POLAND TODAY magazine #08

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photo: Bogdan Krezel (Forum)

Historian Norman Davies explains how the tenacity of culture has helped Poland to survive. page 18

A veteran of the Warsaw Uprising shares his memories of the battle 70 years after its outbreak. page 102

Business leaders say it was Poland's people that powered its successful transformation. page 36

The man at the top

(08) sept/Nov 2014

How ruthlessness, a steady hand and luck have helped make Donald Tusk one of the most powerful men in Europe page 22 Magazine • Portal • Conferences • find out more at www.poland-today.pl

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photo: Viktor Cap

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6

table of contents

editorial

08

IN FOCUS

10-16

interview

18

The tenacity of culture

Acclaimed historian Professor Norman Davies, many of whose books have focused on Polish and Central European history, sits down for an exclusive interview with Poland Today editor Andrew Kureth

profile

22

The new president of Europe

Ruthlessness, a steady hand and luck have all played their part in Donald Tusk’s successful political career

39

business

How is Poland perceived abroad, and how have perceptions changed?

Business review

Through the lens of history

40

Master of its own destiny Poland is well-positioned to become a more active regional leader

42

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

54

BPO: the regional revolution

Poland’s second-tier cities are increasingly becoming the location of choice for many BPO/ SSC investors

Telling 56 Poland’s story A beachhead for the future to the world Poland Today gives 50 journalists from five continents a first-hand look at the country’s transformation

46

Delivering change

Poland’s transformation has been largely positive, but the country still has a lot of work to do if it is to become truly business friendly, says Integer CEO Rafał Brzoska

48

Business, transformed

Poland Today takes a look at how various sectors of the Polish economy have changed over the past 25 years in the run-up to its Poland Transformed Business Awards Gala

Poland Today sits down with Rafał Andrzejewski, an investment director and a member of the management of CEE Equity Partners, a Chinese-backed private equity fund based in Warsaw

58

A fashion for technology

A Warsaw-based startup is using high-tech ­solutions to bring businesswomen better choices for professional attire

62

Chambers of commerce

A loyal Tusk ally is Poland’s new prime minister

In our new-format ‘Chambers of commerce’ feature, we ask our bilateral chamber partners to give us their opinion on a particular issue.

In this edition, we asked them to explain how their member companies could help Poland achieve its much sought-after energy independence

27

CITY FOCUS: BYDGOSZCZ

POLAND’S POWER WOMEN

25

Ewa Kopacz: The loyalist

Table of contents

52

64-68

Elżbieta Bieńkowska: The technocrat

She has moved quickly up the political ladder

The northern Polish city of Bydgoszcz is ­making a name for itself as a rising star when it comes to attractiveness for BPO investment.

Not only that, but it offers a rich, diverse array of cultural events – from top-class operas to a world-renowned film festival.

Read features on all of this and more, plus an interview with Mayor Rafał Bruski, in our special focus on this dynamic city

POLAND TRANSFORMED

28

No pain, no gain

Poland made the tough decisions – but the right ones – and that’s why its transformation has been successful

32

More trust, less red tape

As it looks to the future, Poland will have to overcome cultural and administrative barriers to progress

36

People power

The Polish people are the strength driving the country’s economic success

Interview: Norman Davies page 18

Eyewitness: The Warsaw Uprising page 102

68

Poland Today presents a special edition of Urban Issues for the Expo Real international property trade fair in Munich, October 6-8, 2014

71

The slow tsunami

Slowly but surely, Asian capital is increasingly becoming active in Poland

73

Regions on investors’ map

Record investment volumes this year will be driven by investors heading to Poland’s regional cities

74

Emerging opportunities

Poland Today sits down with Stanislav Frnka, Country CEO at developer HB Reavis Poland, to talk about the condition of the office market in Warsaw and the plans of the company in the sector

77

High hopes

Can a new owner reverse the fortunes of ­Warsaw’s most prominent real estate failure?

78

The subway surge

The development of the second line of the Metro is giving a boost to formerly neglected districts of Warsaw

81

Spanish ‘distress’ means developers gain

Rising demand for building land is driving acquisition of distressed Spanish-owned assets in Poland

102

Uprising veteran Edmund Baranowski offers his memories of the battle that would change Warsaw forever

106

It happened in ... October October 9, 1980. Czesław Miłosz wins the Nobel Prize for Literature

SCIENCE & TECHNOLOGY

108

Megaprojects, mega impact

BOOKS & ARTS

112

Warsaw 1944, remembered

In ‘Rising ’44’, Davies overturns the traditional Western narrative of the Warsaw Uprising

FOOD

114

The roots of Poland’s potato traditions

Potatoes aren’t just healthy and delicious, they also show off Poland’s latent culinary diversity

Poland Today sits down with Leszek Sikora, managing director at developer ECE Projektmanagement Polska, to talk about the condition of the retail property market in Poland

Summer sport round-up

Real estate review

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

EVENT REVIEW

87-100

From investment opportunities in Radom and Bydgoszcz, to the analysis of the hotel and home appliance sectors, to a two-day conference on investing in Central European real estate – Poland Today’s events over the summer provided critical market intelligence

Richard Stephens

Publisher Poland Today

Poland is punching above its weight in Europe’s big high-tech projects, and Polish scientists are reaping the benefits

SPORT

85

table of contents

Eyewitness: The Warsaw Uprising

82

A never-ending market

7

HISTORY

117

A Polish bicycle star rises, a haul of medals at the European Athletics Championships and a fiasco for Legia Warszawa

IMPRESSIONS

118

A wish for unity

Mykola Yanchukov says there is a greater sense of community and togetherness in Poland than in his home country of Ukraine

Business has made

an undeniable contribution to Poland's economic transformation, but which companies played a leading role? And which companies will drive and sustain further transformation?

These questions are not sector specific, nor even Poland specific. Polish and foreign companies alike have played their part and changes in one sector have had dramatic implications for others, demonstrating the interdependence of business.

In December this year, leading experts and professionals from across sectors will nominate and select winning companies based on a single criterion: their contribution to Poland's economic transformation. These objective and transparent awards are a fitting conclusion to Poland's 25th anniversary celebrations and the culmination of Poland Today's 'Poland Transformed' conference and press tour in May this year, which brought 50 journalists from every corner of the globe to Poland to share its success story.

Poland Today's objective has been to bring Poland to the world and the world to Poland. Therefore, through its print and digital media and via the event itself, we will provide a national and international platform for nominated and winning companies to share their contribution to Poland's economic success. For more information please check out our new website, www.poland-today.pl

Publisher’s Note

URBAN ISSUES

8

editorial

‘Norman Davies argues that common experiences, a national memory and shared traditions are stronger than military might.

