 27 million and scheduled for completion in August 2014. Porr Polska is the general contractor of the facility, while CBRE and DTZ are its joint leasing agents.

Meanwhile, the tallest structure in the Plac Unii office and retail complex in Warsaw has been topped out. The project, which is located at Unii Lubelskiej Square in the city’s Mokotów district, comprises three buildings, including a 21-storey tower, and is scheduled for completion in autumn this year. The scheme is one of the largest office developments now under construction in central Warsaw and will deliver a total of 56,800 sqm of GLA, including more than 41,000 sqm of office area occupied by tenants including the ING Group. “Leasing is proceeding efficiently and according to schedule. The office part of Plac Unii is already 44% leased and the retail part in 73%, including preliminary

Lubelskiej Square

Griffin Group

is joining the growing group of office developers planning an office tower in the centre of Warsaw.

Pictured is the company’s newproject on the site of the Emilia Meble store.

Ghelamco

has signed the first tenant for its flagship Warsaw Spire office development in Wola.

Eduard Zehetner, CEO of Immofinanz Group, says that Warsaw’s office market will remain high on the list of office destinations for international companies. The Austrian company is developing its first project in Warsaw, Nimbus.

agreements. We are in the process of negotiating new lease deals,” said Patrick Van Den Bossche, a managing director at Liebrecht & wooD, which, along with BBI Development NFI, is one of the investors behind the BREEAM-certified development. Plac Unii was designed by the renowned Warsaw-based APA Kuryłowicz & Associates studio, while construction company Warbud is its general contractor.

Also in Warsaw, developer Skanska Property Poland has sold its Nordea House and Green Corner office buildings to two RREEF property funds for a total of EUR 94.6 million. The buildings form a newly completed LEED-precertified complex that is located in the city’s Wola district and comprises a combined 27,000 sqm of leasable space. The complex, whose sale was facilitated by Colliers International acting as an advisor to Skanska Property Poland, is currently 95% leased to tenants including Grupa Nordea, Grant Thornton and Jones Lang LaSalle Group Services. Skanska is now planning several other new office buildings in the Wola district which will include high-rise structures located in the vicinity of Warsaw’s ONZ and Daszyńskiego Roundabouts. Meanwhile, the developer has also sold its Green Towers office complex in Wrocław in Lower Silesia to one of Poland’s largest financial institutions for EUR 64 million. The fully commercialized complex consists of two buildings offering a total of 23,300 sqm of leasable space.

The first of those buildings was delivered in March last year and has already been LEED-certified, while the other is scheduled for completion this month. Skanska is now also building an office project called Green Day in Wrocław and planning a scheme called Dominikański in that city. “Selling our sustainable office buildings after leasing them is part of Skanska’s business strategy,” commented Waldemar Olbryk, president of Skanska Property Poland’s management board. “2012 was a

very successful year and we believe that involving tenants from that sector, one of in 2013 investors will continue to be inter- the largest of which was the lease by the ested in top quality green office projects General Directorate for National Roads occupied by reputable tenants, often from and Motorways of space in Skanska the growing business service sector. This Property Poland’s Green Corner in was the case of Green Towers and Nordea Warsaw, is on the rise. “I think that the House/Green Corner, both of which were trend will strengthen in the years ahead, almost fully commercialized before the which, in turn, results from the still-large end of construction and sold right after- investment activity in the office market wards,” he added. in Poland, and particularly in Warsaw,” Mr Skałba said. Located in the Wola disIn Poznań, developer SwedeCenter has trict of Warsaw, next to the Hilton Hotel, selected Porr Polska as the general contrac- Warsaw Spire will consist of a 220-meter tor of the first phase of its Business Garden tower and two lower structures (B and C).

Poznań office investment. Construction on The skyscraper is the first of a number of the phase, which will comprise four office high-rise office buildings that Ghelamco buildings offering a combined 42,000 sqm Poland is planning to build in the vicinity of leasable space, is scheduled to launch of Warsaw’s Daszyńskiego Roundabout in this quarter and finish at the end of 2014. the next few years. The neighbourhood The whole Business Garden Poznań is now one of the city’s office hotspots scheme will be built in two phases and will and several other developers includfeature nine office buildings with a total ing Skanska Property Poland have also of around 80,000 sqm of leasable space already secured land there. when completed. SwedeCenter is planning to obtain LEED certification for the Continued high tenant demand for office development. The Poznań project is the space in Warsaw has recently also been second Business Garden-branded scheme highlighted by Grupa Banku Ochrony to be launched in the Polish market by Środowiska’s lease of the whole Feniks Swedecenter. Construction is under- building in Wola district. The company way on Business Garden in Warsaw and has signed a long-term lease agreement a Wrocław complex is in the pipeline. for c. 10,000 sqm of class-A space in the newly delivered facility. The Feniks The last few weeks saw several large scale project, which obtained an occupancy office lease deals in Poland. Developer permit in December last year, was creGhelamco Poland, for example, signed EU ated by developer Europlan and a fund agency Frontex as the first tenant for its from the Griffin Group, which provided flagship Warsaw Spire office investment mezzanine financing for the scheme, the in the Polish capital. The external bor- first project in Poland to have benefited der security agency has signed a 10-year from mezzanine financing offered by the lease for around 14,600 sqm of space in group. This form of additional financing, building B of the 100,000-sqm complex obtained by an investor along with a regand is expected to start furnishing its ular bank loan, involves the participation new premises in September 2014. Paweł of the mezzanine lender in profits from Skałba, partner, office agency tenant rep- the financed project. “The funds are still resentation, at Colliers International, available and their use depends only on noted that cooperation between the pub- the quality of the projects which will be lic sector and real estate developers and shown to us,” said Przemysław Krych, investors has improved in recent years president of the management board of and that the number of office lease deals Griffin Group. by Adam Zdrodowski Skanska Property Poland’s Nordea

House in Wola has been sold, together with Green Corner, for EUR 94.6 million

34 business review

No shortage of potential development deals in Warsaw Cushman & Wakefield is advising Polski “In accordance with the zoning plan, at Holding Nieruchomości (PHN) on acquir- least two-thirds of the property will

Adam Zdrodowski's

professional profile

on page 32

35

residential sector

ing a joint-venture partner (or partners) house residential buildings, while onefor the company’s planned Port Rybacki third will house office buildings and (Fishermen’s Port) project in Gdynia on other commercial projects,” said Piotr the Baltic Sea. The development will Szmilewski, a senior consultant in the involve the revitalisation of a 10.4-hec- capital markets group of Cushman & tare site located in a post-industrial water- Wakefield. He added, however, that the front neighbourhood of Gdynia, in close final proportions would be determined proximity to the existing Sea Towers and during talks between PHN, the potential Gemini shopping centre buildings. PHN investor and Gdynia City Hall. Founded envisions housing and office buildings in 2011, following the consolidation with ancillary retail and service functions of state-owned real estate companies, on the land, which is owned by one of its the PHN group is one of the largest, in subsidiaries, Dalmor. The company plans terms of the size of its portfolio, entities to carry out the scheme in the form of a in the Polish commercial property marsingle investment or a number of inde- ket. Major planned projects of the group pendent ventures with one or several include an office tower located in downpartners. town Warsaw.

business review

Warsaw Stock Exchange-listed developer

Atlas Estates is planning a new housing

tower in the Polish capital’s Wola district that will be built next to the existing Platinum Towers and Hilton hotel buildings, said Reuven Havar, board president at Atlas Management Company, of the Atlas Estates group. Atlas Estates was originally planning to develop an office high-rise at the site but in the end decided to go with a residential skyscraper to avoid competing with the many office buildings planned in the neighbourhood and, at the same time, to take advantage of the demand generated by employees who will work in those buildings. The company plans to apply for a building permit for the development once a zoning plan for the area has been enacted, which, it hopes, will take place by the end of this year.

“The investment project could then be launched in 2014,” Mr Havar said.

According to the company’s concept, the 44-storey tower will house luxury apartments and will be comparable in terms of standard to the most prestigious residential towers currently under construction in Warsaw. Prices, however, are to be lower than in other projects of this kind in the Polish capital and start from 12,000 zł per sqm. Atlas Estates estimates the value of the planned scheme €80m.

Meanwhile, the company continues to develop its ongoing residential projects in Warsaw. It has recently secured financing for the third and last phase of Capital Art Apartments, which is scheduled for completion in the second half of 2014.

Polski Holding Nieruchomości (PHN) is looking

for a partner for its planned ‘Port Rybacki’ project in Gdynia. The company envisages the scheme to be mainly residential and office in nature.

Piotr Szmilewski of consultancy Cushman & Wakefield is advising on PHN’s Port Rybacki scheme.

Wojciech Okoński,

management board president of residential developer Robyg.

The company is to build the 5th part of its Nowa Rezydencja Królowej Marysieńki development in Wilanów.

Reuven Havar, from Atlas Management Company, said the company changed its mind about building an office tower in Wola, to avoid competing with nearby office tower projects.

The building will now be residential.

Ronson Development’s

Tamka residential project in central Warsaw is one of 8 residential investments the company is preparing.

Atlas Estates is planning to buy two new residential sites in Warsaw for mid-sized housing projects this year, Mr Havar said.

called Copernicus, while in Szczecin it could launch new phases of the ongoing Impressio and Panoramika developments.

The exact number of new investments that Another major Warsaw Stock Exchange- Ronson will launch this year will depend listed developer, Robyg, has recently on how the market situation develops. In secured a building permit for the fifth subsequent years, the company also plans phase of its Nowa Rezydencja Królowej to launch construction on new projects in Marysieńki development in Warsaw’s Warsaw, which will be built on land that Wilanów district. The phase is set to the developer acquired in 2012. Last year, deliver 127 apartments in the first quarter Ronson signed land purchase agreements of 2014. Robyg, which is also selling apart- concerning plots in the Mokotów and ments in an estate called Osiedle Zdrowa Wola districts. in Wilanów, has recently also purchased another four hectares of land in the same In the former district, Ronson is planneighbourhood on which it is planning to ning one of its largest projects which develop a third scheme with around 600 will deliver more than 700 housing units, apartments. The company has to date said Andrzej Gutowski, sales and marketdeveloped, or is now developing more ing director and member of the compathan 2,000 housing units in the district. ny’s management board. He added that “In Wilanów we are well perceived by buy- construction on the scheme will launch ers and this is why we want to buy addi- in 2014 at the earliest. Also in 2014, the tional plots in the location,” said Wojciech company could start building apartments Okoński, management board president at on the Wola site where over 600 housthe group. “We are currently in talks con- ing units are being planned, Mr Gutowski cerning two potential sites but these are at said. a very early stage,” he added.

Warsaw bourse-listed developer Gant For its part, Ronson Development, Development and Hungarian real estate also listed on the Warsaw bourse, has developer and investor Futureal Group announced that it is now preparing will jointly develop selected residential eight investments with a total of 1,005 projects from the former company’s portapartments, which it could launch in folio. In accordance with an agreement 2013. In Warsaw, these would include signed by both entities last December, the two new projects, Magellan in Mokotów companies will jointly build up to 1,200 and Tamka in downtown, as well as new apartments in three cities in investments phases of the ongoing Sakura, Verdis and valued at a total of €87m. Futureal will Espresso schemes. In Poznań, the com- invest up to approximately €10m of its pany could launch a new development own financial means in developer projects

from the Gant portfolio, with a scheme in Kraków set to be the first investment that the companies will develop together. For Futureal, the cooperation agreement with Gant is part of a broader strategy that envisions investing with partners in promising projects in Central Europe. The company earlier signed a joint-venture agreement with Caelum Development concerning the construction of a shopping mall in western Poland.

Meanwhile, analysts predict that the year 2013 will be a difficult time for the residential market in Poland. The uncertain economic situation, rising unemployment and lack of government support for those buying apartments will result in property price devaluations amounting to up to 10-15%, both in the primary and secondary markets, said Robert Barszcz, residential department director at real estate brokerage Ober-Haus.

He added that factors including difficulty in obtaining bank financing for home purchases and high bank margins will also be adding to the negative picture of the market this year. Buyers with cash will have most say in the market this year, Mr Barszcz said, and noted that already in 2012 many transactions involved buyers’ own financial means, rather than bank loans. According to the analyst, the situation in the renting market should remain similar to that of last year. “In spite of a considerable demand, one should expect a slight downward rent rates correction of up to 5% in the residential rental market,” Mr Barszcz said. by Adam Zdrodowski

36 business review

37

retail sector

Steady flow of shopping centre acquisitions Dom Handlowy Renoma, Griffin

Group’s recentlyacquired retail and office project in Wrocław, was built in 1930.

