POLAND TODAY magazine #07 by Poland Today

An exclusive interview with President Bronisław Komorowski. page 22

Two big investments could shift Poland’s beleaguered auto industry back into gear. page 58

ESA membership is boosting Poland’s role in exploring the final frontier. page 86

The innovation push

To overcome the challenges of the next 25 years, Poland must become a knowledge-based economy

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illustration: Shen Akindo

pages 18-37

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

(07) may/aug 2014

photo: Dmitry Brushko

Solidarity with Belarus Information Office Keeping Polandâ&#x20AC;&#x2122;s neighbour in mind, opening up perspectives.

The 20-year reign of President Alexander Lukashenko has led to political repression, economic backwardness, human rights violation and international isolation for Belarus. By creating a platform for dialogue between Belarusian and international journalists, experts, and other professionals, Solidarity with Belarus Information Office aims to help keep Belarus in the international focus of attention, as well as to open up new perspectives for Belarusian civil society. Each week, the Office informs the world about the situation in Belarus through the distribution of first-hand information and analytical commentary on social, political, and economic events. It also holds an annual competition for journalists writing about Belarus for international media. To get involved, visit www.belarusinfocus.info

table of contents

EDITORIAL

IN FOCUS

08-16 LEADER

Where do we go from here?

Will Poland use the next 25 years to do what it takes to catch up to Western Europe? Jan Cienski sets out the positive and negative scenarios

30-37

Poland Transformed

Check out the programme for this executive conference by Poland Today. Edward Lucas, Jan Krzysztof Bielecki, George Friedman and Henryka Bochniarz are among the opinion formers that will speak at Poland Transformed on May 28 (page 30). We are bringing journalists from around the world to the conference, and asked some of them to tell us what they know about the country (page 32). Plus, interviews with economist Witold Orłowski and Skanska executive VP Roman Wieczorek about their observations of Poland’s transformation (pages 34 and 36)

The EU giveth and the EU taketh away

The capital’s rise has been impressive, but further development depends on infrastructure, autonomy and detailed planning, said Deputy Prime Minister Elżbieta Bieńkowska and Warsaw Mayor Hanna Gronkiewicz-Waltz at Poland Today’s Primetime Warsaw II conference (page 44). Also discussed at the event: Warsaw’s increasingly competitive commercial property market and prospects for the capital to improve its transportation system (pages 50 and 52)

The accidental architect

Preparing for the worst

Leszek Balcerowicz, who is credited with steering Poland toward its successful economic transformation, initially refused the job

EYEWITNESS

June 4, 1989. Election day

Poland Today asked regular Poles to share their memories of the day that ushered in Poland’s transition to democracy

As events in Ukraine spiral out of control, Poland is doing its best to insulate itself

BUSINESS

Business review

A round-up of the top business and economic stories in Poland

Shifting back into gear

2014 is bringing welcome positive news to Poland’s beleaguered auto industry, says business editor Lech Kaczanowski

Risk and reward

The innovation challenge

Table of contents

Blueprint for the future

INTERNATIONAL

The 10-year deluge of EU funds has been a boon, but membership has also caused a brain-drain that will be hard to counteract

Borno Janekovic, director for Central and Eastern Europe at international asset management firm Franklin Templeton, talks with Poland Today editor Andrew Kureth

Problems to tackle page 98

44-53

PROFILE

Enduring ideals

President Bronisław Komorowski reflects upon the country’s past and future in an exclusive interview with Poland Today’s Andrew Kureth and Richard Stephens

PRIMETIME WARSAW II

Interview: President Bronisław Komorowski page 22

The Nixon visit page 96

A dream come true

A Polish startup has created technology that aims to help people find a better way to sleep

Chambers of commerce

A review of the most important news and events from the various chambers of commerce in Poland

URBAN ISSUES

Big deals

Large transactions drove Poland’s commercial property investment market in the first quarter of 2014

Bringing home the bacon

Residential developers had a bumper first quarter on the back of much-improved apartment sales

Building demand

More active developers and international interest means higher transaction volume in Poland’s market for building land this year

Through the eyes of two boys, ‘Stars’ brings to life the Polish-Jewish friendships of WWII Poland

The wrong notes

Poland’s philosophy on music education needs to change if it wants an innovative society

FOOD

Give us this day ...

Bread plays a crucial role in Polish culture – and baking traditional Polish bread at home isn’t too difficult

HISTORY

It happened in ... May Warsaw, Poland, May 31, 1972. US President Richard M. Nixon visits Poland

SPORT

Key figures and quotes from Poland’s real estate industry

The whole nine yards

Real estate review

A round-up of the biggest real estate and urban development news stories in Poland

EVENT REVIEW

75-85

Participation in American football has exploded in Poland, but it still needs to gain the interest of regular Poles if it wants to sustain itself

IMPRESSIONS

102

A smile from Nepal

Soniya Sharma says she feels more ambitious and free in Poland, but wishes there were more people smiling

We review Poland Today conferences that took a look at the opportunities for logistics in Silesia (page 78), as well as for investment in Bydgoszcz (page 76) and Radom (page 80). We also present reports on the UX Poland 2014 conference (page 82), which explored new trends in ‘user experience’ technology and the European Executive Forum (page 84), which examined the continent’s leadership needs in today’s political and business environment

SCIENCE & TECHNOLOGY

Lifting off

Poland’s burgeoning space industry has received a boost from membership in the European Space Agency

table of contents

They were friends, too

Data in focus

BOOKS & ARTS

Putting Poland on the right economic path page 18

When the Soviet empire

began to crumble at the end of the last century, it was Poland where the cracks first formed. On June 4, 1989, Poland held the first partially democratic elections in the Soviet bloc, an event that led to a sea change in European geopolitics and destroyed the grim masquerade of communist authority in the region once and for all. When people think of freedom in Eastern Europe, they must remember that it is Poland where it all began. And yet, major news outlets such as CNN have already begun promotional build-up for coverage of the anniversary of ... the fall of the Berlin Wall. Those wonderful events of October 1989, while undeniably important and symbolic, tend to overshadow Poland’s accomplishments, to the degree where many think of them as the beginning of the end of communism in Europe. This view, however, is wrong. All the more important then, that Poland Today keeps to its mission of bringing Poland to the world and the world to Poland. As part of this commitment we are bringing 50 journalists from around the world to Poland so they can hear for themselves the story of Poland’s transformation, and especially the role business played in it. We want to ensure that they go back to their home countries and relate Poland’s story to audiences on every continent. We have also created, on behalf of the Ministry of Foreign Affairs, a presentation about Poland for other Polish government ministries and embassies across the world to use as an introduction to the country, a project I personally presented to Foreign Minister Radosław Sikorski recently. Small beginnings perhaps, but we want to do our part to help break through the wall of misperception around Poland – and as we know, it all starts with a few small cracks.

Richard Stephens,

Founder & Editor in Chief

Publisher’s note

editorial

‘Rather than valuing strict adherence to wellworn processes, Poland must begin to reward innovative problem solving’ 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

What country

Andrew Kureth is

Editor’s note

editor of Poland Today. Originally from the United States, Andrew has been reporting on Poland for 10 years, specialising in topics related to business and economics. He has written for numerous international publications, including the Financial Times. He was editor in chief of Warsaw Business Journal for seven years. He has a degree in English from Kenyon College in Ohio.

do you most associate with innovation? Perhaps Japan or South Korea, with their high-tech electronics firms? Maybe the US with its Silicon Valley or Germany with its advanced manufacturing technologies? Could it be the UK, with its highly developed financial sector? Or perhaps Israel, with its state-of-the-art defence systems? What if Poland were among those countries? Today the idea seems far-fetched. But if it wants to catch up with Western Europe in the next 25 years, that is the target Poland must aim for. Implementing Western technologies and business processes has brought the country far. Poland’s well-educated labour force, willing to work for wages significantly lower than those of their peers in Western Europe, has brought investment in both manufacturing and outsourcing. But Poland will not reach its potential putting people to work in factories and call centres. The country must now invent its own technologies, create its own solutions and build its own global businesses (see page 18). President Bronisław Komorowski echoed this sentiment in our exclusive interview with him (see page 22). To a degree, this is happening. Poland’s firms are increasingly investing abroad. The country’s computer programmers are some of the best in the world. It has several strong videogame makers. Startup firms like NeuroOn (see page 62) are using technology in innovative ways. Still, much more needs to be done. Poland ranks 49th out of 142 countries in the Global Innovation Index. It only spends 0.9% of its GDP on innovation, far behind the European Union average. Most of that spending comes from the public sector, rather than private businesses (see page 26). Deputy Prime Minister Elżbieta Bieńkowska seems to understand what needs to be done. In our exclusive interview with her (see page 28), she explains how EU funds will be used to encourage academia to cooperate with companies in finding marketable innovations – a welcome change, considering the suspicion with which these two communities have traditionally viewed each other. Moreover, as professor Witold Orłowski points out (see page 34), Polish business leaders need to build social capital – using people’s talents instead of viewing them as a threat. All of this is possible. Rather than valuing strict adherence to well-worn processes, Poland must begin to reward innovative problem solving. This will require a change in attitude throughout all of Polish society. But as the saying goes, ‘Polak potrafi’ (‘a Pole finds a way’). To reach its full potential, Poland must find a way to become a leader, rather than a laggard, in innovation.

Founder & Editor in Chief Financial Director Business Development Director New Business Consultant International Client Director Business Strategist

Richard Stephens Arkadiusz Jamski James Anderson-Hanney Tomasz Andryszczyk Toby Hancock Ana Hermoso

Editor Marketing & Communications Director Sales Director

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The Armenian Weekly: Armenian National Committee of Poland formed in Warsaw

AMERICAS

The Wall Street Journal: Poland’s reliance on Russian natural gas eases

IN FOCUS

Massachusetts-based English-language publication the Armenian Weekly reported on the first meeting of the Armenian National Committee of Poland (ANC Poland), formed in Warsaw with the intention to “raise awareness with the public opinion and political leadership of Poland, regarding issues pertaining to Armenians.” The ANC of Poland hopes to establish close relations with the Armenian embassy and existing Armenian associations in Poland.

An upgraded pumping station in Germany which will allow gas to reverse flow towards the east in case of the cessation of Russian gas exports to Poland has eased Polish reliance on Russian natural gas, The Wall Street Journal reported. Should Russia attempt to disrupt gas exports to Poland, Germany will be able to send Poland 60% of what the country imports from Russia annually.

ASIA AND PACIFIC

Pittsburgh Post-Gazette: Danuta Wałęsa adds perspective to her husband’s legacy in Poland

Through foreign eyes: We invited 50

New York Daily News: Church of Flying Spaghetti Monster allowed to register as religion in Poland

New York’s Daily News covered the recent Warsaw court ruling which upheld the right of the Church of the Flying Spaghetti Monster to register as a religion. The daily noted that the Church of the Flying Spaghetti Monster is considered by many as a “caricature of orthodox religion.” Roman Catholic Church officials in Poland have spoken out against the religion’s followers, the Pastafarians, claiming that the movement is an “anti-Catholic provocation.”

Polish Agriculture Minister Marek Siwicki said that Poland would protest Austrian and Danish pork sales to Russia despite Russia’s ban on European Union pork, according to a report from Chinese news agency Xinhua and picked up by Shanghai Daily. The minister argues that Russia’s embargo of EU pork after the discovery of African Swine Fever in Lithuania and Poland means that Austrian and Danish pork sales to Russia are illegal.

NBC: 5,000+ books fall like dominos in world record

NBC posted footage from the Częstochowa School of Economics where students have broken the world record for most books toppled like dominos. The domino line of more than 5,000 books considerably surpasses the previous record of 4,085 books set last year in Antwerp.

PRI: Polish grad student wants to help bring Yiddish back to life in Poland

US-based Public Radio International interviewed Aga Ilwicka-Sheppard, a doctoral candidate in Jewish Studies at the University of Wrocław, to discuss her own passion for Yiddish culture and the “small group of young Poles who are helping in the effort to revive Jewish culture and scholarship in their country.”

photos: Andrzej Bogacz (Forum), Ettore Ferrari (ANSA), anatares.com

Global news review

journalists to Warsaw for our Poland Transformed conference in late May. Before they arrived, we asked some of them how Poland is perceived in their home countries. Some of their answers might surprise you. see page 32

The Pittsburgh Post-Gazette reported on former first lady Danuta Wałęsa’s trip to Carnegie Mellon University in the western Pennsylvania city for its international film festival. The wife of Solidarity leader Lech Wałęsa arrived for a five-day visit to attend two screenings of Andrzej Wajda’s film ‘Wałęsa. Man of Hope’. She told the newspaper, “At one time I could have resented – and did resent – the fact that my husband was not letting me in on certain matters. Today ... I can see that it couldn’t have been otherwise,” because the communist authorities were listening in on their conversations, she said.

Shanghai Daily: Poland protests Austrian, Danish pork sales to Russia

‘The crisis has forced a deep integration of the euro zone. Poland will not be joining in the next few years for both political and economic reasons’

The Times of India: Salman Khan in Poland to shoot ‘Kick’ climax

Famous Bollywood actor Salman Khan’s trip to Warsaw to shoot his upcoming movie ‘Kick’ was noted in India’s largest English-language newspaper The Times of India. The paper wrote that Warsaw was “selected for its tall buildings and many river bridges”. Indian Ambassador to Poland Monika Kapil Mohta said, “We have been urging Bollywood producers and directors to use Poland for their outdoor shooting for the past three years. Now they have seen the virtue of using Poland’s natural beauty, which is no less than [that of ] Switzerland.” In a separate article, the newspaper pointed out that Poland’s potential for Bollywood films was being recognised quickly. Another film, ‘Bangistan’, is moving filming from the UK to Kraków after the script was picked up by Poland-based Alvernia Studios.

EUROPE

Reuters: Poland will join the euro but not for ‘several years’: PM Tusk Prime Minister Donald Tusk said Poland would gain if it entered the euro zone, but at the same time admitted that it would not attempt to do so for several years, London-based news agency Reuters reported. Tusk said adopting the euro would help Poland play a larger political role both in Europe and around the world, but acknowledged the many challenges involved. “Let’s not have any illusions,” he said. “The crisis has forced a deep integration of the euro zone. Poland will not be joining in the next few years for both political and economic reasons.” Tusk also pointed to the lack of a parliamentary majority backing such a move. Entering the euro zone would require an amendment to Poland’s constitution, which only allows the National Bank of Poland to issue money used in the country.

RIA Novosti: Ukraine restarts gas imports from Poland, maxes out pipeline

Russian news agency RIA Novosti reported that Ukraine had restarted imports of natural gas from Poland, noting that the country reached the “maximum capacity of the pipeline,” whereas “previous gas purchases from Poland were on a much smaller scale, and ceased completely in December after Russia gave Ukraine a 30 percent discount on gas imports.” Russia ended its discounts on gas exported to Ukraine earlier this year, claiming the country’s gas debts voided the decision. Ukraine’s state-run Naftogaz recently announced that it is ready to buy imported gas from Russia at the discounted price.

The Telegraph: Auschwitz metal stamps used by Nazis for tattooing discovered in Poland

The UK’s Telegraph reported on the discovery in Poland of sinister looking metal stamps used for making numeric tattoos to identify prisoners at the Nazi concentration camp in Auschwitz. “This is one of the most important finds in years,” said Piotr Cywiński, the director of the museum at the former concentration camp. “The sight of a tattoo is getting rarer every day as former prisoners pass away, but these stamps still speak of the dramatic history that took place here, even after all these decades,” he added.

‘The sight of a tattoo is getting rarer ... but these stamps still speak of the dramatic history that took place here, even after all these decades’

BBC: Germany returns art stolen by Nazis in 1939 to Poland

German Foreign Minister Frank-Walter Steinmeier recently handed over an 18th-century painting that had been looted from Poland’s National Museum by the Nazis in 1939, to Polish Foreign Minister Radosław Sikorski. Steinmeier said the painting – ‘Palace Stairs’ by Venetian artist Francesco Guardi – represents “the difficult history that connects our two countries ,” the BBC reported. He added that returning the painting would “be a signal to restart the stalled German-Polish dialogue on cultural artefacts.” Germany hopes to recover some 300,000 documents from Poland, including manuscripts by Mozart and Beethoven.

The Guardian: Why British businesses should consider exporting to Poland

British daily The Guardian points out that Poland is a fast-developing country benefiting from post-communist economic liberalisation, with a growing appetite for Western products. Research cited from KPMG showed a 10% increase in money spent on luxury goods in the country since 2011. The article mentions e-commerce, pharmaceuticals, chemicals, fuels, office telecom, and electrical equipment as sectors that should target the Polish market.

EUobserver: No political fuel for Poland’s far-right

The far-right National Movement (Ruch Narodowy) party led by Robert Winnicki, which is among the parties responsible for the yearly November 11 nationalist protests, paradoxically “lacks any real influence” in Poland despite the “crowd in Warsaw every November” and the fact that “around 20% of Poles hold nationalist views,” according to online newspaper EUobserver. The article points out that “no more than a small percentage of Poles oppose democracy, dislike the European Union, and accept authoritarian rule and xenophobia – all at the same time.” It added that the European parliamentary elections on May 25 will “provide a good opportunity for the emergence of new movements,” but Poland’s National Movement "is not even close” to receiving the required amount of support to receive representation.

European Voice: Poland referred to ECJ over F-gases

Poland’s failure to comply with EU rules on fluorinated greenhouse gases, or F-gases, has landed it before the European Court of Justice, reported the Brussels-based European Voice. The European Commission has not yet announced the penalties for companies that do not comply with F-gas regulations and Poland has not yet notified its national certification bodies, which are responsible for train inspection personnel.

The Moscow Times: Poland offers assistance in Moldova’s reforms

MIDDLE EAST

The Jerusalem Post: Jewish groups welcome limited legalization of shechita in Poland

Poland’s lower house of parliament, the Sejm, informed Poland’s Constitutional Tribunal of its view that “in its current form, Polish law does not permit penalizing slaughter for internal Jewish communities,” in response to a ban instituted in 2013, the Israeli Jerusalem Post reported. The Sejm’s decision to allow ritual slaughter (called ‘shechita’ when pertaining to kosher slaughter), only permits the practice for internal consumption in Poland’s small Jewish and Muslim communities. Until the ban in 2013, “Poland was Europe’s primary exporter of kosher and halal meat.”

Azernews, an English-language weekly in Azerbaijan, ran a story on the ‘Day of Azerbaijan’ organised by the Azerbaijani embassy in Poland and held in the northern Polish city of Wejherowo. This year marks the 20th anniversary of the re-establishment of AzerbaijaniPolish relations following the breakup of the Soviet Union, as well as 540 years since the first diplomatic relations between the two countries were established.

Britain’s foreign exchange reserves, which are “used to defend the pound during a financial crisis,” are lower than those of Poland and the Philippines, according to a Deutsche Bank report cited by the UK’s Telegraph. Poland was 20th on a list of largest central bank foreign exchange reserves, with the UK in 24th position.

compiled by Piotr Narel

English-language Russian newspaper The Moscow Times ran an AP story about President Bronisław Komorowski’s eagerness to offer “wide-ranging assistance to Moldova in reforming its local administration” during Moldovan President Nicolae Timofti’s two-day visit to Poland ahead of the signing of an association agreement with the European Union. Like Ukraine, Moldova is currently competing with Russia over its territory in Gagauzia and Transnistria. The Transnistria region, which is south-west of Ukraine, is seeking to join Russia and currently hosts Russian troops on its territory.

Azernews: Poland hosts Day of Azerbaijan

The Telegraph: Britain holds less foreign currency reserves than Poland

IN FOCUS

Preparing for the worst: As events in

Ukraine remain unstable, Poland is doing its best to insulate itself. The first moves include calling in a stronger NATO presence and a European energy union. see page 54

photos: Huber Hans-Peter (Bildagentur Huber), Maciej Jarzębiński (Forum), Yves Herman (Reuters)

EU says Poland must allow right-hand drive cars

Lift off: When Poland first moved to enter the European Space Agency, the decision was met with derision. Now that money in research and development is flowing in, politicians are realising that there is value in having a domestic space programme. Science and technology journalist Wojciech Brzeziński takes a look at the gains Poland's space industry has made. see page 86

The European Court of Justice has rejected Polish and Lithuanian concerns for safety and ruled that the refusal to register right-hand drive cars purchased in the UK and Ireland are violations of the EU’s free market and import regulations. Poland and Lithuania will now be forced to change laws which require drivers to modify their vehicles to move the steering wheel and driver’s seat from the right to left side. The European Commission had earlier reported the violation to the EU’s highest court upon receiving multiple complaints from Polish and Lithuanian owners of right-hand drive cars purchased in the UK and Ireland who were unable to register their cars upon returning to their native countries. The court rejected Poland’s and Lithuania’s claim that refusing to register right-hand drive vehicles improved Australia and UAE ease visa road safety because doing so without rules for Poles. US next? also altering other features, such as Agreements to lift visa restrictions for lighting and windscreen wiping, may Poles travelling to Australia and the actually create more safety hazards. United Arab Emirates were signed in Exemptions for short-term guests in the March. In Australia, visa-free travel will country also weakened the argument apply exclusively to those under the age for safety concerns and instead demonof 31. The agreement was signed just in strated that the restrictions in the two time for young Poles to look for sum- countries particularly targeted imports mer employment Down Under this year. from other EU countries, namely the In the UAE, Poles will no longer have to UK and Ireland. Court cases concerning pay the steep fee of 500 złoty for visas. countries restricting the sale of rightSome time restrictions are also likely hand drive cars in Europe date back to to be lifted. But when it comes to visa- 1973 when the UK joined the European free travel, it is the United States that Economic Community. The court ruled that by virtue of joingets most Poles’ attention. Currently, the US requires visas for citizens of five ing the EU, the UK and Ireland made the EU countries: Bulgaria, Croatia, Cyprus, prohibition of right-hand drive vehicles Romania and Poland. In March, Deputy illegal across the union even despite Economy Minister Andrzej Dycha said potential safety concerns. But road that the lifting of US visa restrictions for safety in general remains an important Poles had been “almost decided” thanks issue in Poland and Lithuania, which to lengthy negotiations between the EU have some of the highest rates of road and the US over the Transatlantic Trade fatalities in the EU. In comparison to and Investment Partnership agreement. an annual 28 road fatalities per million American President Barack Obama inhabitants in the UK and an average of has suggested that visa-free travel for 55 across the EU, Poland has 93 road Poles could be a reality even before the fatalities per million inhabitants while end of his term in 2017. One location Lithuania has 100. which has recently become less accessible for Poles is the formerly Ukrainian peninsula of Crimea, which Poles may now only visit if they are in possession by Piotr Narel of a valid Russian visa.

Poland to reform reservist forces, wanting larger NATO presence While NATO has provided the country with unprecedented security over the last decade and a half, the landmark 15-year anniversary of Poland’s membership in the collective security organisation on March 12, 2014 prompted a discussion about the country’s own capacity to defend itself. Unlike many countries where standing armies are ready to be supplemented with significant numbers of well-trained reservist forces, Polish military experts consider the quality and quantity of Poland’s reservists to be sub-par. As a result, reform of Poland’s fouryear-old National Reservist Forces service is already in the works, according to Defence Ministry advisor General Bogusław Pacek. Polish military capability is especially relevant in light of the situation in neighbouring Ukraine. The United States, a NATO ally, sent a dozen F-16 fighter jets and about 300 service personnel to Poland in March to participate in military training drills. Originally intended to be of a smaller scale, the US heeded Polish requests to expand the scope of these drills following Russian intervention in the Crimean peninsula. The US was soon joined by France, which offered to send four fighter jets to the Baltic states and Poland to strengthen NATO patrols over the Baltic region. In April, Prime Minister Donald Tusk said that NATO would strengthen its presence in Poland “within weeks” but did not offer more specifics. Despite the shows of support, Poland’s unsuccessful history of alliances makes it clear as to why it is interested in expanding its own military capability. Some argue that a decision to respond to a potential crisis in Poland would take some time. Even if such a decision were made, the country would still need to defend itself for a significant amount of time before the arrival of the security organisation’s NATO Response Force.

CONFERENCE & COCkTAIL PARTY

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in focus

A girl smiles next to a picture of John Paul II as

Pope Francis visits a Polish community at St. StanisĹ&#x201A;aw church in Rome on May 4, 2014. John Paul II, a Pole, was canonized on April 27 by Pope Francis.

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Julia Bernard

Julia Bernard, known to audiences in Japan by her stage name, Aralka, is a Pole making a name for herself for her multilingual singing talents. The Warsaw native has already twice taken part in the Japanese programme Song for Japan – Nodojiman The World. Besides reaching the finale of the show, what’s most impressive about her is that the young Pole sings her songs in Japanese. During an interview on Poland’s ‘Pytanie na Śniadanie’ morning programme, Aralka revealed that her introduction to Japanese manga (comics) at the age of five led her to develop a strong interest in Japanese culture. Her pseudonym is based on the main character from the ‘Dr. Slump’ manga series.

Artur Dębski

The wrong notes:

People

Poland is rich in music history and musical talent. But the country’s philosophy on music education needs to change if it wants an innovative society. see page 92

Polish parliamentarian Artur Dębski of liberal opposition party Twój Ruch (Your Movement) flew to London on a low-budget airline in April and spent two weeks in the city to better understand the mentality of Polish migrants who have chosen to move to the UK since Poland’s 2004 European Union accession. Despite Poland’s economy being one of the most successful in the EU, the migration numbers remain staggering – by some estimates over a million Poles have migrated to the UK. Surveys by market research company Ipsos suggest that 72% of Poles living in the UK intend to stay there, with 40% thinking of applying for British citizenship. Dębski’s role-play as one of these Polish migrants in the UK entailed his living on a weekly budget of £100 and using his actual credentials to attempt to land a job paying at least a £6.50 wage. Pictures posted by Dębski showed him initially spending a night sleeping on a floor in an area heavily populated by Poles before he was subsequently able to find a place for £10 a night. The parliamentarian explained his actions to English newspapers, saying, “We need to tell Poland and our government what works in the UK, and bring these things to Poland.” Critics such as Ewa Winnicka, an author and journalist who covers Polish migration, said that if Dębski had really wanted to learn about migration, he should have read “serious studies on the subject.” She called his actions “nothing more than a PR stunt for his party.”

Aneta Sablik

Another singing sensation abroad, Aneta Sablik, a 24-year-old from the southern Polish city of Bielsko Biała, reached the finale of ‘Deutschland sucht den Superstar’, Germany’s version of ‘American Idol’, in April. Sablik sung songs in English, such as the Jackson 5’s ‘I Want You Back’, Beyonce’s ‘Best Thing I Never Had’, and Christina Aguilera’s ‘Ain’t No Other Man’. Though she did not win the €500,000 grand prize, her success throughout the show’s run has provided her with considerable publicity in both Germany and Poland. Her official Facebook page has over 260,000 likes, rivalling even the most famous Polish female pop stars.

Jerzy Janowicz

Poland’s number-one male tennis player, Jerzy Janowicz, lost his temper with journalists at a press conference following a disappointing performance from himself and other Polish tennis players at the Davis Cup in Warsaw. His comments not only highlighted problems with the Polish sports system, but also revealed rather strong personal views on Poland and Polish society. Janowicz said that Poland was a country where there was a lack of “any kind of prospects in terms of sports, or in business, or in private life,” adding that “students go to college simply to get out of this country and we (athletes) train in sheds.” He added, “There’s no assistance, in any sport, in any discipline!” He addressed journalists directly when he said, “Who are you to have expectations of me? What do you do? You just sit there and criticise us!” A few days later, a smiling Janowicz revealed that he had imposed on himself a ban against speaking with the media.

in focus

The whole nine yards: Deante Bat-

tle came to Poland to play American football, but has since made the country his home. see page 98

Olga Malinkiewicz

Young Polish scientist Olga Malinkiewicz received the prestigious main prize of this year’s Photonics21 contest for her research on perovskite, a chemical structure which may replace silicon in solar cells to provide energy more efficiently. Malinkiewicz improved on earlier University of Oxford research to produce a paper at the University of Valencia carrying the daunting title of ‘Perovskite solar cells employing organic charge-transport layers’. Besides the prize, which was presented to her in April by Vice President of the European Commission Neelie Kroes, Malinkiewicz is already making quite a name for herself through her publications in prestigious scientific journals and attendance at high-level conferences. She has received offers to cooperate with some of the best scientific laboratories in the world.

For the canonisation of Pope John Paul II, Polish marathoner Piotr Kuryło set out from a small town near Augustów, Poland on March 15 to run the 2,000 kilometres to Rome, Italy. He arrived on April 25, well in time for the ceremonies. The 41-year-old runner completed his run by covering about 70-80 km each day. All the while, he pulled a 70kg wagon attached by a harness to his waist. Inside, he kept essential supplies and a comfortable place to sleep. Both man and machine had problems during the trip, but the former proved far more resilient. Kuryło only experienced knee problems during the stretch through the Alps, whereas his wagon was already in need of repairs in Slovakia. The marathoner has done similar runs in the past and already has plans to participate in the 212km UltraBalaton in Hungary at the end of May, as well as the historic 246km Spartathlon race in Greece at the end of September.

by Piotr Narel

photos: Tomasz Adamowicz (Forum), Jerzy Dudek (Forum), Rafał Guz (Forum), Duncan Grove (Actionplus), Photonics21

Piotr Kuryło

in focus

Automobile production in Europe If producing vehicles in Europe were a race, Germany would be in the lead by far

Germany 5,718,222

illustration by Morgann Lechat

Poland is the eighth-largest producer

of motor vehicles in the European Union. Most of what is produced in Poland goes for export. It is estimated that the industry directly accounts for 760,000 jobs, and supports a further 600,000 in related sectors.

Objects in the mirror ...

Chart not to scale. Figures presented are units produced in 2013. (Sources: Central Statistical Office, International Organization of Motor Vehicle Manufacturers)

Spain

2,163,338

France

1,740,000

Shifting back into gear: After several

1,597,433

years of losing out on investment deals and cuts in production, Poland's auto industry has finally received some welcome good news, with two huge investments set to take place in the near future.

Czech Rep.

1,132,931

Slovakia

975,000

see page 58

Italy

658,207

Belgium

480,164

Poland

590,300

Romania

410,997

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Where do we go from here?