We couldn’t agree more’

If there’s one thing you can say about Poland, it’s that

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.

the country is a survivor. Torn apart by three more powerful neighbours, it ceased to exist as a state for 123 years. Still, it came back. Battered by the wars of the 20th century, it endured. Constrained by the yoke of communism, it broke from those chains to once again forge ahead down its own path, free.

Norman Davies, the acclaimed historian who has dedicated his career to making sure Poland’s story is told, calls this phenomenon “the tenacity of culture.” Common experiences, a national memory, shared traditions – these things are stronger than military might, he argues. We couldn’t agree more. He expands on those views and more in our exclusive interview with him (see page 18).

Edmund Baranowski, a veteran of the Warsaw Uprising, is a survivor himself. During that fateful battle he and his comrades only had enough rifles for every fourth soldier.

Still, they held out against the full force of the German army, which brought its most terrible weapons and sadistic officers to bear in its effort to crush the insurgency. Though they were ultimately defeated, Baranowski and his fellow soldiers held off the worst the Nazis could throw at them for a full 63 days with hardly any outside support. He shares his memories of those days with us (see page 102).

And now, exactly 70 years later, a Pole has been elected president of Europe. While the position under Herman van Rompuy was at times dismissed as of little import, there is good reason to believe that former Prime Minister Donald Tusk could wield the position’s power with greater effectiveness (see page 22).

Regardless, with a Pole having reached the highest global stature since Karol Wojtyła became Pope John Paul II, Poland’s interests are sure to be strongly represented in Europe. How did Poland get here, just 25 years after the fall of communism? Poland Today invited business, economic and political leaders to its Poland Transformed conference at the end of May to answer that question. They offered some interesting responses: sacrifice was necessary, but the pain of reform allowed for the Polish people to gain economic opportunity quickly. They were able to make the most of it, and Poland’s human resources are now its most valuable asset (see pages 28-51).

In the end, that’s hardly a surprise. Throughout more than 1,000 years of history, Poles have proven time and again that they are history’s comeback kids.

And that is why Poland is a survivor.

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10 IN FOCUS

compiled by Gabriel Rom and Yoni Wilkenfeld

AFRICA

EUROPE

ENCA Alleged Polish crime boss could be freed

EUObserver EU leaders pick Tusk, Mogherini for top posts

Janusz Graf, a notorious Polish crime boss wanted on numerous criminal charges in Poland and currently being detained in South Africa, might evade deportation because a key person in the case is unavailable due to medical reasons. Graf was apprehended in the Western Cape province of South Africa on an expired visa. He is accused of a murder and robbery in Poland 14 years ago.

Polish Prime Minister Donald Tusk has been pegged as the next president of the European Council, which is comprised of the heads of state of EU member nations. Tusk will take over from outgoing council head Herman Van Rompuy, the former Belgian prime minister who has served as president since 2009. Italian minister Federica Mogherini was also given a top post, the EU’s High Representative of Foreign Affairs, replacing the British Baroness Catherine Ashton. Tusk, who will serve in the highest EU post yet for a Pole, highlighted that “Eastern European expertise will be badly needed in Europe” given the ongoing crisis in Ukraine.

AMERICAS

Stars and Stripes 1st Cavalry soldiers headed to Poland, Baltics

Some 600 American soldiers from the Army’s 1st Brigade, 1st Cavalry Division have been sent to Poland in response to the ongoing confrontation between Russia and Ukraine. The shipment included M1 Abrams tanks and armoured personnel carriers. The soldiers were deployed for three months to join other American forces in Operation Atlantic Resolve. The added troop strength comes as Poland’s allies in NATO have decided to bolster the alliance’s presence in Eastern Europe.

RTT News Lockheed Martin: partnership with Warsaw University reaches major milestone

American defence and aerospace giant Lockheed Martin has announced a partnership with the University of Warsaw for work on ­unmanned aircraft vehicles (UAVs), often referred to as drones. As reported by US-based DefenceNews in March, after Prime Minister Donald Tusk announced an expedited modernisation of the Polish military, Polish Defence Ministry officials said that Poland would acquire a “fleet” of UAVs by 2016. Lockheed Martin, one of the largest defence contractors in the world, has partnered with the Polish Air Force since 1997, most notably on the 2003 sale of 48 F-16 fighter jets.

ASIA & PACIFIC

Variety Oscars: Poland anoints ‘Ida’ as candidate for foreignlanguage Academy Award

A panel organised by Poland’s Minister of Culture Małgorzata Omilanowska and led by screenwriter and director Filip Bajon has chosen Paweł Pawlikowski’s ‘Ida’ as Poland’s official entry for the Academy Award for Best Foreign Language Film.

The movie was released to international critical acclaim and has been sold to over 30 countries. It has grossed over $3.5 million. The Academy Awards will be held on February 22, 2015.

Chinese officials met in Prague with political and business leaders from 16 countries from the Central and Eastern Europe region. The mutual goal was to increase cooperation among businesses and governments, developing the so-called ‘Silk Road economic belt’ that connects commerce between Asia and Europe.

The meeting came as Poland and China continue to strengthen ties, with 30 Polish cities taking part in a twinning programme with Chinese counterparts, and the Polish “Go China” programme designed to increase cultural and business ties. Polish Prime Minister Donald Tusk has said that Chinese relations with the Central and Eastern Europe “have entered the best period in history.”

The Free Press Journal When Poland came to India

Poles can be found all over the world, includingin places you might not expect. For example, over 1,000 Polish World War II refugees found sanctuary in Nawangar, India. Jam Sahib, a powerful Maharaja of the region, built a large camp that housed hundreds of homeless Polish orphans. Over 70 years later, this story has been brought to the screen as part of a collaboration between the governments of Poland and India. The 52-minute documentary, entitled ‘Little Poland in India’ is scripted and directed

by Indian filmmaker Anu Radha. Radha was awarded the ‘Bene Merito’ by the Polish Ministry of Foreign Affairs.

Deutsche Welle German, Polish leaders unite in commemoration of outbreak of WWII

Polish President Bronisław Komorowski met with German President Joachim Gauck on the Westerplatte peninsula, near Gdańsk, to commemorate the 75th anniversary of the September 1939 invasion of Poland by Nazi Germany. Gauck said that he felt “a deep shame and a deep compassion for those who suffered under the Germans.” On September 1, 1939, German aircraft bombed the town of Wieluń, killing over a thousand and destroying most of the city, while a German battleship opened fire on the Polish military at Westerplatte. The attacks are considered the formal beginning of World War II.

photos: Kacper Pempel (Reuters), Evandro Inetti (Zumapress)

Global news review

Xinhua China, Central-Eastern Europe seek more potential on cooperation

12

IN FOCUS

compiled by Gabriel Rom and Yoni Wilkenfeld

The Economist Poland and America: black sites

The Telegraph Polish town erects statue of a urinating Lenin

The European Court of Human Rights has fined the Polish government for allowing the US’s Central Intelligence Agency to use a detention facility at Stare Kiejkuty, in northeastern Poland. The two applicants in the case were a Saudi national, Abd al-Rahim al-Nashiri, and a Saudi-born Palestinian, Zayn al-Abidin Muhammad Husayn. The court found that Poland must pay the two claimants €100,000.