Joanna Richter,

president of the management board of Centrum Development & Investments.

business review

XXXZajawka iLis

quis rem estotate pa vollo commodias ellecupta dolorempel illati volore volorro cum es persper spicius, exerum fugiasit ad molute offic tem sintiaspera sunt quiasi omnit, natiur

Griffin Group

Adam Zdrodowski's

has recently taken on the renovation of Hala Koszyki market hall in downtown Warsaw.

professional profile

on page 32

Aleksander Walczak, president of

the management board of Dekada Realty, says that his company will expand their network of small city centre shopping centres.

A fund managed by Griffin Group has acquired the Dom Handlowy Renoma retail and office project in Wrocław in Lower Silesia from Centrum Development & Investments for €117.6m. Announced in the second half of December, the deal was one of the largest transactions in the Polish property market in 2012. Griffin’s acquisition of Dom Handlowy Renoma results from the company’s strategy of focusing on prime real estate assets in central loca- Jan Mroczka, president of the managetions. The newly bought development has ment board of Rank Progress, is overseeing won recognition within the industry for the development of several small-scale retail the thorough revitalisation and extension projects in small towns and cities. process it went through a few years ago.

Originally completed in 1930, the facility currently comprises approximately 31,000 sqm of retail space, housing more than 120 stores, as well as 10,000 sqm of office area occupied by IT company Hewlett-Packard. Centrum Development Real Estate which was originally planning & Investments, for which the sales deal is to revitalize the property itself but in the meant to facilitate new investments, will end decided to sell the asset and focus on continue to manage the building on behalf other investment opportunities in Poland. of the new owner. “This year we plan to The revitalised Hala Koszyki facility is continue work on two retail projects: expected to accommodate a delicatesSupersam in Katowice and Pasaż Victoria sen store and a number of other stores on in Lublin,” said Joanna Richter, president its underground floor, while its ground of the management board of Centrum and first floors are set to house tenants Development & Investments. “The com- including restaurants, cafés, art galleries pany will also actively continue the proc- and hobby stores. Altogether, 10,000 sqm ess of leasing and selling the facilities it of retail space will be provided. An addiowns,” she added. tional 10,000 sqm of office areas will also be developed within the investment.

Griffin Group has also recently launched preliminary conservation work on the his- The renowned Warsaw-based JEMS toric Hala Koszyki market hall in down- Architekci studio is responsible for the town Warsaw. The company acquired the design of the scheme in which retail and site in September last year from Avestus office spaces are respectively being leased

out by DTZ Polska and Colliers International.

Dorota Wysokińska-Kuzdra, president of the management board of Hala Koszyki, part of Griffin Group, said that the company first had a chance to check potential tenants’ reaction to the eponymous project at the MAPIC retail property fair in Cannes, France, in November last year.

“We were surprised at the large interest of retail chains, especially those which are just planning to enter the Polish market,” Ms Wysokińska-Kuzdra said and noted that this may result from the fact that the revitalisation of old market halls is still very rare in Poland.

Inter IKEA Centre Group Poland has

secured a building permit for the remodelling of its Park Handlowy Bielany retail facility near Wrocław and is now applying for a building permit for a new part of the shopping gallery. The company is now in the process of modernising and extending the mall, which is expected to offer more than 145,000 sqm of retail space housing approximately 200 stores in 2014. Already one of the largest shopping centres in Lower Silesia, Park Handlowy Bielany currently comprises 80,000 sqm

Between 2001 and 2012 the company completed 25 investment schemes, including seven of its own shopping centres, four of which it has already sold. Rank Progress will this year launch construction on new investments in Duchnów near Warsaw, Kielce, Olsztyn and Mielec, said Jan Mroczka, president of the company’s management board. He added that the company has also selected 81 locations for mini shopping centres in towns with populations of between 30,000 and 50,000.

“Entering smaller towns with shopping centres with approximately 6,000 sqm of retail space is for us one of the priorities for the next few years,” Mr Mroczka said and added that his company plans to build from four to 10 mini shopping centres per year. The first of such projects will be developed in Oleśnica in Lower Silesia. Rank Progress is now in talks to secure land for other mini shopping centre schemes across Poland, Mr Mroczka said.

of retail areas. Inter IKEA Centre Group Poland is now also working on a shopping centre project in Lublin, which will be integrated with an IKEA store, said the company’s managing director Michael Andersson. “It will comprise a total of approximately 80,000 sqm of space and house approximately 150 stores, including a Tesco hypermarket,” Mr Andersson said. He added that the project is scheduled for completion in 2014. Already this year, Inter IKEA Centre Group Poland wants to open a new retail passage developed near the existing Park Handlowy In Olsztyn in north-eastern Poland, invesFranowo shopping centre in Poznań. tor Retail Provider is currently leasing, in Meanwhile, Warsaw Stock Exchange- cooperation with DTZ, retail space in the listed developer Rank Progress has planned Nowy Dworzec Olsztyn mixedannounced the winning, along with a use project which will involve the delivery business partner whose name has not of a shopping centre with approximately been revealed, of a public tender for a plot 45,000 sqm of GLA, as well as a new railof land in downtown Wejherowo in north- way station and a bus station. The comern Poland on which a new shopping mall pany believes the scheme has major with approximately 14,000 sqm of leasable potential due to its unique concept conspace will be developed. The project will sisting in the combination of transcombine retail, entertainment and service port and retail functions, which allows functions and is expected to be the first for footfall to be generated by both the scheme of its kind in the city. The devel- inhabitants of the city, and visitors comopment will be built in a joint-venture ing by train or bus. A similar solution is formula, with Rank Progress and its busi- now also being implemented by developness partner planning to equally partici- ers Neinver and TriGranit, in Katowice and pate in the construction costs, as well as Poznań respectively. Thanks to their locato equally benefit from the future rent and, tion, the facilities will be regional centres, potentially, sales revenues. Construction said Katarzyna Michnikowska, a senior on the investment could launch in spring consultant in the valuation and advisory next year and last 18 months. Legnica- department of Cushman & Wakefield. based Rank Progress specialises in the “Tenants’ interest and the level of negodevelopment of retail projects located in tiated rents are making developers and investors plan other investments of this Polish mid-sized cities.

kind,” Ms Michnikowska said. She added that the largest new scheme located next to a transport hub is Forum Radunia in Gdańsk and that developments in smaller cities are also being planned. In the case of Nowy Dworzec Olsztyn, the investor is additionally counting on Russian visitors coming from nearby Kaliningrad.

Retail Provider has already secured financing for the project and is now awaiting the enactment of a zoning plan that will enable the launch of construction.

It hopes the scheme could be delivered before the end of next year.

BOIG Property Consulting has success-

fullly leased Dekada shopping centres across Poland. Facilities in Olsztyn and Myślenice, respectively in north-eastern and southern Poland, have already been fully leased, while all the other operational centres of the chain, located in Kraków and in Sieradz, Skierniewice and Żyrardów in central Poland, are currently leased out in at least 90% of cases. Present in the Polish market since 2011, Dekada is a chain of convenience shopping centres, typically located in city centres and major housing estates, and meant to meet the most basic shopping needs of the local inhabitants. They are occupied by tenants including food, home appliances and consumer electronics, clothes, footwear and healthcare products retailers. In the near future, Dekada-branded facilities are also expected to open in several new locations across Poland: a project located near the ring-road in Grójec in central Poland, a scheme located in downtown Brodnica and integrated with a bus station and a centre in Rypin (both in northern Poland), are all scheduled for completion in 2013, said Aleksander Walczak, president of the management board of Dekada Realty.

“Next year we are planning to develop facilities in Nowy Targ and Malbork and in subsequent years we also want to open shopping centres in Nysa and Łowicz,” he added. by Adam Zdrodowski

business review

Adam Zdrodowski's

professional profile

on page 32

PointPark Properties

will concentrate mostly on managing and leasing its current portfolio, including the company’s PointPark Poznań scheme.

warehouse & logistics sector

Investor interest in warehouse sector rising Caution and stability will characterize Poland’s logistics market in 2013, according to a recent report by international real estate consultancy CBRE. Demand for warehouse space should remain stable and lead to a decrease in the vacancy rate, the study said. According to CBRE, some 1.8 million sqm of warehouse space were leased in Poland in 2012, with most new investments currently preceded by pre-lease agreements. Built-to-suit (BTS) developments are common in the market, while speculative schemes are very rare. “Tenants are most active in Silesia and Lower Silesia,” said Agata Czarnecka, a senior consultant at the company, noting that the regions feature well-developed road infrastructure can benefit from the proximity of the German, Czech and Slovak markets. CBRE expects development activity to remain stable and mostly focused on the most important existing logistics locations in Poland. However, the company’s experts also point out that new warehouse destinations in the country, including Lublin, are now increasingly attracting tenant attention.

Towards the end of 2012, monthly rents for high-quality warehouse space in Poland ranged from €2.8 - €3.5 per sqm in the Warsaw region (locations between 15 and 80 kilometers from the Polish capital) to €3 - €3.5 per sqm in other parts of the country, and to €4.5 -€5 per sqm in locations within 15 kilometers from downtown Warsaw.

the medium term is to achieve the lead- European countries including the Czech ing or co-leading position in this sector,” Republic, France, Germany, Luxembourg, Mr Ryszka added.

Romania, Slovakia and the UK. Developer SEGRO has extended a major lease agreement with medical equipment producer ArjoHuntleigh at its Tulipan Park Poznań distribution centre. The tenant currently occupies 17,000 sqm of warehouse and office space at the complex.

Tulipan Park Poznań is located approximately 10 kilometers from downtown Poznań, in the vicinity of the A2 motorway.

The park now offers 126,000 sqm of built space and is expected to comprise a total of 230,000 sqm of leasable warehouse and production space when fully developed.

It is one of several SEGRO logistics centres in Poland, which also has projects in cities including Gdańsk, Gliwice, Łódź, Tychy, Warsaw and Wrocław. This year, SEGRO plans to continue to expand its portfolio in locations including Silesia and central Poland, with constructions in Wrocław, Tychy, Gdańsk and Stryków already underway. The company also wants to expand further in the Warsaw area, said Bożena Krawczyk, an investment director for Central Europe at SEGRO.

Industrial space developer Panattoni Europe has signed two major lease extensions for a total of 18,000 sqm at its Panattoni Park Błonie I and II of late.

Logistics companies Alfa Logis and Poltraf will remain at the distribution parks, where they currently occupy more than Meanwhile, CBRE Global Investors 10,900 sqm and 7,200 sqm, respectively. recently acquired the 34,000-sqm Following the lease extensions, Panattoni Warszawskie Centrum Dystrybucyjne Europe’s distribution parks at Błonie, a warehouse and office development town near Warsaw which has one of the in Warsaw from Peakside Polonia highest vacancy rates in the area, are now Management. Located in the southwest- fully leased. ern Włochy district of the city, close to Chopin international airport, the com- Meanwhile, PointPark Properties (P3) has plex comprises 25,300 sqm of warehouse recently secured Fiege and ND Logistics, space, 8,700 sqm of office area, and cur- two of the largest logistics services prorently houses 28 tenants. Savills and vider in Europe, for its PointPark Linklaters advised CBRE Global Investors Mszczonów distribution centre in cenon the investment, while the selling party tral Poland. The former entity has signed was advised by Jones Lang LaSalle and a new lease deal for more than 20,500 sqm Clifford Chance. “CBRE Global Investors of space, while the latter has increased will consider further acquisitions in the its lease by over 2,400 sqm. PointPark logistics sector in 2013,” said Grzegorz Mszczonów is located approximately Ryszka, head of transactions Poland at 45 kilometers southwest of Warsaw and the company. “However, at least in 2013, comprises three buildings offering a total we will only be interested in the Warsaw of almost 96,000 sqm of space. When market, especially prime multi-tenant fully developed, it is expected to feature properties located in Zone I. Our goal in 12 buildings and offer a total of almost 319,000 sqm. Piotr Wąs, leasing and development director at P3 Polska, said that the company will mostly focus on managing its existing real estate portfolio this year, including the leasing of existing space, looking for tenants for the planned buildings at the PointPark Mszczonów and PointPark Poznań logistics parks, and continuing with built-to-suit schemes.