Will Poland use the next 25 years to do what it takes to catch up with Western Europe? Jan Cienski sets out the positive and negative scenarios

A quarter century ago,

Jan Cienski is

ilustration: Shen Akindo

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.

it was very difficult to guess which Central European countries were destined for success and which ones for stagnation and failure. One country had spent more than a decade trying market reforms, had some private businesses, a less repressive government and a higher GDP per capita than most of its neighbours. Another country had an enormous aerospace and defence sector, good universities and educated people, well-functioning heavy industry and an agricultural sector with vast potential. Finally, a third country was bankrupt, suffering from hyperinflation and its most valuable export was coal. The country had a rebellious population steeped in decades of resistance against its rulers, fragmented and unproductive small farms, few natural resources and decades-old clapped out factories. The first two countries were, respectively, Hungary and Ukraine. The third was Poland. Andrzej Koźmiński, the founder of the eponymous business university, one of the most successful in Central Europe, recalls teaching in California in the early 1990s, where he spent time talking to researchers focussing on the Soviet empire. “All the European and Soviet specialists were convinced it was Ukraine that would be the success and that Poland would fail,” he remembered with a grin. The experts were wrong. It was Poland that succeeded. In 1990, per capita GDP in today’s dollars was $3,186 in Hungary, $1,569 in Ukraine and $1,673 in Poland. By 2012 Poland’s GDP per capita was $12,708, just ahead of Hungary at $12,531. Ukraine was left far behind, at only $3,867, according to World Bank data. The main reason for the huge discrepancy in growth rates over the last 25 years were the reforms launched under the aegis of Leszek Balcerowicz and his team of economists in early 1990. Balcerowicz moved quickly to cut off financial guarantees for state owned companies, banned the central bank from financing the budget deficit, made the zloty internationally convertible and ended the state’s monopoly on foreign trade. Millions lost their jobs as collective farms went bust and factories were forced to close. Even the storied Gdańsk shipyard, cradle of the Solidarity labour union, teetered near bankruptcy. The government’s popularity took a beating and by 1993 the former communists were back in power. But the reforms also launched a wave of new businesses, about 600,000 within two years of Balcerowicz’s administration of shock therapy. The sidewalks of Poland’s towns and cities were transformed into bazaars, with people selling shoes, clothes, foods – everything that consumers had been

starved of under communism. “The private sector played a key role in Poland’s civilisational leap,” said Mateusz Szczurek, Poland’s finance minister. Today, many of Poland’s largest fortunes and most successful businesses date from those turbulent times. Leszek Czarnecki, who ran a small private diving company, now owns Getin, one of the country’s largest financial groups. Dariusz Miłek, who started out selling shoes on a camp bed, now owns a retail empire and is worth just over $1bn. Meanwhile Hungary, which had been significantly wealthier than Poland, never undertook the same kinds of dramatic reforms that Poland did, which gave it a slower average growth rate than Poland over the last quarter century. Ukraine languished in corruption and misrule. It is one of the least reformed ex-Soviet republics, and its weakness has made it prey for aggression from Russia. Poland has been Europe’s best longdistance runner, averaging about 4% growth over more than two decades, and is the continent’s only economy not to fall into recession over that period. The question is whether Poland has the stamina to continue catching up over the next quarter century, or if the growth that has transformed the country will eventually sputter out. That leads to two possible scenarios for 2039, marking 50 years, or two generations, since the reforms of 1989 and a full century since the start of World War II, which left Poland a bloodstained, smoking ruin.

entered another country. High speed trains whoosh along modern tracks built not far from the highway, while discreet signs (billboards have long since been expunged from the landscape) notify drivers of hotels and other services. Sweeping into Warsaw less than four hours later, our driver sees the dense cluster of skyscrapers marking the centre of the Polish capital – the Palace of Culture can only be made out with difficulty against the backdrop of other towers crowded into the city’s core. The city of more than 2.1 million people (compared to 1.7 million 25 years earlier), is encircled by a ring road and knit together by three subway lines and new tramway and commuter rail links. The grey concrete communist-era apartment buildings have either been tarted up with new paint, or demolished to make way for modern developments. The highway banks around the capital, crossing the Vistula River, and then heads east, all the way to the Belarusian border. The industrial areas outside of cities like Warsaw, Poznań and Wrocław are crowded with low office towers housing thousands of workers working on advanced engineering projects for local companies like Pesa, the locomotive maker and Nowy Styl, one of Europe’s leading office furniture producers. Those companies, and hundreds more, have moved beyond the Polish market and have built up solid brands and products that compete head-to-head with the best that EU, US and Chinese companies can offer. The roots of Poland’s continued success stem from a long-running government policy of making small incremental reforms. “Poland doesn’t need a revolution,” said Marcin Piątkowski, a Warsawbased economist. “We don’t need to change the model, but to adapt it gradually. It’s hard to tell Europe’s growth champion that its model is flawed.” Those small steps included overhauling Poland’s hidebound court system and slashing regulations hemming in business. Simpler tax regulations also shifted Polish entrepreneurial drive to building business as opposed to avoiding taxes and dodging rules. Poland’s education system had already seen enormous strides in the first quarter century of reforms, with

‘We’ve grown for the last 15 years at an average of 4.2% of GDP. I don’t see any reason why that should be different in the future’

The positive scenario: The steady, sensible path to prosperity In 2039 Poland, for the first time in its more than thousandyear-history, is as wealthy as Western Europe. According to the OECD, the per capita GDP in 2005 dollars for the OECD’s European members will be $41,000 in 2039 – that is up from $26,500 in 2013. “Because we’ve grown for the last 15 years at an average of 4.2% of GDP. I don’t see any reason why that should be different in the future,” a prescient Marek Belka, governor of the National Bank of Poland, said in 2014. Except for the language on road signs, drivers speeding eastwards from Germany barely notice that they have

The positive scenario for Poland over

the next 25 years sees the country continuing to make incremental reforms. A big-bang approach, as with the Balcerowicz Plan of the early 1990s, is unnecessary, economists say. Some of those changes could include overhauling Poland’s rigid court system, simplifying tax regulations and implementing a revamped immigration policy.

Poland’s education system will need

to be reformed if the country is to make the most of the opportunities of the next 25 years. While the country’s students score high in international rankings, Poland’s universities lag behind. Experts suggest greater cooperation between business and academia, and raising university fees to encourage students to demand better quality.

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international rankings showing that Polish schools were among the best on the continent. In the 2013 Programme for International Student Assessment rankings, Poland placed fifth in Europe and 14th in the world. However, the country’s universities had languished, with Poland’s two best schools, the University of Warsaw and Kraków’s Jagiellonian University in the fourth centile of international institutions. However, the emphasis at universities shifted from publishing as the only road to advancement to allowing ambitious researchers to spin off their ideas into businesses. Other reforms introduced higher tuitions, forcing students to demand higher quality for the money they were paying for their educations. That did not turn Polish universities into Nobel Prize generating mills – that is probably a goal that will always remain out of reach – but they did train a new generation of Polish workers to be ever more productive and innovative, allowing them to close the productivity and wage gap with their Western European counterparts. Poland also moved to ramp up its spending on research and development. In 2012, Poland spent 0.9% of GDP on research and development, up sharply from a year earlier, but still far below the level of more advanced European economies. The government still dominated that spending, accounting for 60% of R&D. The small role of the private sector was due to foreign companies keeping most R&D in their home countries, while most Polish businesses were too small and parochial to spend much on research. But over the 25 years from 2014, Poland saw a huge increase in research spending. Some of that was fuelled by EU funds, while the Polish government also invested more. But the biggest change came from Polish companies, which were building up brands and starting to compete on international markets. Companies like bus maker Solaris had to devote large sums to producing products able to compete on international markets.

ilustration: Shen Akindo

Under the negative scenario Polish com-

panies focus on continuing to supply Poland’s richer neighbours with semi-processed goods, and don’t invest in R&D or make an attempt to create global brands. Poland still grows, but only until it reaches about 70% of the average EU GDP per capita, when it begins to stall.

‘All the specialists were convinced it was Ukraine that would be the success and that Poland would fail’ Poland’s demography issue One of the most important challenges facing Poland’s future economic growth, say experts, is its declining population. From the World Bank: “Poland is aging, and aging fast. In 1950, the median age was 25.8: half of the Polish population was younger, half older. Today it is 38.2. It will be 51 in 2050. As the population is aging, it has also started to decline: from 38.6 million in 1995, to 38 million in 2010, to an expected 32 million in 2050. ... On average, a Polish woman has 1.3 children: it would take 2.1 to replace generations. And demography works in waves. There are about 3.2 million women between 25 and 35 years old today, in the most procreationfriendly period of their lives. But because fertility fell in the 1990s, there are only 1.8 million girls between 5 and 15, the potential mothers of the next generation: even if they all were to have 2.1 children, this would not suffice to stop the demographic decline. ... Emigration is further accentuating the demographic trends. Over the last two decades, a number of Poles have left their country, and only a fraction has come back, in spite of the 2008-2009 crisis that hit some of the host countries. Emigrants tend to be young, and they will have children in foreign countries. Are there ways to keep these people in Poland? This will likely depend on jobs and economic opportunities – that is on Poland’s ability to maintain high levels of economic growth.”

‘We don’t need to change the model, but to adapt it gradually. It’s hard to tell Europe’s growth champion that its model is flawed’

Finally, Poland dealt sensibly with its poor demographics. The loss of more than a million people following Poland’s entry into the EU in 2004 coupled with one of Europe’s lowest birth rates left the country vulnerable to a steep fall in population after 2030, when the number of Poles was only 35.5 million. However, the government embarked on a sensible immigration policy, largely aimed at attracting poorer neighbours from the east, especially from Ukraine. With Poland’s GDP per capita above 80% of the EU average, these migrants tended to stick in Poland and not move further west. Linguistically and culturally similar to the bulk of the Polish population, their absorption caused much less social and economic strain than had been the case with mass migration to Western Europe in past decades. “We can reach the EU average by 2039,” said Ryszard Petru, president of the Association of Polish Economists. “This doesn’t demand enormous changes or revolutions like under Balcerowicz. It’s not a matter of spectacular successes, just of growing two to three percentage points faster than Germany over many years. Over time that makes an enormous difference.”

In this poorer Poland, Polish companies largely avoided the risk of creating their own brands and building up their international presence. Instead, they stayed with the safer course of continuing to supply Germany with semi-finished products. That meant there was less need to innovate and increase spending on R&D, and less pressure on local universities to improve. That left Polish workers less efficient than their Western counterparts – and earning a lower salary. Instead of building new companies, Polish entrepreneurs continued to devote a large part of their formidable abiliThe negative scenario: ties to avoiding the increasing snarl of red tape and onerous No breaking through the red tape taxes. “I’m quite worried about what happens when we reach Poland’s pessimistic scenario still leaves Poland significantly 80% of EU GDP,” said Piątkowski. “That’s when we’ll have wealthier than it was in 2014, when GDP per capita was problems because we’ll have to create our own products and just over half the EU average. The gloomier prognosis sees our own brands and become innovative.” Poland’s stalling at about 70% of EU GDP per capita, repeatThe government also hung on to play a large role in the ing the Portuguese experience of rapidly catching up but economy, refusing to privatise state companies, which prothen running out of steam after failing to make the economy vided a welcome cash flow into the budget as well as jobs more competitive. “In this situation, Poland grows just a bit for well-connected boys. With salaries still much lower than faster than Western Europe,” said Petru, who prepared an in Western Europe, and the best jobs reserved for insiders, outline of two future scenarios for Poland’s next 25 years for Poland continued to haemorrhage ambitious young people, President Bronisław Komorowski. “In this scenario we stay millions of whom trekked west. That made Poland’s demoa poorer relation of Western Europe.” graphics significantly worse than the prognosis by the Polish statistics office. It was also difficult to attract new migrants, as they also tended to move west at the first opportunity. “It is worth realising the role of demography in future calculations because potential growth is likely to fall over the next decades,” said Szczurek. This stagnant Poland still has good highways and much better rail systems than in 2014 thanks to continued EU structural fund spending. But Poland loses the historic chance to become a normal Western European country. “Things get better, but there is no breakthrough,” said Petru. by Jan Cienski

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Well-educated Poles will continue

to leave the country en masse due to stubbornly low wages and an economy that doesn’t encourage meritocracy, while the government refuses to privatise state-owned companies, in the negative scenario for Poland over the next 25 years.

Enduring ideals

leader

President Bronisław Komorowski reflects upon the country’s past and future in an exclusive interview with Poland Today’s Andrew Kureth and Richard Stephens

The entire 25-year period of freedom in Poland has been a historic success. This has been the best time in Poland’s history for several centuries. Poland is now rooted in the structures of the West, is a member of the European Union and NATO and its borders are secure. During the past 25 years Poland has been inexorably developing and catching up with the wealthiest countries in Europe. Poland’s success has many faces. However, if I had to list areas in which the greatest changes have taken place then I would point to the growth in the Polish economy, the development of our independence and the transformation in peoples’ attitudes. During the past 25 years – even during the global financial crisis – Poland has been and remains a leader in economic growth. Communism stifled not only peoples’ enterprise but also the energy of society and the opportunity for self determination. Political freedom brought with it changes in those areas. We could once again feel that we owned our own homeland. The rebirth of self government allowed Poles to accept responsibility for their immediate surroundings. We have learned to manage freedom and to enhance it with active citizenship. Poles have come to believe that a lot depends on them and that they should take matters into their own hands. We are now a different society – more open and more engaged. This is reflected by the development of NGOs, voluntary organisations and the use of new media and technology. This is particularly visible among the younger generation. Young Poles are dynamic, educated, speak foreign languages and do not differ from their peers in the West – and they are unreservedly engaged in building a common Europe.

In the early years of the transformation, did you ever worry that the changes could go in the wrong direction and that Poland might not seize its chance? Given the enormous challenges facing Poland, concern about the future and the success of the reforms was rather natural. However, I remember the

mood of those days, the great hopes and, after June 4, the growing belief that perhaps now it would all work out. The concerns remained but they were not paralysing. Instead they added reason to our actions. The Solidarity generation, which stood at the head of the transformation, was able to take responsibility for the essential changes while the people bore the burden of the reforms – which were often difficult for some groups of society. Today, 71% of Poles believe that it was worth changing the system.

Poland’s success has many faces,

says President Bronisław What do you consider to be the Komorowski – but among the greatest challenge facing Poland most prominent over the next 25 years? What goals are its strong ties should Poland set for itself? to the West, its unThe world has not stood still and precedented level it will require constant effort to remain of security and its among the leaders. Effort which will economic development. He also cites strengthen the competitiveness of the a change in attitudes Polish economy and allow us to make among Poles and the most of the social capital which growing participation was released by the Solidarity revolu- in NGOs and civic organisations. tion. We need a new reforming drive. One cannot rest on one’s laurels in business, because without momentum today’s business may founder. We are faced with the need to identify new driving forces for growth. It is time for our economic success to be based not just on cheap labour but on competitiveness and innovation. Economies do not operate in a vacuum. The future of Poland will be dependent on the quality of our public institutions and the laws that are adopted. The level of political culture and the maturity of our democracy are also important. The institutions in a democratic country should be the place where freedom can be realised wisely. We should treat them not as a necessary evil, but as a tool for the organisation of a government that serves citizens and allows them to work for the common good. Such a government will attract and not deter Poles. It will encourage them to take a more active role in the democratic process. Poland faces a serious challenge to its future when it comes to demographics. Economic and social growth requires the creation of a ‘Good Climate for the Family’ in various areas of life, and my office has created a programme under that name. In it I encourage busiphoto: prezydent.pl

What do you consider to have been Poland’s greatest success over the past 25 years?

photo: Marek Lapis (Forum)

What role does Poland have to play in bringing Europe closer together, at a time when antiEU sentiment is running high in many members of the bloc? Poles want a united Europe. The 89% support for membership of the European Union is not just the result of the benefits that membership of the EU has brought. It is a reflection of the conviction that we have found the right place for us. Polish support for European integration is not just a choice of well-being and growth but also the choice of the values of the specific union in which human rights and the ambitions of nations are protected, creating the strength and success of Europe. Taught by our complicated history, we regard the EU as a project that provides a guarantee of peace and security. The dramatic events in Ukraine, which is fighting for its independence and the right to join the European Union, show that Poland made the right choice. It is a bitter paradox that the voice of the Eurosceptics in the EU was becoming louder at the same time as people in the Maidan in Kiev were dying for the European ideal. That is food for thought. Euroscepticism provides a challenge to improve the European project, to bring it closer to the people in order to involve them more strongly in taking key decisions. It is important for Europe as a whole that these views do not begin to dominate or threaten the progress of integration. During the 10 years of Poland’s membership of the European Union, we have clearly defined our role within an integrating Europe. We encourage it to be open to other countries, we support their accession, while also acting in favour of uniting the existing structures. We take an active part in creating tools that give Europe prospects for the future. We have proved this ability to build cooperation in, for example, the Visegrad Group, the Weimar Triangle, and as the joint author of the Eastern Partnership. Recently, Poland again demonstrated that we can react constructively to a challenge by suggesting the creation of an energy union.

What role does Poland have to play in the global community as a whole? Can Poland be a positive role model for countries striving to achieve a democratic system for themselves? Can Poland offer practical assistance? At the beginning of this interview we recalled the great changes that resulted from the victory of Poles seeking freedom under the banner of Solidarity.

‘We believed that Solidarity’s ideals could change Europe and the world. And that is exactly what happened’

steady hand President Komorowski is known for hold-

ing steady under difficult circumstances. An active member of Poland’s opposition movement throughout the 1970s and 1980s, he needed his nerve when he was arrested or targeted for harassment. He was forced to endure internment for a time while Poland was under martial law.

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But the moment his mettle may have been most tested was when he was thrust into the spotlight on April 10, 2010. On that day President Lech Kaczyński and 95 others died in a tragic plane crash outside Smolensk, Russia. As Speaker of the Sejm, Poland’s lower house of parliament, the constitution mandated that the mantle of acting president fall on his shoulders. At the time, he had been running for president against the late Lech Kaczyński himself.

photo: Adam Hunger (Reuters)

nesspeople and local governments to create working conditions that will allow people to balance work and family.

Komorowski called for all Poles to put aside their political differences during a period of mourning. They did, and so did he. The aftermath of the Smolensk disaster remains one of the only periods in Poland’s democratic history that the country’s political scene was so united, if only fleetingly.

We believed that those ideals could change Europe and the world. And that is exactly what happened. The Polish transformation led to the collapse of the Iron Curtain and the end of the Yalta-based division of Europe. The Solidarity message and the successful transformation are our ideas to export. After all, the history of struggles for freedom has not yet ended. There are still places in the world where freedom remains an unfulfilled dream. It was extremely moving when during the Arab Spring people in distant countries drew upon the symbols, demands and achievements of the Polish Solidarity movement. The removal of autocratic government is just the beginning. Poland, with its experience of a successful transformation can, and wants to, provide support to all nations that wish to wisely manage and enshrine their freedom. We are already providing such assistance to our eastern neighbours by sharing our experience in building an effective free economy, democratic institutions, an independent media, independence, as well as how to fight pernicious phenomena such as corruption. We would like Poland to occupy a stronger position in Europe and the world. We are also aware of the responsibilities that come with this. The Poles themselves have noticed the growing role our country plays in the international arena – some 70% believe that over the past 25 years the position of Poland and its security have improved, as have our relations with our neighbours. We want to make use of the international success of our country as a source of optimism which is so needed today by the whole of Europe and the peoples of the world.

interview by Andrew Kureth and Richard Stephens

He went on to win early presidential elections against the late president’s twin brother, Jarosław. Since that time he has remained one of Poland’s most trusted politicians. He is expected to run for a second term in 2015. This year he is promoting June 4 – the anniversary of the country’s first partially democratic elections since World War II – as a ‘Day of Freedom’ during which the country will celebrate its successful transition to democracy.

Political achiever Bronisław Komorowski was born on June 4, 1952 near Wrocław. He graduated from secondary school in Warsaw and went on to study history at the University of Warsaw. He is Poland’s fifth president since 1989, the year Poland began its transition to democracy and a market economy, and has served in the role since 2010. But Komorowski has a long history of being active in Polish political life, going back to 1968, when he took part in the March Protests against Poland’s communist authorities. Komorowski became active in the opposition movement, and worked as a printer, journalist and publisher of the underground press. From the early 1980s until 1989, he taught history at a theological school in the village of Niepokalanów, just west of Warsaw. Komorowski got back into politics in 1991, when he ran successfully for parliament. He served there until becoming president in 2010, working in the Commission for Poles Overseas, the Commission for National Defence, and the Commission for Foreign Affairs. During this time he also served in the governments of Tadeusz Mazowiecki, Jan Krzysztof Bielecki and Hanna Suchocka as Deputy Minister of National Defence. In 2000-2001 he was Minister of National Defence in the Jerzy Buzek government. Komorowski was elected as Speaker of the Sejm twice – in 2005 and 2007 – and in 2006 he was elected deputy leader of the Civic Platform (Platforma Obywatelska) party. He and his wife, Anna, have five grown-up children.

Poles themselves have noticed the

growing role Poland is playing in world affairs, says President Bronisław Komorowski. Poland's relations with its neighbors have improved and its voice plays a crucial role in the formation of European policy. Poland wants to make use of its international success by sharing its experiences and lessons with nations that are still developing their democracies.

26 The EU giveth and leader

the EU taketh away The 10-year deluge of EU funds has been a boon for Poland, but membership has also caused a brain-drain that will be hard to counteract

On May 1, 2014, Poland celebrated a decade of EU membership. Looking back at the past 10 years, two main themes have largely dominated the narrative of Polish EU membership: cohesion funds and mass emigration. Both stand at odds with each other. As investment has flowed in, creating a framework for developing and sustaining a strong economy, hundreds of thousands of Poles have continued to pour out of the country. In February last year, when the government announced that Poland would receive a record amount of EU cohesion funding – close to €107bn and the largest received by any member state – Prime Minister Donald Tusk marked the occasion by cutting through a cake designed in the guise of euro banknotes. A politician digging into a money cake is a risky PR image at best. “I dedicate this money to all those who are seeking a job and cannot find employment in Poland,” said Tusk before he sliced through the cake, adding that the overwhelming majority of funds should be “invested in development.”

‘There is still too much emphasis on the absorption of funds, rather than on results’

Transformed economy

Liam Nolan cov-

photo: Maciej Jarzębiński (Forum)

ers 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.

Undoubtedly the Polish economy is in a much healthier – some would argue completely transformed – state today than it was 10 years ago on the eve of EU accession. Between 2004 and 2012, GDP per capita (in terms of purchasing power parity) increased from 51% to 66% of the EU average and gross monthly salaries have increased by a third (see table). All macroeconomic indicators point towards a robust, burgeoning economy. For this new seven-year EU funding period, investments in innovation and development have been earmarked as priorities – approximately €10bn has been set aside for innovation areas such as Intelligent Development and Digital Poland (see box). Indeed, the generous 2014-2020 budget signalled a huge vote of confidence from the European Commission for Poland’s well-managed use of funds during the period 2007-13. This time around, cohesion and structural funds amount to €82.3bn (converted to current prices) with €28.5bn allocated for common agricultural policy funds. Since 2007, huge progress has been made in transport infrastructure, where some €28bn – 42% of 2007-13 cohesion funds – was spent on developing infrastructure and environment projects, giving Poland a much-needed network of modern motorways, airports and rail lines. Infrastructure development will continue apace until 2020. Paweł Tynel, executive director of tax, grants and incentives advisory services with consulting firm EY in Warsaw, believes that EU cohesion funding is one of the reasons why Poland did not suffer from the recession and that they have partially contributed to the country’s positive GDP growth. He added that, from the perspective of companies, there is a significant change in EU funding from brickand-mortar projects to R&D activity. However, investment in Poland in R&D projects remains low, at 0.9% of GDP, just one-third of which comes from the private sector. That is well below the EU’s current average of 2.06%. The Polish government aims, as part of the Europe 2020 Strategy programme, to increase investment in R&D to 1.7% by 2020, and to achieve a 50/50 split between private and public

Young Poles have left Poland by the hun-

dreds of thousands since EU accession, even as the country has received billions of euro in funding for investment in initiatives to spur job creation. In part due to EU aid, wages have risen sharply since 2004, but not enough to match what Poles can earn in member states to the west.

Poland’s average monthly gross salary, in złoty, 2004-2012

Poland’s GDP growth, in %, 2004-2012

2004: 2,289.57 2005: 2,380.29 2006: 2,477.23 2007: 2,691.03 2008: 2,943.88 2009: 3,102.96 2010: 3,224.98 2011: 3,399.52 2012: 3,521.67

2004: 5.3 2005: 3.6 2006: 6.2 2007: 6.8 2008: 5.1 2009: 1.6 2010: 3.9 2011: 4.5 2012: 2.0

Source: Polish Central Statistical Office

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The biggest European Union flag

ever (20x30 m) was unrolled on April 14, 2009 by Polish students in Brussels to celebrate the fifth anniversary of Poland's accession to the EU.

photo: Maciej Jarzębiński (Forum)

sector funding. Interestingly, in most western EU economies, Gowin. From studying the labour statistics of Western EU private sector funding in R&D outweighs that of the public countries, Iglicka maintains that approximately 2.5 million sector by two to one. Poles have emigrated permanently to Western European Not all economists are impressed with the handling countries and that, along with newer, short-term migrants of EU funds to date. Professor Małgorzata Starczewska- to the UK and Germany, the number of Polish economic Krzysztoszek, chief economist at the Polish Confederation migrants comes to at least 3 million. That’s far higher than Lewiatan, the country’s largest employers’ association, the 2.1 million Poland’s own statistics office says have left the said that there is little acceptance within government cir- country in search of work. cles for backing risk-heavy projects with public money. Minister Bieńkowska has highlighted the creation of Starczewska-Krzysztoszek believes that structural funds for approximately 250,000 new jobs during the previous sixthe period 2014-20 should be focused on a small number year EU budgetary period as one of the most important of projects, notably in R&D and innovation. “First we have to effects of cohesion policy investments at regional level. identify what kinds of problems we have in our society and However this figure has hardly remedied the massive brain this money should be used to support and solve those prob- drain that has hit Poland over the past decade. “The snowlems.” She suggests novel ideas on how to invest structural ball of Polish migration is still growing and unfortunately we funds, such as developing the production of graphene, the cannot see the end of this story,” added Iglicka. She believes revolutionary carbon material which has remarkable heat that EU funds have not helped to stop Polish migration, and and electricity storage capabilities, or in research connected are not targeting “real problems”. In reality, no amount with preventing age-related illnesses, a signal to Poland’s of EU structural funding is going to encourage Poles to return ageing demographic. home if average wage levels do not increase significantly. In this budgetary period voivodships will be given “It’s not easy for any economy to become innovative,” an increasingly important role too. Previously, from said Piątkowski. He believes that Poland needs to set up 2007 to 2013, voivodships administered close to 25% an environment that can help tech start-ups to “shift from of all EU funds. For 2014-2020, that importing ideas to exporting ideas”. figure will rise to 40%. The Ministry But is there a worry that the priof Infrastructure and Development, EU-funded innovation vate sector will become reliant on under the stewardship of Deputy programmes in poland EU funding and lose competitiveness Prime Minister Elżbieta Bieńkowska, Digital Poland (€2.2bn): An entirely beyond 2020 when structural funds who gained much praise for her man- new programme, Digital Poland will dry up? EY’s Tynel does not think so. agement of EU regional funds as min- support the development of information He said that due to a greater focus and communications technology, particularly being placed on R&D and a lack ister for regional development, has a the enhancement of greater broadband of EU support for funding capital reputation for being rigorous about infrastructure and online speeds throughout expenditure, firms will, in turn, be accounting for where every euro is the country. It is hoped that by 2020 everyone forced to think about finding alterspent – the ministry’s website even in Poland will be able to access the internet at a capacity of 30MB per second. displays a clock showing the exact native sources of financing for their value of EU funding contracts signed Intelligent Development (€8.6bn): capital expenditures, hence retaining to date. Marcin Piątkowski, senior The Intelligent Development programme aims a competitive edge. economist at the World Bank office to strengthen links between research centres Economists generally agree that – essentially universities – and the business in Warsaw, said that the organization this budgetary period will be the last community by supporting an increased has been impressed with how Poland number of research and development projects. to offer Poland such large amounts of has “successfully absorbed EU funds.” The government is keen to use the funds cohesion funding. But they do not think He added however that there is still to develop R&D projects into marketable that Poland will hit a brick wall after products, with the aim of achieving tangible, too much emphasis on the absorption 2020 once the funds are spent. The prilonger-term economic results. of funds, rather than on results. It is vate sector and young entrepreneurs a mindset that the World Bank would in particular offer the best chance of like to change. using this last gasp of EU funds to spur innovation and future long-term Emigration equals exodus? job creation. Lewiatan’s StarczewskaHowever, Prime Minister Tusk’s goal of using the funds to Krzysztoszek said that, at the start of each academic year, build an economy capable of significant job creation will be she asks her economic students at the University of Warsaw difficult to achieve. Unemployment remains high at 13.5% if any of them are thinking about starting their own business. and, 10 years after joining the EU, Polish emigration to west- Eight years ago, she said, only two out of 80 students raised ern member states shows no sign of abating. “Macro indi- their hands. This year, out of a class of 50 students, the cators paint a very encouraging picture of Poland but the opposite was the case – only two did not put their hands up. reaction of most young Poles is in stark contrast to these Therein lies the hope that Poland’s brightest minds are macro findings,” said Krystyna Iglicka, a professor of eco- thinking about accessing EU funding programmes, and nomics at Warsaw’s Lazarski University and vice president may contribute to building an even stronger economy, of the Polska Razem party (Poland Together), established instead of deciding to board the first flight out of Poland in December 2013 by former PO justice minister Jarosław after graduation. by Liam Nolan

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challenge

Deputy Prime Minister and Minister for Infrastructure & Development Elżbieta Bieńkowska discusses innovation funding, oversight and Poland’s plans for the next wave of EU money in this exclusive interview with Poland Today What will be the main focus of spending the current round of EU structural funds?

photo: Piotr Dziubak

We still have two more years to realise projects from the 2007-2013 budget. These funds will be available until the end of 2015. The 274.5bn złoty in EU funds for which we have signed agreements translates to close to 11,000 km of new or renovated roadway and 340,000 jobs. It’s also support for thousands of businesses, support for the development of the education system at every level, and support for the functioning of government online services. Poland is quite a different country from what it was 10 years ago. Until now, EU funds have mainly helped us in building infrastructure and catching up in terms of development. During the 2014-2020 period, we will shift the focus towards supporting innovation and entrepreneurship. European funds are intended to increase economic competitiveness, improve societal and territorial cohesion, as well as increasing the efficiency and effectiveness of the state. We will allocate funds to provide for energy security as well as increasing the utilisation of renewable energy. It will also be necessary to finish the construction of a modern and complete transportation network. In accordance with the advice of the EU Commission, we will give special consideration to the railway system, as an environmentally friendly mode of transport. Reducing the emissions of carbon dioxide, to which we are obligated under the EU’s climate and energy regulations, will be achieved through investments in, for example, low-emission public transport. Finally, there will be support for investments in the protection and improvement of the environment, as well as the preservation of cultural heritage. Competitive businesses will need highly qualified workers, which is the reason for European funding towards improving the quality of higher education as well as matching it to the needs of the labour market.