Leszek Miller, Poland’s prime minister from 2001-2004, contested the verdict, claiming that it is based on “gossip” and “innuendo.” The Polish internal investigations into the accusations, begun in 2008, are still ongoing.

In Nowa Huta, an industrial town established by the post-war communist government, an art festival has revived a decades-old statue of Vladimir Lenin. This time, however, the Soviet leader has been painted bright green and is portrayed as relieving himself onto the platform. The original, removed after the end of the Polish communist regime in 1989, had been on the receiving end of an attempted bombing in 1979 by anti-regime workers.

MIDDLE EAST

BBC US actress with Polish descent Lauren Bacall dies at 89

Famous the world over for her captivating on-screen presence and marriage to leading man Humphrey Bogart, Lauren Bacall passed away in New York City at the age of 89. First spotted on the cover of ‘Harper’s Bazaar’ by director Howard Hawks, Bacall rose to stardom alongside her husband, appearing on screen in classics like The Big Sleep. During the 1940s, when Congressional worries about communist infiltration led to Hollywood blacklisting, Bacall and Bogart started the Committee for the First Amendment to fight back. Born to a Polish father and Romanian mother in 1924, Bacall’s Polish roots connected her to another prominent figure – her first cousin, former Israeli President and Prime Minister Shimon Peres, who was born in Wiszniew, part of the Second Polish Republic before World War II.

Times of Israel In first, Poland to pay pensions to Shoah survivors abroad Lithuania Tribune Poland finalizing GROM missile defence offer to Lithuania

Poland has agreed to sell Lithuania its air defence system known as GROM (not to be confused with the JW Grom Polish military special forces). The anti-aircraft missiles, which were deployed successfully in Georgia’s war with Russia in 2008, will compliment Lithuania’s arsenal of STINGER and RBS-70 anti-aircraft systems. Lithuanian defence Minister Juozas Olekas said that “the system is vital for satisfying the immediate needs of the operations carried by Lithuania’s Armed Forces.” Negotiations are being finalised and no costs have been publicly released; further discussions will take place in March.

Global news review

Russia Today 74% of Germans oppose permanent NATO bases in Poland and Baltics

According to a poll published in the German magazine Internationale Politik, 74% of Germans oppose permanent NATO bases in Poland and the Baltic states, while 18% of those polled supported the idea. Opposition to the idea was stronger in formerly communist Eastern Germany. Russia is a key trading partner with Germany and Germans are wary of military force, as evidenced by another poll in the German magazine Stern, in which 71% of Germans opposed military action even if sanctions and diplomacy failed. Fearing Russian aggression, multiple Baltic nations and Poland want NATO to permanently base troops on their territories.

Most recently, Estonian President Toomas Hendrik Ilves said he would welcome NATO troops in Estonia.

Financial Times Ukraine PM’s office hit by cyber attack linked to Russia

The embassies of Poland, along with those of at least eight other countries, were said to have been hit by the infamous ‘Snake’ malware, thought to have been used by hackers with ties to the Russian government. The Ukrainian prime minister’s office was hit as well. Intelligence sources, along with reports from the data security firm Symantec, revealed the attack, and showed that sensitive diplomatic information was compromised. In 2008, a predecessor to the Snake malware was believed to have been responsible for a breach of the Pentagon, considered the worst such cyber attack in US history.

The Polish government will now allow the Polish Office for War Veterans and Victims of Oppression to pay out €100 monthly to Holocaust claimants who live outside Poland and do not own a Polish bank account. The new stipulations were approved by President Bronisław Komorowski and will go into effect in October for residents of the European Union, and for claimants in the rest of the world in April 2015.

Gulf News Airbus offers Poland joint ventures, no urgency in share stake

The French Airbus Group has signalled interest in setting up a joint venture with the Polish government, a move which could lead to the restructuring of Poland’s defence industry. The Polish government has indicated that it is considering buying a 1-2% stake in the company. Airbus is also considering adding Poland to its ‘core nations’, alongside Britain, France, Germany and Spain. The deal would help integrate Airbus’ aerodefence and aerospace operations with Poland’s defence industry.

Last year, a senior Airbus official said that the company hoped to “marry with Poland”.

The negotiations come at a time when Poland is increasing its military spending. Poland’s finance ministry estimates that the country will spend approximately PLN 130bn between 2013 and 2022 to modernise its military.

‘In Nowa Huta an art festival has revived a decades-old statue of Vladimir Lenin. This time, however, the Soviet leader has been painted bright green and is portrayed as relieving himself onto the platform’

photos: JaysonPhotography, Michał Tuliński (Forum)

Defence Ministry steps up army modernization

Polish native extradited to United States

Uprising veteran:

Edmund Baranowski, a veteran of the Warsaw Uprising, tells us his memories of that trying battle exactly 70 years ago.

The insurgency was expected to last just two or three days, but the Polish Home Army instead held out over two months.

What was their objective and what does he want the world to learn from the battle?

Find out in our ‘Eyewitness’ feature. see page 102

Andrzej Rybka, a Polish native, has been extradited to the United States to face reckless homicide charges, resulting from a 2004 car crash in Chicago which killed two. According to court documents provided to the Chicago Tribune, Rybka, a construction worker, had been drinking vodka and beer for several hours before stepping into his vehicle. The two fatalities were also Polish nationals – both of whom were 18 years old.

After the crash, Rybka fled on foot and led investigators from New York to Zurich and back to Poland, where he had hoped for legal immunity. But in 2011, Poland’s Constitutional Tribunal ruled that extradition to the US was legal under Poland’s constitution.

Rybka is reported to be cooperating with Chicago police authorities.

Seeking innovation at home, Poland looks to Silicon Valley

Polish Deputy Defence Minister Last year, a World Bank report pointed Czesław Mroczek said in an interview to new EU-led efforts to boost priwith Reuters that Poland would push vate sector innovation in Poland, an forward its purchase of 30 attack heli- area where the country lags significopters by two years as part of its cantly behind much of Europe. With response to the growing instability the gains of financial and social liberaliin neighbouring Ukraine. sations running out, Poland’s economy Mroczek did not name the source has begun to slow down. So leaders for the helicopters, whose purchase in business and academia are looking was previously scheduled for 2016, but at the United States, to the most fernoted that 10 companies had submit- tile area for innovation in the world: ted offers. Mroczek told Reuters that he Silicon Valley. hoped to have the helicopters ready for As reported by Inside Higher Ed, combat by 2019 or 2020. They will join an American publication covering higher another 70 multi-purpose helicopters education, the Top 500 Innovators whose purchase is already in progress. programme is sending another round The move is part of a broader plan of Polish academics to learn from to “increase (Poland’s) attack force, the best. Since 2011, the programme as well as its deterrence potential,” has sent hundreds of Poland’s elite Mroczek said. By 2022, Poland plans to attend seminars on innovation at to spend about 130bn złoty updating the University of Stanford and the its military – still mostly comprised of University of California at Berkeley.