Headquartered in Prague, P3 is present in

In the Warsaw region, commercial real estate advisory firm Axi Immo has recently facilitated lease transactions totaling almost 8,000 sqm of warehouse and office space at four distribution parks in and around the Polish capital.

The largest of those involved the lease by telecom company Netia of almost 2,400 sqm at Europolis Park Błonie (owned

by CA Immo) and the lease by transport and logistics company Transportir of 1,980 sqm at Metropol Park Błonie (owned by Metropol Group). The other deals were signed at Ożarów Logistics Centre (owned by Fundusz Inwestycyjny WBK Arka) and Norblin Industrial Park in Warsaw (owned by Grupa Kapitałowa Norblin). Renata Osiecka, managing partner at Axi Immo, said that Warsaw and the surrounding region will remain the leader in Poland in terms of existing warehouse space in the years ahead. In Q3 2012, total supply in the region amounted to almost 2.6 million sqm. “The availability of space will continue to be diverse depending on the location. Low supply, especially of larger modules of more than 10,000 sqm in locations along the A2 highway (Pruszków), can be an opportunity for warehouse parks in Błonie, Nadarzyn and Teresin, where high supply and lower rents make these locations more attractive,” Mrs Osiecka said.

Commenting on the main trends in 2013, Ms Osiecka said that the market is increasingly popular with investors and that one can expect investment funds to display a slightly less restrictive purchase policy this year and focus not only on whole portfolios in the best locations, but also on schemes in less popular destinations. She added that major developers are expected to focus on managing their existing parks and preparing them for sale. When it comes to new investments, these will mostly be BTS and pre-let developments. On the demand side, renegotiations are forecast to account for a substantial share of the total transactions volume, Ms Osiecka said.

Tomasz Mika, head of industrial department Poland, Jones Lang LaSalle, said the situation in the warehouse property market reflects the economy at large. Once Poland began to feel the effects of the crisis in Europe, demand for warehouse space in the country started to decrease, he said. Developers have adapted their policies to these conditions and have stopped building speculative projects. “As long as the economic situation in Poland and in Europe remains uncertain, the warehouse property market will see limited tenant and developer activity,” Mr Mika said.

by Adam Zdrodowski

transport sector

Motorways, Modlin Airport and Koleje Śląskie Following the manic rush to complete in so many businesses going bankrupt new motorway stretches in time for Euro in the building sector. GDDKiA’s most 2012, the General Directorate for National important criteria of offering contracts to Roads and Motorways (GDDKiA) believes the lowest bidders was to blame. On averthat the construction boom will slow down, age, 11 companies fought for each motorbut will not come to a halt. GDDKiA has way contract, and the price of building recently revealed its investment plans for materials soared because of huge demand.

2013, which is timely information for con- Even when companies began to fail, struction companies that are struggling to GDDKiA left no scope for renegotiating survive after a wave of bankruptcies last contracts. After complaints from conyear. GDDKiA intends to spend 18bn zł on struction companies over the way in which the construction of 706km of roads in 2013, tender policies are offered, GDDKiA plans but almost half of this package includes to extend its tender specifications in 2013 delayed road investments, which should to include the duration of the investment, have been completed before Euro 2012. and the length of the warranty. However, By 2016, spending on roads is estimated the lowest price will still remain the decidto reach 43bn zł, and is part of the gov- ing factor. Additionally, in 2013 companies ernment’s plans to stimulate economic that finish motorway jobs ahead of schedgrowth as announced by prime minis- ule can look forward to receiving an additer Donald Tusk in his October exposé tional ‘success fee’. GDDKiA CEO Lech to the Sejm.

Witecki says that he favours competition because it saves money. He claims that the GDDKiA is awaiting permission from the average price per kilometre of highways Ministry of Transport to announce new in Poland is €10m, which does not differ road tenders. In the coming weeks, the from European standards. authority plans to start looking for a contractor for the A1 Tuszyn to Pyrzowice After only five months in operation, Modlin motorway, which will be an important link airport – which had handled 900,000 pasbetween the A2 and A4 motorways, facili- sengers since July – has closed due to a tating journeys from Łodz to Silesia. When damaged runway. Construction errors complete, it is estimated that it will be are being blamed. The airport, originally one of the most crowded roads in Poland. meant to have opened in time for Euro In addition, the GDDKiA intends to offer 2012, seems to be dogged by bad luck. tenders for the S8 expressway route In autumn, low-cost carriers were furious within the Warsaw area (the exit road when it became necessary to refer flights from the capital city towards Białystok and to Warsaw Chopin airport due to fog – Lithuania), and the S7 section between Modlin airport does not possess a vital Gdańsk, Warsaw and Kraków.

Instrument Landing System (ILS) system needed to guide approaching airplanes in The latest version of the national road programme has raised some debate.

Local activists started protests in December against government plans to not build ring roads in cities such as Olsztyn, Suwałki, Góra Kalwaria, Nysa, Kędzierzyn Koźle. Why ? It is expected that the EU budget for 2014-2020 will provide Poland with about €10 bn funding for road construction projects. And, as a priority, the Ministry of Transport has decided to spend the cash on missing sections of motorways and expressways.

This will provide Poland with the fifth largest volume of national motorway networks in the EU. However, a side effect is the exclusion of building any roads that remain outside of the planned network of motorways and expressways. photo: tomasz adamowicz (forum)

38

The second problem associated with the national road building programme is the frail condition of many construction companies. According to a Euler Hermes report, more than 260 construction companies went bankrupt in 2012, a 96% increase on 2011 bankruptcy figures. It is a sad paradox that the biggest road construction programme in Europe between 2008 and 2012 (worth 80bn zł), resulted

Departure areas remain void of passengers at Modlin Airport. Closed since late December, airport management have said that normal sevices are likely to resume in April. As well as lacking a vital Instrument Landing System to guide approaching airplanes in fog, the airport was closed due to chipping on the runway’s concrete surface.

heavy fog. Finally, in late December, Urząd Nadzoru Budowlanego (Construction Supervision Office) said that chipping on the runway’s concrete made it too dangerous for use. Warranty repairs on the runway cost construction company Erbud 20m zł. Consequently, Erbud’s shares on the Warsaw stock market have dropped by 20%. Worse still, Modlin airport has decided to sue Erbud for compensation due to flight cancellations and lost revenue. The airport’s authorities estimate that losses caused by the closed runway are worth over 1m zł per week. Decisions

by Ryanair and Wizzair to move their operations to Warsaw Chopin airport until mid January have also cost the fledgling airport dearly.

In December, all eyes turned to Śląsk (Silesia) due to the failed launch of Koleje Śląskie (Silesian Rail), which was due to handle all rail traffic in one of Poland’s most populated voivodships. Having not offered any formal tender, the Marszal’s Office signed an agreement with Silesian Rail from 2013 to 2015. As a result, the Silesian division of Przewozy Regionalne – the largest rail carrier in Poland – was closed in December, and almost 2,000 people lost their jobs. On 9 December, Silesian authorities decided to withdraw from co-financing the project, claiming that the standard of service was not sufficient, and that the amount of regional subsidies required was too high – in 2011, Silesia contributed 147m zł, the largest funder among 15 voivodships of Przewozy Regionalne.

Koleje Śląskie had been trying to enlarge its fleet, buying new trains from Polish producers Newag and PESA, but also leasing rolling stock from other carriers, such as PKP Cargo, Lotos Kolej and Ceske Drahy. However, the company’s first fortnight in business was marked by chaos. Dozens of late and cancelled trains were reported, over 20% of scheduled services in many cases. Koleje Śląskie CEO Mark Woroch and his deputy Artur Nastała were dismissed. Finally, Silesia’s Marshal Adam Matusiewicz also resigned.

This has had serious repercussions for the Polish rail industry. The failure of Koleje Śląskie to become independent from Przewozy Regionalne may discourage other local governments from setting up their own rail companies. This situation will strengthen the position of Przewozy Regionalne and is likely to hamper much needed restructuring within the group, such as cutting staff, the elimination of unprofitable connections and improving the efficiency of rolling stock management. The Silesian rail fiasco has damaged the image of Polish rail, which has improved greatly in recent years thanks to EU subsidies. by Konrad Majszyk

39

business review

Konrad Majszyk

writes about transport, infrastructure, roads and railways for Dziennik Gazeta Prawna daily newspaper, and also appears as a commentator on the TV Biznes channel. He was previously infrastructure, transport and EU investment correspondent for Rzeczpospolita daily newspaper for nine years.

40

Got your ID? Welcome to the doctor’s office

Starting in 2013, every patient should be

given a special wristband with their personal information, making it easier for doctors and nurses to identify the patient.

to reduce the risk of error and facilitate is to be established, combining the functhe identification of patients by medical tions of the Agency for Health Technology personnel, as well as help with issuing Assessment and NFZ. The specifics of prescriptions and medication. The wrist- these changes are yet to be revealed. band system has a successful track record In addition to the decentralization of the in other countries, but here in Poland the NFZ, the Ministry is expected to proproblem is that while all hospitals have pose solutions for additional insurance to been issued with the bands, not all of them increase competition on the market. are equipped with the necessary scanners to read the bands. Although many facil- One thing is certain: the changes proities complain about the high costs of posed and implemented by the Ministry the equipment, the consequences of not of Health won’t show any immediate having them are severe. If a healthcare effects. They will need not weeks, but provider, be it clinic, doctor’s surgery or months, so patients would be unwise to hospital, doesn’t provide the equipment, expect a revolution or sudden improvethey can be crossed off the NFZ register, ment in easy access to specialized healthto all intents and purposes meaning that care. And that’s too bad, because quick they won’t be able to function as medical change is needed. According to data from the Patients’ Rights Ombudsman, over the facilities. last three months of 2012 over 2000 peoThe New Year also saw changes in the ple filed complaints about the inability to list of subsidized medications. The list access all kinds of healthcare services now consists of 71 drugs, among them new treatments for rheumatoid arthritis, Finally, on a more positive note, a spemultiple sclerosis, psoriasis and epilepsy. cial 3-year in vitro programme will cover In over 600 cases the amount the patient 15,000 couples, with 70-80% of the treatco-pays (with the government) will ment’s cost to be covered by the govincrease, while in over 2000 the co-pay- ernment. The programme is intended ment amount will be cut. The Ministry of to subsidize “three cycles” and the govHealth has emphasized that the new list ernment estimates that the cost of the changes the approach to healing epilepsy, first six months of the programme will with patients getting access to therapy in amount to approximately 50 million zł.

by Bartosz Kwiatek an earlier phase of the illness than before, which is aimed at helping their social and professional lives. The way you can access new medication for aggressive rheumatoid arthritis has also been changed, with a refund for two new modern biological drugs. Further changes concern widening the scope of off-label use for 180 medications, used, for example, in cardiology, nephrology, immunology, rheumatology and oncology. When buying drugs, every patient must be informed by the pharmacist about the possibility of purchasing a cheaper, generic substitute of the medication prescribed by the doctor. According to the drug reimbursement act, the list of medications subsidized by the government is updated every two months.

The refundable drugs have fixed, official prices and premiums.

As of January 1st 2013, patients using public healthcare services don’t have to worry about presenting documentation to confirm that they have health insurance. To be admitted into the doctor’s office, you only need your personal identity card (dowód osobisty) or another document containing your personal identification number (PESEL). This is thanks to a new electronic verification system called eWUŚ.

Any healthcare facility which has signed a contract with the National Health Fund (NFZ) will be able to check a patient’s insurance eligibility online. If the electronic system shows that the patient does not qualify for a given service, they can write a statement confirming their insurance and still get into the doctor’s office.

NFZ data shows that 98% of providers are now using the new eWUŚ system.

The introduction of the programme is just the first step in the planned digitalization of the Polish healthcare system, with Minister of Health Bartosz Arłukowicz The primary plans of the Ministry of declaring that in 2014 all medical docu- Health for 2013 are: reforming the mentation will also be available in digital National Health Fund, and launching a form, with the introduction of electronic subsidized programme for in vitro fertilimedical records for every patient. This zation which Minister Arłukowicz hopes should mean that any doctor in any facil- to introduce by July 1st. Concerning ity in Poland will be able to quickly access reform, NFZ is to be decentralized and a patient’s medical history and other nec- the role of regional branches will be expanded. At the expense of NFZ headessary medical documentation. quarters and the Ministry of Health, they Starting in the new year, each hospi- will be given more power to shape local tal patient should in theory be issued healthcare policy while increasing their with a special wristband containing the responsibility to provide healthcare on a patient’s basic information and the name day-to-day basis. It is not yet clear, howof the ward, the remaining data being hid- ever, who will be implementing and superden in a barcode. The system is designed vising regional healthcare. A tariff agency

Health Matters Building a sustainable healthcare system for Poland

Health Matters will discuss

the current shape of the Polish healthcare sector and explore how both public and the private sectors can best ork together to build a more sustainable healthcare system.