What can large cities expect from the structural funds? Which kind of investments will be most supported? Cities constitute an important element of Polish regional politics. In 2014-2020, they will be one of the main beneficiaries of European Union

aid. The support will include large cities along with their metropolitan areas, as well as smaller municipalities of subregional and local importance. Every city is a natural economic and social centre in its sphere of influence. A fundamental source of funding for cities is based in regional programmes which will finance Integrated Territorial Investments – intended to support the realisation of cities’ strategies aimed at solving problems concerning the economy, the environment, climate issues, demographics and society. Every Integrated Territorial Investment must fulfil certain indicators concerning entrepreneurship, the labour market and especially the protection of the environment. This is why projects involving sustainable transport, waste disposal, and thermomodernisation are especially significant. Large urban areas will also receive support from national programmes, whereas smaller cities will be able to make use of funds from the Operational Programme ‘Infrastructure and Environment’. This funding will entail connecting these smaller cities with larger urban centres, improving public transportation, as well as wide-reaching revitalisation efforts. Additionally, investments concerning environmental and societal infrastructure will receive support, especially emergency medical services and investments in culture.

Poland’s cohesion and structural funds budget for the 2014-2020 period Total: €76.8bn Regional Programmes: €31.2bn Infrastructure and Environment: €27.5bn Intelligent Development: €8.6bn Knowledge, Education, Growth: €4.4bn Digital Poland: €2.2bn Eastern Poland Programme: €2.1bn Technical Assistance: €0.7bn Source: Ministry of Infrastructure & Development

Poland. Earlier implemented mechanisms – such as grants for machinery purchases, conference participation, or schooling – were intended to increase the competitiveness of our economy. Today, however, no economy is able to quickly develop simply thanks to raising competitiveness. We need to focus more on research and development. Without this, it would be difficult to catch up to more developed countries. This does not mean, however, that there will be a lack of funds for supporting entrepreneurship. Such activities will be geared towards small and medium-sized enterprises, mainly through regional programmes. The national programme, known as Intelligent Development, will focus on supporting research and development projects realised by companies as well as with the cooperation of scientific research centres.

What are the challenges in turning Poland into a more innovative economy?

There was a lot of controversy on how infrastructure, and particularly highway construction, funds Our goal is economic growth result- were allocated during the previing in GDP per capita reaching 77% of ous budget. Is there a change to the EU average by 2023. We will focus how the funds will be allocated on activities which increase levels under the 2014-2020 budget?

of economic innovation and competitiveness. These activities are based on knowledge, intellectual capital, as well as results of the digital transformation – a characteristic giving modern economies a competitive advantage. We will designate close to €20bn to this end. We will be working towards having spending on research and development reach 2% of GDP by 2023, half of which should come from the private sector. For this reason, we are betting on cooperation between business and science in order to streamline the introduction of new and unprecedented solutions in the market, not necessarily limited to

It is hard to discuss economic innovation and competitiveness without basing it on a well-functioning infrastructure. This is why funding the development of railways and roadways, especially those which are found in the Trans-European Transport Networks (TEN-T), will continue. Sustainable transport will gain in importance, including the railway system as well as the tram system and the underground in cities. Land transport, sea transport, ports, and mixed transport may also count on support. Funds for investments in this area, including the European Commission’s Connecting Europe Facility, amount to over €27bn.

‘Our goal is to bring GDP per capita to 77% of the EU average by 2023’

Why has Poland been able to avoid some of the corruption and misallocation scandals seen in other new EU member states? Firstly, constant oversight and evaluation is necessary – beginning at the stage of preparing projects and public tenders. Mandatory ex-post evaluation is also important: how a tender was conducted, what was realised, and in

what way. We have worked out a special system of checks on advanced projects. We are conducting constant monitoring and necessary controls. We are in constant contact with the European Commission and regularly pass on information concerning activities conducted by the Ministries with the aim of guaranteeing that EU funds will be spent appropriately. Such actions bring results – the level of error revealed in our country is quite small. In Europe they use us as a model of good and effective use of funds. Among other things, this is why we received another large pool of funding for investments in the 2014-2020 budget.

How does the political calendar, especially parliamentary elections in 2015, affect the structural fund spending programme? The period for utilising European funds spans seven years, meaning that it lasts longer than the term of office of the Polish government. Regardless of election dates, EU programmes are realised because the methods for their implementation are set. National and European strategies help describe the most important regulations. For example, programmes for the 2007-2013 period were partly prepared by my predecessors. The political calendar therefore does not have a great effect and does not constitute an obstacle to realising EU programmes.

Are government funds the best way of spurring innovation, or does it lead to waste? The EU funds that have been spent so far were firstly intended to increase the competitiveness of our businesses. Poland should markedly increase spending on R&D, which should primarily concern the industrial sector. We want to encourage businesses to engage their resources towards the realisation of research and development, so that half of all R&D spending by 2023 will come from them. Increased engagement of businesses in conducting and funding research and development will enable the development of a knowledge-based economy. This is why our Intelligent Development programme, which exceeds €8.6bn, will focus on supporting other programmes realised through the cooperation of science and business – which on the one hand is meant to ensure that the infrastructure purchased by research centres in the past years is more effective and on the other improve the commercialisation of results achieved through R&D. In accordance with this approach, scientific research funded by public resources should correspond mainly to the needs of industry – and therefore benefit the entire economy.

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Deputy Prime Minister and Minister of Infrastructure & Regional Development Elżbieta Bieńkowska was the keynote

speaker at Poland Today’s Primetime Warsaw II conference in April. There she outlined how EU funding would be used to benefit large Polish cities like the capital.

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conference & cocktail party

Poland Transformed May 28, 2014 | Endorfina Foksal | ul. Foksal 2, Warsaw

An executive conference by Poland Today Poland Today is proud to present the programme for its ‘Poland Transformed’ conference, taking place on May 28, 2014, at the Endorfina Foksal palace in Warsaw. The conference will focus on the role business has played in Poland’s transformation, and will bring together opinion formers, business leaders, as well as 50 journalists from around the world. Featured speakers include: former Prime Minister Jan Krzysztof Bielecki, business leader Henryka Bochniarz, The Economist Senior Editor Edward Lucas, World Bank Country Manager for Poland and the Baltic Countries Xavier Devictor, as well as George Friedman, Founder and Chairman of global intelligence firm Stratfor.

The speakers The goal of the Poland Transformed conference will be to hear directly from decision makers about how business in Poland helped shape the country’s transformation, what lessons can be learnt, and what direction the country should head in over the next 25 years. Conference panel discussion topics include how to define Poland’s success, business transformation over the past 25 years, what challenges and opportunities businesses in Poland face as they look toward the future, Poland’s image abroad, and the country’s role in the global context.

Conference programme 8:30 am – 11:00 am

Interview sessions

Time dedicated for foreign journalists tour to conduct interviews with partners. 10:30 am – 11:00 am

Registration & refreshments 11:00 am – 11:05 am

Welcome

ichard Stephens, Founder R and Editor in Chief of Poland Today

11:05 am – 11:15 am

Opening address

an Krzysztof Bielecki, head of the J Prime Minister’s Economic Council, former Prime Minister

11:15 am – 11:25 am

Poland’s economy – an overview

rofessor Witold Orłowski, member of the P Prime Minister’s Economic Council and Chief Economic Advisor at PwC

11:25 am – 12:15 pm

Defining Poland’s success What were the drivers behind Poland’s successful economic transformation?

oderator: Edward Lucas, M Senior Editor at The Economist Panelists: Jan Krzysztof Bielecki, Head of the Prime Minister’s Economic Council, former Prime Minister Henryka Bochniarz, President of Polish Confederation Lewiatan, former Presidential Candidate, President for Central and Eastern Europe Region of Boeing Co. Jacek Socha, Partner in the Advisory Department and the Deputy Chairman of PwC in Poland, Former Treasury Minister Xavier Devictor, World Bank Country Manager for Poland and the Baltic Countries Adam Maciejewski, President of the Management Board at the Warsaw Stock Exchange 12:15 pm – 1:30 pm

25 years of Poland’s business transformation: How unleashing business helped write Europe’s biggest success story

photo: Claudio Divizia

oderators: Andrew Kureth, Editor, M Poland Today; Lech Kaczanowski, Business Editor, Poland Today Panelists: Beata Stelmach, CEO and Director General of GE Poland and the Baltics Adam Purwin, CEO of PKP Cargo Marek Podstawa, Member of the Management Board, PKN Orlen Other panelists to be announced soon 1:30 pm – 2:30 pm

Lunch

Networking and discussion

2:30 pm – 3:15 pm

Facing the future What are the opportunities and challenges for the new generation of Polish business leaders?

oderator: Mirella Panek-Owsiańska, M President and Director General of the Responsible Business Forum Panelists: Rossen Hadjiev, Member of the Management Board at Integer.pl Group Julian Kozankiewicz, Managing Director at COMP Centre for Innovation Łukasz Wejchert, CEO and Founder of Dirlango Katarzyna Zawodna, President of Skanska Property Poland 3:15 pm – 3:30 pm

Poland 2039: A tale of two countries What must Poland do to fulfil its potential and avoid economic stagnation? oland Today senior writer Jan Cienski P discusses the positive and negative scenarios set out in his article for Poland Today about the country’s economic future.

3:30 pm – 4:30 pm

Breakout sessions & networking

Participants will have the chance to contribute their own thoughts and arguments on the in smaller, more informal, breakout sessions. 4:30 pm – 5 pm

Myth and reality How is Poland perceived abroad?

What is Poland’s image abroad, and has the message of its success filtered through in foreign media? Moderator: Richard Stephens, Founder and Editor in Chief of Poland Today Panelists: Rick Lyman, Central and Eastern European Bureau Chief, The New York Times Marie Charrel, Economic Correspondent, Le Monde, France Derek Scally, The Irish Times, Ireland Lily Galili, i24News, Israel 5 pm – 6 pm

Poland in the global context A discussion with Edward Lucas and George Friedman

oderator: Andrew Kureth, M Editor, Poland Today Panelists: George Friedman, Founder and Chairman of Stratfor Edward Lucas, Senior Editor, The Economist

Cocktail Party 6 pm – late

Cocktail party

Networking and discussion

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Jan Krzysztof Bielecki

Henryka Bochniarz

Head of the Prime Ministerâ&#x20AC;&#x2122;s Economic Council and former Prime Minister

George Friedman

Julian Kozankiewicz

Edward Lucas

Managing Director at COMP Centre for Innovation

Rossen Hadjiev

Chairman of Stratfor

World Bank Country Manager for Poland and the Baltic Countries

Member of the Management Board at Integer.pl Group

Adam Maciejewski

Senior Editor at The Economist

Witold OrĹ&#x201A;owski

CEO of the Warsaw Stock Exchange

Marek Podstawa

Chief Economic Advisor at PwC

Vice Chairman of PwC in Poland

Senior Writer at Poland Today

Founder and head of the Polish Confederation Lewiatan

Xavier Devictor

Jacek Socha

Jan Cienski

Adam Purwin

Member of the Management Board at PKN Orlen

Beata Stelmach

CEO and Director General of GE Poland and the Baltics

CEO of PKP Cargo

Katarzyna Zawodna

President of Skanska Property Poland

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conference & cocktail party

Poland Transformed May 28, 2014 | Endorfina Foksal | ul. Foksal 2, Warsaw

poland transformed International press tour

Journalists from countries around the world share their knowledge and impressions of Poland

Japan

Hiroaki Takai Nikkei News

Poland Today’s mission is to ‘bring – I have never been to Poland, but from what Poland to the world and the world to I know it has a unique economy, especially after the global financial crisis. In Japan, Poland is Poland’. As such, we decided to bring known for Marie Skłodowska-Curie and as a 50 journalists from around the world beautiful place in general – especially the Old to our Poland Transformed confer- Towns in Warsaw and Kraków. The Polish peoMonitor (Albania), L’Echo (Algeria), ence in late May, so that they could see ple are known to be beautiful as well, though it’s difficult for Japanese to distinguish people Wirtschaftsblatt (Austria), De Stan– for themselves how the country has from the various countries in Central Europe. daard (Belgium), Folha (Brazil), Capital changed and what role business has Relations between Japan and Poland are very Weekly (Bulgaria), Renmin Ribao played. The goal is to give them good. Many Japanese companies have bases in (China), Hospodářské Noviny (Czech a more complete view of Poland, so Poland – so the economic relationship is very strong. I’m very interested in the people Republic), Polennu (Denmark), Eesti that they can go back to their home of Poland, their world view, what they think Päevaleht (Estonia), Suomen Kuvalehti countries well-equipped to tell Poland’s of the changes during the last 25 years. (Finland), Le Monde (France), Deutsche transformation story for the anniver- They have seen some huge changes in their lives and their economy. When it comes to the Welle, Suddeutsche Zeitung, ZDF sary of the June 4, 1989 elections. main challenges facing Poland, in the near term, TV (Germany), To Vima (Greece), Before they came, we decided to ask it’s economics and relations between Russia Magyar Nemzet, Figyelo (Hungary), them what they knew about Poland and Ukraine. In the medium term, Kjarninn (Iceland), The Irish Times, – about its history, its challenges for the it is adoption of the euro. RTÉ (Ireland), i24News (Israel), future, how it is viewed in their country La Repubblica, Il Sole 24 Ore (Italy), and what relations are like.

As of press time, publications participating in the Poland Today ‘Poland Transformed’ international press tour were as follows:

Nihon Keizai Shinbun – Nikkei News

Bulgaria

(Japan), LETA (Latvia), IQ Magazine (Lithuania), L’Expansion , Revista Proceso (Mexico), Nederlands Dagblad, De Telegraaf (The Netherlands), Expresso (Portugal), Aljazeera (Qatar),

photo: Claudio Divizia

compiled by Cynthia Naugher Sklodowski

Adevarul, Foreign Policy Romania (Romania), Kommersant, ITAR-TASS (Russia), Business Daily Finance (Slovenia), SAKE 24 (South Africa), El Mundo, El Pais (Spain), Sydsvenskan (Sweden), Dünya Gazetesi, Hurriyet Daily News (Turkey), The Economist (UK), The New York Times (USA).

Paulina Mihailova Capital Weekly

‘People from my country associate Poland with music’

‘Poland is something like a dream for Bulgaria – in terms of economy, business, living standards and traditions in democracy’

– I was in Poland about eight years ago. It is a great country, with a very interesting business environment. Poland, as far as I know, is one of the best examples for a successful transition to a market economy among the countries from Central and Eastern Europe. It is one of the leaders in terms of foreign direct investment in the region, and one of the countries always on the radar of the multinationals. In Bulgaria we associate Poland with tourists – traditionally we have lots of Polish tourists. When it comes to relations between our two countries, trade is growing very fast, but there is still a lot of potential. Poland is something like a dream for Bulgaria in terms of economy, business, living standards and traditions in democracy. I believe the main challenge for Poland going forward is that it must find a way to remain the ‘tiger’ of the region.

Albania

Laura Cela Monitor

– I’ve never been to Poland and I don’t know any Polish people, but I know that it has been developing rapidly in recent years, especially after 1990. Many Polish people have emigrated to the UK and other European countries. People from my country associate Poland with music.

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Finland

Israel

Teppo Tiilikainen Suomen Kuvalehti

Lily Galili i24news

– I have been to Poland many times, first in 1976 and the last time in April this year. For that reason I know quite a lot about Poland – too much to say concisely. Poland is always an interesting place to visit. I would say that relations between Poland and Finland are fine.

Latvia

Raivis Spalvens LETA

– I was in Warsaw once in 2012. I adored the city immediately. Most of all I loved the food, but also the museums – the Fryderyk Chopin Museum and the Warsaw Rising Museum. Poland and Latvia have much in common, such as suffering caused by the USSR and communism. Our countries have strong ties both historically and economically, so the LatvianPolish relationship is grounded in bilateral respect and trust. However, I have noticed that we in Latvia don’t hear about Poland so much. Maybe that’s because Latvians simply consider Poland a strong economy and trustworthy trade partner. Looking back at the last 25 years, I see that Poland has demonstrated the ability to get over crises, be they economic, social or political. I think that for Poland – like other European countries – the greatest challenge in the future is to secure economic growth by thinking how to diversify trade markets.

I’ve been to Poland several times and I was impressed by the progress and the struggle to deal both with the past and the future. I have some knowledge of Polish politics and society, having occasionally covered both over the last 10 years. For example, I was sent to cover Poland’s accession to the EU and the pope’s visit to Poland. I do know several Polish people, either those living in Israel or people I interviewed or met in Poland. Being an Israeli, Poland in my country is mainly associated with the Holocaust. Yet, since more and more Israelis visit Poland and do business with it, this is certainly broadening the horizon. I think that one of Poland’s main challenges going forward is for it to find its right place and its own voice in the EU and in Europe in general.

Russia

Maria Ivanina ITAR-TASS

– I have never been to Poland, but from what I know the people are very friendly and the food is very tasty! I think that is mainly the view that people from Russia have about Poland as well. I see Polish-Russian relations as friendly and based on energy cooperation.

Iceland

Greece

Thordur Snær Júlíusson Kjarninn

Achilleas Hekimoglou To Vima

– I visited Warsaw for one weekend in 2004. I liked what I saw and really enjoyed myself. We have quite a large Polish contingent here in Iceland. Between 9,000 and 10,000 Poles live here – over 40% of all foreigners. So we have been dealing with Polish integration for many years and have seen second- and third-generation Poles being born here. Most have probably moved over here in search of work. I think that there is no one stereotypical view the Icelandic people have of Poles and Poland. I will arrive with an open mind and high hopes for what I will experience in one of the fastest growing economies in Europe. Relations between Poland and Iceland are quite good. That’s due to the large Polish population here and the fact that Poland was one of the few countries that offered to loan Iceland money after the crisis.

–I have never been to Poland, but I know it went through a painful transition in the 1990s. Now, the country has been established as an important market in Europe, it participates in all Western institutions and, as far as I understand, it can only do better. Poles have a good reputation in Greece. Immigrants from Poland have created the most peaceful and hard-working foreign community. Plus, in some rural areas, like northern Greece, where the agricultural sector is still important, Polish immigrants brought with them innovative know-how and helped the modernization of the production procedures. Nowadays, our bilateral economic relations are getting stronger through trade and tourism. Greece is a top destination for Polish tourists, while Greek exports to Poland are about to break a record. Poland will definitely have a role in the process of developing EU-Russia relations as an important European player. Furthermore, entering the euro zone could be a step forward for the country.

‘Poland is always an interesting place to visit’

‘Polish immigrants brought with them innovative know-how’

‘In Japan, Poland is known as a beautiful place – especially the Old Towns in Warsaw and Kraków’ ‘I was impressed by the progress and the struggle to deal both with the past and the future’ ‘Poland was one of the few countries that offered to loan money to Iceland after the crisis’

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Time to cooperate Polish firms must capitalise on their employees’ social capital if they are to build global brands

Poland Today sits down with Witold Orłowski, professor of economics, member of the prime minister’s Economic Council, and chief economic advisor at consultancy PwC.

PwC is content partner of Poland Today’s Poland Transformed Conference,

taking place on May 28, 2014 at Endorfina Foksal in Warsaw

What stage of life were you at in 1989? What are your memories of that time?

At that time I was planning to prepare my PhD; I didn’t have any position in At that time I was in the United Polish academia. States. I was a post-graduate student A little over a year later in 1991, at Harvard on a Fulbright scholarship. when Poland was negotiating potenI voted at the embassy. I was very tial associate membership of the EU, interested and excited about what was Jacek Saryusz-Wolski, who at the time happening in Poland. There was a new was the plenipotentiary for European hope. What happened helped me to integration, asked me to prepare some decide to return to Poland, and I found simulations of the EU association it very exciting to come back to my impact for Poland’s economy. The EU home country a couple of months later. had produced some dire models for Poland, and they needed some counWhat was it like watching what ter-models to show them. He asked me was happening from the US? if I could prepare them in one week. It was nice because it was one of the I said that I would, and I managed rare moments when Poland was often to do it. Following that I was made on the front page of major US newspa- responsible for the economic matters pers. I could pick up the Boston Globe regarding negotiations for European or the New York Times and there it Union membership. was. People there were always askSo I was involved in the transformaing me what was happening in Poland. tion process from the early 1990s. Once Of course this was before the time of I started, I spent the remaining 22 years the internet, so I had to call home to find being involved in what was happening out myself! But I was proud and happy in the Polish economy. to see the changes happening, and I was proud that people were asking me What do you think has been questions. I remember the day of the the key to Poland’s success elections in Poland. My family called me over the past 25 years? when the first results were announced. It was Poland’s explosion of entreI immediately told my colleagues at preneurship first of all – not the forthe graduate student dormitory. When eign investment. The Czech Republic I told them that Solidarity had won 99 got many more foreign investors at the seats in the Senate, they looked at me beginning, but it has been growing at with some disbelief, because in truly a much slower pace than Poland. Here, free democracies no party ever does there were decisive moves towards libquite that well. I got the sense that they eralisation of the economy, and that thought maybe Poland at the time was allowed all of the ‘virtual’ businesses just exchanging one false democracy that had sprung up to become legal for another. But of course that wasn’t almost overnight and flourish. At first the case. this all made Poland look like it was far behind, because Prague and Budapest You were a student of economlooked like beautiful commercial cenics – what was your view of Poland’s tres and in Warsaw there were people trading on the street. But everyone miseconomic situation at the time? I knew that Poland was in a dramatic read what that meant. Poland became economic depression. The economy the first post-Soviet bloc country to was dying. Indeed, it had been dying for grow on its own. The others were waita decade at least, but at that time it was ing for foreign investors. really almost dead. It was such a mixed picture. There was all of this political What must Poland do to continue breakthrough on the one hand but on its economic success in the future? the other hand I knew that the ecoThis task is going to be even more nomic situation was dramatically bad. difficult than the transformation we have achieved over the past 25 years. Developed economies do not consider How did you start off your poor countries as rivals. They are concareer in Poland? I made one last trip around the US sidered a countries whose competitive and in August I was back in Poland. advantages can be exploited. But now

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How can Poland make use of its intellectual capital to build these internationally successful brands? This is where social capital – the ability to cooperate – comes into play. Building a multinational company is possible only once you are able to cooperate and make use of people’s talents. At the moment, most Polish entrepreneurs, even the very successful ones with large companies, tend to want to control everything. They rarely want to use the talents or initiative of their people. They see that as a threat. Instead, they just want to find ways to make their employees work more efficiently. These are entrepreneurs who started off selling on the streets. At first, they only had to worry about themselves. Then they gained a few employees. Now, it may be over 1,000 employees, but sometimes they are still trying to run their company the same way. The best global companies are the ones that look for ways to make their people as innovative as possible. Poland has one of the hardest working populations in the world – but the best way to work is to spend the day thinking, then inventing something that brings value. It’s not working 16 hours a day.

Polish entrepreneurship Today, Poles are well-known for their en-

trepreneurial spirit. But were they always this way? Not according to Orłowski. “Entrepreneurship in Poland really appeared during the 1980s. Previously Poles were not an entrepreneurial nation. Prior to World War II, the entrepreneurs were mostly the Jewish and German industrialists. Poles were more passive. They were the workers. But somehow in the 1980s, when the communist system started to die, for Poles the idea of building private firms became an act of rebellion and survival – it was like building the underground state. Everybody started thinking: ‘What business should I start? The communist economy will not allow me to survive.’ Building a business was a way to fight the system.”

‘Poland has one of the hardest working populations in the world – but the best way to work is to spend the day thinking, then inventing something that brings value’ Cooperation will

be a key quality for Polish firms to hone in order to overcome the challenges of the next 25 years, says Professor Witold Orłowski.

photo: Dmitriy Shironosov

the competitive advantage that we have used – lower wages – is evaporating. They are still relatively cheap compared to those in Western Europe, but no longer very cheap. Therefore, we need an economy that is much more knowledge-based. But this has to translate to Polish companies, not foreign ones. A German company wouldn’t necessarily be attracted by our intellectual capital, since it has plenty at home. Polish companies have to use this intellectual capital to build products and brands for which there will be demand outside of Poland. Now, there are only a handful of recognized Polish brands internationally. Those brands must also begin tapping into customers in developing markets. If you look at Poland’s export structure, it’s mainly foreign brands, made in Poland, to developed economies. In other words, Poland is a product deliverer to slow-growing economies. That will not be Poland’s recipe for success.

36 LEADER

Foundations for freedom Transparency in business and Western practices will set the stage for Poland’s future success

Poland Today sits down

with Roman Wieczorek, executive vice president of Skanska AB.

Skanska is a partner of Poland Today’s Poland Transformed Conference,

taking place on May 28, 2014 at Endorfina Foksal in Warsaw.

What stage of your life were you at in 1989 and what are your memories of that period? I remember the 1980s as the early days of my professional life. Many of us were full of energy and ambition but at the same time the surrounding reality took away one’s will to fight, making any effort seem pointless. We used to read the same books as the people in the West, but at the same time we lacked any hope for true self-fulfilment. The term ‘career’ meant nothing back then. The year 1989 and the changes that came with it gave us a massive boost of hope. Listening to Prime Minister Mazowiecki on the radio for the first time, I felt that someone was speaking to me in my language and about issues that really mattered. Everyone else seemed to share that feeling – there was this air of all-encompassing unity.

rest of Europe was absolutely invaluable from the point of view of foreign investors. The EU funds have of course given our economy a powerful boost, but another crucial and frequently overlooked issue is the regulatory environment that came with our membership. As for the much-discussed exodus of an estimated one million Poles that followed the opening of EU labour markets, I don’t think it should be considered as a purely negative development. Scores of those people are now coming back to the country or will do so in the future, experienced and hungry for success. There are those who find work at Skanska and others who set up their own businesses, after returning to Poland, and become our subcontractors. It’s the European Union that gave them that opportunity.

What did the first years of freedom look like?

What was the role of foreign investors, like Skanska, in this transformation?

It was a time of joyful chaos and amazing energy. Everything was being made from scratch. In politics and business we were creating solutions that had been long established as standard in the West. We were learning the ropes of local governance and business management, figuring out what a company was. The 1990s was this period of experimentation amid a lack of clear regulations. On the one hand, there was this great drive towards privatization and an explosion of entrepreneurship, because everyone wanted to try their luck in business, and on the other hand plenty of problems, including bankruptcies, because the competition was merciless. The end of the 1990s brought about a wave of consolidation, from which emerged many of today’s leading players in key sectors. At the same time, Poland was starting to be recognized by foreign investors as an increasingly attractive market, a gateway to the entire region. It was around that time when Skanska began to seriously look at Poland, which led to the acquisition of Exbud in 2002.

Of course the actual contribution depends on an investor, but besides obvious issues, such as capital and know how, companies like Skanska, with more than 100 years of tradition, brought with them a people-oriented organisational culture, a clear culture of honest work. Of course, like every company, we seek to create value for shareholders, but we also strive to be a place where people want to work. It just so turns out that one supports the other. Teaching people that honest work pays off better than scheming has proven easier than one might think. Of course it requires true leadership and integrity. I am sure that most companies sooner or later come up with a certain culture of values, but this takes time which can be really shortened by introducing a tried and tested organisational culture. Sometimes the thing that takes the longest time for people to realize is that there are no shortcuts in business. The faster people understand that, the sooner they get to focus on what really matters: values-driven work. Perhaps this is the key lesson for Poland from the past 25 years.

That was shortly before the EU enlargement …

What do you see as Poland’s biggest achievement during that period?

The fact that Poland began to operate according to the same rules as the

Transparency in business and its environment, although I am fully aware

37 LEADER

that there’s still a lot left to be done. It was only a few years ago when Poland did very poorly in corruption rankings and now we are on par with the Western average. Transparency is key, because it is the foundation for any further achievements. We created conditions that are transparent enough for global corporations to invest in Poland and we achieved that in an express time. We have a well-educated society of nearly 40 million people. Everything is going in the right direction and we can legitimately feel like citizens of Europe and the world. You have to bear in mind that it took less than a generation to implement all those changes. We embraced capitalism without any business education and the first decade after 1989 was really a period of learning, when we laid the foundations for transformation that truly began later. That first generation of “garage managers” had to find their way in a world they knew little about. However, thanks to intuition and hard work, we reared a generation that is now successful in Poland and abroad.

What, then, was Poland’s chief failure?

learning from the failures and achievements of other countries, where business has been operating more or less the same way for decades. Our technical know-how is world class, but we lack the so-called soft skills. We need to believe that people are the competitive advantage in a world where any machine can be bought.

‘We need to believe that people are the competitive advantage in a world where any machine can be bought’

What should be our key priority in the coming years as far as economic growth is concerned? The next seven years will be a golden era for Poland, a once in a lifetime opportunity. We have more than €100bn of EU funds to spend. We’ve identified our needs and we’ve learnt to manage the resources that were earmarked for us. The challenge will be to utilize this enormous capital in such a way that when the EU money runs dry at the beginning of the next decade, the economy does not experience a shock. We need to create the foundations for long-term growth.

What other challenges is Poland facing?

We need systemic solutions in many areas, in order to make them as independent from politics as possible. I am thinking about taxation, healthcare, or education. The latter should be better linked to business, because our universities still emphasize formal education but fail to teach key business skills, for instance leadership, teamwork, or project management. It is not very effective if such skills have to be taught by employers as it greatly prolongs the assimilation period of new recruits. Another challenge is demographics. We have to stop regarding seniors as a problem and start treating them as an asset. We have to find ways to utilize their experience in the economy, which will help to make them less of a burden for the state coffers. The EU is heading in this direction and it is inevitable. Then comes growing urbanization – another irreversible trend. How do we What should Polish companies focus make our cities better places to live? It’s on in order to succeed in the future? a question for authorities but also for Openness towards others and will- companies such as Skanska if we want ingness to learn from them. Still way too corporate social responsibility to be often we breach open doors instead of more than just a buzzword.

photo: SAV

I think that the lack of pride and optimism among the Poles might be it. What we achieved over the past quarter of a century is a truly amazing thing and the last decade of growth has no precedence in our history. And yet, the Poles seem ashamed to admit to themselves that they’ve succeeded. Driving home for Easter I watched the renovated houses, clean yards and new roads. This very same route in 2004 and 2014 – it’s like two entirely different worlds, and yet we collectively refuse to admit that things have gotten better. This gloomy outlook also affects politics and business. We lack appreciation for ourselves and others, including employees. Another, equally painful issue is the low quality of politics and its excessive influence on other matters. Polish politics oozes venom that makes it hard to enjoy our success.