Soviet-era equipment – with a second The goal is for Poles to bring back naval strike missile system, a mid-range some of the strategies that have missile defence system, long-range helped make the small California region unmanned aircraft, and other elements, a launching pad for the world’s leadReuters reported. ing high-tech companies, like Apple, Multiple firms, including those with Google, and Facebook, as well as thoufactories in Poland such as Sikorsky sands of startups. Katarzyna WalczykAircraft, are competing for some of the Matuszyk, president of the Association project tenders. In 2003, Poland bought of Top 500 Innovators, told the pub48 F-16 fighter jets from American firm lication that changing attitudes is key: Lockheed Martin.

“In Poland people are very individual Mroczek’s comments came ahead and concentrate on their own work of a NATO meeting in Wales in early rather than relying on group work. … In September, at which it was decided that America we have learned to be open a 4000-troop ‘spearhead’ force would and how to cooperate.” be based in Central and Eastern Europe to help beef up the region’s defences.

The plans fell short of Polish ambitions for a ‘permanent’ contingent in Poland.

It was also decided at the conference that the next NATO summit, in 2016, will be held in Warsaw.

by Gabriel Rom and Yoni Wilkenfeld

16

in focus

An apple a day... When Russia banned fruit

and vegetable imports from the EU this summer, it hit Polish farmers hard – particularly Polish apple farmers. Poland is the world’s largest apple exporter: in 2013 it exported €438m ($587m) worth of apples, 56% of which went to Russia, according to Poland’s Agriculture Ministry. After the Russian ban, Poles took to social media, posting photos of themselves eating Polish-grown apples, ostensibly to annoy Russian President Vladimir Putin. The government caught on, and turned the trend into a full-fledged promotional campaign.

Nevertheless, Polish apple farmers will still likely require EU aid to make up for the losses they have incurred.

Snapshot

Photo by Grażyna Myślińska (Forum)

18

INTERVIEW

The tenacity of culture

photos: Rafal Siderski (Wprost, Forum), Krystian Maj (Forum)

Acclaimed historian Professor Norman Davies, many of whose books have focused on Polish and Central European history, sits down for an exclusive interview with Poland Today editor Andrew Kureth

We are speaking the day after you were granted Polish citizenship by President Bronisław Komorowski.

What does it mean for you to have finally gained Polish citizenship?

ate a tradition. But it’s not the same as a national character. People say, “Poles will always have a fight.” Well, the thing about Solidarity – it was a sort of fight – but they very carefully avoided physiI think it’s just the natural culmina- cal and military violence. It was a nontion of 52 years’ connection to Poland. violent struggle. And you could say well, That’s a long time. I think the Polish that’s quite opposed to the Polish charpress wanted me to say that I’ve fallen acter or Polish tradition. But it wasn’t. in love with Poland. I’m a bit old for that. It was simply a new form of struggle It’s not a sudden romance. My wife, who and it was very, very effective. So it isn’t is Polish, is also a British citizen, she has true that it’s part of the Polish character two passports. So it’s just evening it up to get up and fight and lose the battle. in the family. My elder son was born in National character is one of the fictions Poland and my younger one in America which I think oversimplify history.

– so he has three passports.

Having studied Polish history as in-depth as you have, do you think there is a characteristic that is uniquely Polish?

No. I always opposed the idea of a national character. I don’t think the­ re’s a British national character or an American national character or a Polish national character. Every community, whether it be a city or nation, has a series of experiences and the se­que­ nces of experiences is different in every case. But individual citizens, individual Poles, will react against these experiences in different ways, according to their temperament. So when it comes to a ‘Polish experience’, we have the Uprisings. Every generation for 200 years has been involved in armed risings with greater or lesser success – usually lesser success. What it has produced is a nation for whom memories of the risings are very important, but to which they react in very different ways.

Among the veterans of the Warsaw rising you’d get some who are absolutely deeply convinced it was a terrible mistake and they were misled by their leaders. It was a needless slaughter, they say. On the other hand you have other insurrectionaries, powstańcy, who take a very different view. They were doing their duty. Actually in military terms they were very successful. This was one of the great demonstrations of urban guerilla warfare. All the experts thought the Germans would have crushed it within a week. And it went on for nine weeks.

And the SS was only able to close the thing down by granting the Home Army conditions they didn’t give any other group they regarded as bandits.

So there are very different views, very diffe­ rent emotional reactions among the insurrectionaries to 1944.

Poland’s history was particularly brutal in the 20th century. But, as in any nation, there are people who have different temperaments. There are people who are looking for a fight, people who want to compromise, people who are caring for others, people who don’t care for others. And all of these different temperaments inter-react to cre-

Hasn’t it been other cultures that have given Poles this stereotype?

This is part of the international scene, that stereotypes are used on all sides.

You can’t conduct international business on the basis of enormous history books. Stereotypes are necessary in order to conduct relations. The stereotype is a part of the power game – the stronger players of the game can project negative stereotypes against others more successfully than the less powerful can project their stereotypes.

I think Poland at last, today, is coming out of the realm of negative stereotypes.

There have been a lot of unpleasant, hostile, and I think unfair stereotypes, but this is part of being the underdog.

What is the biggest lesson we can draw from Polish history?

It’s almost a miracle that Poland has survived, that in times of great conflict it’s not the mighty military battalions that always win out. Culture is stronger than military force. Unless you comple­ tely annihilate a nation and there’s none left, then the culture survives. Culture is a lot more tenacious than, say, military force. But there have been times in the 20th century, particularly during the Second World War, when the existence of the Polish nation was seriously threatened. It was clear that the Nazis aimed to re­move not just Poland as a state, but the Polish nation from the face of the earth. The Nazis had a calibrated list of targets of people. Jews were at the bottom of the Nazi list, but the Poles were not much higher. They were untermenschen. They had no future. They were to be turned into a slave nation that would be ‘Germanised’ in due course. Similarly,

‘National character is one of the fictions which oversimplify history’

the Soviet Union saw no future for Poles or Poland. They were going to be ‘Sovietised’. And yet, you look back: the Third Reich has gone up in smoke, the Soviet empire has gone up in smoke. And this nation which was under threat 60 or 70 years ago has survived.

There is a lesson in that.

I remember a moment when I came to Kraków as a postgraduate. I began to realize that things in Poland were very tough, that people wouldn’t talk to me freely unless you’d take them outside.