Participants will include: private healthcare providers, insurance companies, hospital management, legal experts, healthcare consultants and hospital planners & designers. as well as private equity funds.

An excellent networking opportunity, expert panels will discuss:

photo: rafal siderski (wprost / forum)

is a print and broadcast journalist specialising in the medical, pharmaceutical and healthcare sector. He has been an editor, producer and reporter for Polsat news, covering healthcare, since 2008. He is also host of the weekly medical programme Encyklopedia Zdrowia.

He has written for Newsweek and Życie Warszawy, and was editor of the pharmaceutical industry publication Farmacja i Jan. He studied pharmacology and journalism.

photo: bartosz lech stefaniak

business review

Bartosz Kwiatek

41

healthcare sector

• Healthcare legislation • Financing sources and structures for clinics & hospitals • Case studies of efficiently designed hospitals • Telemedicine: a major development in diagnostics • Healthy aging

Minister of Health Bartosz Arłukowicz

is the driving force behind the digitalization of Poland’s healthcare system, which should in theory bring much needed order to the unwieldy state monolith.

patrons

CMS_LawTax_RGB_from101.eps

June 2013, Warsaw

42 business review

43

start up

Bridge to revolution Bridge is a young company looking

Poland Today will

profile a new Polish start up every month, as well as giving them space for an advert opposite the article for free, as part of our commitment to supporting entrepreneurship in Poland. If you would like us to consider your company for a profile, or you know of a company you think should be considered, please contact us through

www.poland-today.pl

Jarosław Nowotka and co-founders of Bridge are positioning themselves to be in the vanguard of the 3rd industrial revolution, using the latest in modern technology to bring industry back to a time of artisans and locally crafted products.

“The 1st industrial revolution, the one in Britain in the 1700s, every one knows about. The 2nd industrial revolution was the electrification of factories and the introduction of mass production in the 19th century. The 3rd is happening right now – it’s the use of computers to aid manufacturing” claims Jarosław, not at all over-awed by the enormity of his assertion that we are the dawn of such a seismic change. Products, he says, will increasingly be made according to the customer’s precise needs and be produced locally.

“Products are closer to the end user both in terms of form and production. Right now we’re experimenting with and connecting a lot of fields to create unique, non-standard projects. For example we’re working on a new line of furniture that will be produced on demand with digital fabrication and customizable with internet interfaces.

We’ve done a lot of prototypes so far and we plan to launch our first product in the first quarter of the year. We have more ideas ready for production. We’re also looking for investment, which we want to put towards launching wide range of products.”

The team behind Bridge - the name was chosen because they are bridging the gap between virtual technology and reality - each bring their own expertise.

photo: robert ceranowicz

to reinvent personal links with everyday products. The founding team in studio: Mikołaj Molenda, Hanna Kokczyńska, Jacek Majewski, Michał Piasecki, Jarosław Nowotka (from left to right)

“I’m a software engineer” says Jarosław.

“Mikołaj Molenda – well, he’s amazing. He’s a doer who makes everything work, from directing movies to lasercutting sheets of metal – he’s pragmatic, artistic and a visionary all at once.”

He sounds like he’s a 3rd industrial revolution all by himself. “I met Jacek Majewski a few years ago when we were working on websites and web applications.

The three of us started doing augmented reality applications (ed. apps through which users can view the physical world through their mobile device camera and augment the image with virtually generated interactive content). We found we worked together well and decided to set up a company together. Just before we did, we were joined by Michał Piasecki, Best designed interfaces are so

photo: mikołaj molęda

easy to use, that people using them are not even aware of the interface.

Bridge designed an augmented reality application optimised for best user experience during composition of wall mounted shelf.

a designer and programmer who knows a lot about digital fabrication technologies such as 3D printing, laser cutting or CNC milling – the technologies which produce physical objects directly from a computer file – a kind of printer, but for objects.

Basically, you can print it with exactly the same result in Asia, Europe or the US. Michał suggested we use this technology to produce personalized furniture”.

This would require web interface for customization, product design, and a network of digital fabrication tools. To meet these challenges, they invited the final member of the team, Hania Kokczyńska, a designer with experience in coordinating production.

Bridge started operations in July 2012 at

the Przemiany Festiwal at Centrum Nauki Kopernik (Copernicus Science Centre).

“We helped organize the furniture-design part of the event, in which over 500 people co-designed their own seat, the inspiration being origami design.”

About the company’s plans for the future, Jarosław says that they want to deliver ‘great design’ which is ‘fresh and functional.’

“We want to push the boundaries of what can be put on the market. It’s called ‘digital production on demand’ and it brings back the personal link with everyday objects which disappeared with mass produced, mass delivered things where everything is the same. When the requisite technology and equipment becomes more widely available – and cheaper – our designs will be ready.” by Richard Stephens

country focus

old wounds

Increased trade can only ease Polish-Russian mistrust

of a Polish government plane trying to land in thick mist in Smolensk in April 2010 was, probably, the biggest catastrophe many Poles, alive today, will ever see.

The accident took the lives of Poland’s president Lech Kaczyński, his wife and many top Polish officials. Polish prime minister Donald Tusk rushed to the scene as did Vladimir Putin, then the Russian premier. Their spontaneous embrace at the site of the accident was seen, at that moment, as a genuine gesture of sympathy, support and solidarity.

Official Russian and Polish assurances that the causes of the crash would be thoroughly investigated were taken by some as a sign that the accident would mark a new phase in relations between Warsaw and Moscow. Optimists felt that the tragedy would bring the two peoples together rather than deepen the divisions which history had wrought. After all, no one missed the significance of the fact that president Kaczyński had been on his way to Katyń to commemorate the deaths of 22,000 Polish officers who had been murdered on Stalin’s order in the spring of 1940.

But as time has passed the embrace in Smolensk come for some to symbolise complicity in crime, as around a third of Poles now believe that, either, the crash was no accident and could have been a plot to kill the Polish president or felt that, at the very least, the investigation which concluded that pilot error had been the cause, covered up more than it explained.

Historical foes The crash cast a pall over Polish-Russian relations. The tragedy bitterly divides Poles and makes it difficult for premier Tusk’s Civic Platform party to continue its efforts to improve bilateral relations which started when it came to power in 2007.

It was then that it took over from Lech Kaczyński’s and Jarosław, his surviving twin brother’s, Law and Justice (PiS) party.

PiS had adopted a confrontational stance towards Russia when in government between 2005 and 2007. Adam Rotfeld, a former Polish foreign minister and the cochair of a Polish-Russian ‘Committee for Difficult Issues’, which works to clear the many historical land mines littering the two countries’ mutual relations, explains that his task is not easy. “We are both plagued by inferiority and superiority complexes towards each other,” he often repeats.

That makes coming to an understanding very, very hard.

The Poles see themselves as historical rivals to Russia in the struggle for influence over eastern Europe, representing western civilisation against the Asian mindsets symbolised by their eastern neighbour. Wars, the partition of Poland in the 19th century and uprisings as well as the post war Soviet take-over, all make up a deeply ingrained and persistent feeling of persecution and victimisation.

The Russians, meanwhile, see themselves as a separate centre of power, which has no need to integrate or answer to anyone. Deep down they consider Moscow to be the ‘third Rome’ after Constantinople and Rome itself. As such, the Russians have a natural right to dominate the region.

In their eyes the Poles are a mere irritant, ever rebellious and unwilling to recognise their subordinate status.

That feeling of irritation is all the stronger now that Poland is in the European Union and in NATO. It gives the Poles a voice in the inner counsels of these western alliances while

Russia, uncertain of where it really belongs - in the Asian east or the Western west - remains on the outside.

Cross border trade But despite historical, political and emotional problems, conventional trade between the two countries is developing while in the frontier region, where a recently opened visa free zone stretches between Kaliningrad and northern Poland taking in Gdańsk and the resort town of Sopot, trans border shopping is booming. In 2011, Polish exports to Russia outstripped Polish foreign sales overall by 11% and almost touched the total of near $9bn worth of exports to Russia in 2008, a record year.

In 2012, Polish exports of machinery, cars, household appliances and food rose by 16% on the previous year. Nevertheless the deficit in mutual trade is huge as the cost of imports (growing by 11% compared to 2011) in the first nine months of 2012 reached €10bn or €1.6bn more than in the same period in 2011, as Poland bore the cost of gas and oil imports which makes up over 70% of Polish purchases in Russia.

Direct inward investment though is anaemic and reflects the mistrust that bedevils the political sphere. Recently Luxoft, a Russian IT services company based in Kraków, announced it would be opening a second centre in Wrocław bringing 300 jobs to the city. But the announcement belied the fact that of the 1500 foreign investors in Poland, a mere five companies are from Russia.

And Russian bids for major Polish companies like Lotos, the oil refinery or the Tarnów fertiliser works invariably fail.

Last year saw the value of direct Russian investment in Poland at $63m compared to $109bn from Germany. Polish investments in Russia are even smaller. But it is at the grass roots where trade traffic is growing. Last 27 July saw a ‘small border traffic agreement’ between Russia and Poland come into force which in fact means Kaliningrad, the only district of the Russian Federation which borders with Poland. This means that residents of Kaliningrad can travel without visas into a 30 kilometre area from the frontier which also takes in Gdańsk, Gdynia and Sopot.

Poles from the underdeveloped northern province of Mazuria cross the frontier to buy petrol and cigarettes (the price of vodka is about the same on both sides). Russians flock to shops for basic foodstuffs for themselves, and to sell them on when they get home. Frankfurters are the top item and it is estimated that ten tonnes enter Kaliningrad daily.

Bread, milk and other dairy items are another staple which Russians are buying. More competition between producers on the Polish side simply means they are cheaper and of better quality in Mazuria than in their monopolised counterparts in Kaliningrad. Household appliances on sale in Poland are also a favourite with the visitors from Kaliningrad.

The bustle, or rather the traffic jams at the frontier are a sign that lifting visa controls is the quickest way to allow people to learn about each other and the merits of each other’s political and economic systems. Who’s to say that even now residents of Kaliningrad aren’t wondering why it is that their own producers are not able to produce frankfurters at the price and quality of their Polish neighbours across the frontier? by Krzysztof Bobiński

illustration: Jagna Wróblewska

’We are both plagued by inferiority and superiority complexes towards each other’

photo: Grzegorz Rogiński (Reuters / CIR)

44 Healing

The crash

Krzysztof Bobiński

is the head of Unia & Polska, a pro European organization. He was till the year 2000 the Warsaw correspondent of the Financial Times.

Currently he writes occasionally for openDemocracy.org and the European Voice.

Russia’s Prime Minister Vladimir

Putin comforts his Polish counterpart Donald Tusk as they visit the site of the Polish government Tupolev Tu-154 aircraft crash near Smolensk airport 10 April, 2010.

Total mutual trade

2012 (I-XI): 26.82 € bn 2011: 24.51 € bn 2010: 18.76 € bn

Exports to Russia

2012 (I-XI): 7.12 € bn 2011: 6.14 € bn 2010: 5.03 € bn

Imports from Russia

2012 (I-XI): 19.70 € bn 2011: 18.37 € bn 2010: 13.73 € bn source: National Statistics Office

46

www.svaboda.org

www.indianexpress.com

www.wienerzeitung.at

www.guardian.co.uk

www.uk.reuters.com

country focus

From russia with love Russian art and culture is gaining new fans in Poland

is a Warsaw-based Bulgarian-born journalist, most recently with Bloomberg Businessweek Polska.

He is a frequent contributor to Capital, Bulgaria’s leading weekly publication.

His articles have appeared in publications such as The Jewish Daily Forward (USA), Haaretz (Israel) and Malemen, Forbes and Newsweek in Poland.

He is a winner of the EU-funded ‘Journalists Against Discrimination’ award.

Successful movie festival

Artistic exchange The organisers of the Sputnik movie festival also established a sister festival, ‘Wisła’, in Moscow in 2007, screening Polish cinema for Russian cinephiles. Last year, ‘Wisła’ screened in nine other cities across Russia, including Siberia. Polish theatre is big in Russia too. “There is also a huge RussianPolish relationship in theatre”, smiles Vanya Bowden, a young Moscow-based theatre costume designer.