38 The accidental profile

architect

Leszek Balcerowicz, the man credited with steering Poland toward its successful economic transformation, initially refused the job

Leszek Balcerowicz is the poster boy for Poland’s suc-

running an organization, was key to the success of the whole cessful economic transformation. As finance minister and endeavour. He did however, have to grow into the role. He turned out to be “intellectually well-prepared for the deputy prime minister between 1989 and 1991, he was directly responsible for overseeing the implementation of job, not by Western standards but by Central European the so-called “Balcerowicz Plan” which overnight freed standards at the time,” said Gomułka, who spent 35 years prices, slashed state subsidies and rendered the złoty a con- lecturing at the London School of Economics. However, he vertible currency, effectively ending half a century of com- pointed out that Balcerowicz was “unusual in his absolute munist economics in Poland. determination to concentrate on the implementation of what It was shock therapy and it was brutal. Many Poles couldn’t in his view was important for Poland.” He worked 16 hours a day in his two offices and needed four secretaries to keep cope in the new reality and for a time Balcerowicz became the most hated public figure in the country. Nevertheless the up with his work pace. His wife and three children became of fact remains that due in large part to those reforms, Poland “secondary” importance to him. He turned out to be a good has doubled its GDP since 1989 and dramatically raised liv- organizer and was able to gather a group of people in the ing standards. However, history could have taken a very dif- Finance Ministry who were loyal to him and equally deterferent turn: it turns out that Balcerowicz was charged with mined to accomplish the task ahead of them. transforming the Polish economy entirely by accident.

The job nobody wanted

Remi Adekoya is

a columnist for The Guardian. For several years he was politics editor at Warsaw Business Journal. He has also worked for Wprost, a Polish-language socio-economic weekly. His articles have appeared in South Africa’s Mail & Guardian, Poland’s largest broadsheet Gazeta Wyborcza and Stratfor, the global geo-politics analysis firm.

An autocrat (in public)

If there is anything that both Balcerowicz’s admirers and August 1989: Tadeusz Mazowiecki, a former Solidarity leader critics agree on it is that he is a stubborn fellow, inflexible at times and with autocratic instincts. He grows irritated with and now prime minister-designate, is desperately searching for a potential finance minister. None of the obvious choices attempts to question his logic and brushes off criticism of jump at the job offer. “Thanks, but no thanks,” is what his policies by other economists. Mazowiecki hears from several economists. Small wonder. But Balcerowicz can behave quite differently behind Half a century of communism had left the Polish economy closed doors. During the transformative years Balcerowicz in tatters. Inflation was running at over 600%, shops were believed he should never betray any doubts in public or even empty, people had to queue for hours, sometimes days, just at government meetings as to the course he was taking. He believed if he appeared unsure in public, others would start to buy basic products such as petrol or sugar. And even then to feel doubt too – ordinary Poles, his own government as they often ended up going home empty-handed. So Mazowiecki told his right-hand man, Waldemar well as the team he was working with at the Finance Ministry. Kuczyński, who happened to be an economist, that he would “But in private, amongst his inner circle of advisors, he was have to become finance minister if they couldn’t find any quite different,” said Gomułka. One such example came in 1991, when Balcerowicz and volunteers. In a panic, Kuczyński began racking his brain his Finance Ministry predicted Poland’s GDP growth would for someone to whom he could off-load the job. Then he remembered a young economist who had once made an come in at 3% for the year. But then Comecon (Sovietimpression on him – Leszek Balcerowicz. But the little- dominated economic bloc), collapsed and things started known 42-year-old economist was also not keen to take on going downhill fast. Gomułka remembers one day when they the role at first. He had just been offered a cushy job lectur- received particularly bad economic data. “If this decline coning in a British university and was set to move with his family tinues what will happen next?” Balcerowicz asked him in to the UK in a few days. “No way,” he told Kuczyński. a panicked voice. Gomułka said that while Balcerowicz However, Kuczyński finally convinced him to meet with always held one line in public, in private with his closest the soon-to-be prime minister. After the meeting Mazowiecki advisors, they mulled over “hundreds” of possible options. told Kuczyński he believed Balcerowicz was the man for the job. A month later Balcerowicz was sworn in as finance min- Balcerowicz the politician ister and deputy prime minister, and was assigned the task After the successful implementation of his economic plan, of completely overhauling the Polish economy. Balcerowicz decided to become a politician. This was a misStanisław Gomułka, a close adviser to Balcerowicz at take. He has neither the charm nor the flexibility required the time, said one of their first major tasks was to reduce to flourish in politics. Poland’s galloping inflation. However, this would necesHe led the liberal Freedom Union party from 1995 to sarily involve a significant increase in interest rates. “The 2000, serving once again as finance minister and depprime minister was about to run for president in 1990 so we uty PM from 1997 to 2000 in a coalition government. But worried whether Balcerowicz would be able to convince his neither the public nor his party colleagues took to him boss to agree to what would obviously be a very unpop- much in his new role and the party won 3% of the vote ular decision,” said Gomułka. But Balcerowicz convinced in the 2001 parliamentary elections. the PM, earning the immediate respect of the economists Balcerowicz quit politics and went back to his natural he was working with. habitat, serving as head of the National Bank of Poland from Two interest-rate hikes were implemented in rapid suc- 2001 to 2007. He is currently active on the lecture circuit cession and the foundations were laid for the implementa- where his speeches usually centre on the need for more tion of the Balcerowicz Plan. Gomułka said the character economic freedom in Poland, more fiscal reforms and less of Balcerowicz, hitherto an academic with no experience of bureaucracy. by Remi Adekoya

profile

photo: Filip Ćwik (Forum)

‘Balcerowicz was unusual in his absolute determination to concentrate on the implementation of what in his view was important for Poland’

40 EYEWITNESS

Eyewitness: June 4, 1989. Election day Poland Today asked regular Poles to share their memories of the day that ushered in Poland’s transition to democracy when the first partially free elections in the country’s history were held

Anna, 34 (interpreter and translator)

On June 4, 1989, Poland held partially free elections for the first time since before World War II. The results shocked the communist authorities, the world and many Poles themselves: Solidarity won in a landslide. The movement’s candidates won all 35% of the seats they were allowed to contest in the Sejm, the lower house of parliament, and won 99 our of the 100 open seats in the Senate. The results paved the way for Poland’s peaceful transition to full democracy.

I was 10 years old then and politics was not something I followed, let alone understood. Every night my mother would watch the news, so I knew about the Round Table, about Wałęsa, and about ‘strikes’, but I never gave it much thought. We lived in a small town that seemed peaceful, quiet and far away from all the turmoil I saw on TV. What I remember most is feeling confused. On the news Solidarity was presented as a threat, a villain, or at the very least a troublemaker. But my grandma would take me to church and the priest would tell people to vote for Solidarity because it was the right thing to do for the country. This just didn’t add up to me. I didn’t know who to believe anymore, who was good and who was bad. So my only clear memory from election day is me coming up to my mother – she was doing something in the kitchen and she had a small black-and-white TV on. She was listening to some journalists talking about all the trouble Wałęsa was stirring up. I remember asking her, “If that Wałęsa guy wins, is it good or bad for us?” I wanted some clear answers for once, but she only sighed, clearly worried, and said, “I don’t know kid, I have no idea anymore. Let’s hope for the best.”

Bogusław, 55 (historian)

The atmosphere of that time was solemn, and we all knew that something very historically important was happening. All in all it was obvious whom the overwhelming majority of our friends and acquaintances would vote for. However I knew people who planned on voting for a communist candidate or who abstained from voting altogether. Don’t forget that only 63% of people entitled to vote actually did. It was just the beginning of changes and we were waiting to see how the situation would evolve. Solidarity got all the 35% of the seats in the Sejm they were allowed to contest and all but one seat in the Senate, which clearly showed the direction the change was headed in.

Jerzy, 43 (economist)

All of my family was very much against communism, so it was like an us-versusthem feeling, and we were all quite sure

about the results of the elections. I can say I was strongly involved in the election campaign activities, such as organizing the collection of signatures for the Solidarity Citizens’ Committee (KO), hanging posters, organizing meetings, and so on. I met many people in those days. The vast majority of them were strong supporters of Solidarity. From my point of view it was a great time and a great opportunity to take part in such a historic moment. I also remember the euphoria of people gathered in Niespodzianka Café at Plac Konstytucji in Warsaw, which at the time was KO headquarters, after it became obvious that we had won. Since then, I can say that Poland has somehow even exceeded my expectations from those days. It is a part of the EU, NATO, has a quite strong economy and continues to develop rapidly.

that was unexpected. We had a walk to the Wola Theatre (Teatr na Woli), where the voting was taking place. I remember my father taking me into the booth and telling me to check in several boxes. I can’t remember exactly whom he voted for, other than it was Solidarity. Is Poland today what I thought it would be like back then? To some extent – yes. They took far longer than I had hoped for to see deep infrastructural changes. Other things were pretty fast, like the establishment of small and medium-sized businesses, internet access or media pluralism.

Michał, 39 (production manager)

The atmosphere was weird. Nobody – especially not me – knew what to expect. I was 14 years old at the time and I didn’t quite understand what was going on, whereas my parents were very moved and were really looking forward to elecDanuta, 63 (retired) In the run-up to the elections, all tion day. At the polling station I rememof Poland was going crazy. Wherever ber a lot of people queuing up, which you were, the discussion was about I guess wasn’t so strange because the elections and Wałęsa. I wasn’t par- there were always queues everywhere; ticularly impressed with him. I was a big standing in these also felt natural. I went supporter of Tadeusz Mazowiecki at the to the local voting station with my time (who ended up becoming prime parents and sister. I couldn’t vote yet minister when the first government and I didn’t understand why, because was formed). But how could Wałęsa be I wanted to participate in something so great if he was telling the whole coun- important too. Voting took place in try to strike? Where was that going to an elementary school in a hallway decoget us? The day of the election I remem- rated with flags and election messages ber there were huge crowds at the poll- on the walls with improvised places ing station, and it was very warm. where one could vote in peace. Since then though, Poland hasn’t Today after so many years, everylived up to my hopes. Our health care thing seems so funny: so many people system is a mess, and so many edu- at polling stations, family excursions cated people are leaving for other to go vote, posters all over the streets. countries. Others are exploited because The politicians today are less trusted they aren’t on proper work contracts. than they were then, but maybe I knew that transformation wouldn’t nec- it’s ultimately better that we stopped essarily be smooth, I knew there would treating them like saints. Maybe we’ll be problems – but that people would start selecting competent people be so exploited or leave the country to instead of choosing on the basis of our make a living? That I didn’t expect. emotions. It’s just a shame that voter turnout has gone down.

Kamil, 34 (journalist)

I don’t remember it as a particularly special day, but that might have something to do with the fact I was just 10 years old and hardly even remotely interested in politics. The atmosphere at home was normal, nothing fancy, no extraordinary hype. Later on, however, my parents told me to put my suit on. Now

Elżbieta, 55 (historian)

In my family, our hopes were great but we were also realistic – the elections did not mean that the country was free. The communist party still had much of the mandate to rule guaranteed. I went to the election with my family and we let our daughters toss our votes into

photo: Chris Niedenthal (Forum)

EYEWITNESS

the ballot box. I remember that when I entered the voting room I was curious to see what kind of people would be sitting in the electoral commission. Was it really going to be transparent and honest, or would there be some communist sleuths watching our every move? I don’t recall seeing anything suspicious. The outcome of the election, the landslide win for Solidarity, was a surprise to both sides. Looking back at those times now I can see that we had no idea how difficult the process of transformation would be. But for me, as someone who struggled through years of communism, it is very upsetting to see how little we appreciate and respect this amazing achievement.

Wojciech 58, (accountant)

I remember these events very well, because I was an active participant. Our side had nothing – no press, no radio, no television, not even qualified staff able to organize and conduct an election campaign. Not to mention our lack of technical and financial means. We had to run a campaign for the first time in Polish post-war history and moreover, win it. In response to this, the whole country began to spontaneously create Citizens’ Committees. Lech Wałęsa gave these regional organs the main form of election propaganda – pictures of candidates with himself, nothing more. The authority that Lech Wałęsa commanded at the time was Pictures of election day by Chris enough to convince people to vote Niedenthal, a World for a particular candidate. In my Civic Press Photo w inning Committee all of the election monitors photographer who met in the morning on June 5, after the has chronicled Poland’s transformacounting of ballots. The results put us tion. For an in-depth in a state of near euphoria and were interview with him, even a little surprising. see our previous issue.

Sylwia, 38 (English teacher)

I was 13 at the time and not much into politics, but I remember the general feeling of optimism and excitement at home. Generally, it was the time when you really felt that change was just around the corner. I didn’t vote obviously, but our whole family went together to a local school, where the voting took place. The place was crowded. My parents ticked their candidates on the lists, while I and my sister, who was three years old at the time, put the ballot papers into the ballot box. I had the feeling that I was doing something really important. My sister definitely did not feel the gravity of the situation, but was really excited with the idea of playing hideand-seek behind the curtains of the polling booth. After the voting we all went for ice cream in Hortex Café, which was a big treat reserved for special occasions. I’ll never forget the taste of Hortex ice cream and it will never be the same. I didn’t think much about

‘I promised myself that I would always vote – even if I had to do it on a stretcher’ the future of Poland at that time, but I remember my parents and their friends’ excitement. They talked about freedom of speech, and how important it was to be able to learn about Poland’s real history in school. They hoped the conditions of life in Poland would improve considerably. They never anticipated the problems and struggles within the Solidarity circles that followed, and that was really hard for them to swallow. As for me, I felt my future and the future of Poland was bright. I was happy when I was thinking that I would probably be able to travel freely when I grew up.

Ewa, 47 (architect)

In 1989 I was at university in Silesia, far away from my home town. I remember the atmosphere of those days: first of all I did not realize how important it was. We lived in transformational times and the election was just one of the steps. The importance of this particular day came later, when we looked back on it. Those days, for me, it was just a goal: to vote for a candidate who was on a poster with Wałęsa. I remember that most of the students had a feeling that new times were coming. However, some of them were not patient enough. We were all tired of deep economic crises, and some of my colleagues emigrated to West Germany, for a better, easier life. I had no clear vision how Poland should look in the future. Freedom and independence was a lot to achieve. I didn’t expect then that our country would become a member of the EU and that our life would change so drastically in such a short time.

Teresa, 64 (retired)

We were in Belarus when we found out about the elections from watching the events take place on TV. Our family was very excited but we were also concerned about the outcome because we feared not being able to return to our country. Had the elections gone the other way, most likely the borders would have been closed and we would have been forced to stay abroad. We voted upon returning to Poland. I remember that we voted at a school on Marx Street. In our area, the elections of 1989 did not result in the same kind of opportunities that I assume were

felt in large cities like Warsaw. During communism, more than 20 people lived in our building, whereas today there are only three. Fields lie barren with wealthy landowners buying up the rest. Average people are all trying to go somewhere else – mainly abroad. The main problem is with employment – there simply are not enough jobs for young people. Another problem is with the quality of living. Go to a supermarket in Warsaw and then go to a supermarket in the rural countryside. You’ll see that most products cost the same. As retirees, we have enough money to survive, but little else. There is no money for luxuries. I wouldn’t say that communism was better for us, but we didn’t feel as much need for the change as others may have. Even though we were young, we never felt a lack for anything. Life was fine during communism. We live in a small town so the shift in government made little difference to us personally. We were accustomed to what we had before, and we have become accustomed to what we have now.

Ryszard, 62 (entrepreneur)

I was very overworked in the Milanówek Citizen’s Committee which was supervising the elections in the city. As a seasoned underground player for the opposition, I needed to offer strong support for the committee’s activities. There was a lot of concern about provocations and fraud from the side of the government. The whole time, we were also concerned that this might be a temporary reprieve and later on there would again be arrests and jailing. Us opposition old-timers had that constantly in the back of our minds. Despite this, people were very happy that there was a chance to beat the communists. We were ecstatic because, for many of us, we were going to elections for the first time. I promised myself then that as long as Poland was free, I would always vote – even if I had to do it on a stretcher. I voted with my children. We were very happy but full of concern for what would come next. In the past several decades, I have spoken with many acquaintances about what we expected besides democracy, free access to our passports, and things of that nature. Everyone agrees – despite many present-day attitudes and dissatisfaction with contemporary times, nobody expected such a huge success in terms of the economy, social development, and the mentality of Poland and Poles. Today’s outlooks really are contemporary. If someone had told me in 1989 that Poland would look like it does today, I would think that they had just escaped from a mental hospital.

photo: Chris Niedenthal (Forum)

44 PRIMETIME WARSAW ii

Growing pains:

In debates over how to improve the capital's transportation system and public spaces, officials didn't pull any punches.

photo: Krzysztof Freszel

Conference

Primetime Warsaw II

see page 52

Warsaw’s blueprint for the future

PRIMETIME WARSAW ii

The capital’s rise has been impressive, but further development depends on infrastructure, autonomy and detailed planning

The copious construction of office buildings and highrises, a flood of foreign investment, global businesses establishing regional and continental headquarters in the city – Warsaw’s development over the past decade or so has been astonishing. Whereas Prague was once considered the power centre of the region, Poland’s capital has clearly taken on that mantle and is now the most important city in Central and Eastern Europe both politically and economically. The city has “risen like a phoenix from the ashes,” said Warsaw Mayor Hanna Gronkiewicz-Waltz in early April at Poland Today’s Primetime Warsaw II conference. “This is a special time for Warsaw, when we can make use of our position in Europe and have an influence.” The city’s meteoric rise has largely occurred under her leadership over the past seven and a half years, during which a staggering 34bn złoty has been invested in the city from local government, national government and private funds, according to the mayor.

The government seems to be listening. Minister of Infrastructure & Development Elżbieta Bieńkowska revealed at the conference that the government was launching a national metropolitan policy that would eventually lead to more autonomy for cities to make development investments. The policy sets out goals for cities such as increasing competitiveness and raising the standard of living. It will emphasise the need for cities to come up with precise plans for spending national and European funding. The government is also working to put municipal development on the EU’s radar, especially when it comes to dedicated funding for such projects. “The EU hasn’t paid much attention to city development over the past few years,” said Minister Bieńkowska. “But we have experience in this area and Poland has blazed a trail for the direction of this discussion.”

‘This is a special time for Warsaw, when we can make use of our position in Europe and have an influence’

PPP and R&D

Public-private partnership initiatives could also help spur development, if Infrastructure off track only they could get off the ground. For years firms have pleaded both with the Still, much remains to be done if the capital wants to reach the developcentral government and local authoriment levels of its Western European ties to do more to facilitate such investcounterparts. Infrastructure is one key ments. But politicians have shied away, factor. Warsaw has devoted enormous wary of a public backlash and arguing resources to the construction of the that Poles are still highly suspicious city’s second subway line: it will cost of cooperation between governsome 30bn złoty to fully complete. ments and businesses. However, Mayor The project is critical for facilitating Gronkiewicz-Waltz said that Warsaw east-west transportation across the city, had already begun working on several but even once it is completed the city’s such projects, including the construcsubway network will pale in comparison tion and repair of booths at bus stops, making street lighting more energy effito those in say, London, Paris or Berlin. Moreover, construction of the cient and refurbishing schools. Investments in innovation and R&D first portion – a 7km stretch from the Breakdown: eastern district of Praga to Rondo investments in Warsaw will also form a crucial engine drivDaszyńskiego just west of the city cen- According to Warsaw Mayor Hanna Gron ing Warsaw’s development toward tre which will cost some 4bn złoty – has kiewicz-Waltz, some 34bn złoty has been Western levels. Bieńkowska said that dragged on, missing its initial comple- invested in the city since she took office over €4bn would be allocated to in December 2006. Some 15bn złoty has Warsaw for such investments. But tion date of 2013. It is now expected to come from the city itself, 10bn złoty has been to maximize the amount of funding open before the end of this year. The invested by companies, while the central govthe city can receive throughout the delays, along with road closures related ernment has invested 9bn złoty. She said that the national government had invested to the project, have irked Varsovians. European Union’s 2014-2020 budget “too little,” but pointed out that its share The completion of a ring road perspective it will need a clear, would increase once construction around the city is another impor- of the ring road finally gets moving. focused plan on how investments tant infrastructure investment critiin innovation will spur development. cal to the city’s development. “We While Poland was able to spread are ashamed that we don’t have the funds from the last budget over a complete ring road around the city,” a wide range of projects and busisaid Gronkiewicz-Waltz. “It’s something very important ness sectors, new rules will force local governments to we are missing.” But she added that the investment is target specific innovative industries. The threshold for the responsibility of the central government, not the city. EU approval of such spending will be higher as well. Indeed, she emphasized that in order to reach its full Governments will have to show precisely how the potential the city needs more independence from the cen- money will be spent and how it will increase a region’s tral government. According to the mayor, the city can’t innovativeness.“Everything comes down to a clear, precise even decide for itself on such minor issues as parking fees. plan,” Bieńkowska said. by Andrew Kureth

Andrew Kureth

is editor of Poland Today. Originally from the United States, Andrew has been reporting on Poland for 10 years, specialising in topics related to business and economics. He has written for numerous international publications, including the Financial Times. He was editor in chief of Warsaw Business Journal for seven years. He has a degree in English from Kenyon College in Ohio.

46 PRIMETIME WARSAW ii

Notable quotes Experts had plenty to say about Warsaw and its development at Poland Today’s Primetime Warsaw II conference in April

Hanna Gronkiewicz-Waltz (right),

Conference

Primetime Warsaw II

Mayor of Warsaw: “Cities are not egotistical, they create jobs. … Let’s not be afraid of cities because all of us stand to benefit from them.”

Jacek Wojciechowicz (above),

Deputy Mayor of Warsaw: “Transportation is the bloodstream of every city and it must constantly be upgraded and extended so that people can commute easily.”

Elżbieta Bieńkowska (below), Minister of Infrastructure & Development: “Previously the EU didn’t pay much attention to city development. But we have we have a lot of experience. What we have done in terms of regional development strategies and city development is now also visible in EU documents. And now there are instruments being created that cities will be able to use.”

Jeroen van der Toolen (right),

managing director for the CEE region, Ghelamco : “Warsaw has developed itself economically but now needs to look toward quality of life in the city, including building a good public transportation system.

photos: Piotr Dziubak, Arkadiusz Chłopik

Sven Bienert (left), University of Regensburg: “Sustainable building and certified building are not the same thing. You could build a building in the middle of the desert with green certification, but I’ll leave it up to you to decide if that building would actually be sustainable.” Andrzej Chołdzyński (left), chief

architect and founder of AMC Architects: “A good subway system is fundamental for building a European model of transport.”

Arkadisuz Jamski (below left), financial director of Poland Today, with Maciej Raczyński of RPS Legal, Poland Today’s legal advisor.

Conference

Primetime Warsaw II

PRIMETIME WARSAW ii

Dr Andrzej Brzeziński (left),

Warsaw University of Technology: “Recent years have brought a lot of changes to improve Warsaw’s public transportation. I would say Warsaw is the leader in terms of public transport in Poland.”

Rafał Mazurczak (left), office and

hotel projects department director at Echo Investment: “I believe that mixeduse projects are the way of the future. ... It’s all about building spaces that live during and after office hours.”

Jarosław Zagórski (below),

photos: Piotr Dziubak, Arkadiusz Chłopik

commercial & business development director, Ghelamco: “I would like to see more variety in Warsaw shopping malls. No matter where I go I seem to encounter the very same brands.”

Jarosław Bator (below), manag-

Piotr Goździewicz (left), director of

ing director for real estate, PKP: “Changing our country also depends on changing working conditions in the country.”

capital markets CEE, BNP Paribas Real Estate: “The shopping centre penetration rate in Warsaw is among the lowest in the country even though the city boasts the highest income per capita.”

Leszek Sikora (above),

managing director, ECE Projektmanagement Polska: “It has been a long time since a new large-scale shopping centre was last developed in Warsaw.”

PRIMETIME WARSAW ii

50 PRimetime warsaw II

Commercial developers must get creative Warsaw’s increasingly competitive commercial property market is forcing developers to find new solutions to attract tenants

Warsaw continues

Adam Zdrodowski is Poland Today’s

Conference

Primetime Warsaw II

real estate editor. See pages 66-74 for more analysis of Poland’s property sector.

to offer commercial space development opportunities, but it has also become a very competitive market in recent years, said real estate industry experts at Poland Today’s Primetime Warsaw II conference in April. There is still a lot of room for new office and retail projects in the city, they said, but due to the growing competition, developers now need to be very creative while planning their new schemes.

Abundant offices

future. Today public officials mostly occupy old office buildings but this will change sooner or later, Bator said. Much of the discussion focused on the numerous new office skyscraper projects which have been announced in Warsaw in recent years. A number of them are already under construction, while several others are expected to be launched later this or next year. Referring to the issue of whether the Warsaw market will be able to absorb the space in the under-construction and planned towers, Rusak said that some office tenants favour high-rise buildings, while others clearly prefer to be in boutique projects. According to Zagórski, whose company is now developing the Warsaw Spire complex in the Wola district, new skyscrapers should be built in locations where their construction is justified by the price of land and good transport connections. When it comes to investors, there is currently a lot of demand for medium-sized office buildings in Warsaw, said Piotr Goździewicz, director of capital markets, CEE, at BNP Paribas Real Estate.

The large supply of new office space in Warsaw admittedly remains a challenge for developers, but it should not prove a major threat to the overall shape of the office market as such. The total modern office stock in Warsaw currently amounts to over 4 million sqm and is expected to reach 5 million sqm within the next two to three years. Approximately 300,000 sqm of new space will be delivered annually throughout the next few years. Jarosław Zagórski, commercial and business development director at Ghelamco, argued that in the shortterm the market will not be able to Shopping space absorb such a large amount of new There is also plenty of room for retail office space. He stressed that finan- in Warsaw, but the municipal authoricial institutions will have an important ties have to decide where the future role to play as natural market regula- shopping centres should be located, tors. “I hope that banks will be selec- said Leszek Sikora, managing directive in financing new office schemes,” tor at ECE Projektmanagement Polska. Zagórski said. Tomasz Rusak, procure- “It has been a long time since a new ment and financial director at Hochtief large-scale shopping centre was last Development Poland, admitted that developed in Warsaw,” Sikora added. there is more and more competition BNP’s Goździewicz pointed out that among developers in Warsaw. They the Polish capital has one of the lownow have to offer something more est shopping centre penetration rates than just regular office space to be able among the largest cities in Poland. Admittedly, Warsaw Stock Exchangeto attract tenants, Rusak said. Rafał Mazurczak, head of the listed developer Globe Trade Centre office and hotel department at Echo is now planning two large shopping Investment, was more optimistic. centre projects in Warsaw, but it is not He noted that the planned projects known when exactly the company will are at various stages of the investment be able to launch construction on them. process and will not be delivered at the The schemes, called Galeria Wilanów same time. Jarosław Bator, managing and Galeria Północna, will respectively director for real estate at Polish State be located in the Wilanów and Białołęka Railways (PKP), pointed out that the districts of Warsaw, in which many new existing office buildings are now get- residential projects have been develting old relatively quickly. “New build- oped over the past few years. ings will find their place in the market,” Meanwhile, an opportunity could Bator said. He added that the public soon emerge for the development sector would also generate demand of a new large-scale retail project for office space in Warsaw in the near in downtown Warsaw. PKP is now

planning the redevelopment of the 10-hectare Warszawa Główna site, which houses a former railway station and a museum, Bator said. Ghelamco’s Zagórski stressed that the developers of the new malls should make sure that their centres offer something different from the existing retail offer in Warsaw. Ghelamco itself will not be developing malls, but will rather focus on small convenience centres, he said. During a separate panel discussion devoted to high-street retail in Warsaw, the participants discussed the various factors hindering the development of that sector of the market. Marta Machus-Burek, director at Colliers International, mentioned ownership and legal issues, property claims and the lack of sufficiently large retail units as some of the major problems that the high streets in Warsaw are facing. Piotr Krawczyński, managing director at Kulczyk Silverstein Properties, pointed to management problems. It is much easier to manage a shopping centre than a high street in which the properties belong to many owners, he noted. According to Michał Olszewski, deputy mayor of Warsaw, solving the ownership issues will take many years. However, he was convinced that the centre of Warsaw, as well as the Praga area which Warsaw City Hall plans to revitalize, have big potential for highstreet retail. by Adam Zdrodowski

Green commitments pay off Empirical data show that investment in green solutions always has a positive impact on property value and rents, Sven Bienert, professor of sustainable real estate at the University of Regensburg, said during the Primetime Warsaw II conference. Green solutions translate into more tenant satisfaction, which in turn brings tangible benefits to asset owners, he said. However, many developers continue to view the sustainability issue simply in terms of its usefulness in marketing. Reservations about the profitability of green investments may be related to the time gap between the costs and the benefits. Future pay-off sometimes stands against additional upfront cost today. However, Bienert stressed that the sustainability issue cannot just be seen as an issue of profit, but also an issue of responsibility. He pointed out that the property market is a major polluter. The sector accounts for 25-40% of overall energy consumption, 30-40% of greenhouse-gas emissions and 30% of raw materials consumption.

Warsaw’s growing pains

PRIMETIME WARSAW II

Can Warsaw improve transportation and public spaces in the city while it is so focused on the second subway line?

As Warsaw grows

into its status as the leading city in the region, one of the biggest questions it faces is how to better manage its public spaces and transportation. At Poland Today’s Primetime Warsaw II conference in April, experts discussed these issues, and didn’t pull any punches. While there seemed to be broad agreement on the goals, how they should be accomplished and who should work to achieve them were a subject of lively debate. In the end, these discussions featured some of the most open dialogue between government officials and representatives of the private sector at the conference.

Piotr Narel is

Conference

Tunnel vision

photo: Piotr Dziubak

Primetime Warsaw II

a journalist with Poland Today. He is a native Pole but spent over 17 years in the United States. He graduated from Loyola University Chicago in 2012 with a degree in International Studies. His research in Jordan on religious symbolism was his first published work.

Car trouble One panel at Primetime Warsaw II specifi-

cally addressed the problems associated with working to make Warsaw residents less reliant on their cars for transportation throughout the city. Łukasz Puchalski, deputy director at the Ministry of Transport, was adamant that the public transportation system in Warsaw was the best in the country. A well-known supporter of bicycle transportation, Puchalski noted the successful implementation of the city’s Veturilo bicycle sharing programme. Obstacles that keep Warsaw from shaking its reliance on automobiles include the way in which cars are treated as status symbols and residents’ reluctance to give up on their car-centric lifestyles, panelists said.

When it comes to transportation in Warsaw, the central issue was clearly the construction of the second line of the Warsaw subway system – the Metro. The project is the single biggest infrastructure investment implemented directly by a local government in the country. The central section of the line, which is due to finish later this year, will cost 4bn złoty by itself. Deputy Mayor Jacek Wojciechowicz said the city chose to commit to such a large investment because Warsaw simply would be unable to function without it. Architect Andrzej Chołdzyński, who was responsible for designing several of the stations on the first line, pointed out that anywhere between 20,000-25,000 people use the Warsaw Metro on a daily basis. He added that the subway system is the backbone to a strong public transportation system and therefore the basis of a European model of transit. The construction of the second line of the Warsaw underground has been met with significant delays, with the original plans intending to open the line for use by autumn 2013. During the panel discussion, Wojciechowicz defended these delays by comparing Warsaw’s efforts to the construction of Berlin Brandenburg airport, which has already been delayed by four years and is expected to open in late 2015 – at the earliest. He noted wryly that this delay was in a country known for its organisational skills. But Jeroen van der Toolen, managing director for Central and Eastern Europe at real estate devel-

oper Ghelamco, moved the discussion beyond the second subway line. He pointed out that improved public transportation in general could make life better for many Varsovians, adding that the city’s system suffers from significant overcrowding.