I remember there was a colleague who had been a Home Army courier during the war and he had spent about 15 years in prison after the war. In the 1960s, he had only been out of prison a few years. I remember asking him: “What’s the future of this country?” He took me outside and he just said one word. He said, “przetrwamy” – “we will survive”. That’s the spirit which is amazing. It’s not to do with Polishness, it’s to do with the human spirit. But Poland has had a particularly hard time.

It has been said that Poland has entered a new golden age. Do you agree with that and how does it compare with Poland’s last golden age?

19

INTERVIEW

Andrew Kureth

is editor of Poland Today. Originally from the United States, Andrew has been reporting on Poland for 10 years, specialising in topics r­ elated 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.

It’s too early to talk of a golden age, I think. Perhaps it’s a silver age, or a step or two below that. In Poland’s golden age, this country was not just a national state, it was a multinational empire.

It was absolutely the largest state in Europe, a place it lost when Russia began to grow and expand. PolandLithuania in a way was the great power of the east before Russia, and that’s why Russians have a great complex about Poland. Putin chose as his national day (called Unity Day) the same day that the Poles were expelled from Moscow (November 4, 1612) – it tells you a huge amount.

But it’s a long time ago now. We’re talking the 16th, early 17th century. ‘Trail of Hope’: Poland was not a military power; it was One of the many episodes from a great cultural power. It was much World War II that is more influential in all sorts of fields. overlooked in most It was a religious power. It was one of Western history textthe great instruments in the Counter- books is the story of Anders Army (see box, Reformation. It was the world’s main next page). Poland asylum for Jewry. The country where, Today caught up with essentially, the Jews of the world sur­ historian and author vi­ved. So Poland isn’t returning to that Norman Davies while he was in Poland to sort of state. It is returning to a decent promote the ‘Trail middle-of-the-road, reasonably pro­spe­ of Hope’ project, rous, optimistic, middle-size European which aims to use the internet to collect stonation, which is not a bad thing to be. ries and photos from around the world that When you first came to Poland, bear witness to this did you think Poland would be fascinating set of events. a democracy in your lifetime?

No. You know I go back a long way and back in the 1960s there weren’t really any dissidents. Looking back you can see that the tide of opposition to the regime was growing. The seeds

Norman Davies Historian and author Norman Davies has gained worldwide renown for his work on Central and Eastern European history. Born in 1939 in Bolton, England, he was educated at Oxford and Jagiellonian University in Kraków, where he earned his PhD. He is best known for his desire to ensure that Central Europe is properly represented in historical study, and not blotted out by the more popular study of regions to the west and east. To this end, he wrote ‘Europe: A History’ in 1996, which endeavours to provide a more complete history of the continent, giving Central European history equal weight with that of Eastern and Western Europe. The book became a #1 best seller in Britain. He is also the author of ‘God’s Playground’ (1981), recognized as an authoritative history of Poland, as well as ‘The Isles: A History’ (1999), ‘Microcosm: A Portrait of a Central European City’ (with Roger Moorhouse, 2002), ‘Rising ’44: The Battle for Warsaw’ (2003, see book review, page 112), ‘Europe at War’ (2006) and ‘Vanished Kingdoms’ (2011).

‘We will survive’

“It is almost a miracle that Poland survived,” says Davies. Seventy years ago, Poland was under threat from the Third Reich and the Soviet Union, both of which have since disappeared. Poland, however, remains.

“There is a lesson in that,” he adds.

No golden age

Some call Poland’s current period of prosperity a new golden age. But Davies points out that during its original golden age Poland was a multinational power, had the largest territory in Europe, and enjoyed greater cultural influence.

‘Trail of Hope’ project In 1941, Stalin needed allies after Germany’s

invasion of the Soviet Union. Desperate for more forces to join the battle, he agreed to release Polish prisoners of war throughout Russia’s Gulag system and allow them to form a fighting force. Under the command of General Władysław Anders, some 120,000 Polish soldiers and their families left Russia.

Men and women of fighting age were sent to Central Asia, Persia, Iraq, and Palestine to join the British Army in Egypt and Italy, while civilians, including 18,000 Polish children, were sent to India, Africa, New Zealand, and Mexico. The ‘Trail of Hope’ project attempts retell this fascinating story – unknown to many the West – through the first-hand accounts of survivors and the stories they told their children and grandchildren.

At andersarmy.com, they can upload photographs and stories that have been passed down over the generations.

The pictures and stories are placed in an interactive time line and map, and will be accompanied by a historical narrative written by Norman Davies.

were sown about the time that I got there. I used to commentate on the BBC quite a lot in the 1970s and 80s and I remember pontificating that the communist system run from Moscow is the biggest military camp in the world.

The biggest nuclear arsenal, the biggest police forces. This system is going to try to defend itself. And it is absolutely astonishing that the Soviet Bloc and the Soviet Union itself fell apart without really much violence. I don’t think that was predictable. Of course Putin is the backlash of the old Soviet establishment who also can’t believe that they let it all slip. And he’s trying, I think with­out much success, to put Humpty Dumpty together again.

You have made it a point to emphasize Poland’s place in European history, and yet ‘European History’ is still often seen as the history of Western Europe, perhaps plus Russia. Why do you think that is?

I have spent most of my career fi­ght­­ing this. Not just negative stereo­ ty­pes, but the big black hole – and it’s not just Poland – it’s anything be­yond Germany and before Russia, which is a huge area. ‘Bloodlands’ is the label that (author) Timothy Snyder has come up with, which is a very good label – that is, a te­r­rible label for a terrible time.

I think a big reason for this mentality is this concept of ‘Western Civilization’ which is all but bound up with views of the world in the early 20th century – i.e., the great imperial powers of Western Europe were what counted. Russia was a rising imperial power, and all of the other nations just aren’t there. But Western Civilization is deeply imbued with this idea of superiority. But also about achievement. The ‘Western Civilization’ view doesn’t say anything about the negative sides of European history. It doesn’t tell you about the wars of religion – maybe the Crusades.

It’s all about glorifying Western Civilization selectively and just missing out anything which doesn’t fit into that framework. A loser state like PolandLithuania isn’t there.

So that was one of my targets. It’s not that I aim to praise Poland – I try to avoid looking at history in a way where you praise this and denigrate that. I simply thought it was a big piece of the jigsaw puzzle that was missing – and you’ve got to talk about it.

Why is the story of the Anders Army important?

It’s something which has been on my screen for decades, largely because in Britain I met Poles that had been in the Anders Army and were living there after the war. An old friend of ours had been in the Gulag, had been at the battle of Monte Cassino. So I had been

through his stories many times about his experiences on what I now call the ‘Trail of Hope’, because this was a group of people essentially hoping to survive.

When they were deported from eastern Poland in 1939-40, either to the Gulag or to out beyond the deserts of Kazakhstan, they were slated to disappear.

His wife, for example, told me about how her family had been on one of these train convoys taking tens of thousands of people at one time from eastern Poland to Kazakhstan and Uzbekistan.