“We even have a theatre company called ‘Polish Theatre in Moscow’. Young theatre snobs love to brag about knowing the names of Polish theatre gurus. And, Dorota Masłowska is known for her plays here.

She is really good!” adds Vanya.

Polish actress Karolina Gruszka and her Russian husband Iwan Wyrypajew, a critically acclaimed theatre and film director, playwright and actor, are passionate representatives of the Russian-Polish theatre and cinema lobby in Moscow.

While Gruszka is a regular in Moscow theatres, Iwan Wyrypajew is busy directing in Poland – his latest play, Ożenek, premieres in February at the Teatr Studio in Warsaw.

In January, Wyrypajew won the “Paszport Polityki” award, one of the most prestigious theatre awards, given by Polish weekly magazine ‘Polityka’.

And, there are a growing number of Polish journalists writing books about their big neighbour, such as Igor T. Miecik, whose book ’14:57 do Czyty. Reportaże z Rosji’ was released in November. In 2011, ‘Dzienniki Kołymskie’ by acclaimed Gazeta Wyborcza journalist Jacek Hugo-Bader hit the bookshelves and became an instant success. In it, HugoBader tells the story of Kolyma, a region in far east Russia, synonymous with the harshest Gulag labour camps, as he tours the region on his motorbike. “Poland is a very interesting country, but it’s already predictable, not to mention Western Europe,” says Hugo-Bader, who has written about Russia for almost 20 years. “How is Moscow going to look five years from now? No one knows. For the last two decades I’ve been witnessing the end of the Soviet empire and this is

’Today I still have nothing but warm feelings for Russia. The real Russia is often overshadowed by on-going political issues, which is too bad’

Culture is the word that agendas in Russia and Poland should pay particular attention to. When, in 2007, the Sputnik Russian Film Festival kicked off in Warsaw, the organisers from the Wspieram Foundation had hoped to remind Varsovians about good old Russian cinematography, and bring them up to speed with contemporary Russian cinema. Last November – six years on from the original event – the festival showcased not only in Warsaw, but also in over 40 other cities and towns across Poland, turning Sputnik (first called ‘Sputnik nad Warszawą’, now entitled ‘Sputnik nad Polską’) into the longest movie festival in the country. Screenings across Poland are scheduled to last until March.

Aneta Rudaś, a Warsaw resident working for a PR firm in the city, is one of a few thousand Poles who regularly checks out ‘Sputnik nad Polską’. After years studying Russian, or as Aneta calls it, “my beloved language”, she decided to complete a one-semester student exchange programme in Moscow. “Today I still have nothing but warm feelings for Russia. The real Russia is often overshadowed by on-going political issues, which is too bad.

I really wanted to get to know the society better and it paid off – Russians are big talkers, always ready to help out.”

Russian president Vladimir Putin even sent a letter, which was read out at this year’s ‘Sputnik nad Polską’. “The festival will contribute to creative dialogue between Polish and Russian societies,” it read. His Polish counterpart, president Bronisław Komorowski, also wrote a letter, underlining that

photo: Katarzyna Werczyńska

Mladen Petrov

culture and art create “the perfect forum for getting to know each other”. It is hard to recall another occasion when two presidents addressed a movie festival.

what I write about. How many empires have we had? Not that many. Turns out I am really lucky to have been given such an opportunity” he adds. British publisher Portobello Books has recently purchased the rights for ‘Dzienniki Kołymskie’, and his previous non-fiction book “Biała gorączka”, which dealt with themes of alcohol and disappearing languages in Siberia, has been published in the US. Being Russian in Poland is losing its sting too. Daria Zmiejewa, a 17-year-old high school student from Warsaw, has grown up in a Russian speaking family. In the past, she says her family paid “a high price” for their Russian background. Recently however, being Russian has become fashionable. “All of a sudden, the kids at school were taking Russian and wanted to get to know this weird country better. Earlier I was exotic, now I am fascinating. It’s much easier today. It’s enough to mention my background and the conversation just flows,” says Daria. Back at the Sputnik movie festival, the conversation between Polish and Russian moviegoers is flowing too. “After many screenings, we find out that we are close to each other and the differences between us aren’t actually that significant,” says Małgorzata SzlagowskaSkulska, the festival’s director. Maybe that graffiti artist on Poniatowski Bridge had a point after all. by Mladen Petrov

let’s drink tonight The artist behind the graffiti piece said

that he scribbled the message on Warsaw’s Poniatowski bridge - prior to the Poland versus Russia match at Euro 2012 - in response to Polish tabloid headlines, which he felt had overblown the possibility of clashes erupting between rival fans. “I went there at dawn on 12 June with an old can of brown paint and intended to write something so that every Russian on the way to the match would see it,” the anonymous artist told Vice Magazine.

Later, a passer-by snapped a photo of the artwork and shared it on Facebook.

Within a few hours thousands of Polish Facebook users had shared the image before it found its way onto Russian social networks, where it received huge coverage. Reuters and CNN soon reported the graffiti’s welcoming message, and British newspaper The Guardian declared it the quote of the day. Within 24 hours, millions of television viewers and internet users across Europe, India, Japan, China and the United Arab Emirates has viewed the now famed graffiti.

www.youtube.com

If you want to send a message out there, leave it to the artists.

The fragile state of Polish-Russian relations is a big concern on both sides of the border, but one improvised artistic gesture last summer tried to clear the air. Well, at least for one day before it was painted over. ‘Welcome to Warsaw, brothers Russians! F*** politics! Let’s drink wódka tonight!!’ read a piece of graffiti on Warsaw’s Poniatowski Bridge prior to the Poland and Russia Euro 2012 group match. Pictures of the street art went viral, both in Poland and abroad, and suggested a vital point: Poles and Russians do have something in common. And no, it’s not all about vodka culture.

Find more about

this unexpected viral on Abonent Czasowo Niedostepny Facebook fanpage (in polish)

Voivodship focus

Poland’s beating economic heart It’s not just Warsaw which attracts investors to Mazowsze

Mazowieckie

Liam Nolan covers Polish current affairs for the Irish press, RTÉ Radio and NPR news. He has also contributed to The Atlantic, The Financial Times, CNBC Magazine and other international publications. From 2004 to 2011, Liam directed and produced television programmes for Irish national broadcasters RTÉ, TG4 and Setanta. He has a Masters degree in Communication from Université Lumière Lyon II, and a B.Sc in Communication from DIT, Ireland.

has often been proof that not all FDI is Warsaw-based. described as Poland’s economic leader. Take South Korean electronics giant, As the country’s most densely popu- LG Electronics. The group opted to lated region, it mops ups 23% (an esti- establish a factory in the northern town mated €4.69bn) of all foreign direct of Mława in 1999, and today employs investment (FDI) in Poland. That figure 2,500 people, focusing on the manuis way ahead of the region’s closest rival, facture of television sets, mostly for Śląskie, which attracts about €1.02bn export. Delphi, a producer of electronic FDI annually. Not surprisingly, Warsaw devices for the automotive sector, operis responsible for a sizable chunk of ates from the small town of Błonie while these investments. According to a 2012 ProLogis, the global warehouse and report by analytical and advisory team logistics development and investment Technopolis Group, 43 of Poland’s 100 group, maintains six industrial premises largest companies are headquartered across the region. The region’s agriculin Warsaw. tural production also performs well – One of Poland’s sixteen voivod- more than 16,000 people are employed ships, Mazowieckie is responsible for in the sector. “We observe an increascreating 21.9% of Polish GDP, while ing trend of foreign investors choosGDP per capita is 160% higher than ing the capital city as the location for the Polish average. From telecommu- their companies’ headquarters, while nications, financial services, insurance the businesses themselves are set up in and IT firms in Warsaw, petrochemi- smaller cities and towns of our region”, cal companies huddled around Płock, says Mr Struzik. Indeed, the region’s five to train manufacturing in Siedlce and Special Economic Zones (SEZ) offer Poland’s largest fruit growing region investment incentives such as income around Grójec, Mazowieckie displays a tax exemptions.

According to ARMSA, regional aid in diverse economy. Research and development is also well represented – there Warsaw is capped at 30% for investors are 70 research institutes dotted across engaged in creating new jobs. Outside the region. Some of the leading inter- the capital, it’s an even rosier 40%. national companies now operating in Small businesses can expect a further Mazowieckie include: France Telecom, 20%, and medium sized firms another Bauer, Citigroup, Gazprom, Vivendi, 10% on top of base aid funding. Despite European Bank for Reconstruction and the incentive to establish businesses Development, UniCredito Italiano, Levis, outside the capital, a survey entitled LG Electronics, Samsung Electronics, “European Cities and Regions of the and Nestlé. And, according to ARMSA Future 2012/2013” by fDi Intelligence (the Mazovia Regional Development (The Financial Times), Warsaw came Agency founded in 2006 to support fourth in a survey of major European socioeconomic development and spur cities with ‘Best Business Friendliness’. on the growth of small and medium London, Moscow and Brussels took sized enterprises), both the telecom- first, second and third spots on the munications the financial sectors podium respectively. have received the largest injections of capital investment in recent years. All roads lead to Warsaw Mazowieckie will have received €2.7bn Road construction may be slowing elsein EU structural funding by the time where in Poland after the boom-to-bust the current 2007-2013 budget expires, scenario of Euro 2012 road projects, but an opportunity that “a lot of local governments have seized,” says Adam Struzik, Marszał of the Mazowieckie Voivodeship.

Not all about the city While the majority of international companies tend to gravitate towards Warsaw’s shiny financial towers, a host of companies from a variety of sectors can be found outside the capital –

of motorway half way between Warsaw and Siedlce is the only stretch of the road to have been completed.

Stark differences at play

Mazowieckie facts & figures Capital: Warsaw Population: 5.24 million Av. monthly GDP per capita: 4,625 zł Urban population: 64.6% Population density: 147 per km2 Unemployment rate: 9.4% Other principal cities:

Radom, Płock, Siedlce, Pruszków, Ostrołęka (Source: PAIiIZ)

the government appears keen to finally deliver good access routes to the capital. According to research group PMR, Mazowieckie is one of only four regions in Poland that will enjoy an increase in the number of road construction projects during 2013. In the first half of 2012 alone, the GDDKiA (National roads authority) issued 60% more road construction permits in Mazowieckie compared to 2011. Connectivity between Warsaw and its main arteries – Płock, Siedlce, Ostrołęka, and Radom – has improved a great deal in recent years.

During 2011 and 2012, the regional government spent around 730m zł (including 190m zł from EU funds) on modernising the region’s existing road network. It also contributed 100m zł last year for the construction of the new Warsaw-Modlin airport. However, completion of the region’s eastern section of the A2 motorway still appears to be a distant goal. At present, a 21km spurt

’We observe an increasing trend of foreign investors choosing the capital for their companies’ headquarters, while their businesses themselves are set up in smaller cities and towns’

Labour costs in Mazowieckie are, on average, notably higher than elsewhere in the country, 4,625 zł being the average gross monthly wage versus the national average of 3,496 zł.

The average rate of unemployment in Mazowieckie rests at about 9.4%.

However, within the voivodship itself, stark disparities exist. According to Voivodship Labour Office figures for 2011, the highest levels of unemployment were: Szydlowiecki (35.9%), Radomski (30.4%), and Przysuski (25.7%). Warsaw’s unemployment rate performs the best (3.5%), followed by three other powiat (counties) situated close to the capital: Warszawski Zachodni (6%), Pruszkowski (6.9%), and Grodziski (7.2%). No other voivodship experiences such disparate unemployment levels.

Worryingly, Mazowieckie’s bank balance is not overly flush with cash at the moment either. The region’s public finances faced a budget deficit last year of 486m zł, adding to an existing debt bill of 1.5bn zł. Towards the end of last year, credit rating agency Fitch Group delivered a rather sombre prediction for Mazowieckie by downgrading the region’s long-term ratings from stable to negative. The need to support the region’s indebted health care sector, and its struggling railway company Koleje Mazowieckie (KM), were cited as two main factors for the revision.

“The high share of corporate income tax, at about 66% of operating revenue, makes the region highly dependent on changes in the macroeconomic environment”, stated the Fitch Ratings report. The report also cited that Mazowieckie “has been approaching the legal borrowing limit, leaving it with little ability to incur new debt.".