Parks vs. cars Van der Toolen took his point further in a discussion on the development of Warsaw’s public spaces. He criticised Warsaw city officials for not taking more of an initiative in working with real estate developers to create public spaces in the city and advised that it not waste the opportunities that will arise with the spate of development planned for Warsaw’s Wola district. Wojciechowicz defended the city, sarcastically remarking that it often seems as if developers are the ones who run the city. He added that not all real estate developers were as “enlightened” as Ghelamco and that establishing cooperation between them is often difficult. He also pointed out that the city’s efforts were limited by its budget, which is already under strain from the construction of the second subway line. The discussion of public spaces continued during a panel which included Deputy Mayor Michał Olszewski, who presented a number of potential ideas to establish public spaces with green areas for pedestrian use and to develop high street retail in the city. The locations mentioned included the area bordered by the streets Królewska, Marszałkowska, Jerozolimskie and Jana Pawła II in the centre of the city, as well as an area in the Praga district, which lies east of the Vistula River. Piotr Krawczyński, managing director at Kulczyk Silverstein Properties, mentioned the near omnipresence of cars in the city centre, especially those parked on sidewalks and curbs, as one of the main obstacles to overcome in order to create attractive public spaces. Olszewski agreed, adding that allowing parking on public streets was not always necessary. He pointed to Warsaw’s Royal Route (Trakt Królewski – a number of connected streets running south from Warsaw’s Old Town, some of which are reserved for pedestrians) as a successful example. by Piotr Narel

54 Preparing for international

the worst

As events in Ukraine remain unstable, Poland is doing its best to insulate itself

Andrew Kureth

photo: Yves Herman (Reuters)

Violence in Ukraine

reached a new apex in May. The beginning of the month saw forces controlled by the country’s interim government on an offensive in several eastern cities. Clashes between pro-government and proseparatist groups were becoming increasingly common and brutal. On May 2, a fire in Odessa killed over 40 people, mostly Russia-aligned activists who had barricaded themselves inside a building after run-ins with pro-government groups. Poland looked on in dismay. “These dramatic events,” said Polish Prime Minister Donald Tusk, “show that we are, in fact, dealing with a war. It is perhaps somewhat

of a different type of war; it is a war without a declaration, but in reality we are dealing with a de facto war.” Poland, along with the US and several other countries, believes Moscow has been working to destabilise the country to deprive the new, Western-leaning government of legitimacy. After annexing Crimea in March, Russia has repeatedly threatened to take action in eastern Ukraine, holding military exercises just across the border. The West accuses Moscow of inciting – if not directly supporting – the separatist movements in Ukraine. For its part Russia says the ousting of former President Viktor Yanukovych in February

The man with the plan Prime Minister Donald Tusk toured Europe

in April, visiting Brussels, Paris and Berlin, promoting his plan for a European Energy Union. The arrangement would be based on these six proposed pillars:

1. Creation of an effective gas solidarity mechanism in case of supply crises

2. Increased financing from the European

Union’s infrastructure funds for ensuring energy solidarity, in particular in the east of the EU – even up to 75% of a project’s value Collective energy purchasing Rehabilitation of coal as a source of energy Shale gas extraction Radical diversification of gas supply to the EU

Globe and Mail. He added that the military alliance needed to “get back to basics” in response to events in Ukraine which “have proved that whereas it’s still true that conflict inside the European Union is unthinkable, conflict outside the European Union is not only thinkable, but seems to be growing.” Fifty more Canadian troops were due to arrive in Poland for the exercises, while NATO also expanded Baltic airspace patrols – increasing the number of jets from the usual four to sixteen.

EU = Energy Union

However for Poland security doesn’t simply mean a more robust military presence. Energy security is the even 3. more pressing need. Poland receives around 60% of the the Danish military 4. 16bn cubic metres of gas it uses every year from Russia. began patrols of Esto- 5. Moscow has signalled its willingness to turn off the taps nian airspace in May. 6. They were joined when it disagrees with the political decisions of its customin NATO's Baltic air ers – particularly Ukraine – before. Now it appears ready policing mission by to do so again. Since the new government in Kiev took four Polish MiG-29s, power, Russian state-owned Gazprom has raised gas prices four British Typhoon jets, and four French to Ukraine dramatically – by 80% – and claims that Kiev owes Rafale aircraft. it $3.5 billion in unpaid bills. Gazprom now says that if advance payment on the debt is not made by the end of May, it will cut off gas supplies to and the installation of the interim government, led by Prime Ukraine starting at the beginning of June. That could disrupt Minister Arseniy Yatsenyuk, is a US-backed plot to bring flow to several EU countries that get their gas from pipeNATO to its doorstep. lines that go through Ukraine, including Bulgaria, the Czech As Poland Today goes to press, Russia seemed to be send- Republic, Hungary, Romania and Slovakia. Poland has long been at the mercy of Moscow's whims ing signals it would not engage in further military action. But Moscow has repeatedly called on the Ukrainian gov- when it comes to gas, and already pays some of the highest ernment to halt its military operations in the east, saying prices for Russian gas in Europe. But in recent years Poland they put roundtable negotiations meant to de-escalate has worked hard to diversify its sources. By next year, an LNG the crisis in jeopardy. For its part, the Yatsenyuk govern- terminal in Świnoujście, in the country’s north-west, should ment faces calls at home to bring the country under control be operational, allowing Poland to import gas from places prior to presidential and municipal elections on May 25. like Qatar. It continues to work on legislation that would make With those elections under threat extraction of shale gas – of which it may and a lack of agreement on how to have some of Europe’s largest reserves resolve the crisis, instability could – easier. In April, Polish gas pipelines to continue next door to Poland for Germany reversed their flow for the first the foreseeable future. The country time, allowing Poland to receive gas has therefore begun moving to do from Germany (and possibly push it all what it can to insulate itself if worse the way to Ukraine), for the first time. But all of that together would still leave comes to worst. Poland relatively vulnerable to gas cutNATO needed offs and price hikes from Moscow. In April Prime Minister Tusk laid out The first step was to request a beefedup NATO contingent on Polish soil. The a plan for what he calls a European logic goes that greater numbers of Energy Union, which would essentially NATO troops could potentially deter allow the European Union to negotiRussia from entering Ukraine, but more ate gas prices collectively and would importantly, would give Poland added allow gas infrastructure projects to be up to 75% financed by EU funds. Tusk security if Moscow felt it needed to convisited the EU’s centres of power in late solidate any gains it makes in Ukraine April, promoting the plan. He met with by moving its military further west. EU President Herman Van Rompuy in Foreign Minister Radosław Sikorski called for 10,000 NATO troops to be Brussels, French President François deployed on Polish soil. Instead, he Hollande in Paris and German Chancellor got a total of 600 NATO soldiers sent Angela Merkel in Berlin, urging them to for training exercises in Poland, Latvia, get on board. The plan is contentious however: one of its six points calls for Lithuania and Estonia. The first of these arrived on April 23, when 150 paratroopers from the US’s the “rehabilitation of coal as a source of energy”. Moreover, 173 Airborne Brigade Combat Team landed in Poland. relationships with Russia throughout the bloc vary. Germany, Pentagon press secretary John Kirby said that the troops for instance, doesn’t want to risk its firms’ significant investwould rotate in and out of all four countries, and that the ments in Russia by angering Moscow. But experts say deeper rotation could continue for the rest of this year. The exercises integration of the bloc’s energy infrastructure is key to future could expand to include more countries, he added. “If there’s energy security for Poland. a message to Moscow … it’s that we take our obligations” Where events turn next in Ukraine is anyone’s guess. to defend NATO members “very, very seriously,” Kirby said. Poland isn’t taking any chances. But the country’s security The deployment was necessary to send a message to depends on the cooperation of its allies and neighbours. President Putin that “NATO territory is sacrosanct,” Foreign The world will be hoping the increased security measures Minister Sikorski said in an interview with Canada’s The never have to be used. by Andrew Kureth

Four F-16 fighter jets operated by

‘If there’s a message to Moscow … it’s that we take our obligations very, very seriously’

international

PLL LOT, Poland’s

state-owned air carrier, recorded a profit in 2013, the first time in five years. The company said it saved money on fuel due to its new Boeing 787 Dreamliner planes. The airline needed a huge infusion of state aid in 2012 to stave off bankruptcy.

Business

Poland’s LNG terminal in the

north-western city of Świnoujście is 75% complete, officials say. Poland hopes to use the facility to diversify its sources of natural gas, for which it is currently heavily dependent on Russia.

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ECONOMY

IMF: GDP growth to reach 3.1% in 2014

Poland’s GDP growth will rise to 3.1% in 2014, from 1.6% last year, and then edge up to 3.3% in 2015, the International Monetary Fund wrote in its World Economic Outlook report in early April. The forecast raises the IMF’s previous 2014 GDP growth forecast for Poland by 0.7 percentage points.

Unemployment down to 13.5%

Registered unemployment in Poland dropped to 13.5% in March from 13.9% in February according to statistics office GUS. Poland’s Labour Ministry predicts the figure will reach 13% by the end of the year. At end-March, the jobless count was at 2.184 million people, down by 72,000 from February.

One of Poland’s top retailers, the Empik Media & Fashion Group (EMF), has decided to divest the fashion arm of its business, which posted a PLN 371m loss last year. EMF’s fashion business in Poland encompasses Gap, River Island, New Look, Aldo, Esprit and a number of other popular brands. It manages a total of 118 outlets, including 61 in Poland, 47 in Russia and 10 in Ukraine. The EMF group as a whole turned over PLN 3.037bn last year, marking a 2% increase on the prior year, but its net loss deepened from a mere PLN 6m in 2012 to PLN 300m in 2013.

ENERGY

LNG terminal nearing completion

Polish retail sales rose at an annual rate of 3.1% in March, falling short of average projections, statistics office GUS said last week. The reading was below expectations, “but in our view this disappointment was due to overly optimistic forecasts of car sales stemming from changes in VAT regulations,” BZ WBK bank analysts wrote in a commentary. “Still, sales in other categories were optimistic, so in our view March’s data do not mean deteriorating consumer demand prospects,” they added.

Poland’s first liquid natural gas (LNG) terminal in the north-western Baltic coast city of Świnoujście is 75% complete and will be ready by the end of 2014, the Prime Minister’s office announced in mid-February. According to earlier plans, the project, which is considered key to Poland’s energy security, was to reach completion in mid-2014. The terminal will allow Poland to import 5bn cubic metres of LNG annually (about a third of Poland’s annual consumption), with the possibility of increasing capacity to 7.5bn cubic metres. The investment will cost state-controlled Polskie LNG a total of about PLN 3bn. Another PLN 4.5bn is expected to be spent on the related infrastructure.

LISTED FIRMS

PGNiG and Chevron seal shale exploration alliance

Retail sales slower than expected

Business review

Retail group EMF to shed loss-making fashion unit

LOT posts first net profit in five years

Troubled state-controlled airline LOT Polish Airlines has reported a net profit for the first time in five years, with the flag carrier posting a PLN 26m net profit in 2013. The airline was expected to report a net loss of PLN 20m and attributed the profit to its restructuring programme and fuel savings on its Boeing 787 Dreamliners. LOT requested state aid to avo id bankruptcy in December 2012 and received a temporary rescue bailout package. LOT carried more than 4.6m passengers in 2013, down 5% over 2012 due to compensatory measures required by the European Commission.

Following the memorandum the two companies signed in December 2013, Polish gas distribution and production giant PGNiG and Chevron Polska Energy Resources, the Polish unit of US energy giant Chevron, inked a deal on joint shale gas exploration projects in southeastern Poland. Under the agreement, the companies will jointly appraise shale gas deposits in four exploration license areas, two owned by PGNiG and two belonging to Chevron, paving the way for tighter cooperation.

OUTSOURCING

Convergys to create 250 jobs in Lublin

US customer management company Convergys Corporation is opening a new contact centre in the eastern Polish city of Lublin in May, expecting to create approximately 250 new jobs by the end of the year. Convergys recently acquired a facility with 300 employees in Szczecin as part of its March takeover of Stream Global Services. The centre will initially provide support for German-speaking customers of Spanish wireless operator Telefonica. “We are very committed to Poland as we believe Poland provides a highly skilled, hard-working and very motivated workforce that we have proven delivers high-quality results for our clients,” said Cormac Twomey, Convergys’s managing director for EMEA.

Austrian firm to employ 400 in Gdańsk

Austrian outsourcing company Competence Call Center has launched a Polish unit in Gdańsk to deliver multilingual contact centre services to European clients. “Our first partner in Gdańsk is an existing international client representing the travel industry and we are looking for German-, Nordic-, Russian- and Polish-speaking employees,” Ulf Herbrechter, the firm’s COO, told Poland Today. “We plan to employ 200 people in the office in Gdańsk by the end of 2014. The expansion to 400 employees is planned for next year,” he added.

TNT Express launches Warsaw shared services centre Global parcel delivery giant TNT Express has launched a shared services centre in Warsaw, which is to create a total of more than 400 jobs by the end of next year. The unit is already operational, with approximately 100 staff, and handles bookkeeping, financial reporting and other related administrative duties for TNT’s subsidiaries in Poland and Italy. In the future, the Warsaw centre will provide similar services to TNT companies in the UK, Germany and the Benelux region.

AUTOMOTIVE

VW to employ 2,300 at new greenfield plant

Volkswagen will build a greenfield factory in Września, some 50 km to the east of Poznań. The facility will create 2,300 new jobs and focus on the production of the Crafter delivery van range. The latter has been made since 2005 at two German Daimler plants under a co-operation accord with VW that is due to expire at the end of 2016. Relocating production to Poland will allow the German group, which already makes the Caddy and T5 commercial vehicles near Poznań, to significantly

reduce its production costs. Construction is scheduled to start at the end of 2014 with the start of production following in Q4 2016. Poland’s Economy Ministry said the investment will total €800m.

Scania cuts 200 jobs in Słupsk

Swedish bus manufacturer Scania is embarking on a major cost-cutting programme that will see 200 jobs lost in Słupsk, Poland and 50 at Scania’s head office in Södertälje, Sweden. According to the company, the job cuts have to do with the dwindling demand for Scania’s fully-built city buses. The Słupsk site turned out just 96 buses last year, down from 341 in 2012 and 500 in 2011. As for Poland’s bus industry as a whole, last year it produced 3,715 vehicles (up 4.3% y/y), after reaching its lowest level in more than five years in 2012 (3,560 units), according to market researcher JMK Analizy Rynku Transportowego.

Quad maker Polaris to launch production in Q3

The first European factory for Polaris Industries, a US manufacturer of all-terrain vehicles (ATVs), has been completed in Opole. Developed at the cost of PLN 100m, the 33,000 sqm built-to-suit project took little more than half a year to complete. Production is set to launch in Q3 2014 with a staff of 250. “At full capacity, which we hope to reach towards the end of 2015, we expect to have over 500 employees in Opole,” Bogusław Dawiec, director of operations at Polaris Poland, told Poland Today. The Opole plant will be making 25,000 quads and small ATVs per year, to be delivered to Europe, Middle East and Russia.

INDUSTRIAL PRODUCTION

ArcelorMittal opens longrail production in Poland

ArcelorMittal Poland has officially opened its new long-rail installation in Dąbrowa Górnicza (20 km north-east of Katowice), one of only three sites in the world capable of producing 120-metre rails for high-speed trains. To date, the site has been producing 30-metre rails. The commissioning of this $46m project follows the announcement of a major contract under which ArcelorMittal Europe is to supply 129,000 tonnes of rails to German railway company Deutsche Bahn in 2014. Both parties also agreed an option to deliver a further 129,000 tonnes in 2015.

Polish Rovese finalises €200m investment in Russia

Poland’s top manufacturer of ceramic tiles and bathroom fittings, the Kielce-based Rovese Group, has launched production of tiles in the Russian town of Zheleznodorozhny, some 20 km east of Moscow. With more than €200m invested in Russia to date, Rovese is the largest Polish investor in the country.

The Warsaw-listed group acquired Kuchinsky Kermichesky Zavod in 2011, and it has since doubled its production capacity at the cost of €70m. With a staff of 500 employees, the factory plans to make 8 million sqm of tiles this year, to be sold in Russia and other nearby markets.

FagorMastercook to lay off 1,120 in Wrocław

Close to 1,120 employees will be made redundant by the end of May as part of group layoffs at the FagorMastercook plant in Wrocław, one of Poland’s largest producers of home appliances. According to Teresa Kalisz, the courtappointed receiver at FagorMastercook, a new investor for the business has failed to materialise and the plant lacks orders that would ensure it can operate over the long-term at minimum 50% of its capacity. The collapse of FagorMastercook Wrocław follows the bankruptcy of its Spanish parent Fagor Electrodomésticos.

HP owns up to major corruption in Poland, pays fine in the US

IT giant Hewlett-Packard (HP) is to pay US regulators $108m to settle a corruption scandal involving employees at subsidiaries in three countries, including Poland, who were charged with bribing government officials to win and retain lucrative public contracts. In Poland, corruption was unearthed in relation to contracts worth $40m to install IT equipment at the national police headquarters.

Norwegian software firm lands in Gdańsk

Powel AS, a Norwegian provider of software and IT services for the energy sector, has launched a new development facility in the northern Polish city of Gdańsk. According to Powel, the creation of the Gdańsk office will support software development for the company’s growing customer base in power generation and distribution, local authorities and contractors. The company plans to employ 25 IT professionals in Gdańsk by the end of this year, Tom Røtting, vice president for strategy & technology at Powel, told Poland Today.

MERGERS & ACQUISITIONS

PKO BP to merge with Nordea unit by mid-2015

57 Business

Poland’s top lender, PKO BP, plans to complete its merger with the Polish arm of Sweden’s Nordea Bank by mid-2015, the bank announced after the country’s financial watchdog finally gave its blessing for the transaction in March. The deal seals PKO’s position as Poland’s number-one lender, boosting its share in the banking sector’s total assets from 15% to 18%. PKO BP paid PLN 2.642bn for the bank and a further PLN 188m for its insurance and leasing units.

LOGISTICS

Integer.pl strikes deal to enter Italy

Polish postal services group Integer.pl has struck a deal with TNT Express Italy to be its logistics partner as it introduces its trademark parcel locker terminals into Italy. The company said its cooperation agreement with TNT Express will support plans for 400 of its ‘easyPack’ brand of automated self-service parcel pick-up and drop-off points to be installed in Italy by the end of June. Up to 1,000 terminals could be in place by the end of 2015 under the plan.

VENTURE CAPITAL

Polish fund teams up with Israel’s Pitango to finance startups

Poland’s National Centre for Research & Development (NCBiR) has teamed up with two venture capital companies, Polish INVESTIN and Israel’s Pitango Venture Capital, to establish the country’s largest advanced technology fund, PI Ventures. The state-run R&D institution, will contribute a half of PI Ventures’ initial capital of PLN 210m. “We intend to make investments of up to PLN 1m in seed projects, several million złoty in startups and up to PLN 15m in growth projects,” Władysław Halbersztadt, general partner at PI Ventures and cofounder of INVESTIN group, told Poland Today.

PKO Bank Polski,

Poland’s largest bank, solidified its position in the market when regulators approved its takeover of the Polish arm of Nordea Bank. The merger should be complete by the middle of next year, company officials say.

photos: Arcelor MIttal, LOT, PKO BP,

ArcelorMittal Poland unveiled

its new long-rail installation (far left) in Dąbrowa Górnicza in Silesia. It will be one of only three sites in the world capable of producing 120-metre rails for high-speed trains.

58 Shifting back business

into GEAR

2014 is bringing welcome positive news to Poland’s beleaguered auto industry

The past few years have hit Poland’s automotive industry hard. Passenger car production in Poland has nearly halved since 2008. Several global car manufacturers have chosen Poland’s southern neighbours for new greenfield projects and in 2012 the country’s number-one carmarker, Fiat, bowed to political pressure and shifted production of its top-selling Panda model back to Italy. On top of that, companies waited for the euro-zone crisis to subside before embarking on any significant capacity increases. This year, however, brings a small ray of hope to an industry that generates some 8.6% of Poland’s GDP, directly employs an estimated 760,000 people and supports a further 600,000 jobs in related sectors.

Diesel engine First came the announcement from General Motors that it would launch production of a new generation of mid-size diesel engines at its plant in Tychy. The firm’s outlays are set to reach €250m, making it the largest investment the Tychy plant has seen to date and bringing total GM investments in Poland to more than €1bn. According to GM, production of the all-aluminium, 1.6-litre, four-cylinder engines will launch in 2017. The company expects a maximum annual capacity of 200,000 units. “The Tychy plant had been awaiting GM’s decision on the new engine range with much anticipation because the investLech Kaczanowski is the editor of Poland ment determines the factory’s future,” said Rafał Orłowski Today's weekly of automotive industry think tank AutomotiveSuppliers.pl. newsletter, Business “Looking at GM’s investments in Hungary, one can only hope Review+. From 2002 for more similar decisions to follow in the future,” he added. to 2013 he covered business and economic GM’s main Polish production unit is the Opel plant in news from Poland Gliwice. The factory churned out about 108,500 cars last year, for Sweden's Bonnier Group and other Nordic down by some 16,800 units from the 2012 and well below its media. A former Open total annual capacity of 207,000. Opel employs some 3,000 Society Institute Fellow staff in Gliwice and cooperates with an estimated 100 supat Duke University in pliers in Poland. The Polish plant manufactures several verNorth Carolina, Lech sions of the Astra IV compact and recently added the new has degrees in economCascada convertible to the mix, which required investments ics, sociology and journalism. to the tune of €55m. The Cascada is part of Opel’s newmodel offensive, which is set to cost billions of euro and will introduce 23 new vehicles and 13 new powertrains from 2012 through 2016. In mid-2015, GM wants to launch production of the next-generation Astra V in Gliwice, which will require capital expenditures to the tune of €200m.

Seeing green In March, Germany’s Volkswagen unveiled details of a project that had been fodder for rumour since autumn last year. The company will make Poland’s first greenfield car factory investment in over a decade, after the Wolfsburg-based giant completes its plant in Września, some 50 km east of Poznań. The facility will create 2,300 new jobs and focus on the production of the Crafter range of delivery vans. The latter has been made since 2005 at two German Daimler plants under a co-operation accord with VW that is due to expire at the end of 2016. Relocating production to Poland will allow the German group, which already makes the Caddy and T5 commercial vehicles near Poznań, to significantly reduce its production costs. Construction is scheduled to start at the end of 2014 with the start of production following in Q4 2016.

Poland’s Economy Ministry said the project will total €800m, which would make it one of the priciest automotive investments Europe has seen in years. A Mercedes-Benz factory in Hungary opened two years ago at a cost of €548m and had a much larger floor size and production volume. Perhaps the elevated capex has something to do with VW’s expectations with regard to state aid. The Polish government has agreed to include the investment site in the Wałbrzych Special Economic Zone. Günther Scherelis from VW’s commercial vehicles unit in Hannover wouldn't discuss numbers, but confirmed that the plant’s annual production capacity would reach 88,500 units. According to the Cologne-based IW economic institute, labour costs in Poland’s manufacturing industry came to an hourly €6.65 per worker in 2012, about a sixth of Germany’s rate of €36.98. Recent large-scale improvements in road infrastructure have only strengthened the country’s position as a competitively priced manufacturing hub for German companies. Last year Germany bought more than 30% of Poland’s total automotive exports.

Investment acceleration? Despite a slight improvement in automobile sales, Polandbased car manufacturers turned out slightly more than 575,000 passenger cars and light commercial vehicles last year, marking a 9.6% drop from 2012, according to market researcher Samar. Although Fiat Auto Poland retained its position as the country’s number-one carmaker, its share in the country’s total vehicle output dropped by 3.4 percentage points, down to 51.4%. The Poznań-based Volkswagen plant came in second with a 29.7% share (up by 4.2 pps), whereas Opel Polska’s factory in Gliwice saw its share shrink by less than 1 pps, reaching 18.9%. “Due to the current situation in Europe’s automotive sector, further investments of this scale are unlikely to materialise any time soon, although a few years from now, when car sales in the EU return to pre-crisis levels, other carmarkers may follow in VW’s footsteps,” said Orłowski. In the meantime, however, some of VW’s suppliers and subcontractors will likely relocate to Poland, and its 70 or so partners who are already based in the country will hope to receive new, larger orders. “Assuming that one new job at the VW factory creates another two or three with its partners, by early 2017 the project may result in the creation of some 6,000-8,000 new automotive jobs in Poland,” added Orłowski. As the transport infrastructure improves, new opportunities for medium- and large-scale production may emerge in the east of the country, which has so far failed to attract much automotive investment. Lublin, for example, was for decades one of Poland's top commercial vehicle production sites. Perhaps not all the skills and manufacturing traditions in the area have been lost. The deepening political uncertainty across Poland’s eastern border may force some carmakers to rethink their investment strategies with regard to Russia, creating further opportunities for Poland, where the economic and legal environment is predictable, new roads are being built by the month, skilled workers abound, and wages remain competitive. by Lech Kaczanowski

‘GM’s outlays at the Tychy plant are set to reach €250m, making it the largest investment the factory has seen to date’ Automotive exports in € bn

Part power

the volume of Poland's auto exports increased slightly last year, after a huge drop in 2012.

Although new models made in Poland at-

tract a lot of public attention, fully-built cars represent less than a third of the sector’s total output, which rose by an estimated 6% y/y in 2013, nearing 110m zł. According to estimates by AutomotiveSuppliers.pl, the largest products group was parts and components, representing more than 38.8% of the country’s automotive exports (€6.95bn, up 5% y/y), followed by passenger cars and LCVs with 30% (€5.13bn, down 3.8% y/y) and diesel engines with 12.3% (€2.2bn, up 4.8% y/y).

€ 19.15bn

€ 18.44bn

€ € 17.91bn 17.69bn

€ 17.27bn € 15.84bn

991k cars

899k 887k cars

cars

825k cars

636k cars

575k

photos: Marek Lapis (Forum), Krom1975, Opel Gliwice

cars

Vehicle output in thousands.

Passenger car production in Poland has nearly halved since 2008.

2008

2009

2010

2011

2012

2013

Recently GM added

the new Cascada convertible to the cars it produces at its Opel factory in Gliwice, investing €55m in the process.

Volkswagen will

make Poland’s first greenfield car factory investment in over a decade

The total exports figure came to €17.9bn in 2013, 1% up on the prior year, and in 2014 the figure is likely to reach €19bn, according to Rafał Orłowski of AutomotiveSuppliers.pl. Since component makers support a number of models and manufacturers across several markets, their performance rarely hangs on the fate of a single product, the way Fiat’s Polish plant in Tychy depended on the Panda. Although less glamourous, this type of production may be more sustainable in the long term and ensure better allocation of resources than giant assembly plants.

EXPORTS BY THE BUSLOAD

Take for instance Europe’s top producer of light alloy wheels, Switzerland’s Ronal Group, which has recently launched its third Polish production unit in the south-western city of Wałbrzych. Developed at a cost of €114m, the site produces 2m wheels per annum with a staff of 480. With 1,270 staff at its two other factories in Wałbrzych and Jelcz-Laskowice and a turnover of over 1bn zł, Ronal Polska supplies the world’s top carmakers, such as Volkswagen, Mercedes, BMW and Fiat. With an annual output of 3m wheels, the Jelcz-Laskowice plant is Ronal’s largest factory worldwide.

After reaching its lowest level in more than five years in 2012 (3,560 units), Poland’s bus production topped 3,715 vehicles last year (up 4.3% y/y), of which 3,303 were exported, mainly to Germany, Sweden, and Norway according to market researcher JMK Analizy Rynku Transportowego.

business

Solaris Bus & Coach is a well-known

name domestically. It was Poland's second biggest bus producer last year, with 1,229 buses coming off its assembly lines. Other large producers in Poland include MAN, Scania and Volvo. Poland's bus production reached 3,715 units total last year.

With skilled labour at a fraction of Western

European costs, Poland has emerged as one of Europe’s key bus exporters over the past decade, thanks to investors from Germany (MAN) and Sweden (Volvo & Scania), as well as domestic player Solaris Bus & Coach. In 2001 Polish factories exported merely 373 buses, but in little more than a decade the figure has grown nearly tenfold, making Poland number three in Europe after Germany and Sweden.

The two key categories were city buses (3,025 units, up 10.6% y/y) and long-distance buses (543, up 10.6% y/y). With 1,512 vehicles completed last year, Germany’s MAN remains the leading bus producer and exporter in Poland, followed by Solaris (1,229), Volvo (699) and Scania (96). In addition to complete buses, Polish factories made 700 chassis and 250 bus bodies as well as 75 trolleybuses. Domestic carriers purchased 1,389 buses last year, marking an 8.6% improvement over 2012. The number-one seller in Poland was Mercedes-Benz with 542 vehicles registered in 2013 (including bodies from other manufacturers mounted on Mercedes chassis), marking a 19.6% increase against 2012. Solaris came in second with 318 units (up 23.7%), followed by MAN (63) and Autosan (62). The latter, one of Poland’s oldest companies, has been in receivership since October last year.

Car production in Poland by maker:

Fiat

2009: 605,500 2010: 533,500 2011: 467,760 2012: 348,500 2013: 295,725

Volkswagen 2009: 138,200 2010: 148,200 2011: 177,001 2012: 162,000 2013: 170,867

Opel

2009: 96,400 2010: 158,700 2011: 174,015 2012: 125,300 2013: 108,525

Risk and reward

business

Borno Janekovic, director for Central and Eastern Europe at international asset management firm Franklin Templeton, talks with Poland Today editor Andrew Kureth

‘From an asset management perspective, Poland is a highly competitive market’

illustration: Shen Akindo

‘The government’s decision (to implement pension reform) will likely have implications on the attractiveness of the capital markets and the economy’

business

How does Franklin Templeton see the Polish market relative to other countries in the region and globally?