And they were on this train – cattle wagons – for several months and then suddenly, in the middle of winter, the train stops, on the Steppes the guards come along, throw everybody out of the wagons into the snow, and then the train pulls away. One thousand people are left in two metres of snow. They were expected just to freeze to death. She had a baby boy and an elderly grandmother and that night about half of the people just froze to death. She managed to huddle together, keep warm, and in the morning these Kazakh nomads appeared on horses and saved the survivors. They were taken to a yurt, where there was mare’s milk, and they were revived and survived.

The husband was in the Gulag. He had been a lawyer. The NKVD’s practice was to summarily convict what they called ‘enemies of the people.’ They had all sorts of categories of people that they regarded as enemies of the people: all politicians, all professionals, all doctors, all lawyers, all teachers, all state employees. All gamekeepers: that’s because the gamekeepers control forests, and that’s where dissidents escaped to. So the first people you wipe out are the gamekeepers.

And the last on the list – can you imagine? Stamp collectors, because they have foreign contacts. They all had 30 seconds in court, where they weren’t allowed to speak. There was no official death sentence but being sent for 20 or 25 years to the Gulag was, in effect, a death sentence. And of course they did shoot people as well.

So I heard all of this for the first time as a young historian working at Oxford, at a time when in Poland the Anders Army was one of several taboo subjects. There was no way the communists could have justified the deportation of more than a million people.

And it wasn’t just deportation, it was essentially an attempt to wipe out entire social classes that were thought are ho­stile to the Soviet order. It to be a form of genocide.

What can we learn from the story of the Anders Army? How can it inform how we look at the world today?

It’s just one of the topics that I think need to be described. Once the Anders

Army became a viable topic, Poles tended to seize on the Battle of Monte Cassino, and that one episode has al­most blotted out everything else.

I think the biggest story is not one battle for a mountain in Italy, but again it’s the survival against the odds of a big group of people – 100,000 of them; the only “group” who had been in the Gulag and who were let out of the Soviet Union. There were thousands of them, and they started to infiltrate Britain during the Second World War, and they had information which is vital to the understanding of the Second World War. Namely our great ally, the Soviet Union, was a mass-murdering tyranny. I use the word “genocidal” – certainly Stalin killed a lot more people than Hitler did.

And this group of Poles was the only sizeable group that ever got out. And of course the information they had was rigorously suppressed by the British and Americans. There was war censorship.

You couldn’t talk freely in wartime about Katyn, or the deportations, the Gulag.

The Gulag becomes a big topic in the 1970s but that’s 30 years after the war, 20 years after Stalin’s death.

So the Anders Army is also sort of wit­­ness to one side of the Second World War which I don’t think the British and Americans have ever really taken seriously. They still go to Normandy and talk about liberating Europe.

The Western powers liberated about a quarter of Europe. A third of Europe was neutral. And about a half was overrun by the Soviet Union – if you think that was liberation.

What do you find most remarkable about the Anders Army story?

Its sheer geographical size. Earlier this year we were in New Zealand. Low and behold there is a group of orphans, Polish orphans, taken to New Zealand in 1944, from Persia. The Anders Army came out of the Soviet Union, got to Persia, and they had tens of thousands of children. A lot of them were orphans, and various allied governments were asked to take a quota. The government in New Zealand took several thousand, who are still there. The biggest group went to India. A big group went to Mexico, and from Mexico to the States; another big group went to Australia at the end of the war.

‘Poland at last, today, is coming out of the realm of negative stereotypes’

During the war, the priority were the tens of thousands of children, then families. And then, at the end of the war, all of the soldiers. What do you do with 80,000 soldiers who can’t go back home? The Soviets had just annexed eastern Poland, so all these soldiers of Anders Army had no homes to go to. It wasn’t even in Poland. So the Polish soldiers – many of them young men without families – the biggest group opts to go to Australia. Another big group goes to Canada. Hardly any of them, a few individuals, go to Poland. But if they went to Poland they tended to be at the least imprisoned, and if they weren’t lucky they were shot.

You are associated with traditional academia and books on history. Why did you choose to work on this project, which makes use of relatively new technology and new ways of gathering information?

Polish citizen:

Norman Davies received Polish citizenship this past summer in a ceremony presided over by President Bronisław Komorowski. Our interview with the historian took place the next day.

I have essentially agreed to write Filling the the text for a photographic album. We ‘big black hole’ ‘Europe: A History’, know that there are a lot of pictures that which was published people have in attics and so-on. And in 1996, is probably my co-author is actually a professional Norman Davies’ bestphotographer, and we are visiting most known work. The book aims to provide of the stops on the ‘Trail of Hope’ and a more complete histaking modern, colour pictures to go tory of the continent, along with the black-and-white pictures giving Central Eurothat people are sending in. We had the pean history equal weight with that of idea of using the internet to mobilise Eastern and Western people to share the things that they Europe. The book became a #1 best seller may have in their attic.

It’s a project in two parts, one of in Britain. “I have spent most of my cawhich will be an ‘album’, because the reer fi­ght­­ing the big emphasis on the visual material. I am black hole,” that is, going to write the contextual informa- the lack of historical tion about it all. But it’s not going to coverage of “anything be­yond Germany and be a traditional academic study. It’s not before Russia, which going to be a book. is a huge area,” says Davies.

Do you think that future generations of historians will make use of these technologies and methods?

Well, it’s one of many new technological aids that we have. I think that the world is becoming more visual. And people are less willing to read heavy texts whereas they are more willing to see images. And obviously computers and the internet and everything is very good at distributing images. But nonetheless all images have to be put in to context and have to be described.

interview by Andrew Kureth

22 The new president PROFILE

of Europe

Ruthlessness, a steady hand and luck have all played their part in Donald Tusk’s successful political career

Donald Tusk,

Remi Adekoya is

photos: Kacper Pempel (Reuters)

a columnist for The Guardian. For several years he was politics editor at Warsaw Business Journal.

He has also worked for Wprost, a Polishlanguage socio-economic weekly. His articles have appeared in South Africa’s Mail & Guardian, Poland’s largest broadsheet Gazeta Wyborcza and Stratfor, the global geopolitical analysis firm.

Poland’s prime minliamentary election. Like all successful politicians Tusk had a healthy dose of ister for the past seven years and the the four eu presidents luck on his side. Poles were fed up with next ‘president’ of Europe, is without Tusk is widely being hailed as ‘President a doubt the most successful Polish poli- of Europe’ after being elected head of the the Law and Justice-led government, tician of his generation. He became PM European Council. But new President of the which had ruled chaotically from 2005in 2007 after leading his centre-right European Commission, Jean-Claude Juncker, 2007. They wanted someone calmer will arguably have more power. Then there and more level-headed than Law Civic Platform party to a decisive paris the president of the European Parliament, and Justice’s erratic leader Jarosław liamentary victory. In 2011, he became a position held by former Polish PM Jerzy the first party leader to win back-to- Buzek between 2009 and 2011. Finally, there is Kaczyński. Donald Tusk was on hand back parliamentary polls since Poland the ‘rotating presidency’ of the Council of the to provide an alternative.