Mr Adam Struzik is however positive about the region’s future, and says that he wants Mazowieckie “to become the most developed region in Central Europe.” He says that his office aims to intensify regional development by investing in research and renewable energy projects, supported by public and private funding. by Liam Nolan

photos: Orlen, Stadler, Piotr Malecki (Napo Images / Forum),

48

Warsaw Located in the heartland of the Masovian Plain, 260 kilometres from the Baltic Sea, 516 kilometres from Berlin and 1152 kilometres from Moscow.

Population: around 1,710,000 inhabitants live in the Greater Warsaw area.

As the regional and national capital, Warsaw is home to the country’s political and juridical systems of administration (the Polish parliament, Presidential palace and Supreme Court are based here), business and culture as well as the country’s largest number of universities.

The city’s current mayor Hanna GronkiewiczWaltz is the first female mayor in the city’s history. Many of the world’s top financial institutions have operations based in the city and the Warsaw Stock Exchange – restablished in 1991 after a 52 year hiatus – is the largest securities exchange in all of Central and Eastern Europe.

Two international airports, Fryderyk Chopin International Airport and the recently opened Modlin-Warsaw Airport, serve the city.

Siedlce

Płock

Population: 77,000

Population: 125,000

Siedlce, located 90 km from Warsaw and 117 km from the Polish-Belarusian border, has an atypically young population by Polish standards – 67% of its citizens are of working age, and almost 20% are under 18. Swiss rail vehicle construction company, Stadler, occupies the place of the city’s prize foreign company, operating here since 2007 after the company renovated a number of decayed former PKP train depots. “Siedlce was chosen because of the town’s railway tradition”, says Urszula Matej-Bil, communication director at Stadler Polska. After a five-year period of producing trains solely for the export market, Stadler won a contract in December to produce and supply twenty ‘FLIRT’ trains by 2015 to Łódź Agglomeration Railway – a deal worth over 510m zł.

Teleperformance Polska opened a telemarketing centre in the city in 2007, while construction group Polimex-Mostostal has a regional office here. The agricultural sector is also highly present with a number of dairy and feed production plants located outside of Siedlce.

Płock is possibly best known for being the headquarters of PKN Orlen, Poland’s largest refiner of crude oil – the group operates one refinery in the area. The maker of classic American jeans, Lévi-Strauss, is here too, employing 900 locals. Despite the presence of these large-scale corporations, unemployment in Płock is a whopping 20.6% – a figure that does not tally with Mazowieckie’s image as the country’s economic leader. The city’s PPPT (Płock Industrial and Technological Park) – the brainchild of PKN Orlen and the Municipality of Płock – has attracted a number of Polish technology, engineering and chemical firms (ASE, Elektobudowa, ​PCC Rokita to name but three) since opening in 2011.

Poland Today attempted to source information about PPPT’s offers but the manager of the investment and marketing department was unwilling to comment about the business park.

Downtown Warsaw is home

to many international financial firms.

Stadler Polska’s assembly line in Siedlce

Dusky evening

at the PKN Orlen refinery in Płock

50 Voivodship focus

Winter adventure, Mazowsze style

Kayaking in winter sounds a bit crazy.

I was skeptical at first, but it turned out to be a brilliant idea.

A weekend trip with a surprisingly chilly twist

Saturday: Żyrardów, Niepokalanów and Nowy Dwór

personal photos by the author

Friday: Warsaw’s Copernicus centre Living in a hot country all my life, I was craving a bit of snow, so Michael and I bought a 39 zł plastic sledge, if you could call it that, and headed to Moczydło Park, where there’s a little hill and a frozen pond. When we got there the pond was populated by seemingly thousands of ducks and Michael took it upon himself to try to feed them all, so we didn’t get round to sledging.

We both like gadgets, so, after a wonderful open-oven-baked pizza, we decided to check out Centrum Nauki Kopernik (Copernicus Science Center) next to the Wisła river. The queue was so big that it lagged all the way outside, and we had to wait twenty minutes in zero degrees Celsius – which wasn’t really what I had in mind. Once inside the museum, though, it’s a completely different story. There are numerous activities where you interact with the displays and discover the laws of science. I really enjoyed the adult section (a guard stops kids from entering this area) where you can check how your brain reacts to different stimulations, like watching TV commercials. Michael really enjoyed the parts where he had to out-run electronic predators and mimic animal voices. Copernicus Science Center is definitely worth a visit.

In case you don’t know, Nicolaus Copernicus came up with the model that placed the Sun, rather than the Earth, at the centre of the universe, and is as important to Poles as Pope John Paul II, Fryderyk Chopin, Marie Curie Skłodowska and Lech Wałęsa. In the evening we went to the winter market in the Old Town. There was a very friendly atmosphere, made even more so by a glass of sweet and spicy hot wine.

The next day Aleksandra, Michael and I drove to Żyrardów, located 50km south-west of Warsaw. Żyrardów seemed like my kind of town, offering attractions such as extreme quad escapades and horseback riding.

Aleksandra, who is pregnant, had a different opinion. She envisioned the trip as a chance to go for short walks and Sunday: Winter sightsee rather than risk a head injury on Kayaking a quad bike. How does she always manage to get the upper hand? Beats me. In the morning I drove down to Warka We walked around John Paul II Square (40km south of Warsaw), located on in the centre of town, where the red the edge of the Pilica river, with my brick houses look like they were built in brother-in-law Filip and newfound the 19th century. Then we continued on friends Arek and Jamie, for a spot of through a succession of small villages winter kayaking. Warka is known for to Niepokalanów, a further 25km north its famous brewery and offers attracof Żyrardów in the direction of Płock. tions like hunting, kayaking, fishing and There we visited the Basilica of St Mary camping. Kayaking in winter sounds a Immaculate, a monastery built in the bit crazy and I was a bit skeptical at first, early 20th century which offered shel- but it turned out to be a brilliant idea. ter to many refugees, both Polish and If you do it, though, you must dress Jewish, during the Second World War. warmly – exactly as if you were going At the front of the building is a statue skiing! I remember my grandmother, of Pope John Paul II, to commemorate who had Polish roots, always nagged the late Pope’s visit to the town in 1983. me to leave the house with a sweater, When we arrived there were many pil- “just in case”. Good advice in this case. grims and the town had a real festive Witek, the office manager of the kayak atmosphere with a live band singing company, Stero, was waiting for us in and even a fire engine parked outside his office. We loaded three kayaks onto for the kids to play on. the back of his truck, but before setOur final stop on the way back to ting off he invited us inside his house Warsaw was Nowy Dwór. We ate in and insisted we have a cup of coffee a castle next to the Wisła river that and sample some cakes baked by his served excellent traditional polish food. wife. He then took out a map and calcuWe had duck, Schab with potatoes and lated the possible routes. Considering dumplings and I drank grzaniec (hot that it had started snowing, and that beer). Nowy Dwór has a large mili- there was a good chance we might fall tary base, and it was here in 1939 that into the freezing water, we decided Polish solders heroically carried on that a two-hour trail would be more the struggle against the Nazi invasion than enough. as a defensive outpost of the fighting capital. By the end of the war about 70% of the town’s housing had been destroyed. The view over the ruined granary of Modlin fortress is very beautiful and makes an unforgettable impression. But, it takes a while to find it as there are no proper signs to guide you to the view point, called Tatars Tower. The town, if properly invested in, has the potential to become a remarkable tourist place.

The starting point was covered with ice, and Witek had to shovel a clear path for us to access the river. We pushed the kayaks into the water and watched Witek’s figure shrinking as the river pulled us downstream. Parts of the surface were frozen and we had to paddle through chunks of ice. At the first fork in the river we took the left one, which we kept doing as more forks appeared.

This led us more than once into dead ends, forcing us to row back against the current. If you row hard, you are bound to get wet. Luckily, the splashing water froze quickly and we were able to brush the ice off our clothes. At one point the silence was interrupted by gun shots coming from the woods, and a flock of ducks crossed the sky, fleeing the hunters. Then we steered the kayaks to the main stream and lay back, letting the river pull us all the way to the meeting point. As promised, Witek was there waiting for us, holding a thermos flask with warm tea (I could swear there was a taste of alcohol in it). Kayaking in winter is simply tremendous. Trees cluster the sides of the river and everything is still and quiet while you drift along in the small kayak, basking in the ride.

It also happens to be an excellent way to kill a hangover. by Yair Saragosti

51

Voivodship focus

Poland Today asked Yair Saragosti,

an Israeli businessman living in Warsaw with his wife Aleksandra and six-yearold son Michael, to tour Mazowieckie for a weekend and report on his travels.

food & drink

wine has long been the poor relation of its cousins beer and vodka. Battling inclement weather, indifference to its fate and unfavourable regulations, the beverage has had to live in the shadows of other booze with production confined for decades to private consumption. But now the winds of change are gently rustling the vine leaves.

A number of producers have set out to bring Polish wine to the dinner tables of Poland, and in doing so establish the drink in the national consciousness.

Quiet revolution

covers Central Europe for the UK’s The Telegraph, while also writing on Central and Eastern European affairs for the Scotsman.

He has reported on major events such as the 2010 Smolensk disaster and Poland’s recent presidency of the EU. He first came to Central Europe in 1992 as an English and history teacher.

wine cellars which has become a popular option on the agri-tourism market. In order to pay for tasting events, visitors can opt to purchase a bottle of wine.

Ignored for decades, Polish wine is back in vogue and winning new converts

When it comes to alcohol in Poland

Matthew Day

Organising wine tasting sessions in

“Business is good,” says an upbeat Mike Whitney. A Californian who first came to Poland in 1996 to teach at Wrocław Polytechnic he now owns the Adoria vineyard, which covers four hectares of land “just 15 minutes” from Wroclaw, and has no regrets about moving into Polish wine. “You can go to the big hotels in Warsaw: Marriott, the Hyatt Regency, the Victoria; we are all over the city. We’re in good restaurants,” he says.

“They want a Polish wine.” Producing its first commercial crop in 2008 from either pinot noir, chardonnay or Riesling grapes, Adoria now pumps out 20-25,000 bottles a year, and Whitney says he expects business to grow by 50-100% a year for the next 10 years – although he stresses they are starting from a small base – as knowledge and appreciation of Polish wine spreads.

In some ways this can come as a surprise. Siberian winters and a reputation as a bastion of hard spirits meant that the word “Poland” was rarely followed by, or even remotely linked to, the word “wine”. But the country does have something of a wine pedigree, with western regions of Poland boasting a production record stretching back to the 13th century. Quantities were never great, but wine was produced and drunk by locals. Commercial production, however, withered under communist rule, with the government failing to invest in the wine industry. Neglect led to wine being handicapped by a legal framework that banned the sale of grapes and a raft of taxes and regulation that made commercial production unviable. The result was that Polish wine production became a strictly amateur affair with people producing for friends, families and the

occasional local wine-tasting contest.

However, matters began to change in 2008 when the government introduced legislation freeing vineyards producing less than 1,000 hectolitres from the unloved regulations, thus making it possible for wine growers to make some money out of their bottled produce.

A mixed breed of wines At the same time a growing class of affluent Poles started to turn away from beer and vodka, and take an interest in wine in general. Wine consumption in Poland increased and Polish palates, long starved of decent wines for most of the socialist years, began to develop sophistication and curiosity. Tomasz Prange-Barczyński, editor-in-chief of the wine magazine Wino, estimates that there are now some 1,000 wine producers in Poland but of these only about 15 are trying to sell wine on a commercial basis. Many growers, be they amateur or professional, still congregate around the old heartland of Zielona Góra but others with an adventurous streak have started to take vines to new areas.

Along with the region around Wrocław, vineyards have now cropped up near the Slovakian border while others have started to sprout near Sandomierz, an area that wine growers have high hopes for given its combination of charitable weather and good soils.

Lower silesia Capital city: Wrocław (0.63 mn pop. )

Dolny Śląsk (Lower Silesia) provides suitable conditions for wine growers. Despite being a meeting point for movements of oceanic and continental air, the climate here remains mild.

Lower Silesia the warmest place in Poland.

The region’s vegetation period – temperature over 5°C – lasts for 225 days of the year and is the longest in Poland (compared to 185 vegetative days for the coldest place in the country).

Affluent Poles started to turn away from beer and vodka in favour of wine Some of products of these lands, says Prange-Barczyński, are good wines. But with every silver lining comes a cloud, and Polish wine has a number of these. To begin with not everybody is enamoured with their product after they’ve paid for it. “Just before Christmas a lady wanted to sell her wine to me,” says Robert Miełżyński, a wine expert and Warsaw-based wine merchant. “She’s a very good businesswoman, and the price per bottle for me was about 40 zł, and even if I put a small margin on it it’s still going to be, let’s say, 60 zł. But that wine is not going to sell for 60 zł.” Mielzynski, who admits that not everybody in the Polish wine industry likes him, explains that one of the reasons why he is not prepared to buy Polish wine at that price is that much of it comes from hybrid grapes, which, he adds, are not “100% drinkable”.