Financial terms

For us, Poland is certainly an impor- SICAV: An acronym for the French term tant market. We have been here since ‘société d’investissement à capital variable’, the late 1990s, with the opening of this can be translated as ‘investment company with variable capital’ and is an open-ended our Warsaw office, which currently collective investment scheme. It is similar to an has more than 20 employees. Poland open-ended mutual fund in the United States. is uniquely positioned in the heart Investopedia defines it as “a type of open-ended of Europe, bridging Russia in the east investment fund in which the amount of capital in the fund varies according to the number of to Western Europe. Its sizeable popuinvestors. Shares in the fund are bought and lation of 38 million, dynamic economy sold based on the fund’s current net asset value. and reliable workforce certainly make SICAV funds are some of the most common it a leader in the region. Indeed, a well- investment vehicles in Europe.” educated workforce is a key factor Insurance wrapper: Otherwise known in Poland’s ability to successfully as ‘private placement life insurance’, this is compete with countries like India in a variable form of life insurance whose cash outsourcing of services. All these fac- value is linked to the performance of one or more investment accounts within a policy. tors were instrumental in our decision to expand to Poznań in 2007 to build TFI: ‘Towarzystwo funduszy inwestycyjnych’ our back-office operations where we in Polish, roughly translated: ‘Investment fund currently have over 500 employees association’. This is an entity which administers investment funds in Poland. spread across 35 departments. From an asset management perspective, Poland is a highly competitive to tap into our investment expertise. market. There is approximately $50bn To this end, we will establish a new cominvested in mutual funds, distributed pany to manage the domestic funds, mainly through banks and as insurance and have applied to the Polish wrappers (see box). There are over Financial Supervision Authority (KNF) 50 asset management companies regis- for a license. tered for public distribution of onshore funds. But as far as the offshore SICAV What are the main risk (see box) space is concerned, Franklin factors for Poland? Templeton manages over $1bn and has Poland, like other markets, is not a sizeable market share in this segment. devoid of risk. Market saturation is one risk for asset managers in the market. There are more than 50 TFIs (see box) When it comes to your in the country, which effectively makes business in Poland, where do for a crowded space. you see the most opportunity? Every year, Franklin Templeton Another risk comes from some conducts a Global Investor Sentiment policy decisions, most notably the Survey, and the results for 2014 were government's decision to implement released in April this year. Poland was pension reform. included in the list of the 22 countries This move effectively brings an end surveyed, and one of the telling results the to the second pillar of Poland’s was a strong home bias for Polish inves- three-pillar scheme. This is certainly tors, who saw the local market as pro- a great cause for concern for the asset viding the best equity and fixed income management industry, and the decireturns in 2014. Asia came in second sion will likely have implications on the as being seen to provide the best equity attractiveness of the capital markets returns for 2014, and still reigns as the and the economy. favourite over the next decade. In terms of fixed income over the How could Poland’s next decade, respondents expected policymakers improve the the best returns for Poland and Western investment environment? Europe. We are currently looking We believe it would be beneficial at opportunities that would give Polish for the Polish government to continue investors access to products that will along the path of reform and regulation address home bias and the ability in the market. This could be in the form

Borno Janekovic, director for

Central and Eastern Europe at Franklin Templeton, sees opportunities for Poland in the long run when it comes to the relocation of manufacturing from Western Europe, but perceives challenges in the saturation of Poland’s market and the results of the government’s recently implemented pension reform.

of tax incentives for savings and investment in mutual funds across the board.

What is Franklin Templeton’s outlook for Poland generally? We are, of course, believers in the Polish growth story and see a positive outlook for the market. Given our presence in Warsaw and Poznań, we are committed to the local market and will continue to adapt our business here in Central and Eastern Europe’s largest economy. Broadly speaking, we believe that in the long-run, Poland could benefit from the process of relocation of factories from Western Europe to Eastern Europe. These long-term trends could lead to the creation of additional jobs and lead to strong domestic demand, which in turn enhances economic growth. interview by Andrew Kureth

62 BUSINESS

A dream come true A Polish startup has created technology that aims to help people find a better way to sleep

Few facets of human life

James Anderson-Hanney is the

business development director at Poland Today. Born in the UK, he lives with his Polish wife and four children. As a creative at London advertising agencies, he wrote the copy for numerous advertising campaigns and has since written for both Polish and UK publications. He holds degrees in advertising and psychology.

have rupted by the invention of the light changed as little as sleep, but one Polish bulb. If so, the NeuroOn could provide company is looking to start a revolu- the technological answer to a problem tion in how we slumber. Earlier this year technology initially created. The company also ventures that the Intelclinic launched the NeuroOn, the ‘World’s first sleep mask for polyphasic NeuroOn may be used to help induce sleep’ via the crowdfunding platform lucid dreaming. However, this potenKickstarter. The Polish team behind it tially lucrative avenue may have soured raised more money than any previous slightly after ‘Luci’, a device intended Polish project on Kickstarter and over to induce lucid dreaming, raised four times their original $100,000 goal. over 363,0000 Canadian dollars on In July this year they will ship the first Kickstarter only to be withdrawn amid 3,000 units to eager backers. But the allegations of fraud. technology has the potential to reach Fortunately for the NeuroOn there a far wider customer base. are already multiple avenues for exploThe allure of boosting productivity ration and the bio-hackers and scienby reducing time spent sleeping is not tists who have expressed an interest are new. One recurrent solution has been bound to find more. While no one may polyphasic sleep. There are many vari- have taken them up on their Kickstarter ations but the basic premise is to sub- offer of $7,500 to dine with the foundstitute conventional daily monophasic ers, it looks like NeuroOn’s other sleep for a number of shorter naps dreams are coming true. by James throughout the day and night, provid- Anderson-Hanney ing up to six extra waking hours a day. Kamil Adamczyk, CEO and founder Poland Today talks to Kamil of Intelclinic, has been using the Adamczyk, CEO and founder ‘Everyman’ sleep pattern for a year now of Intelclinic and the reclaimed waking hours have undoubtedly been useful in balancing Has Poland been a conducive his medical studies with the demands environment for launching and of a rapidly expanding startup. To be developing your business? restive, polyphasic sleep should maxThe founding members of the comimise the amount of the more regenera- pany came together in an interdiscitive rapid-eye-movement (REM) sleep, plinary project between several Polish at the expense of non-REM sleep. The universities. Since then the team has NeuroOn tracks brain waves, muscle grown from three to more than 10. tension and eye movement to differen- The local availability of excellent engitiate between REM and non-REM sleep. neers, computer scientists and specialists The data is then sent to a smartphone at, internationally speaking, a relatively and analysed to help you develop your low cost, has been essential to our very own polyphasic sleep schedule. growth. While some of our suppliers will While polyphasic sleep may pique be Polish we want to ensure a product media and individual interest, in real- of the highest quality. The majority of ity evolutionary, personal and societal production will be outside Poland but obstacles will probably limit its use still within the EU. to a flexible and determined minority. Winning first place in the Startup However, NeuroOn should find a far Competition at LeWeb Paris 2013 was more practical and widespread appli- an important step in establishing our cation in promoting health and wellness reputation internationally. Initially, we by improving the quality of your current explored EU funding but this would sleep schedule. The mask can wake you have meant forfeiting other opportunigently once REM sleep ends: first with ties that ultimately proved better suited light, then vibration and finally sound, to our needs. Poland is at the end of which should leave you feeling more the world for Americans, so our office in San Francisco was an important step rested and energised on waking. There is also growing interest in the towards gaining access to the financial potential benefits of biphasic sleep. backing we needed to develop the It has been proposed that biphasic company further. Access to the intersleep was natural for humans and dis- national market is crucial to our success.

At the UX Poland 2014 conference in Warsaw you spoke about the role of Kickstarter. What are its strengths and weaknesses as a fundraising platform? Kickstarter has been a crucial element of our success, not just in helping us raise almost $440,000 to start production but also in terms of visibility and feedback from the community. We have discovered that most backers were more interested in improving the quality of their sleep than embarking on polyphasic sleep schedules. This has a bearing on the development of the product and how we market it.

What does the future hold for the NeuroOn? It’s impossible to foresee all of the potential opportunities for the NeuroOn as a product and for the data it creates. It provides accuracy close to professional polysomnograms but the mask permits sleep monitoring in a less intrusive manner. In the future NeuroOn may provide therapeutic benefits in the resolution of many sleep problems that are behavioural in origin. Once its use is more widespread, there may be an opportunity to share metadata with scientists, adding to the body of knowledge about sleep. We hope trials will both confirm the efficacy of the NeuroOn and contribute to future improvements.

What is polyphasic sleep? How many times have you wished there were more than 24 hours in a day? Those who advocate polyphasic sleep say they have come as close as possible to making that a reality. As you might guess, polyphasic sleep refers to sleeping many times in a 24 hour period. The term contrasts with monophasic (one phase) and biphasic (two phases) sleep, which are the typical sleep schedules for most humans. However, of the eight hours of sleep an average person gets per night, much is spent in phases of sleep where their brains aren’t ‘recharging’ thoroughly. These phases are called non-rapid eye movement sleep. Polyphasic sleepers aim to cut those periods down as far as possible, maximizing the time they spend in rapid eye movement, or REM, sleep. A typical polyphasic sleep schedule might include one period of 3.5 hours of sleep, with three 20-minute naps throughout the day. It’s not for everyone, but for those who want to crunch a lot of work into their days, switching to such a schedule may be worth sleeping on. The Polyphasic Society has more information: www.polyphasicsociety.com

illustration: NeuroOn

64 BUSINESS

Polish-Belgian Business Forum highlights investment opportunities

The Polish-Belgian Business Forum on Investments, held in Warsaw in April, gave entrepreneurs and officials from Belgium and Poland the opportunity to exchange views and experiences about investing in both countries. The forum was divided into two parts: Investment Opportunities in Belgium and Opportunities for Belgian Companies in Poland. The forum was a joint project of the Ministry of Economy of Poland and the Embassy of Belgium in Poland, along with the Brussels, Flemish and Walloon Regions in co-operation with the Polish Information and Foreign Investment Agency (PAIiIZ) and the Belgian Business Chamber. “Poland has already become an active player in the market of investments abroad,” said PAIiIZ president Sławomir Majman. “For now, the cumulative amount of Polish investments is only €50bn. But over the last four years, there has been a five-fold increase [in Polish investments abroad], and Belgium is sixth on the list of countries attracting Polish investments.” Later in the day, Deputy Economy Minister Jerzy Pietrewicz stressed that Belgium is an important economic partner for Poland. “With turnover in 2013 of around €7bn, you have to think about possibilities of further cooperation, to identify common opportunities for conducting business – even collaborations in third markets – that can be based on trust built over the years,” he said.

Chambers of commerce

Poland outshines CEE neighbours in AHK survey

Once again Poland managed to outshine its Central and Eastern European neighbours in terms of investment attractiveness. The German-Polish Chamber of Industry and Commerce (AHK), with the participation of the International Group of Chambers of Commerce (IGCC), presented the results of their 2014 ‘Poland in the eyes of foreign investors survey’ in Warsaw in April. Overall the results of the ninth edition of the survey were optimistic compared with previous years. Among the assets that investors found most attractive were EU membership and HRrelated factors, such as worker qualifications, higher education, motivation and performance. Also topping the list was the availability of subcontractors and skilled workers, as well as the stable political climate. Infrastructure (including IT, communication, energy, and transport) moved up significantly in the ratings as compared with last year. However, down from 2013 were the predictability of economic policies and adequacy of vocational training. Tax administration, public administration, and the transparency of open tenders remained at the bottom of the list. Some of the more interesting points from the survey include a significant fall in the number of respondents favouring adoption of the euro (53% now, down from 60.1% in 2013) and a dramatic rise in respondents predicting growth in the exports of goods and services (40% now versus 26.2% in 2013). The number of respondents rating the economic situation in Poland as “good” also jumped 11.5% from last year to 35%. The survey, which was carried out with a total of 142 respondents throughout Poland in February 2014, calculated investment attractiveness based on 21 factors driving the inflow of foreign capital into the country.

British-Polish defence forum: strong interest in closer ties

The British-Polish Chamber of Commerce (BPCC), along with the Department of Trade and Investment Promotion at the Polish Embassy in London, as well as trade organisation Aerospace, Defence and Security, held the third in a series of British-Polish defence forums at the Polish Embassy in London at the end of March. The latest event focused on the current consolidation of Poland’s state-owned defence industries and the possibilities of cooperation in research and development. Polish Ambassador to Britain Witold Sobków and BPCC chairman Antoni Reczek officially opened the event. Marek Matraszek, founding partner of CEC, followed with a presentation on changes in Poland’s military structure, consolidation of state-owned defence firms and strategic trends in defence commitments. He also commented on Poland’s defence ministry’s intentions to modernize the country’s military hardware by 2022, 70% of which currently comprises leftover equipment from the Soviet era. There was also a panel discussion in which topics ranged from the tendency to focus on immediate prices over whole-life costs in procurement decisions, as well as the overuse of various provisions of the Lisbon Treaty as a way to circumvent procurement procedures specified in directives by the European Commission.

Exploring Portugal’s finest gastronomy

Since 2010, the Polish-Portuguese Chamber of Commerce (PPCC) has hosted an annual weeklong promotion called Flavours of Portugal, celebrating the wonders of the Iberian nation. The fifth edition will be held May 26-31, 2014 at Warsaw’s InterContinental Hotel, where guests will get to sample the best of Portuguese cuisine, wines, tourism, culture and products. Each evening, PPCC will present a diverse range of Portuguese delicacies, with wine and product tasting from 6:30 pm until 8 pm, followed by dinner prepared by renowned culinary experts, including chef Carla Costa and sous-chef Bruna Matias from Hotel Altis Lisbon, chef Miguel Vaz from Herdade do Esporão and the InterContinental’s own chef Mariusz Jeznach. Some of the regional dishes that can be expected range from duck rice from the region of Douro, codfish croquettes from the Ribatejo region, and fillet of pork with white clam from Alentejo. Not to be outdone by the food, Flavours of Portugal will also feature traditional fado music and live performances each night by singer Ana Pinhal. The last day of the event will offer a family brunch. Salivating yet? Contact the InterContinental for availability (downtown@ihg.com).

CSR à la française For many years, corporate social responsibility (CSR) has been a priority of French companies, which strive to create programmes and individual actions geared towards having a positive affect on the environment, customers, and local communities. Capitalising on the wealth of experience of French companies, the French Chamber of Commerce in Poland (CCIFP) has become involved in a number of initiatives to promote CSR in the country. One of these is the creation of a Standing Committee on CSR, which meets bimonthly to

present CSR best practices as well as to provide guidance on implementing similar activities in Poland. CCIFP members are also encouraged to sign the Declaration of Responsible Business, which encourages voluntary integration of CSR activities into business operations. So far, the declaration has been signed by 43 companies. At the beginning of April, CCIFP affiliates presented at the fifth annual CSR Fair organized by the Responsible Business Forum (Forum Odpowiedzialnego Biznesu) held at the National Stadium in Warsaw. The CSR Fair gave visitors the chance to learn more about the CSR programmes in place at a variety of companies including French powerhouses Carrefour, Orbis, Karmar and Human to Business, among many others. CCIFP is also set to publish a CSR guide, out in May, which will study actions implemented by companies in the areas of strategy development, diversity, reporting activities, cooperation with NGOs, business ethics, environmental protection, and social dialogue. The release of the guide will be accompanied by a presentation of a study carried out by French investors in Poland on the involvement of companies in CSR projects.

PHIG elects new board for 2014-2016

The Polish-Spanish Chamber of Commerce (PHIG) held a board meeting at the end of March which was attended by Spanish Ambassador to Poland Agustín Núñez Martínez, the commercial counsellor of the Spanish embassy Rocío Frutos, and the counsellor of the commerce and investment promotion department of the Polish Embassy in Madrid, Mirosław Węglarczyk. Representatives of PHIG member companies also elected new board members for the 2014-2016 period. Stefan Bekir Assanowicz from Rubau Poland, will be among the five new members joining the board, alongside six returning board members. That same evening, PHIG’s monthly meeting, Tarde de Sabores, also took place in Warsaw. However, this time it had the double aim of not only bringing together Polish and Spanish businesspeople to meet and network, but also of turning awareness to the larger worldwide issue of water shortages. In recognition of Worldwide Water Day, Roca, a strategic partner of the Polish-Spanish Chamber of Commerce, took advantage of the event to promote its foundation, We Are The Water, and the activities it initiates to reduce water consumption and waste.

India-Poland cooperation prospects explored in Gdańsk

The Polish-Indian Chamber of Commerce (PIIG) held the latest edition of its ‘Poland-India. Business cooperation prospects. Expectations, opportunities and challenges for the development of economic relations’ conference in Gdańsk in mid-April at the AmberExpo Convention Centre. This latest instalment, co-organized by the Gdańsk Regional Development Agency and the Polish Agency for Enterprise Development (PARP), was developed in order to acquaint interested businesses in the potential opportunities in India, as well as reduce the level of uncertainty associated with approaching this culturally unique market. The conference featured speakers including the Ministry of Economy’s promotion and bilateral cooperation specialist Lucyna Jaremczuk, director of the Gdańsk branch of language school Berlitz Bartosz Jurkiewicz, and legal advisor from Von Zanthier & Schulz Joanna Witkiewicz.

66 Big deals URBAN ISSUES

Large transactions drove Poland’s commercial property investment market in the first quarter of 2014

The commercial real estate investment market in Poland put up an impressive performance in the first quarter of this year, with transactions valued at a total of approximately €900m signed in the period, according to the major agencies. That marked a 50% increase on the combined value of the deals concluded in the same period of last year and suggests that the total volume of transactions this year could top the €3.3bn recorded last year.

Adam Zdrodowski,

Large transactions

Poland Today’s real estate editor, takes a look at the landscape of Poland’s property market.

Poznan City Center (above)

was bought by Resolution Fund and ECE Fund from TriGranit, Europa Capital and PKP for more than €200m, according to unofficial estimates.

Deutsche Asset & Wealth Management’s acquisition of

the Rondo 1 skyscraper (right) in Warsaw from BlackRock was the largest single-asset office transaction ever closed in Poland, at €300m.

‘The total commercial property investment volume in Poland in 2014 is expected to comfortably exceed the €3.3bn recorded last year’

RONDO 1 Designed by the Skidmore, Owings and Mer-

rill architectural studio and completed in 2006 by Hochtief Development Poland, the Rondo 1 skyscraper in Warsaw stands 192 metres tall. The building comprises almost 60,000 sqm of office space and approximately 5,000 sqm of retail area. BlackRock acquired a 50% interest in Rondo 1 in 2006 and assumed full ownership of the property two years later.

Q1 2014, according to data from Colliers International. The retail and logistics sectors accounted for 32% and 10% of the volume respectively. Piotr Mirowski, director for CEE investment services at Colliers, noted that the demand for logistics assets is currently on the rise. A number of new deals in the sector are now in due diligence, he said. The transactions signed in the first quarter of 2014 were almost evenly distributed between Warsaw and the regional cities. The Polish capital accounted for 51% of the total investment volume recorded in the period. According to Mirowski, investor interest in the regional cities is now rising due to factors including the shortage of product in Warsaw. Many of the investment funds that have bought new assets in the city in recent years are long-term holders, he said.

Several big transactions largely contributed to the very high Q1 investment volume which, according to DTZ experts, was the best quarter for the investment market in Poland in nine years. These included, first of all, the sale of the Rondo 1 office tower in Warsaw for around €300m and the sale of the Poznań City Center mall for an undisclosed amount. According to Łukasz Maciak, director of the capital markets department at DTZ, the value of the latter deal exceeded €200m. TriGranit, Europa Capital and PKP sold the property to a consortium of Resolution Fund and ECE Fund. Meanwhile, the sale of Rondo 1, which was acquired by two funds managed by Deutsche Asset & Wealth Management from BlackRock Europe Property Fund II, set a new record in the commercial property investment market in Poland. New investors The deal involved the sale of the “best Those who invested in commercial real office asset in Warsaw” said Mike Atwell estate in Poland in Q1 are mostly entities head of CEE capital markets at CBRE. which – like GLL Real Estate Partners, It was the largest single-asset office Griffin, Hillwood, IVG, RREEF and W.P. transaction ever closed in Poland and Carey – already have properties in the one of the biggest the Central and country. The German investment funds, Eastern Europe region has seen to date. which are some of the most important Maciak pointed to market specula- market-makers in Poland, continue tion that the sale of the Metropolitan to witness the inflow of new capital building, another important office from private and institutional investors, asset in central Warsaw, will be Mirowski said. announced soon. Its value easily However, he stressed that they are now also seeing capital diversificaexceeds €100m, he said. With a number of investors currently tion. There are emerging new buyers planning further office building acqui- who are interested in both the “safsitions, the total commercial property est” projects and more opportunistic investment volume in Poland in 2014 is schemes, he said. expected to comfortably exceed last “Some of the funds will be using capiyear's total. tal raised in China and South Korea. This is money which has not yet been present Product shortage in the Polish market, or has been present Altogether, the office sector accounted to a limited extent,” Mirowski added. for 58% of the total investment volume in by Adam Zdrodowski

photos: BartĹ&#x201A;omiej Banaszak, Marek Lapis (Forum)

Special focus on real estate

URBAN ISSUES

Bringing home the bacon Poland’s residential developers had a bumper first quarter on the back of much-improved apartment sales

results of eight major listed developers – Budimex Nieruchomości, Dom Development, Inpro, JW Construction, Marvipol, Polnord, Robyg and Ronson – increased by 63% y/y in the first quarter of this year, according to data from the brokerage arm of bank BZ WBK. According to a recent report by residential real estate analysis firm Reas, in Q1 2014 a total of over 11,000 apartments were sold in Poland’s six largest residential markets – Warsaw, Kraków, Wrocław, Tri-City, Poznań and Łódź. The demand was driven by factors including low interest rates, relatively low prices and, to some extent, the introduction of the new Mieszkanie dla Młodych (Apartment for the Young) subsidized mortgage programme for first-time home buyers.

Ambitious plans The Żoliborz Artystyczny residential

project (above), by Dom Development. The company plans to launch construction on a combined eight projects in Warsaw and Wrocław in the first half of this year.

The largest Warsaw Stock Exchangelisted residential developers saw significant increases in their apartment sales results for the first quarter of 2014, showing that the rebound in the housing sector is well underway. The uptick in the demand has already resulted in increased development activity. Major developers are now replenishing their land banks and announcing ambitious investment plans.

Looking up Housing giants Robyg and Dom Development, which respectively sold as many as 1,731 and 1,605 apartments last year, both saw their apartment sales improve year-on-year in the first quarter of 2014. Robyg sold a record 576 apartments in Warsaw and Gdańsk, the two cities in which it is active, in the first quarter of 2014. That marked an increase of more than 90% compared to the same period last year. The company hopes to continue this trend in the upcoming months and sell a total of more than 2,000 housing units in 2014, said Oscar Kazanelson, president of the supervisory board at Robyg. That prediction will ultimately depend on the continued health of the market – a global economic shock could change the situation drastically. But the results the firm

The positive figures are already leading developers to buy sites for new recorded in the first quarter of the year projects. The major agencies are indicate that the 2,000-unit goal is real- reporting that residential developers now generate the most demand for istic, said Kazanelson. For its part, Dom Development building land in Poland. sold a combined 400 housing units As early as last autumn, Robyg in Warsaw and Wrocław in Q1 2014, adopted an investment plan which marking an 18% increase over the same envisions the spending of up to 150 milperiod of last year, according to prelimi- lion złoty on the acquisition of plots in nary data published by the company. Warsaw over the next three years. Even though the first quarter of this Earlier this year Dom Development year did not bring record sales of new announced the acquisition of plots apartments, Dom Development views for four new schemes in Warsaw. The it as a successful period for the indus- company has also already made down try, Jarosław Szanajca, president of the payments for a number of sites whose management board at the company, acquisition has not yet been finalized. said in a statement. In the first half of 2014, Dom Other Warsaw Stock Exchange- Development plans to launch conlisted residential developers have struction on a combined eight projects shown good Q1 apartment sales in Warsaw and Wrocław. These will results. While they slightly undershot include three new development – two the figures from Q4 2013, they bested in Warsaw and one in Wrocław – and the results from the first quarter of five new phases of already ongoing last year by far. The aggregate sales investments. During the first three months of the year, residential developers launched sales of a total of almost 9,500 apartments in the six largest residential markets in Poland, according to the Reas report. This was more than in the previous quarter (over 7,800 units) but due to the good sales the total volume of the apartments on offer in those six markets decreased by approximately 4% during the period.

‘In Q1 2014 over 11,000 apartments were sold in the six largest residential markets in Poland’

by Adam Zdrodowski

conference

Spotlight Hotel Investment Poland 2 June 2014, Golden Tulip Warsaw

Room for development Do hotels offer a promising alternative to traditional real estate developments and investments? Bringing together investors, developers, hotel chains and finance providers to discuss entering, developing, financing, managing and selling hotel projects in the Polish market. Participants will benefit from both strategic insights and exceptional networking opportunities.

Ticket price: EUR 160 (600 PLN) For more information go to www.poland-today.pl Speakers include: Katarzyna Sobierajska, Undersecretary of State, Ministry of Sport and Tourism Ireneusz Węgłowski, Vice-President, Orbis SA and President of IGHP Dominic Seyrling, Senior Director of Acquisitions, Europe, Host Hotels Ltd Christian Hribar, Director Hotel Development, Worldhotels Christoph Hager, Associate Director, Development – EAME, Starwood Hotels

and Resorts Worldwide

Dr Andrzej Chełchowski, Partner, Miller Canfield Sebastien Denier, Vice-President Central & Eastern Europe, Louvre Hotels Wiesław Likus, Wolf Immobilien Polen S.A.

Content Partners

Partners

Frida Hansen, Director Business Development, Steigenberger Hotels AG Andreas Scriven, International Managing Director&Head of Consultancy, Christie + Co. Michal Thedy, Executive Director Tax Services, EY Frans-Jan Soede, Managing Partner,

Hotels Asset Management

Dr. Franz Jurkowitsch, Chairman of the Management Board, Warimpex

Finanz– und Beteiligungs AG

Dr Krzysztof Łopaciński, Director of the Institute of Tourism Przemysław Wieczorek, Management Board Member, Puro Hotels Małgorzata Dybaś, Partner, HG Consultants

Patrons

Media Patron

Agnieszka Kaczyńska, Director of Real Estate & Structured Investments, mLeasing Adam Walczak, Managing Partner, AGK Architekci AW Sp. z.o.o. Ralph Steinert, Development Director Germany and CEE, Louvre Hotels Ascan Kokai, Director Fund Management, Hotels, Invesco Real Estate Stéphane Obadia, Development Director, Algonquin Susanne Friedrich, Director Business Development, The Rezidor Hotel Group Astrid Schafleitner, Development, Motel One Adam Konieczny, Country Head Poland, Christie + Co.

Venue Partner

URBAN ISSUES

Building demand More active developers and international interest means higher transaction volumes – and higher prices – for building land in Poland

The value

Demand for building land

is strong despite plenty of supply, say experts, because Poland lacks plots that meet developers’ requirements.

‘Developers are now even ready to overpay for land if they manage to find a suitable plot’

of transactions for building land in Poland is expected to rise to 1.75bn złoty this year, up from about 1.5bn złoty in the past two years. The increase will come on the back of strong demand from office and residential developers, as well as from international investors set to make their first purchases in Poland. Already in the first quarter of this year, several major transactions for building land have taken place. Colliers International brokered deals valued at approximately 215m złoty in the first quarter, while CBRE participated in transactions worth around 100m złoty. But there is still plenty of supply. Colliers expects to close deals valued at a combined 500m złoty within the next several years, while CBRE is currently working on transactions whose total value exceeds 700m złoty. JLL is currently working on a portfolio whose total estimated value amounts to approximately 1bn złoty. Nevertheless, demand in Poland has not yet been sated, experts say, because there is a shortage of plots that meet commercial and residential developers’ requirements. Emil Domeracki of Colliers International said that developers are now even ready to overpay for land if they manage to find a suitable plot.

Residential rising According to Colliers data, Poland’s residential market accounted for as much as 55% of the combined value of the building land transactions closed in Q1. The office and retail markets accounted for 40% and the warehouse market for 5% of the total investment volume. Warsaw accounted for approximately 80% of the total value of the market in Poland, but investor interest in the regional cities is now also on the rise.

Developers are currently looking for residential sites in markets including Wrocław, Tri-City, Kraków and Poznań, experts say. Domeracki noted that the large demand for residential sites is a result of the positive apartment sales results that developers have been seeing in recent months (see page 68). Investors are therefore looking for plots which will generate relatively quick returns. Prime office sites are also in demand, but retail developers are now mostly focusing on the revitalization of existing facilities, rather than on the purchase of land for new projects, say experts.

New capital A number of new international entities are now planning to make their first building land acquisitions in Poland within the next few years. Several such transactions were discussed at the MIPIM property fair in Cannes, France in March, said Daniel Puchalski of JLL. He added that at least nine new foreign investors, coming from markets including the Scandinavian countries and Ukraine, are expected to acquire office and residential sites in Poland in the near future. Generally, after several years of decreased investor activity, analysts say that there are now an increasing number of entities in the market that have already raised a substantial amount of capital and are looking for opportunities to invest in building land throughout Poland. According to Puchalski, these are often investors who are planning to enter into joint-venture partnerships with the developers already active in the Polish market, both in Warsaw and the major regional cities. Let the buying begin.

by Adam Zdrodowski

illustrations: Artem Egorov

urban issues

Key data on Poland’s property market Investment volume, prime yields, stock, vacancy rates and more

€3.3bn – the total volume of investment transactions in the commercial property market in Poland in 2013

Investment volume 111 (%) by sectors, 2013 Retail Office Warehouse Hotel

47 38 12 3

(source: Colliers International)

Office stock and vacancy rates in major Polish cities and agglomerations, Q4 2013 (source: Colliers International) City/ Agglomeration

Stock (sqm)

Vacancy rate (%)

Warsaw Kraków Wrocław Tri-City Poznań Łódź Katowice

4,112,800 519,500 458,900 350,000 265,900 236,200 218,300

11.7 4.4 12.9 13.4 15 16.5 8.6

Major Polish cities’ share of Poland’s total shopping centre space Q4 2013 (%) (source: DTZ Research) Warsaw Silesia Tri-City Kraków Poznań Łódź Wrocław Szczecin Białystok Bydgoszcz Kielce Lublin Częstochowa Radom Toruń

19 16 10 9 9 8 8 4 3 3 3 3 2 2 2

Prime yields in Poland, Q4 2013 (%) Warehouses Offices Retail (source: JLL)

€300m was the value of the largest single-asset office transaction ever closed in Poland – the sale of the Rondo 1 tower in downtown Warsaw. The sale was completed in April this year.

Warehouses 7.50-7.75

Expected growth of office stock in major Polish cities in 2014 (%) (source: DTZ Research) Katowice Kraków Lublin Tri-City Wrocław Warsaw Szczecin Łódź Poznań

7.50-7.75 6.00-6.25 5.75

21.1 15.9 10.3 9.5 8.6 7.5 5.4 3.7 1.9

Offices

6.00-6.25

Retail 5.75

‘We can expect demolitions and redevelopments of entire retail projects.’