European Union, which Poland held in 2011. emerged from communism 25 years It was during the successful 2007 ago. Under Tusk’s leadership, Civic parliamentary campaign that Tusk first found his mojo as a political leader. Prior to that, he was perPlatform has won every significant election in Poland since 2006. If not for his recent appointment as the new president ceived as a dull and uninspiring politician with no cojones – a of the European Council, Tusk could very well have gone on fact readily admitted by some of his supporters. But someto win a third term as Poland’s prime minister in parliamen- thing happened during that campaign which gave Tusk the tary polls scheduled for next year. His career is proof you confidence he needed to play the role of leader convincdon’t have to be born a leader, you can become one. ingly. The transformation came about during a televised debate between Tusk and then-Prime Minister Kaczyński.

Imperfect beginnings Despite Law and Justice’s unpopularity with many voters, Donald Tusk was born in the northern coastal city of Gdańsk Civic Platform was still trailing them in the polls. Tusk knew in 1957 to working-class parents. His father was a carpenter the debate was his last chance to turn things around.

Kaczyński, on the other hand, underestimated his oppowho beat him often. Tusk once said in an interview that he felt “a sense of relief” when his father died, even though he nent and expected to win by simply turning up at the stuwas only 15 at the time. Tusk studied history at the University dio. Tusk crushed him. He was relaxed, smiled a lot, offered of Gdańsk, where he was involved in student associations common-sense arguments and generally made Kaczyński that supported the Solidarity trade union led by the leg- look stiff and out of touch. It also helped that throughendary Lech Wałęsa. After communism collapsed in Poland, out the debate Tusk’s supporters on set constantly booed Donald Tusk co-founded the Liberal Democratic Congress, and laughed any time Kaczyński spoke, while applauding a party of economic liberals, which went on to win 37 seats and cheering Tusk, who seemed to grow bigger by the minin the 1991 parliamentary elections. One of those seats went ute. Assurance depends on one’s surroundings. Whatever to the then 34-year-old future prime minister. But two years the methods, during that debate Donald Tusk the leader was later the party failed to make it into parliament and disap- born, and he has not looked back since. peared from the political scene altogether.

In 2001, Tusk co-founded his present party, Civic Platform, Growing in office a pro-business, centre-right outfit. He contested and lost Each day as prime minister seemed to give Tusk more conthe 2005 presidential elections to the late Lech Kaczyński, fidence. Very soon it started to look as if he had been born while his party was also defeated in parliamentary elections for the role. Here again, he had help. Most mainstream that same year by the conservative Law and Justice party. journalists looked with a favourable eye upon Tusk’s govThose losses were heavy blows for Tusk, who had expected ernment, relieved that the often unpleasant and unpredictvictory in both cases. They would be the last time Donald able Kaczyński, who demanded (male) journalists stand Tusk would lose an election to date. up before asking him questions at press conferences, was no longer premier. During his first few years in power, Tusk Tusk, the winner was largely portrayed positively in the media, increasing After bouncing back with a victory in local government polls his self-confidence.

But although he quickly learned how to pay the part of in 2006, Donald Tusk and his Civic Platform party swept to power in 2007, capturing 41.5% of the vote in a snap par- prime minister very well, Tusk ended up disappointing many.

23

PROFILE

‘Tusk has been a ruthless politician.

Over the years he has eliminated every potential political rival in his party’

On the domestic front Prime Minister Tusk has disappointed economic liberals because of the slow pace of reform. Nevertheless, he received the political credit for steering Poland through the global economic crisis relatively unscathed.

Because Civic Platform was supposed to be an economically liberal party, its voters hoped Tusk would enact far-reaching reforms in the public sector and in public finances. He did no such thing. He has said he prefers the “politics of small steps.”

“I am not here to enact reforms that will be painful for people just because some experts think I should,” he retorted.

This is not to say that Tusk the prime minister was an all-out disappointment. Far from it. He steered the country through the crisis years of 2008-2009 with a steady hand and Poland was the only EU nation not to experience recession in 2009.

That in itself was a huge achievement. He also enacted one very unpopular reform, namely increasing the retirement age for men from 65 to 67 and for women from 60 to 67. In his seven years as prime minister, Poland witnessed steady economic growth as well as the most politically stable period in its post-communist history. Tusk had a hand in all this.

Tusk the person Nevertheless, Tusk has been a ruthless politician. Over the years he has eliminated every potential political rival in his party. He can be cold, brutal and as some who have worked closely with him say, “incredibly mean and even sadistic; he seems to enjoy humiliating people in public.” But in front of the cameras he is all smiles, every bit the warm and caring statesman. “He is brilliant when it comes to the techniques of keeping control. He is good at playing people off against each other, getting one person to fight another person,” Paweł Śpiewak, a sociologist and former Civic Platform MP, said in a 2010 interview.

However, that is Tusk the political party leader. Tusk the prime minister is well-liked and respected in Europe for his ability to bring people together to the discussion table, one of the reasons he got the European Council job. His pragmatic approach – devoid of any delusions of grandeur – should be helpful in this role, where he will have to contend with the egos of 28 EU leaders as he tries to get them to reach consensus on some extremely contentious issues.

Europe’s ‘president’ must be someone who can bring leaders with varying interests together.

Of course, once again Tusk had some luck on his side. His appointment seems to be a timely signal to Vladimir Putin that the EU is done with appeasement towards Moscow.

The Polish PM has been clear in his condemnation of Putin’s actions in Ukraine and in the current political atmosphere in Europe, which likely worked to his advantage. Europe is hoping his winning (and lucky) streak will continue in his new role. by Remi Adekoya

Internationally

Tusk has gained admiration mostly for not displaying the prickliness and unpredictability that his predecessor, Jarosław Kaczyński, did. He has also been largely successful in increasing Poland’s stature in Europe and making sure its priorities are taken into account in the EU decision-making process.

24 photos: Filip Błażejkowski, Adam Chelstowski, Adam Lach, Krystian Maj (Forum)

PROFILE

Place at the table: Though she has achieved

much in her own right throughout her political career, most commentators are quick to point out her loyalty to and friendship with former PM Donald Tusk as the reason she was tapped to succeed him.

Madame Prime Minister: Kopacz

Poland’s power women

entered parliament in 2001 on the Civic Platform ticket. In 2007 she became minister of health and in 2011 speaker of the Sejm. As Poland Today went to press, she was set to be elected Poland’s next prime minister – the second female head of government in the country’s history.