High costs and red tape Then there is the problem of cost, and even promoters of Poland’s wines concede that production costs for Polish wine exceeds those of more established wine-producing countries. This is mainly because many Polish vineyards are starting from scratch. Vines have to be planted in virgin soil and all the equipment has to be bought brand new: a situation uncommon in France or Italy, for example. “Costs of production are high,” says Prange-Barczyński.

“To produce even a small quantity of wine, you have to make a number of basic investments which at the very beginning are quite high. Even the cost of a hectare can come to €2,000. Then you have to construct a house, a winery, buy equipment, and employ people. It costs money, money, money.” On top of this, Whitney adds, come laws restricting the use of pesticides, which means “you lose 30% of your crop right away”.

53

food & drink

And then there is the problem of red tape. “The paperwork to go with excise duty is crazy,” continues Whitney.

“It takes me about 20 hours a month to do it. The Germans don’t have it.

There is a huge amount of governmental compliance. We’re controlled by 13 governmental agencies.” But for all the problems, producers remain bullish. Although the chances of Poland becoming a force in world wine on a par with the traditional powers are almost zero, those trying to bring Polish wine to the masses believe they can carve out a niche. “We were invited to the world’s biggest wine festival in Germany, and every year they pick one foreign wine.

Last year they chose us,” says Whitney.

“They have a very sophisticated wine culture there. We sold a hell of a lot wine.

It was great for our self confidence.”

by Matthew Day

photos: Bartłomiej Kudowicz (Forum), Jan Brykczyński (Forum), Mike Whitney (Adoria), Bartosz Wojciechowski (Adoria)

52

The tentative return of Bacchus

Many growers, be they amateur or professional, still congregate around the old heartland of Zielona Góra

Kinga KowalewskaKoziarska during

harvest time at the aptly named ‘Kinga’ vineyard in Stara Wieś near Nowa Sól.

Grzegorz Sapijaszka

and his family at their vineyard near Wrocław.

Bacchus (2011),

one of the vines crafted localy by the Adoria winery, which is held by Mike Whitney, a Californian who moved to Lower Silesia in 1996.

history

in 1987, when Gdansk basked in the sun and the sweet smell of chestnut blossom enveloped the city, my wife Ania was asked by Polish intelligence to become a spy. If she agreed, her passport would be promptly re-issued; if she refused she might, it was implied, wait a long time before being able to rejoin me in Mexico City where I was Time Magazine’s bureau chief for Latin America. During the Communist era, a Polish passport was hard to get and had to be surrendered and re-applied for every time the holder returned to Poland. Ania had dutifully handed back her passport after we flew into Gdansk for a brief visit to her family, applying also for it to be re-issued so she could return with me to Mexico.

Comical proposition

nally from Taranaki in New Zealand, was for 25 years a foreign correspondent for several of the world’s leading publications and media organizations, including The Guardian, Economist, BBC and TIME magazine. Almost 20 years ago he settled in Poland’s Kaszubia region with his wife, setting up a small luxury hotel called Kania Lodge, establishing a local newspaper, Express Kaszubski, and creating Wine Express and specialist label Vestal Vodka. He also has his own vineyard.

history

Cold War games and Ryszard Kapuściński

On a spring day

John Borrell, origi-

55

’Greetings from Zygmunt’

At the passport office in ul. Kartuska she was directed to a sparsely-furnished office where a middle-aged man in a grey suit unlocked a metal filing cabinet and withdrew a file which contained her passport and other documents. “Pani Borrell,” he said, leafing through papers from the file, “we’d like you to find out for us what your husband knows about certain things in Latin America. We’ll arrange for one of our people in Mexico City to meet you at a shopping centre to give you instructions. You’ll carry a copy of the newspaper El Universal and our man will use a password so you can identify him.” This probably sounds like a Johnny English-type parody of spy-craft but it’s typical of the way Polish intelligence operated during the Communist era, something I was reminded of while reading the recently released English-language edition of Artur Domosławski’s biography of the Polish writer Ryszard Kapuściński (Verso, an imprint of New Left Books).

When Kapuściński was heading to Africa as a correspondent in the 1960’s, Domosławski writes, he was told by Polish intelligence that they were interested in the activities of American institutions and organizations. Someone, he was told, would approach him in Dar es Salaam with operational instructions using the phrase, “Greetings from Zygmunt” to which he was to reply: “Has he sold the car yet?” Just what

’We would like you to find out for us what your husband knows about certain things in Latin America.

We’ll arrange for one of our people in Mexico City to meet you’

my wife’s passphrase would have been we’ll never know. Ania returned in tears from her interview and told me everything. I thought of protesting to the Foreign Ministry but decided that it was too ridiculous and comical a situation to be invested with so much gravitas.

In fact, I laughed at the thought of Ania slipping out of bed to rifle through my contact book or pouring just one more glass of wine before asking me, huskily sotto voce, for the name of the CIA agent running the covert operation to supply the Contras in Nicaragua (I wouldn’t have known). “Go back to this guy,” I told Ania, “and inform him that your husband is happy to tell the Polish Ambassador in Mexico everything he knows about Latin America in return for a good lunch. Emphasise the good lunch bit.”

Western journalists routinely meet diplomats, amongst others in the know, to swap notes. I’d have been perfectly happy to add the Polish Ambassador to Mexico to the list of ambassadors I was already in contact with in Latin America. I had no secrets to pass on to any intelligence agency and, in fact, a subscription to TIME would have revealed exactly what I knew about any given event in Latin America. I don’t know whether the fact that Ania had told me everything (she’d been specifically instructed not to) unnerved the intelligence officer. Perhaps he misinterpreted my apparent willingness to volunteer information to the Polish Ambassador, and there’s a file on me at the Institute of National Remembrance noting that I had agreed to be an informer. Whatever the reason, he simply handed Ania her passport without comment. She was never approached in Mexico City by anyone with greetings from Zygmunt. I was never taken to lunch by the Polish Ambassador.

I told Kapuściński this story one summer evening in the late 1990’s as we sat on the terrace of my lodge in Kaszubia and reminisced about our time as correspondents in Africa, the Middle East and Latin America. I’d first met Ryszard in Luanda in 1975 during the civil war in Angola. In 1989, as Communism was on its way out in Poland, I lived next door to him in Warsaw. We met from time to time to talk about the events of the day and I once commissioned and paid him

to write a piece on Solidarity for TIME. Kapuściński’s response to my story was a shrug. He said something about intelligence operatives always thinking journalists knew more than they really did and then moved the conversation on, probably because at that time he himself was worried about being exposed as an “informer” during the Communist era. Lustration, fortunately for him, was only to come after his death in 2007.

Unfair to demonise

photos: Bartosz Stefaniak, Maciej Billewicz (Forum), Krzysztof Wójcik (Forum)

54

According to Domosławski, there is no evidence that Kapuściński provided Polish intelligence with any information during his stay in Africa or that anyone ever even approached him with greetings from Zygmunt. When later he was based in Mexico City, archive material from the Institute of National Remembrance shows that he did pass on a small amount of information to Polish intelligence. Some of it, especially his notes on an American journalist and a Polish academic sacked during the anti-Semitic purges of 1968, is craven and embarrassing. But most was banal, embarrassing more for the language than the content. Words like haute bourgeoise and lumpenproletariat, for example, are sprinkled liberally throughout a report on right wing groups in Latin America. The words spy and informer are evocative words infused with stealth, deceit, disloyalty and the art of the double-cross.

To be called either can be damaging, hugely so in some cases. During my own career as a foreign correspondent I never once wrote a report of any kind for an intelligence agency; in fact I was never asked to. I also never once received remuneration of any kind from an intelligence agency.

But I did have contacts with intelligence gatherers from a number of countries. I met and talked to people who were spies. I knew them to be spies.

I was in touch with them (and they with me) because we were both in the information gathering business. I have often wondered what I would have done had I been in Kapuściński’s position. Would I have actually compiled reports for Polish intelligence? Would I have met spymasters in Warsaw on my return from Africa or Latin America? I can only answer the question with any hon-

esty in the full context of Kapuściński’s life and the political realities of his time. Having watched the Germans and Russians trash my country, I might well have joined the Polish Communist party after the war. I might even have become a true believer, as Kapuściński did in the 1950’s, and seen Communism as the purveyor of a rosy future. As a true believer, I’d have not seen any contradictions in being expected to pop in and see people in intelligence, before and after journalistic assignments in Africa and Latin America. We were all on the same side, so to speak, and I would have been acutely aware that saying no would have meant no trips abroad.

In fact I’d have probably thought it all very normal. If I’d had any qualms at all they would probably have been quieted by the fact that if the intelligence people were really intent on turning me into a spy, they’d have given me some proper training and sent me somewhere important in Poland. Somewhere like Germany, for example, and not India, Tanzania or Honduras. What could a poor Eastern bloc journalist with very little English and no Hindi expect to glean intelligence-wise from a trip to India? And so what if later on if I had stumbled upon the fact that Cuba had secretly dispatched troops to Angola to support the MPLA? It would have been an interesting snippet of information for the intelligence gatherers in Warsaw.

But the CIA already knew of the airlift anyway and was busy leaking the story to the western press.

So yes, in his position I’d have probably have co-operated with the men in grey suits in Warsaw. But I would have been very pleased if no-one had ever whispered “greetings from Zygmunt” from behind a newspaper in a street café in Dar es Salaam or San Salvador.

I’m sure that if they had, I already would have forgotten that I was supposed to ask whether Zygmunt had sold the car. I would probably have responded instead with something like: “Zygmunt who?” Like Kapuściński, I wouldn’t have been much of a spy. by John Borrell

Ryszard Kapuściński in 1991 and in the sixties Selected books available in English:

Ryszard Kapuściński Kapuściński (1932-2007) was a Polish

writer and journalist, whose award winning ‘literary reportage’ books have been translated into many languages worldwide. He was born in Pińsk (present day Belarus) into very humble beginnings, and witnessed the horrors of World War Two at a young age.

He wrote for Polish weekly Polityka before being hired by the Polish Press Agency (PAP) in 1962. Kapuściński remained the agency’s only foreign correspondent during the 1960s and 1970s, during which time he covered conflicts in Africa, Asia and Central America.

The Soccer War, Imperium, and The Emperor feature among his most acclaimed books.

Since the publication of Artur Domosławski’s biography in 2010, entitled Ryszard Kapuściński: A Life, controversy has dogged the late writer’s work. In it, Domosławski, an old friend of Kapuściński’s, claims that the correspondent used creative licence to embellish his stories.

- Another Day of Life (1976) - The Soccer War (1978) - The Emperor: Downfall of an Autocrat, (1978) - Shah of Shahs (1982) - Imperium (1993) - The Shadow of the Sun (2001) - Our Responsibilities in a Multicultural World (2002) - Travels with Herodotus (2007) - I Wrote Stone: The Selected Poetry of Ryszard Kapuściński (2007) - The Other (2008)

56

It happened in... February

history

Nepal, 17 February 1980, first winter ascent of Mt Everest

Leszek Cichy (l) and Krzysztof Wielicki (r), the two first climbers ever to reach the summit of Mount Everest in winter. Pictured shortly after descending from the top.

that Sir Edmund the government of Nepal had never Hillary from New Zealand, accompa- granted permission for a winter climb nied by sherpa Tenzing Norgay of Nepal, and, when the permission finally arrived were the first to reach the 8848m sum- (after almost being pipped to it by the mit of Mount Everest. That the first Italians), it stipulated that only six weeks winter ascent of the fabled peak was were granted to attempt the climb. carried out by a team from Poland is To add to the pressure, the permit arrived not so well known, even amongst Poles. unexpectedly on 22 November 1979 (the Led by the legendary Andrzej Zawada, team had only a couple of months earlier who had been inspired by the first been granted a spring permit, so they European woman to climb to the top, assumed the application for a winter Wanda Rutkiewicz, the two who actu- permit had failed)… but was valid from ally reached the summit were Leszek 1 December! As it turned out, nothing, Cichy and Krzysztof Wielicki. These not even a serious lack of money, would are the words of Andrzej Zawada, from stop them. In 2002 Wielicki issued his his later written account of the climb: Winter Manifesto (manifest zimowy), “Then, finally at 2.25pm, the voice of challenging a new generation of Polish Leszek Cichy resounded over the radio: mountaineers to summit the 8000‘Guess where we are!’ We were out of meter peaks unclimbed in winter: “If you our minds with happiness – totally spon- could pull it off, wouldn’t it be great? Can taneous and unrestrained. It was the you imagine that? All 8000-metre peaks most wonderful moment of our lives.” conquered for the first time in winter, In the account, Mr Zawada related how all by Poles.” by Richard Stephens

photos: Bogdan Jankowski (Forum)

Everyone knows

58 history

Eyewitness: the summer of ’82 Football heroes embodied the fighting spirit of an entire nation

59

Boniek’s legendary status

amongst Polish kids was sealed with his Second Round Group A opening game hat-trick against the Belgians

history

Poland Today recently caught up with

You know, these were the guys we thought had tanks at our borders.