John Banka, head of development advisory at Colliers International, on how retail properties in Poland are working to reposition themselves in the market.

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To get a free, no obligation, 1-month trial subscription simply email James. james.anderson-hanney@poland-today.com

URBAN ISSUES

Echo Investment

obtained more than €30m in bank financing from BNP Paribas Bank Polska for its A4 Business Park office project (right) in the southern Polish city of Katowice.

Investment market

Rondo 1 sold for €300m

Want more?

Receive in-depth original reporting on Poland’s property market free each week in your email inbox with PT Urban Issues. For more information or to subscribe, email: adam.zdrodowski@ poland-today.pl

Two funds managed by Deutsche Asset & Wealth Management have acquired the Rondo 1 office tower in downtown Warsaw from BlackRock Europe Property Fund II for nearly €300m. Designed by the Skidmore, Owings and Merrill architectural studio and completed in 2006 by Hochtief Development Poland, the skyscraper stands 192 metres tall and comprises almost 60,000 sqm of office space and some 5,000 sqm of retail space.

W.P. Carey acquires Lipowy Office Park

Two affiliates of the global real estate investment trust W.P. Carey have jointly acquired the Lipowy Office Park complex in Warsaw from CA Immo for approximately €115m. Developed in 2009 by Hochtief Development Poland, the complex is located on ul. Żwirki i Wigury, the main route from the Warsaw Chopin Airport to the centre of the Polish capital, and serves as the headquarters of Bank Pekao, the second largest bank in Poland.

Office

Skanska reveals huge office scheme design

Developer Skanska Property Poland has revealed the architectural design of its planned Generation Park office project in Warsaw. The scheme will be the largest investment to have ever been developed by the company. Designed by the renowned JEMS Architekci studio, the development will be located near the Rondo Daszyńskiego roundabout in the Wola district of the Polish capital. The project will comprise three buildings offering a total of approximately 80,000 sqm of GLA.

Real estate review

Wisher to develop new office project in Warsaw

Developer Wisher Enterprise will soon launch construction on a new 11,000-sqm office project in downtown Warsaw, located on ul. Grzybowska in the Wola district of the Polish capital. The company will start building the scheme on a plot neighbouring the Mint of Poland within the next few weeks. Wisher hopes to deliver the development by Q3 2015.

Refurb begins on tallest Kraków office building

Pramerica Real Estate Investors and WX Management Services, part of the Austrian group Warimpex, have begun refurbishing K1, the tallest office building in Kraków. The building stands 76 metres tall and is a landmark of the Kraków skyline. The refurbishment of the structure, which comprises 12,800 sqm of leasable space, is scheduled to finish in October this year.

The design for the Generation Park of-

fice project (right) in Warsaw was revealed by Skanska Property Poland.

Echo to launch office project in Kraków

Warsaw Stock Exchange-listed developer Echo Investment has recently obtained a building permit for a new office project in Kraków. The phased scheme will be located on ul. Opolska and will comprise approximately 50,000 sqm of office space. Construction is expected to launch in the coming months.

S+B Gruppe Warsaw office development to launch in Q2 Developer S+B Gruppe is planning to launch construction on a new office project in the centre of Warsaw in the second quarter of this year, said Franz Paul Bauer, managing director at the company. The planned scheme will be located on ul. Królewska and will comprise around 6,000 sqm of leasable office space. S+B Gruppe has already secured a building permit for the development, Bauer said.

Warsaw hopes to sell skyscraper site later this year Warsaw City Hall hopes that a plot on ul. Emilii Plater in the centre of the city on which two new high-rise buildings could be developed in the near future will be sold later this year. Jan Budniak, director of property management at Warsaw City Hall, said that a number of the leading developers active in the Polish market are already interested in the plot in question.

Echo gets financing for Katowice offices

Echo Investment has obtained more than €30m in bank financing from BNP Paribas Bank Polska for its A4 Business Park office project in Katowice, in southern Poland. The loan will be earmarked for the development of two phases of the scheme which, when fully developed, will comprise three office buildings with a total of approximately 31,000 sqm of leasable space.

Retail

Griffin set to start Hala Koszyki project

Real estate investor Griffin Group has launched preparatory work on the site of the planned Hala Koszyki retail and office project in central Warsaw. The scheme will involve the reconstruction of an eponymous historic market hall building which will comprise 7,500 sqm

of retail space. Griffin Group hopes to be able to deliver the development at the turn of 2015 and 2016.

Residential

‘Financial failure’ Złota 44 being sold

Developer and investor Orco Property Group has decided to sell its flagship Złota 44 residential project in Warsaw’s centre, which it has described as a major financial failure. The reasons include the lack of bank financing due to covenant defaults, the termination of the agreement with the general contractor and an unsuccessful re-launch of apartment sales last year, the company said in a recent report.

Black Lion plans another phase of Soho Factory

The Black Lion investment fund is planning to launch construction on another phase of its Soho Factory mixed-use project in Warsaw later this year. A new residential scheme within the multiphase development, called Tetris, will deliver 145 apartments. The Soho Factory investment is located on ul. Mińska in the Praga Południe district of the Polish capital and involves the revitalization of approxi mately eight hectares of post-industrial land.

Logistics

Prologis starts speculative project near Wrocław

Distribution space developer, manager and owner Prologis has launched construction on a 27,000 sqm speculative project located within its Prologis Park Wrocław V distribution park near Wrocław. Prologis has to date developed four built-to-suit schemes within the park (for Eko Holding, Neonet, Tradis and UPM Raflatac) which comprise a total of over 90,000 sqm of distribution space.

EVENT rEViEw As part of our mission to bring Poland to the world and the world to Poland, Poland Today initiates, organises and grants media patronage to conferences that we believe help us achieve that goal. In this section, we provide a round-up of the conferences we have been a part of, with a view to our providing an international perspective on Poland’s story. In this issue, we review Poland Today conferences that examined the opportunities for logistics in Silesia, as well as for outsourcing and general investment in Bydgoszcz and Radom. We also present reports on the UX Poland 2014 conference, which explored new trends in ‘user experience’ technology, and the European Executive Forum, which examined the continent’s leadership needs in today’s political and business environment.

EVENT REVIEW

EXECUTIVE BREAKFAST

Bydgoszcz opens up

The city discussed its promotion strategy with executives and potential investors. see page 76

ConFEREnCE

Silesia – Poland’s logistics hub Logistics businesses in the region say they are satisfied with the cooperation they get from local authorities. see page 78

PoWER BREAKFAST

Andrew Kureth

writes on Europe’s new leadership challenges in the face of the Ukraine crisis.

Radom’s time

Proximity to Warsaw, attractive recruitment potential and pro-business city officials are putting this medium-sized Polish city on the investment map. see page 80

MEDIA PATRonAGE

Using technology to be human The UX Poland 2014 conference showed how technology can bring people closer together. see page 82

MEDIA PATRonAGE

Bydgoszcz wants

to attract investors interested in locating BPO and R&D sites in Poland. The city has already had some success, but top Polish business leaders came together and told the city’s Mayor Rafał Bruski exactly what more it needed to do in order to get investors’ attention.

see page 76

Technology has

become integral to our daily lives. But is it building walls between people? Speakers at the UX Poland 2014 conference argued that by concentrating on the user experience – and innovating to solve problems for everyone – designers can do a lot to make sure tomorrow’s tech actually brings people together.

Europe’s wake-up call

Piotr Narel

covers investment opportunities in Bydgoszcz, Radom and Silesia, as well as on new trends in user experience technology.

The Russia-Ukraine crisis is a test of European leadership – and a chance for the EU to truly unite. see page 84

Join us for our

UPCoMInG PolAnD ToDAy EVEnTS :

events. For more information, visit www.poland-today.pl, or e-mail to marta.borowska@ poland-today.pl

see page 82

May 15

June 25-26

October 16

‘Spotlight: Hotel Investment Poland.’ Golden Tulip, Warsaw

May 27-29

‘New Outsourcing Opportunities for Warsaw.’ Radom

‘Green Light for BPO.’ Opole

December 9

June 12

September 11

December 11

‘Poland Transformed International Press Tour’

May 28

photo: Piotr Dziubak

June 2

‘2nd Forum for Home Appliances Producers.’ Rezydencja Hotel, Piekary Śląskie

‘Poland Transformed Conference & Cocktail Party.' Endorfina Foksal, Warsaw

June 5

‘Open for Outsourcing.’ Bydgoszcz

‘CEE Property Summit’ (with Property Investor Europe), Bristol Hotel, Warsaw

September 2

Prospects in Tri-City. Grand Hotel, Sopot

Prospects in Wrocław.

November 20 Prospects in Kraków.

Prospects in Katowice.

Poland Transformed Awards Gala. Soho Factory, Warsaw

EVENT REVIEW

For the full report and

more photos from ‘Bydgoszcz: Open for Outsourcing’, log on to www. poland-today.pl

EXECUTIVE BREAKFAST

Bydgoszcz opens up

The city discussed its promotion strategy with executives and potential investors

Bydgoszcz Mayor Rafał Bruski showed that his city is open in more ways than one at an Executive Breakfast event hosted by Poland Today at the Villa Foksal restaurant in Warsaw in March. The event, entitled ‘Bydgoszcz: Open for Outsourcing’ focused on the city’s many advantages for outsourcing firms, but was remarkable in its format, in which about 20 high-level executives were able to engage in a direct discussion with the mayor.

Join us for the second portion of

the ‘Bydgoszcz: Open for Outsourcing’ initiative on June 12 in Bydgoszcz. For more information, email: marta.borowska@poland-today.pl

In discussions about major Polish cities, Bydgoszcz rarely comes up, and several guests were surprised to learn that it is Poland’s eighth-largest. With its location in north-central Poland, one of the country’s less affluent regions, the city can offer lots of potential employees at relatively low cost to investors. Edyta Wiwatowska, who is in charge of the city’s development agency, mentioned the city’s distinction in being host to the NATO Joint Force Training Centre. Companies that employ people from the Bydgoszcz area have plenty of praise for the workforce. Andrzej Dulka, head of Alcatel-Lucent’s Polish branch, said he felt that workers in the company’s Bydgoszcz facility were especially productive. On the negative side, however, the executives in attendance said that the city could still work on providing more concrete information and on cooperation with nearby cities, such as Toruń. Good advice. Bydgoszcz authorities, for their part, showed that they were open to change. by Piotr Narel

Rafał Bruski (top),

mayor of Bydgoszcz, was able to directly engage in a lively discussion with about 20 executives from major investors in Poland about the merits of investing in his city.

Jolanta Jaworska (bottom), govern-

ment programmes director at IBM, said that the city should do more to publicise the large cache of workers in the region, which includes the city of Toruń.

photos: Arkadiusz Chłopik

EVENT REVIEW

Paweł Panczyj (above), managing

director of the Association of Business Service Leaders in Poland (ABSL).

Andrzej Dulka (above right),

CEO of AlcatelLucent Poland, with Poland Today sales director Aneta Kłodaś.

EVENT REVIEW

PoWER BREAKFAST

Silesia – Poland’s logistics hub Logistics businesses in the region say they are satisfied with the cooperation they get from local authorities

The logistics sector in Silesia is seen by many as an engine of economic development for the region and the country. In late March industry leaders met at a Poland Today conference in the Silesian city of Gliwice to address the issue. Presentations and panel discussions from business leaders and politicians alike demonstrated that the greatest hurdles faced by contemporary Silesia are from within, rather than from abroad. Political games played in the capital affect the region’s propensity for growth with many lamenting the complicated legal system in Poland.

Adam Neumann (above), Deputy Mayor

of Gliwice, emphasised the city’s past successes, attributing them to government stability and its key role in the Katowice Special Economic Zone.

photos: Małgorzata Rakowska

For the full report

and more photos from ‘Hub Silesia: Logistics as the Engine for Economic Development’, log on to www. poland-today.pl

Former Deputy Economy Minister Paweł Poncyljusz gave an example of these complications by pointing out that laws now frequently take up to 18 months to be implemented, when once it took just six. Gliwice itself. Jacek Żarnowiecki of GM to consumers on the same day as the order He also noted that if the text of a new law Poland spoke positively about Gliwice – something which could be possible is four pages long, the subsequent justi- officials, emphasising the benefits that if companies preemptively prepared fications and explanations for aspects his own company has enjoyed from orders to be shipped based on consumer of this new law are likely to reach over 60 its long presence in the Katowice Special preferences. It was even mentioned, not in pages. Despite the bleak picture painted by Economic Zone (KSSE). jest, that in the distant future, companies the former deputy minister, many seemed may be able to deliver products before quite pleased with the existing coopera- Deputy Mayor Adam Neumann empha- they are ordered by the consumer. tion between politics and business in sised past successes in Gliwice which he said were due to the “stability of gov- What is the ultimate message to be gained from this annual meeting of the logistics ernance” in the city. sector? In the context of a thriving indusBesides the discussion on the coop- try and a successful partnership with local eration between the logistics sector governance, business leaders simply seem and city authorities, event participants concerned with making sure that they are were involved in a discussion on the pro- able to continue with more of the same. pensity for a “logistics revolution.” Many In contrast to its volatile past, contempoparticipants mentioned the possibility rary Silesia seems set on stability and conof future online orders to be delivered sistency. by Piotr Narel

Adam Pawelczak (left),

director of logistics at Allegro.

PaweĹ&#x201A; Poncyljusz (below), former

deputy economy minister bemoaned the slow pace of legislative work and the level of bureaucracy in Poland, saying they can slow down business.

Zygmunt Ĺ opalewski (above), external

relations manager at Indesit.

EVENT REVIEW

PoWER BREAKFAST

Radom’s time

photos: Arkadiusz Chłopik

Proximity to Warsaw, attractive recruitment potential and pro-business city officials are putting this medium-sized Polish city on the investment map

For the full report

and more photos from ‘Radom: New Outsourcing Opportunities for Warsaw’, log on to www. poland-today.pl

Andrzej Kosztowniak (left),

mayor of Radom, said that providing vocational training at public institutions was the city’s way of offering businesses a helping hand.

education, providing a large pool of qualified potential employees for businesses looking to invest. City officials have worked with business leaders to establish vocational training programmes for students interested in seeking employment in the BPO sector. Radom Mayor Andrzej Kosztowniak said that city officials understand that often post-graduate vocational training is a Radom, a city of about 220,000 people requirement for businesses and that prolocated some 100 kilometres south of viding such training at public institutions Warsaw, offers many opportunities for was the city’s way of offering businesses investors looking to expand their busi- a helping hand. Radom’s recruitment ness activities in Poland, according to potential is not just due to its high educabusiness leaders and city officials who tional standards, but also its relatively low spoke at Poland Today’s Power Breakfast wages – some 50% lower than in Warsaw in April. Attendees, including representa- and 40% lower than in Kraków. AIG/ tives of businesses interested in investing Lincoln development manager Dariusz in the city, heard an extensive discussion Domański pointed to this as one of the on the city’s unique features and its ability biggest reasons his company had recently to become a major source of foreign and developed office space in Radom, believdomestic investment in the near future. ing businesses would be attracted by the cost effectiveness. One of the city’s biggest advantages, experts said, is its proximity to Warsaw Radom’s competent workforce, excellent and the international airport there. The location and low costs offer hope for the short distance, taking just about 60 min- city’s future. The event provided plenty utes to cover by car on the newly reno- of optimism regarding the city’s potenvated S7 motorway, means that firms tial, especially considering already existbased in Radom have easy access to other ing investments in the city and the good markets throughout Europe. However, cooperation with city officials. PwC partner Roman Lubaczewski noted that “proximity to Warsaw’s airport is not As Anna Polak-Kocińska, vice president the top priority for businesses – people of the Polish Information and Foreign are number one.” On this point Radom Investment Agency (PAIiIZ), said, “Now also excels. Of the city’s 220,000 peo- is the time for Radom’s 15 minutes ple, some 15,000 are students of higher of fame.” by Piotr Narel

Join us for the second portion

of the ‘Radom: New Outsourcing Opportunities for Warsaw’ initiative on June 5 in Radom. For more information, email: marta.borowska@poland-today.pl

EVENT REVIEW

Mirosław Szydelski (above), CEO of AIG/ Lincoln Polska

Sławomir Majman (above), president of PAIiIZ.

Roman Lubaczewski (left), partner in PwC's

photos: Arkadiusz Chłopik

advisory division.

EVENT REVIEW

MEDIA PATRonAGE

Using technology to be human The UX Poland 2014 conference showed how technology can bring people closer together

photos: UX Poland 2014

The tenuous border between the virtual and the real is becoming increasingly blurry – leading to fears about the potential for people’s interactions with technology to replace people’s interactions with other people. Capitalising on such fears, the organisers of UX Poland 2014 chose to declare the fifth edition of their conference on the user experience (UX) as ‘The Human Experience Conference’. The event, which included 150 speakers and about 1,200 attendees, made the natural connection between technology and the people responsible for it. The conference included such features as a video game section, charging stations where participants could recharge themselves or their electronic devices by eating apples and plugging in, and interactive games such as ‘Bullshit UX Bingo’ – bingo using terms used at the conference.

the potential to create something better for everyone. His prime example was the potential to improve the speed and accuracy of typing on computers by improving on already existing technologies which are being used by people for whom standard typing is difficult. Zusman told Poland Today that focusing on disabled individuals forces designers to change their approaches entirely, thus actually addressing real drawbacks of all people using technologies.

Far from being a three-day exploration of highly technical design concepts, the conference addressed the reciprocal relationship that user experience technology plays in the everyday lives of both consumers and designers. The opening keynote on the second day of the conference by event emcee Jeff Parks of Kina’ole outlined the history of the development of technology. Parks noted that the mediums which we use to understand the world In the end UX Poland 2014 demonstrated have become increasingly less engaging. ways in which technology is not always Andrew Zusman, an independent con- a hindrance to real-life human interacsultant, spoke about how focusing on tion but a facilitator, and showed how real individuals that suffer because of a ultimately technology can bring humans lack of universal design carries with it closer together. by Piotr Narel

The UX Poland 2014 conference

was billed as ‘The Human Experience Conference’ and explored the reciprocal relationship that user experience technology plays in the everyday lives of both consumers and designers.

For the full report

and more photos from ‘UX Poland 2014, The Human Experience Conference’, log on to www. poland-today.pl

EVENT REVIEW

MEDIA PATRonAGE

Europe’s wake-up call

The Russia-Ukraine crisis is a test of European leadership – and a chance for the EU to truly unite

Left to right:

former Polish President Aleksander Kwaśniewski, former German President Horst Koehler, Gen. James L. Jones, Jan Kulczyk and former Prime Minister Jan Krzysztof Bielecki.

The West must make a more concerted effort to form a united front to show that the power politics being used by Russian President Vladimir Putin will not succeed, said Horst Koehler, former president of Germany, at a panel discussion in Warsaw in April.

“This is a big chance for Europe to now wake up and show that we are serious about responding to our challenges,” said President Koehler, adding that Europe should use an approach to the RussiaUkraine crisis that showed unity and decisiveness. Kulczyk’s evaluation was harsh. “Russia has shown us that the ‘united’ Europe is more united in name than in fact. Brussels concerns itself with many details, but not the most important issues,” he said. General Jones bemoaned the fact that more NATO countries had not lived up

dent of Germany, said that Europe needs to “wake up”, while Gen. James L. Jones (right) said that this moment in history requires “defining leadership.”

Richard Stephens (below), founder and editor in chief of Poland Today, emceed the event.

to obligations to dedicate two percent of their GDP to defence spending. “We now have a symmetric threat, not just asymmetric threats,” he said. “This is a defining moment in history that requires defining leadership,” he added. “This is a great opportunity, if we seize it, to show that leadership.” For his part former Prime Minister Bielecki joked that he would even like to thank President Putin for his moves in Ukraine, because he ultimately believed they would serve to spur greater unity in the European Union. “This situation offers another chance for Europe to try to answer the question of whether it can live up to its obligations,” he said. by Andrew Kureth

photos: Arkadiusz Chłopik

The panel was hosted by the Executive Club, an initiative started by former Polish President Aleksander Kwaśniewski, who also took part in the discussion. Other members of the panel included former United States National Security Advisor General James L. Jones, former Polish Prime Minister Jan Krzysztof Bielecki, and Polish business magnate Jan Kulczyk. The members of the discussion agreed that more political and economic unity within the European Union would help it to better face the challenges of the present and future.

Horst Koehler (left), former presi-

86 LIFTING OFF science & technology

Poland’s burgeoning space industry has received a boost from membership in the European Space Agency

In a way, the event looked like the

a journalist with Polsat News, and a proud geek. He’s the creator of ‘Horyzont Zdarzeń’, the first weekly science and technology news show on Polish TV and the author of a number of technology-related articles in weekly newspaper ‘Tygodnik Powszechny’ and monthly magazine ‘Logo’.

Star gazers “This was a real milestone for us,” said Jakub Ryzenko, who has been involved in several Polish space projects. With his thick-rimmed glasses and smart suits he would not be out of place at NASA. Instead, he’s likely the only person in Poland whose job description is ‘space policy analyst’. “Up to this point we had no experience with vehicle integration. We had made parts of spacecraft, but this was the first time we were responsible for the construction and operation of a complete satellite.” Polish engineers have been building instruments for various spacecraft for nearly three decades. Their resumés include missions to Saturn, Mars and dozens of other celestial bodies. But for reasons both political and financial, no complete satellite ever came out of Polish laboratories. Lem is a part of a joint Canadian-Polish-Austrian project called BRITE. Its goal is to launch a constellation of small, mailbox-sized spacecraft that could work together to watch the evolution of huge, extremely bright stars that are difficult targets for traditional telescopes. Poland is to supply two spacecraft for the orbital swarm. The Lem started its work last year. Its twin, Heweliusz, is waiting in storage for its own launch on a Chinese vehicle.

photo: Wikimedia Commons

Wojciech Brzeziński is

popping of a huge champagne cork. The cork in this particular case was over 30 metres tall and made of aviationgrade aluminium. It did, however spring up from its underground silo in a way that resembled the opening of a bottle of a fine Dom Pérignon. But instead of being followed by a stream of expensive, sparkling wine, it rose into the sky on a pillar of fire. For a team of engineers and scientists watching the event from an auditorium at the Polish Academy of Sciences’ astronomy centre in Warsaw, this was a far better way to celebrate their achievement than a mere bottle of champagne could ever be. For them, the launch of the Ukrainian-built Dnepr rocket on November 21, 2013 was the grand finale to years of hard work. The rocket’s cargo was their baby: they named it Lem, after the grand master of Polish science fiction. A fitting name for Poland’s first orbital telescope.

Both craft were built using Canadian parts. The Lem was largely a by-thenumbers assembly. This allowed the team of engineers at the Space Research Centre to hone their skills using tried and tested technology. The Heweliusz was modified and improved, using the experiences gathered during the first satellite’s construction. But as important as these spacecraft are, they were both beaten into space by a small team working out of a Warsaw basement.

Eyes on the sky The basement in question lies beneath one of the Warsaw University of Technology buildings. It’s small, dusty and cluttered with robots, rocket models and space memorabilia. It’s the headquarters of the university’s astronautics club. And it’s here that Poland’s first actual satellite was conceived. The PW-Sat was even smaller than the Lem and, if not for its mirrored covering, could be mistaken for a large Rubik's Cube. It was designed and built by a team of students. And, even though it was partly assembled in the very same Space Research Centre workshop that was the birthplace of both Lem and Heweliusz, it managed, thanks to perseverance and some luck, to reach space nearly a year earlier than the first of the scientific satellites. It wasn’t a complete success; a key component failed in orbit. But it was one of a number of projects that proved that young Polish engineers have their eyes firmly fixed on the sky. Later that same year three Polish robots faced off against American competition in a Utah desert. This was the University Rover Challenge, organized by the Mars Society. The goal was to design and build a machine that could, potentially, face the rigours of Mars exploration and provide assistance to human explorers. This was not the first time Polish teams took part in the competition, but this time they dominated the event entirely, with one rover receiving a near-perfect score. A third student team took part in a NASA-backed international competition for robotic lunar diggers. Things didn’t go well. Their robot never made it to Florida, having been misplaced by the airline baggage handlers. The Poles worked all night,

European Space Agency (ESA) 2014 budget (own activities): €3.34bn Polish contribution: €28.7m (0.9% of the total budget)

80-85% of the contribution returns to Poland as contracts for Polish companies and scientific institutes

‘Most companies believe that the European Space Agency will serve as the catalyst for the development of the whole high-tech sector’ using parts borrowed from their competitors, to recreate the machine. They couldn’t, but their efforts earned them a special prize for their fighting spirit.

Cosmic dreams All of those young engineers dream of space. And now, for the first time in Poland’s history, those dreams actually could come true – in no small part thanks to Poland’s involvement in the European space programme. The perfect example is PW-Sat’s project leader, Maciej Urbanowicz. After graduating, he joined a Dutch satellite company, SSBV, and now leads its Polish subsidiary. He plans to turn his native town of Suwałki into a real space business hotspot. “The whole Polish space industry is still in its infancy,” he said. “Most companies believe that the European Space Agency will serve as the catalyst for the development of the whole high-tech sector.” Poland joined the agency as a full member in 2012. The decision was initially met with confusion, even derision from some politicians and media outlets. It was not at all uncommon for media outlets to run the story together with a vox-pop or an online poll titled: ‘Which politicians should we launch into space first?’ But as the agency money started to flow into Polish companies, the stream of sarcasm dried up. “Medical, defence, robotics companies quickly noticed that they were not that far behind, that their technologies were nearly on par with those being used by the Western space industry players,” said Urbanowicz. “Sure, they still need to work hard, to invest, but the possible contracts are very lucrative, so the motivation is there.” The first ESA incentive scheme that promised to fund space-related projects by Polish companies attracted 76 entries. Over €6m in space contracts was awarded to companies working on problems and prototypes ranging from solar-panel-unfurling mechanisms to inventive ways of analysing satellite data. Many of the companies were small startups, founded by the alumni of BRITE, PW-Sat and similar projects. “The whole point of the competition was to encourage Polish companies to achieve the levels of technical expertise that are a requirement for working

science & technology

The Magnum White Rover

photos: Piotr Lampkowski (Forum), Katja Zanella-Kux

combines the technology of several Mars rover projects by Polish students. In 2013, the rover underwent heavy testing in 'Mars-like' conditions in the Moroccan desert (below).

‘The ESA encourages companies to come up with innovative projects that are in line with European space objectives, and pays for the research and prototyping phase’ within the European space industry,” said Paweł Wojtkiewicz, the head of the Polish Space Industry Association. His organization, formed in late 2012, already has several dozen members, from tiny workshops to large companies such as the robot-maker PIAP. “The ESA encourages companies to come up with innovative projects that are in line with European space objectives, and pays for the research and prototyping phase. The companies are then free to sell the technology on the open market.” But the change in the attitudes towards space isn’t noticeable just within the high-tech industry. It’s also apparent at the government level.

Looking for diamonds The Ministry of Defence signed a contract last month with an Italian agency that is to supply the Polish armed forces with satellite surveillance. There is talk of building an indigenous Polish observation satellite, for military and crisis use. And a bill establishing a Polish space agency is slowly making its way through the Parliament. “There is a clear shift in attitude,” said Ryzenko. “It’s becoming clear to everyone, especially in the light of the current crisis, that just as no state can function without special forces, no state can hope to be effective without its own space policy and resources.” And for the engineers striving to launch the Polish space industry off the ground, this change in attitude could mean that for the first time their ambitions and their projects will be treated seriously, and not as the daydreams of a science-fiction fan. “We need to look for diamonds, for projects that could become flagships of our entire hightech industry,” said Ryzenko. “The fact that we joined ESA helped immensely, not because of the money, but because the mindset of the people at the top has begun to change. It’s a shame this didn’t happen years ago, but still, there are plenty of reasons to be optimistic.”

by Wojciech Brzeziński

Space achievements ‘made in Poland’ 1978

The Soviet Soyuz 30 capsule carries into space the first – and only – Polish cosmonaut, Mirosław Hermaszewski. The spacecraft is also equipped with instruments designed by Polish scientists.

1988

Phobos 1 and Phobos 2, two Soviet interplanetary probes launch from Baikonur, Kazakhstan. Both carried instruments designed by the Aviation Institute in Warsaw.

2004

Mars Express, a European Mars observation satellite, reaches the Red Planet. It confirms the presence of water on Mars. The device that is responsible for the discovery, the Planetary Fourier Spectrometer, is largely built in Warsaw.

2005

The European Huygens lander becomes the first spacecraft to land on Titan, one of Saturn’s moons. The probe’s thermal-properties sensors and some of the craft’s electronic subsystems were designed in Warsaw.

2011

Fobos-Grunt, a Russian probe designed to land on a Martian moon launches from Baikonur. A Polish digging device, the CHOMIK, is on board. Unfortunately, a malfunction causes it to go silent and burn up in Earth’s atmosphere.

2012

Curiosity, the largest Mars rover ever, touches down on Mars and begins scanning the planet’s surface in infra-red with Polish sensors.

photo: Eugenia Dargiel (Karta / Forum)

They were friends, too Through the eyes of two boys, ‘Stars’ brings to life the Polish-Jewish friendships of WWII Poland

Books & Arts

Whole libraries

‘How better to understand the terror of bombing raids, the heartbreak of losing one’s family and the idiocy of Nazi beliefs than through the eyes of a child? ’ ABOUT THE AUTHOR Antony Lishak has written over 30 chil-

dren’s books. ‘Stars’ is his first novel intended for adults, and draws directly from his Jewish heritage. According to Lishak’s website, ‘Stars’ is inspired by “an act of selfless generosity by his grandfather that sadly only came to light after his death.” An elementary school teacher for 16 years, Lishak now conducts writing workshops which aim to “empower children to see themselves as authors.”

could be filled of a pig farm there are all too true. with the literature already written Lishak’s combination of fact and fiction on Poland’s experience in World War makes for poignant scenes: the boys live II. Most stories focus on the tragedies: on opposite sides of the Vistula (Marcus on the suffering of the Poles and espe- in Warsaw’s Old Town and Stefan cially Poland’s Jews. Many others focus at the zoo in the Praga district), but some on heroism: that of Poles who stood of their moments of greatest fear come up to their subjugators, of Poles who when they see the bombs dropping helped save Jews, or of Jews who found on the areas where the other lives. And while Stefan’s family has it hard ways to fight back or escape. Precious few, however, explore the friendships enough, the hell imposed on Warsaw’s between Poles and Jews, to the point Jewish community forces Marcus’ famwhere it seems the world has forgot- ily to make some impossible choices. ten that such relationships even existed. The suffering of the Tenenbaums and For that reason, ‘Stars’ by Antony other Jews inspires Jan and Simon Lishak is an important work. Much to come up with a daring plan to help of the literature about the time focuses people escape the ghetto by creating on one community or the other, or how a safe house at the zoo. separate they were (and they were sepAs one might expect, the boys are arated by manifold factors, including less careful than their parents, and culture, religion, neighbourhood and their hatred of their Nazi tormentors language). But Lishak’s book crucially leads them to take an act of revenge points out that regardless of those divi- that threatens to destroy both families. sions, Poles and Jews in Poland came The climax of the novel comes when together for business and leisure prior the group is forced to attempt an audato the war, and that friendships were cious rescue under the very nose of built, strengthened, and maintained Reichsführer Heinrich Himmler himself. despite the massive strain and hardship Eyes of a child brought on by its horrors. The book is significant for another Lishak’s deft storytelling comes with reason as well: it is based on true events great compassion for his characters at the Warsaw Zoo, whose director, Jan and a determination to put the terriZabiński, and his wife, Antonina, hid ble events of the time in a context that an estimated 300 Jews in their villa the modern reader can identify with. and the zoo’s abandoned rooms. While How better to understand the terror the Zabińskis have been recognised by of bombing raids, the heartbreak of losthe Yad Vashem society as ‘Righteous ing one’s family and the idiocy of Nazi Among the Nations’, many Poles don’t beliefs than through the eyes of a child? know their story. The subtitle of ‘Stars’ is: “A story of friendship, courage, and of small, Boys won’t be boys precious victories.” Indeed. Lishak The book tells the fictitious story makes clear that Poles of all ages and of two 12-year-old boys: Stefan Zabiński, backgrounds were winning victories a Pole, and Marcus Tenenbaum, a Jew, of their own in resistance to the Nazis’ living in Warsaw in 1939. The boys have brutal rule. Often, these triumphs been lifelong friends, due to the close- come as a direct result of Nazi folly: ness of their fathers, Jan and Simon. volley after volley of machine gun fire But Marcus and Stefan, who want noth- hurled at the Star of David on the wall ing more than to climb trees and play of the Zabińskis’ villa only serve to make at the zoo, see their families and their it bigger and more visible. Other times, lives torn apart by the war and the inva- they occur as a result of resourcefulsion of the Nazis. Each must become ness: Simon Tenenbaum’s insect cola young hero in his own way. lection makes an irresistible bribe for The tale of Stefan and Marcus may an entomologically inclined Nazi officer. never have occurred, but many events But in an environment where affinity portrayed in the book, including the between Jews and Poles is punishable bombing of Warsaw, the creation by death, the greatest victory is that of the ghetto, the rescue operation through it all, the families maintain their at the zoo and the establishment friendship. by Andrew Kureth

Anthony Lishak’s novel ‘Stars’ tells the tale of two 12-year-old boys, Stefan Zabiński and Marcus Tenenbaum, and their ordeals during the Nazi invasion of Warsaw during World War II.

Opposite page:

Warsaw, 1945. A hole in the wall of the Jewish ghetto on ul. Bonifraterska.

92 THE WRONG NOTES Poland’s philosophy on music education needs to change if it wants an innovative society

In the head office

Richard Berkeley

is president of Fundacja Nowa Orkiestra Kameralna. For the past 14 years he has championed music education in schools in Poland. He is aconsultant and trainer at the top executive level for leading companies in CEE. He took a B.Ed at University of London Goldsmiths College and post graduate performance studies at the Guildhall School of Music.

of an international corporation in Warsaw there is a room decorated like a primary school music room. The walls are covered with a giant felt piano keyboard and colourful musical symbols decorate the furniture and floors. It seems out of place in the stark surroundings. A crèche for corporate infants, perhaps? Surprisingly, the company’s culture recognises the value of music as a useful tool for business. Research and practice have shown that making music develops core skills essential to successful business and innovative thinking. These skills include the abilities to listen and share ideas, to revisit material and improve it, and, above all, the willingness to work for a shared objective. This recognition is at odds with the general view. Contrary to perception, Poland is ill served by its musical community. Perhaps only 7% of Polish children have regular contact with music-making of any meaning, most of which takes place in statesponsored music schools whose aim is to put children over the hurdle of exams rather than instil in them a love of music-making or of music itself. When small, we instinctively respond to storytelling, movement to music and singing. Singing is fundamental for the development of language: the mechanics of making words, articulation and intonation are honed through singing. Through the repetition of a phrase of a song, something all small children do for themselves, comes meaning. Through meaning, imagination. Yet, an informal survey at one large company in Poland showed that as many as 70% of mothers there did not sing to their babies. One wonders about the others.

Official dissonance Whilst the invention of the radio universally killed our millennia-old practice

Music history Though Poland’s music education may be

lacking, Polish music history is rich. Through the centuries Polish music was afforded greater freedom to develop than the other arts. Polish music originated from the folk rhythms and melodies adapted for performances in the homes of gentry. The composer who took Polish music to the international salons, and has become the most famous Polish musician of all time, was Fryderyk Chopin. Considered by many the embodiment of Polishness, Chopin spent most of his adult life abroad. Other famous composers of the same era include Ignacy Paderewski and Stanisław Moniuszko. Today, fortunately, there are still some master Polish musicians practicing their craft. Rafał Blechacz, for example, won such a decisive victory at the 2005 International Fryderyk Chopin Piano Competition that the judges decided not to award a second place. Earlier this year he won the prestigious Gilmore Artist Award. Polish jazz composer and pianist Włodek Pawlik won a Grammy this year for Best Large Jazz Ensemble for his album ‘Night in Calisia’.

of storytelling through song almost overnight, in Poland recent governments seem to have done their utmost to compound the problem, expelling music education from public schools and elevating it to an exclusive activity for mostly upwardly mobile parents who misguidedly think that the ability to play a musical instrument infers some sort of social superiority. Of course, in a sense, it does. Hardly a generation ago, a middle class girl’s education would not be regarded as complete unless she could play the piano; boys had their camp fires and sports songs. Many of the philharmonic orchestras in Poland have concerts for children: someone introduces the music, the band plays and the children clap. The National Opera in Warsaw has just begun Sunday workshops for children. And none too soon. Over the last 20 years it would have been unthink-

able for a British or American institution to apply for state funding if it had no outreach programmes, and not just concert-giving in the comfort of their concert halls and theatres, but concerts and workshops in prisons, hospitals, old people’s homes, schools and, yes, even businesses, places where music does not usually go. However, in a recent interview with Polish daily newspaper Gazeta Wyborcza, Jacek Kasprzyk, the newly appointed chief conductor of the state-financed National Philharmonic, suggested that Muhammad has little intention of going to the mountain. The mountain must come to him and be glad of it. Excellence will attract by itself, without answering how the uninformed and uninitiated will recognise excellence.

Discordant message EU funding has enabled the building of a number of new music venues in Poland. Warsaw has almost totally missed out. Whilst there is a new small hall in the offing in Grochów, it is not a capital project for a capital city of a modern European democracy in desperate need of a living hall. The reconstructed National Philharmonic was originally designed for an elitist late 19th-century audience. It is not a structure for our times but, rather, a grim temple-fortress at the heart of the city. Its heavy wooden doors are closed most of the day, and even when open, guarded iron gates keep the public at bay until the appointed time of the meeting with the purveyors of art. The whole performance intimidates and distances in order to preserve some tawdry and costly status quo. Most concert hall buildings place the audience beneath the performer.

illustration: AntsMarching

music

‘Without inclusive arts education with music at the fore, Poland can never reach its potential’

The musicians are on a raised stage. In the case of the Warsaw Philharmonic, the division is ravine-like, with the audience at the bottom craning upwards to glimpse the gods. This gives the wrong message. The audience should not be subjects but, despite the architecture, a contributing partner, an equal. As with all activities, the more the spectator knows about the game the more he appreciates the act. Yet, where can this knowledge come from if not in school? Where can the democratisation of the arts develop if the venues and the attitude of their managements remain elitist? In many areas Poland has done well to catch up with more developed industrial countries, copying their models. However, what is required in education is innovation, new thinking, leapfrogging. Politicians seem to think that by giving the order to innovate with a dollop of EU funds and a snap of the finger the rabbit will come out of the hat. High hopes. Despite exam achievement in rote learnt subjects, Poland is woefully lacking in innovative teaching in schools. Without inclusive arts education with music at the fore, Poland can never reach its potential. A thorough arts education programme for state schools is desperately needed, one which draws on the experience and personnel of the most innovative nations, and there are a lot to draw on (Poland lies 53 in the list of innovative nations). Given the sluggishness and muddle in the ministries and the lack of leadership in the great state funded music institutions, unless the task of reform is outsourced, the outlook appears grim. Perhaps now is the time for the state to look to the corporate world for insight?

by Richard Berkeley

Music

‘Making music develops core skills essential to successful business and innovative thinking’

94 food

Give us this day ... Bread plays a crucial role in Polish culture – and baking traditional Polish bread at home can provide a real treat

It was round and large

Michał Kuźmiński

is head of weekly Tygodnik Powszechny’s online edition and its science section. With Małgorzata FugielKuźmińska he has written two crime novels: ‘Sekret Kroke’ (‘The Secret of Kroke’, 2009) and ‘Klątwa Konstantyna’ (‘The Curse of Constantine’, 2011). A food enthusiast, he blogs about food as ‘Facet z Nożem’ (Guy with a Knife) at www.facetznozem. blogspot.com.

Baking traditional

Polish bread at home is spreading as a part of the young urban lifestyle, says journalist and food blogger Michał Kuźmiński.

– even huge from a child’s perspective. It had a chocolate-brown, glossy crust, hard enough to need a parent to cut a slice. The slightly burnt bottom was chewy and savoury, and there was this mouth-watering sourness in its taste, beautifully mixing with creamy butter and a pinch of salt or sliced radishes. Or both. The rye bread of my childhood transformed the everyday act of bringing groceries home into a ceremony. A heel was every kid’s favourite part – and since the bread was round, you could have as many heels as you wanted. Perfect. In Poland of the late 1980’s, under communism in a stage of deep decay, bread was a highlight. But no, most people wouldn’t bake their bread at home. Nor would my grandma, living in the country, bake loaves on a regular basis. I once asked her why not. “Child,” she said, “I’ve spent my whole life sweating from my brow from housework, let me relax for a moment and buy bread now.”

Precious bread For Poles, bread is serious business. It bears huge significance for us – and not only liturgical. It signifies hard work and effort. Instead of “making a living” Poles say “earning bread.” Contemporary ‘Traditional Polish Folk Cuisine’ restaurants often advertise with an image of a plump peasant holding a large loaf of bread. Once you look back into 19th-century ethnographic records, you discover this marketing is misguided. In inconceivably poor Polish villages over a hundred years ago, they baked bread for sale and ate barley, or oat flatbread instead. Bread was too precious. It was, however, consumed for special occasions: weddings, baptisms or funerals. Oddly enough, hiring a carpenter was an occasion to bake a loaf, too. Moreover, bread and salt were set out when welcoming guests – which may explain those fauxtraditional restaurants. For Poles bread means community, charity and security. And home. Bread is good. The real question is: ‘Which bread?’ Consider bread’s history. It was invented 6,000 years ago. Over six millennia humanity has developed many types, shapes, techniques and uses.

Recipe: Whole wheat bread The best part about this is that it’s not too

hard. Maybe it’s not a piece of cake, but this is certainly not molecular cuisine. You will need a bread starter. You need not necessarily grow it yourself. Ask friends. Google it – there are websites dedicated to starter exchange. Or perhaps you are lucky and there is a nice bakery at the corner? You also need a clay pot or cast-iron pot. It will work as a mini steam oven and will ensure your bread a well-baked inside and a mesmerising crust. This is a recipe I received from my friends along with a batch of starter. It differs a bit from usual bread recipes – it is simplified, and works every time.

Ingredients:

2 tbsp starter 500 ml lukewarm water ca 450-500 g whole-wheat flour ca 300-400 g bread flour (or all-purpose flour) 2 tbsp honey 1 tbsp (flat) sea salt 1-2 tsp caraway seeds

A night before baking day, mix the whole-

‘For Poles bread means community, charity and security’ For 6,000 years certain yeasts and bacteria co-evolved with humans to make the perfect sourdough. However, in the most recent half century much of humanity has given it all up for an industrial, tasteless, worthless, artificial sponge from the supermarket. Happily, it seems that Poland has a chance to avoid that fate. Being so devoted to what bread should really be, Poles can actually skip the worst parts and rediscover their bread without having totally forgotten it first. Bread-baking at home is spreading as a part of the young urban lifestyle; foodies and bloggers flood the web with ‘bread selfies’. What once symbolized effort and sacrifice for our grandparents’ generation now signifies well-being, health and quality for young Poles. One thing hasn’t changed though – it still represents Polish identity. by Michał Kuźmiński

wheat flour with water, starter and honey. Stir until it resembles a thick porridge. Cover and leave overnight in a warm place.

Next morning, put a golfball-size amount

away for the next baking. Add salt and start mixing in bread flour with a mixer or a wooden spoon. You may need some more or some less, depending on your flour. Aim for sticky but elastic, neither hard, nor soaking dough. When it is no longer possible to mix, sprinkle flour over some working surface, put your dough on it and knead for 10 minutes. When it tends to stick to itself rather than to everything else, put it back to a bowl, cover and set aside.

Four to six hours later, when the dough

doubles in size, put it back on a working surface sprinkled with flour. Stretch it a bit, fold like an envelope and roll to form a loaf. Sprinkle flour generously on a cloth (linen works best), put your loaf gently on it and place in something which will keep your loaf formed – a basket or a bowl will work. Set aside for one-and-a-half to two hours.

Heat up an oven to 250 degrees Celsius with a clay or cast-iron pot inside (if you are using a clay pot, soak it before preheating).

Carefully put the loaf into the heated pot, sprinkle caraway over it, cover and bake for half an hour. Then lower the temperature to 200 degrees Celsius, uncover and give it 20-30 more minutes. The bread is ready when the bottom sounds hollow when knocked.

photos: ClearDesign, Vinicef

96 HISTORY

It happened in ... May Warsaw, Poland, May 31, 1972. US President Richard M. Nixon visits Poland

US President Barack Obama

is due to come to Warsaw in June to participate in the celebrations of the 25th anniversary of Poland’s transformation to democracy and a market economy. He will be coming as the seventh American head of state to have ever visited the country while in office. The visit will mark the 12th of a sitting American president in Poland, with the first having been paid by Richard Milhous Nixon in May 1972. The Polish People’s Republic and the United States had entered into diplomatic relations as early as in July 1945, but until the onset of the 1970s those relations had, for the most part, been rather chilly. Nixon’s initiation of détente policy with the Soviet Union in the late 1960s, which included the signing of new arms-limitation treaties, opened up fresh possibilities for the development of political and economic cooperation between Poland and the United States. After the Vietnam War experience, Nixon was interested in easing the geopolitical tensions between the US and the Soviet Union and China. For their part, the communists ruling Poland hoped to use the visit for propaganda purposes and could give the country access to American technologies and loans. Ultimately, although declared “constructive,” the Nixon visit to Poland proved to bring few tangible results – the most significant agreement was one which provided greater embassy protection for American citizens arrested in Poland and Polish citizens arrested in the United States. In the following decade, the policy of détente again gave way to Cold War rhetoric, with President Ronald Reagan not visiting Poland at all during his two terms in office. However, the Nixon visit to Poland was important on a symbolic level

in that it revealed the truly democratic aspirations of the Polish people. In fact, the visit offered, perhaps for the first time, the opportunity for Americans to witness the distinction between the sentiments of the government of the Polish People’s Republic as compared to the sentiments felt by everyday Polish citizens. The warm reception by the 300,000 Poles who went out to cheer the arrival of the American president demonstrated clearly that many in Poland did not share the same animosity towards the West as their communist leadership. Immediately following the trip, the Associated Press reported on the “warm welcome accorded to Nixon by the citizens of Warsaw” which “provided a sharp contrast to the subdued crowds that watched his arrival in Moscow” only a few days earlier. Significantly, the distinction had been present even earlier, with Nixon having been met with similar enthusiasm in 1959 when he was visiting Poland as vice president. In the 1980s, once the Polish people saw the opportunity to fight the forces ruling over their country in the form of Solidarity, Americans recognised that the formation of the opposition movement was not based on a recent change in national sentiment, but rather on an ongoing struggle. Likewise, when Poland finally became democratic and voiced ambitions to join NATO, Americans remembered that the Polish shift in orientation towards the West was the result of something to which many Poles had aspired even before the change in government. Today, Nixon’s 1972 visit to Warsaw is a reminder that it was not only Poland’s transformation that made the country into what it is today. Poland had always been a land of people yearning to be free. by Piotr Narel

US President Richard M. Nixon

(seated right) with First Secretary of the Polish United Workers’ Party Edward Gierek (seated left) during the former’s visit to Warsaw in 1972. The front page of the main Polish national newspaper at the time, ‘Trybuna Ludu’ (‘The People’s Tribune’), covers the leaders’ meeting.

and Adam Zdrodowski

‘It was Nixon's warm reception by the Polish people that made headlines’

photo: Jan Morek (Forum)

98 SPORT

The whole nine yards Participation in American football has exploded in Poland, but it still needs to gain the interest of regular Poles if it wants to sustain itself

At one match,

Andrew Kureth

an entire section of belligerent, flag-waving, thuggish louts wave so many lit flares that they become difficult to see through the smoke. Police, clad in riot gear, see one flare-wiedling spectator climb atop a security barrier. They move into formation and one of them steps closer, spraying the ‘fan’ directly with tear gas. The flammable liquid causes a ball of fire to ignite around the oaf, if only for a split-second. The man, relatively unharmed, climbs down immediately, though many more flares remain blazing. Escalation of an already dangerous situation has been prevented – for now. At another, children run about on the field at halftime, giggling as they take photos with the home team’s mascot. Others are jumping on inflatable castles near the stands. There is a kiosk for face-painting, and another where children can create their own lollipops for free. Parents change their babies’ nappies in a dedicated changing room. The only security consists of a few men hired from a private firm. In the stands, the fans of the opposing teams mix and converse. People queue up for team-logoed shirts and hats, or for hot dogs and hamburgers. It’s a fun, picnic-like atmosphere. To which of these two football matches in Poland would you rather take your family on a spring weekend?

The stories are true, and even occurred on the same day: April 27, 2014. But they weren’t the same type of football. The first match was played between Śląsk Wrocław and Zagłębie Lubin in Poland’s Ekstraklasa league. The second saw the Warsaw Eagles and Gdynia Seahawks battle it out in the Topliga division of the Polish American Football League (PLFA). Depending on where you’re from and what type of football you prefer, with that knowledge you might change your answer to the first question – or would you? Security has been an issue for years at Polish football matches, while the only violence at American football matches in Poland occurs on the field. American football in Poland has a strong following and a number of very talented players. Many of the players are paid. Some are imported from the United States, where they played at the highest levels. Until recently the league’s biggest star had been Aki Jones, who played in four games for the NFL’s Washington Redskins.

Running up the score The PLFA is in its ninth year. In less than a decade it has grown from six teams to a total of 70 across five different divisions. While in that first year there were probably several dozen players, this year there are over 3,200, according to league president Jędrzej Stęszewski. He credits the game’s explosion of popularity with the merits of the game, the fact that not everyone has the proper body type or talent to play traditional football, and the fact that American football has become trendy. After all, what young Polish American football player in high school wouldn’t enjoy posting photos of himself on social media looking tough dressed in his uniform and padding?

‘We are no longer a curiosity. That’s a huge change from previous years’

VICTORY FORMATION Champions of the highest division

of the Polish American Football League: 2013: Giants Wrocław 2012: Seahawks Gdynia 2011: The Crew Wrocław 2010: Devils Wrocław 2009: AZS Silesia Rebels 2008: Warsaw Eagles 2007: The Crew Wrocław 2006: Warsaw Eagles

The league has managed some major PR successes as well. For the past two years, it has held the championship of its top division – the Topliga – at Poland’s National Stadium in Warsaw: an achievement that raised its share of eyebrows. At the first of these, in 2012, 23,000 people showed up. In 2013 there was an expected slump, but the game still attracted nearly 17,000 spectators. “We are gradually building our fan base,” said Stęszewski, adding that it is aiming to attract about 2,000 fans to regular-season Topliga games within the next few years. American football is isn’t an exotic novelty for Poles any more. “We are no longer a curiosity. That’s a huge change from previous years,” said Stęszewski. “We are pretty ambitious, so there is still a very long way to go.” But becoming an established sport has brought with it new, more difficult challenges. The first of these is money. The best teams in the Topliga have a budget of around 500,000 złoty. Owners or sponsors pay for decent practice facilities, game-day field rental, travel and accommodation for players at away games, as well as various league and organisational fees. Some have a dedicated manager on the payroll, and of course, they pay salaries and travel expenses for their imports.

Problems to tackle But not all of the teams, even in the Topliga, can afford those costs. While the Warsaw Eagles have five paid imports on their team, the Warsaw Sharks (a newly christened team which resulted from the fusion of the Warsaw Spartans and Królewscy Warszawa) has just one. “It’s awfully hard to find sponsors, especially since the sport is still quite young,” said Maciej Pobudkiewicz, vice president of the Warsaw Sharks. “There is very little TV or media cov-

back Shane Gimzo at last year’s Topliga championship game, the SuperFinal. Wrocław won the game in front of some 17,000 fans at the National Stadium in Warsaw. It was the second time in two years that the Eagles had come up short in the SuperFinal, after losing to Gdynia the year prior.

erage, so sponsors aren’t lining up to give us cash. But we have some and we are grateful to them.” Even the richest teams have found themselves cutting back. “We are looking to cut costs, reorganize, to think differently about things we’ve been organising,” said Roman Iwański, president of the Warsaw Eagles. “Our owner has invested heavily in the team. We are doing everything to cover our costs from proceeds.” “As far as the big sponsors, it’s just pure luck,” said Maciej Cetnerowski, head coach of the Gdynia Seahawks. The Tri-City-based team has painstakingly gathered a stable of 20 sponsors over the years, rather than go for the big money from one or two. The strategy has served the team well, said Cetnerowski: if one sponsor drops out, it is easier to find another to take its place. But the difficulty of finding sponsorship is a symptom of some other problems. While the sport has been able to attract players and a loyal fan base – mostly American expats and team members’ friends and parents – it still hasn’t captured the imagination of the wider Polish audience. Other sports, such as tennis or ski-jumping, where the country has bona fide global superstars, have. Poland’s American football ‘superstar’ is Sebastian Janikowski, an excellent placekicker for the Oakland Raiders who holds several league

SPORT

photos: Krystian Maj (Forum)

A Wrocław defender attempts to chase down Warsaw Eagles quarter-

100 SPORT

‘We went a little too far with wanting teams to be professional’

The Gdynia Seahawks (yellow and black), beat the Warsaw Eagles in the 2012 SuperFinal, the first to be held at the National Stadium in Warsaw. Some 23,000 fans attended.

records. But he’s hardly a household name in Poland, at least partly because he doesn’t play one of the ‘star’ positions in American football such as wide receiver or quarterback. Moreover, the sport is still seen by Poles as complex and difficult to understand. And while the league publishes manuals and videos about the rules of American football, Poles, used to the simplicity of traditional football rules, tend to get bored with the game without digging into the material.

Raising their game Another issue is the level of play. while many of the Topliga players are talented, precious few – mostly the imports and a handful of the Polish players – are highly skilled. Since the sport isn’t even a decade old in Poland, this is understandable. None of the Polish players have been honing their skills for longer than

10 years, and those usually didn’t start until they were in their 20s. (In the US, many players have already been playing for a decade by the time they hit their 18th birthday.) As a result, the level of play, even in the Topliga, is usually no better than a small-college matchup in the States, making for a stilted pace and play which is often dominated by the American players. “We went a little too far with wanting teams to be professional, costing them a lot of time and money,” said Cetnerowski. He suggests the league should focus less on imports and more on improving the quality of Polish players. But others feel that would take the excitement out of the game that has attracted the few sponsors it has. The Eagles’ Iwański said that better coordination and cooperation between the teams would go a long way to overcoming the challenges the league faces. “We believe that the league must form into a company itself, where the teams would have a stake in the company,” he said. “Everybody is kind of developing the sport in their city the best they can. But because the teams do not see a common financial interest, it is not coordinated.” Despite the challenges and the differing views on how to solve them, there is still plenty to be optimistic about. The league will hold its championship this

year in the Municipal Stadium in Gdynia, bringing the spectacle to a new audience. The sport will be on show for the world to see at the World Games to be held in Wrocław in 2017. A national team has been started – it has played the Netherlands and Sweden so far, and the hope is for more games to be scheduled soon. The league is exploring cooperation with a major US university, and HBO is filming a documentary on one of the Topliga teams. A women’s team, the Warsaw Sirens, has even started up, which hearkens back to the single positive element that all of the team’s representatives kept pointing out: interest in playing the sport continues to grow at an astonishing pace. They added that while attendance may not be at the same level as traditional football games in Poland, it is increasing steadily and outstrips attendance at some more established European leagues. With patience, and a continued focus on a family friendly atmosphere, that is bound to continue. Just imagine: a stadium full of Polish fans, cheering on their favourite American football players. No tear gas required. by Andrew Kureth

TOP DIVISION Teams in the PLFA Topliga this year Będzin Steelers Gdynia Seahawks Poznań Kozły (Goats) Warsaw Eagles Warsaw Sharks Wrocław Panthers

Playing with the Wrocław Giants,

Deante Battle won a PLFA championship last year. This year he plays for the Wrocław Panthers, a team that resulted from the merger of the Giants with their crosstown rivals, the Devils.

Goal to go Deante Battle is an American player-coach

for the Wrocław Panthers, who after being paid to come play in Poland decided to make the country his home. Poland Today sat down with him to find out why.

You have decided to live in Poland for the foreseeable future. How did that happen? After last season – my second here – I decided I liked it so I started talking with the team to see if there was some way I could stay. The business I have I can do it from anywhere, so I plan on staying here a few years at least.

What is your business?

Here in Poland I sell sports equipment and in the States I sell sports apparel: letter jackets, T-shirts, sweatpants that kind of stuff.

Where are you from originally?

I’m originally from Atlanta. I moved to Chicago when I was 18 to go to college. I stayed there until I decided to come to Europe.

Where else have you played?

In college I played for Northwestern. In 2009 I played in Finland for the Kouvola Indians. In 2010 I played in Germany for the Marburg Mercenaries. Then a friend of mine who was already here said Wrocław is a great city, so I came to check it out and loved it. After my first year in Poland I went and played in Brazil, then to India to help set up a league there. From January to August 2012 I was in India. Funnily enough, I had a two-month break and for vacation I came back to Poland.

How do you like living in Wrocław?

I love the city. A lot of foreigners say they don’t necessarily like it here. But my teammates have made me feel like family. The team has made it easy. They help me out.

What are your goals here in Poland?

I want to help get these guys to a higher level of play, and help develop the league.

They are better in the sense that they have been around for more than 20 years. As far as the level of talent? It’s the same as it was in Germany. But the knowledge of the game there is better. Guys there have been playing since they were 12 or 13 years old. But in Poland it is catching up very fast. We (the Wrocław Panthers) played a Division 3 German team and it was no problem for us.

How quickly do you feel the league is developing?

From 2011 to now it’s like light years. As for the number of fans it’s better than I’ve seen elsewhere in Europe. As the league goes on, every team will get better and put more time into it and it will get to a point where the players will be able to coach. That’s the biggest goal. We are really trying to develop our Polish coaches too. I would love to see football continue grow and develop here to the point where they don’t need help from guys like me.

photos: Marcin Fijałkowski, Grażyna Myślińska (Forum)

How do the German and Finnish leagues compare to the Polish league?

102 IMPRESSIONS

A smile from Nepal Poland Today sits down with foreigners living in Poland who have a unique perspective

How closely did your preconceptions of Poland match your first impressions? Not at all. I expected that nearly everyone would be able to speak English. I didn’t think that communication would ever be a problem. When you’re in Nepal, you think of the West as being very multicultural, so I was surprised at the relative lack of different cultures.

Looking back, have those first impressions proved right or wrong? They have proved right, especially the language barrier.

What else about Poland was unexpected?

photo: Karolina Żurawska

It has been surprising to see how conservative Poles are. In Nepal, you expect people in Europe to be more liberal. The nationalism was another thing that surprised me, as did the staring – which makes me a little uncomfortable. I’m getting more used to it and I try to look back and smile so the people know that I’ve noticed, but they still continue staring and usually don’t return the smile.

Was anything surprisingly familiar?

‘I like that women are more ambitious in Poland. Indeed, the women in this country often seem more powerful than the men’ Soniya Sharma, a native of Nepal, first ar-

rived in Poland two years ago on an Erasmus Mundus scholarship to study international relations at Warsaw University. She also ser ved as an intern at the European Academy of Diplomacy. Since arriving, she has travelled throughout Poland and much of Europe. She is currently finishing up her studies, looking for potential work in Poland and doing her best to learn Polish.

I noticed that there are a lot of young adults in Poland who still live with their parents. That was a surprise. In Nepal, we tend to think that after they turn 18, Westerners leave their homes and go off to do their own things. In general, families in Poland are close, similar to the way it is in Nepal.

What was the thing that was hardest to adjust to when you first came to Poland? The cold. It’s much colder here than back home.

What was the strangest or most memorable experience from your time in Poland? In Nepal, when you make eye contact with a stranger, you tend to smile, so I remember the first time that someone in Poland smiled at me. It was an older lady who tried to strike up a conversation with me in Polish. The only thing I understood was that she kept telling me that I was exotic and beautiful. It was during my first few weeks in Poland so it made me very happy.

What Polish thing do you wish they had in Nepal, and vice-versa? I like that women are more ambitious in Poland. Indeed, the women in this country often seem more powerful than the men. In Nepal, women tend to concentrate more on the man that they are going to marry than on their career. In Poland, I just wish people smiled more and tried a bit harder to help out foreigners by speaking English.

What are the most striking similarities between Poles and people from Nepal, and what are the most striking differences? Like I said, Poland is very family-oriented. People are close to their families and stay with them into adulthood, like in Nepal. Also, I think that both cultures need to be more open-minded to other cultures. When it comes to differences though, the power structure within the family, as I said, is much different. Women seem to be more in control. Also, Poles take action when they don’t like something in society. I feel like in Nepal people are too passive. They wait for social progress, but are less willing to do anything to make it happen.

What advice would you give someone from Nepal coming to live in Poland? Don’t over-indulge. We have a rather closed society in Nepal, so when you come here, you simply experience more than you would at home and so you assume that it’s all very free.

What advice would you give a Pole going to live in Nepal? Smile a lot and if you don’t understand things, just be respectful and people will help you.

In what way has Poland changed you for the better or for the worse? It has definitely changed me for the better. I’ve been able to see a lot of places and I have been able to experience a new, exciting environment. I feel more ambitious and free.

What keeps you here now? My studies, which I expect to finish in July. I would like to stay in Poland so I have taken up the challenge to try to learn the language. I will feel quite proud if I ever master it.

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