There were so many reports and fears that there could be an invasion. Despite being conscious of the anger on the streets, I didn’t really understand it. All I understood was that we had to get at least a draw from this game or else the buzz would be over. I can recall vividly that it was a very tough game, both of us having everything to play for. At that time I was on a fencing training course, I am from what we Poles like to call so the whole camp - kids, instructors, the ‘Teleranek’ (Telly-morning’) gen- even the grumpy director - got together eration, those kids who every Sunday in front of a small TV in the main assemmorning in the 1970s and 80s would get bly room to watch this ‘do or die’ match. up early at the weekend to tune into One of our great players, Włodzimierz their favourite Polish, sometimes Czech Smolarek – who had helped us win our and even on some occasions, western vital encounter against East Germany in cartoons like the Flintstones. One win- the qualifiers – was fouled by a Russian. ter morning, when I was just 11 years I’m not sure who. The Russian put out old, I got up as usual at about 8am and his hand to pick him up but Smolarek strolled out to turn on the television but just slapped it away and shrugged him all I found was a bald guy in a military off. We all erupted in cheers, it was like uniform reading in an uncomfortably we had scored a goal or had won the serious tone, with an odd frown on his World Cup already. It ended 0-0 so face. He was wearing glasses, glancing we were in the quarter final, against all up and down every now and then at a expectations. Nobody had given us any big sheet of paper (this of course was hope. The excitement was fantastic.

General Jaruzelski). My parents told I remember really well the quarterme ‘Teleranek’ wouldn’t be on that final against Belgium and the tragic morning. You can imagine the disap- moment when Zbigniew ‘Zibi’ Boniek, pointment for a kid. after scoring what is now regarded The following summer was like no as one of the best hat-tricks in World other, as we had qualified for the 1982 Cup history, got a second yellow card.

World Cup in Spain. We had drawn It meant he would miss the semi-final the first two games 0-0 against Italy and Cameroon so there wasn’t much hope of advancing at that stage. Next up was Peru and we trashed them, 5-1.

Lato, Smolarek, Boniek, Buncol and Ciołek all scored within twenty minutes of each other. In the second round, we trounced Belgium 3-0 in our opening match. So finally, our chances of qualifying rested on getting at least a draw with the Soviet Union.

Current Polish Football Association (PZPN) President Zbigniew

Michał Pol as he looked back on the Polish football team’s memorable performances and its momentous third-place finish at the 1982 World Cup in Spain. Michał thinks back over those days when, as an eleven year old, the People’s Republic of Poland (PRL), was in the midst of social and political upheaval during martial law.

a top sports journalist in Poland for almost two decades, with Gazeta Wyborcza (1994-2009) and currently for Agora’s Sport.pl portal. He is a familiar pundit on the EkstraKlasa league for nSport and has covered five European football championships, three World Cups and four Olympic games.

You know, these were the guys who we thought had tanks at our borders

Polish fans hold

aloft a Solidarnosc Trade Union banner at Poland’s decisive qualifying game for the ’82 World Cup

against Italy. When our players eventually returned home, after getting knocked out by the Italians but coming away with a consolation third place win against France, they were absolute heroes. Of course, I know now that the government tried to use it for propaganda purposes. Yet, for somebody so young it was a great feeling of joy and pride. Two summers later I found myself crossing the East German border on my way to England – it was my first trip abroad. I was on my own heading to an aunt in England to do a monthlong English course. I had an old Soviet Russian helmet and the remains of a World War II grenade in my backpack to help break the ice with my cousin, who had written to tell me he collected war paraphenalia. I was the only student in the group from behind the Iron Curtain, so for them I was like something from another planet.

So here we are, it’s 30 years later and things are very different. But, I’ve always done my best to adapt. I even have 13,000 followers on Twitter now so I can really keep in touch and interact with both my old and young readers. Back in October, I offered a live feed of the Polish Football Association Presidential (PZPN) election. The position is put on such a pedestal that it’s almost like the third most important position in the whole country. Zbigniew Boniek’s election as the new President of the PZPN was the icing on the cake.

People were really excited afterwards.

It was like stepping three decades back in time, watching the ‘Polish Pelé’ flair at the ’82 World Cup. I really am a lucky guy. I’ve taken part in a shoot out with Zinedine Zidane and scored goals against Van Der Saar. Del Piero taught me how to take a free kick, but hands up I gotta admit, I only hit the wall.”

interviewed by Damien Moran

Michał Pol as a boy: “We all erupted in cheers, it was like we had scored a goal or had won the World Cup already. It ended 0-0 so we were in the quarter final, against all expectations. Nobody had given us any hope.”

photos: Andrzej Iwanowski (Forum), Bob Thomas Sports Photography

Michał Pol has been

Boniek launches a trademark attack on arch-rivals, the USSR, during their final qualifying match for the ’82 World Cup. The match ended up 0-0 and both teams advanced.

60 sport

is a football journalist with “Przegląd Sportowy”, having previously worked as a correspondent for Fakt and Dziennik Gazeta Prawna. He has covered World Cups and European football championships. Marek has just completed his first book entitled “Wielki Widzew”, tells the story of Widzew Łodz team of the 1970s and 1980s.

nazwa działu

Shot put thrower Majewski loses out to champion skier

There was a bit

Marek Wawrzynowski

61

Kowalczyk seals another victory

her symptoms. Kowalczyk however, has alleged that the medicine Bjoergen uses is actually a performance-enhancer, something that the Norwegian fiercely denies. Poles, who generally support her stance, seem to have conveniently forgotten that four-time Olympic racewalking champion Robert Korzeniowski and Olympic swimming gold medallist Otylia Jędrzejczak also used the medication for their asthma and no-one had any problems with that. This may be because Poland has a deficit of sporting champions, especially since the retirement of multiple ski jump world champion Adam Małysz, considered by many to be the most popular Polish athlete of all time. Małysz has since turned his attention to the Dakar rally, where he recently came 15th out of 89 cars in his second race. That’s pretty good going, but the man with the famous moustache no longer arouses the same obsessive interest as he did in the heyday of his jumping days, when the mood of a nation was governed by his performances. A vacancy still remains for the position of undisputed national athlete. Formula 1 driver Robert Kubica was in contention when he came fourth in the 2008 drivers championship with BMW Sauber – several pundits believed that he was the most naturally-talented driver in the field – but the crash in February 2011 which crushed his hand has put his racing future in doubt.

of controversy at the Przegląd Sportowy Sports Person of the Year 2012 ceremony in January when favourite Tomasz Majewski (twotime Olympics shot put gold medallist), was pipped to the award by crosscountry skier Justyna Kowalczyk on the final day of voting – despite the fact that Majewski had been classed as a shoo-in by leading sports papers and television stations. The Przegląd Sportowy poll is Poland’s most prestigious sports award, the equivalent of the British BBC Sports Personality of the Year awards. However, critics allege that the competition has lost its quality since it turned into a television event, arguing that it has become more of a popularity contest rather than a poll to find the year’s best athlete. In recent years, the public have been able to vote for their favourite athlete via text message. This year, a large volume of texts took place on the same day that Kowalczyk came first in a stage of the cross country skiing World Cup, eventu- Keep it cool, Janowicz ally finishing in second place. Majewski, Agnieszka Radwańska is another worldthey point out, is an Olympic champion, class athlete who could be a future as is the man who came third in the poll, contender. Poland’s best tennis player Adrian Zieliński, the London Olympics began, ranked world number 4 as of 85 kg weightlifting gold medallist.

January 2013, is the first Polish player of the Open Era to make a grand slam Kowalczyk, queen of the field final – last year’s Wimbledon championHaving said that, Kowalczyk is world- ship. In the opening grand slam of 2013, class athlete at the top of her sport the Australian Open, she was defeated who recently won the prestigious FIS in the quarter final by eventual runnerTour de Ski competition for the fourth up Li Na of China. In men’s tennis, Jerzy consecutive time, a feat no other com- Janowicz is the rising star, breaking petitor has managed. Seasoned observ- into the world top 30 after his stunning ers believe she is odds-on favourite to run in the 2012 Paris Masters, where win the World Cup this year. Her task he reached the final after beating five is made that little bit easier because top-20 players, including world number her biggest rival, Martit Bjoergen, three Andy Murray in a superb contest. the Norwegian cross country queen, He eventually lost to David Ferrer in missed most of the season due to heart the final. During the year, Janowicz had problems. Martit is now back on her skis, gained a reputation for his good sportand is using asthma medication to treat ing behaviour on the court, but he disap-

Majewski is an Olympic champion, as is the man who came third

Justyna Kowalczyk

is dominating the women's cross country skiing scene at the expense of her Norwegian rival Martit Bjoergen.

Tomasz Majewski was

felt by many to be the country's sportsperson of the year for winning his second consecutive Olympic shot put title.

62

63

sport

nazwa działu

Robert Kubica

could have become Poland's pre-eminent sportsman if he hadn't injured his hand in a crash

Lewandowski – stay or go Turning to team games, there was an outcry from some couch-watching football fans when the national broadcaster TVP understandably decided to schedule Borussion Dortmund’s game with Shakhtar Donetsk on 14 February at the expense of the heavyweight Manchester Utd vs Real Madrid game. Polish trio Łukasz Piszczek (one of Europe’s best right backs), Jakub Błaszczykowski (undisputably one of German Bundesliga’s best league players this season) and prolific striker Robert Lewandowski (there is currently a debate as to whether he is a better player than 1980s Polish legend Zbigniew Boniek) all play with of Germany’s Bundesliga champions Borussia Dortmund. Much of the winter was spent by the media, and the sport-reading public, engaged in a debate entitled something along the lines of “Which club will Lewandowski join next: Manchester United or Real Madrid?” In the end, he stayed with Borussia Dortmund, the club which

Arsenal’s Arsene Wenger believes may go all the way in the Champions League.

Lewandowski is on hot form, recently scoring his 13th goal of the Bundesliga season, and could well be in the frame for Przegląd Sportowy’s top award in 2013. The last footballer to win it was Boniek way back in 1982. The man himself has now been president of the Polish football association (PZPN) for more than 100 days after taking over from another sporting legend, Grzegorz Lato, whose tenure was unfortunately mired in allegations of fraud. It was recently revealed that Lato’s chauffeur – and friend – received a bonus of 100,000 zl, making him Poland’s third best-paid driver after Kubica and Małysz! Boniek, the former Juventus star, has so far concentrated mostly on PR activities, aiming to improve the image of the association. And finally, in boxing, commercial television sta-

Jerzy Janowicz

is Poland's male tennis rising star.

After an impeccable 2012 he lost his cool in the heat of Melbourne.

Robert Lewandowski

has continued his prolific form for Borussia Dortmund

tion Polsat is trying to sell a hoary old chestnut, in the form of a boxing fight between former European champion Przemysław Saleta and one-time contender Andrzej Golota. Ten years ago boxing fans anxiously awaited this fight, but today they resemble two funny 45-year old veterans trying to recapture past glories. Sounds good for a country with a great tradition of cabaret.

by Marek Wawrzynowski

photos: Imago (MIS / Gepa), WRI2 (Teamshoot), Radosław Nawrocki (Forum), Piotr Nowak (Fotorzepa), Bartlomiej Kudowicz (Forum),

pointed fans at last month’s Australian Open when he shouted aggressively at the female umpire during his second round game against Somdev Devvarman of India. He was fined $2500 AUS and was knocked out in the third round by Spain’s Nicolas Amagro.

Much of the winter was spent by the media, and the sport-reading public, engaged in a debate entitled something along the lines of “Which club will Lewandowski join next?”

64