Ewa Kopacz: The loyalist With Donald Tusk’s ascent to the position of president of the European Council, attention among Poland’s politics-watchers moved immediately to the question of who would replace him. The ruling coalition of Tusk’s Civic Platform party with the rural-focused Polish People’s Party quickly rallied around Ewa Kopacz, speaker of the Sejm, the lower house of parliament. Kopacz is widely considered to be Tusk’s personal pick for the position, since she is viewed as a his most loyal ally. Kopacz, 57, served as health minister prior to her stint as speaker. She is not a particularly stirring orator, and there are questions as to whether she will be able to effectively keep her fractious party together through a series of difficult elections over the next 18 months. She will have to answer those questions quickly. Her first big test – local elections that will set the momentum going into parliamentary elections next year – will be held in November.

26

Getting things done: Bieńkowska is known

as a practical technocrat, someone who prefers to get work done than to play politics. She once famously said “I’m not here to build a public relations image, I’m hear to work.” While her frank manner has at times got her into trouble, (she once admitted that winter train delays were inevitable, saying, “Sorry, that’s our climate”), her ability to remain above the political fray has kept her reputation relatively unscathed.

PROFILE

European Commissioner for Internal Market and Services is the

Elżbieta Bieńkowska: THE TECHNOCRAT Poland was the best among the EU’s newest members at absorbing its billions of euro in development funding over the past budget period, and Elżbieta Bieńkowska, who served as regional development minister from 20072013, received most of the political credit. In November last year, Donald Tusk merged her regional development portfolio with that of transport, and elevated her to the position of deputy premier. Five months later, Reuters was declaring her ‘The woman who could become Poland’s next prime minister’ (in fact, that honour goes to Ewa Kopacz). Though she was a popular pick among the public and analysts to succeed Tusk, she herself was tapped to take on Poland’s seat in the European Commission. While rumour had it she would either be named commissioner for regional development (a nod to her area of expertise) or budget commissioner (the powerful position held previously by Poland’s Janusz Lewandowski), new European Commission President Jean-Claude Juncker entrusted her with the internal markets portfolio.

photos: Rafał Siderski (Wprost, Forum), Piotr Dziubak

Poland’s power women

title Bieńkowska will take up when she gets to Brussels. The portfolio involves promoting the free movement of people, goods, and services throughout the European Union.

28

PoLAND TRANSFORMED

The Poland Transformed conference hosted

photo: Claudio Divisia

Conference

Poland Transformed

by Poland Today in Warsaw at the end of May brought together some of Poland's most prominent thought leaders and businesspeople.

It provided a forum for exploring exactly what Poland had done successfully during its 25 years of transformation, and the role that business played in that success. Here we present several summaries of the various discussions at the event.

No pain, no gain

Poland made the tough decisions – but the right ones – and that’s why its transformation has been successful

There is a line of thinking

which says countries that want to implement tough economic reforms need tough le­ad­ ers: efficient decision makers who can hold on to power as the population reels from the initial difficulties they bring.­ De­mo­cracy is too messy, the reasoning goes, to be an effective system when such difficult decisions are being made at the highest levels. People will reject the pain, and change their leaders, never allowing for the reforms to be fully implemented.

If harsh economic reforms must be made, it is better that a strong leader – an authoritarian – is the one who sets them in motion. Political reform can come after economic reform.

Such thinking has become increasingly popular as the world watches China, which has continued to transform from a centrally pla­n­ned economy to one more based on a free market. The theory goes that only the country’s authoritarian leaders – guaranteed to remain in power – could implement such changes, which have undoubtedly had a negative effect on swathes of Chinese society.

But Poland’s story belies that view. At the Poland Transformed conference held by Poland Today at the end of May, former Prime Minister Jan Krzysztof Bielecki pointed out that in Poland 25 years ago, the political reforms and economic reforms went hand in hand. Instead of making the economic reforms harder to implement, the political reforms actually allowed for their more effective implementation.

“The political reforms that were imple­ mented were the strongest support for the economic reforms,” said Bielecki, a top gouverment economic advisor.

“In the early days, we had more prime ministers than a football team has players,” he quipped, a ­ dding that because leadership changed so freque­ ntly, it was difficult for any vested interest to establish itself as a dominant force.

This helped to prevent the consolidation of power in the hands of the few, as was the case in some of Poland’s neighbours after the fall of the Soviet Union.

“Unfortunately there are plenty of examples: oligarchs, co­­rrupt politicians, who managed to be­ ne­ fit themselves, but effectively stop­ped the process of building up a competitive economy,” he said.

business school. “If you ask me what errors Poland made, I would say hundreds.” However, he said, “we would have chosen the same path.”

That path included immediately allowing just about any type of economic activity. All at once, an explosion of entrepreneurship gripped Poland, with people selling goods on the pavements and out of the boots of cars. As many as 600,000 business sprang up within two years.

“The driving force in Poland’s economy has been its people – not just the people, but their activity,” said Orłowski. “One of the biggest factors was the entrepreneurship.” Orłowski said that over the past 25 years Poland had taken “full advantage” of its human capital, pointing out that average GDP per capita had risen from about 30% of the European average to about 62%.

The foreign factor The shock therapy reforms immediately opened up Poland’s economy to the world, which set domestic firms scrambling to compete with more experienced companies from Western Europe. Poland incurred a hefty trade deficit. But opening up to new markets allowed the country to increase exports by a factor of 25 – from about $10bn in 1990 to a quarter of a trillion dollars today. “If you run the right policies your economy will adjust and you can benefit from that,” said Orłowski.

Money from around the globe flooded into Poland – but primarily after EU accession. In 1990, Poland had almost no foreign direct investment, Orłowski said. It had only reached almost $50bn in 2003 – but by 2012 it had rocketed to $250bn. Poland’s pain had paid off in the form of attractiveness for investment. “Broadly speaking, Poland was following a reasonable economic policy – both structural and macroeconomic,” said Orłowski.

It paid off in other ways as well.

Between 1990 and 2013, GDP rose at an average of 4.1% per year. Exports grew at an average rate of 9.8%.

In terms of scale, Poland’s economy has risen from 35th largest to 22nd. During the global economic crisis that began in 2008, Poland never once saw a quarter of negative growth and was the only member of the European Union not to go into recession.

There are still plenty of challenges for Poland to overcome however. Orłowski pointed out that it is only a “moderate innovator” – ranked 25th in the EU. It is in the middle of the value chain, with 76% of its exports going to the EU. Business environment, public services and infrastructure still all need an upgrade, he said. But in the end, the balance of transformation is very positive.

“Any change has winners and losers in relative terms.

I would say the number of winners is much bigger than the number of losers.” by Andrew Kureth

‘The political reforms that were implemented were the strongest support for the economic reforms’

Painful process Nevertheless, Poland’s ability to keep vested interests from holding back competitiveness didn’t mean change was easy. The economic reforms that were implemented became known as ‘shock therapy’ for their harsh initial effects. Almost overnight, 1.1 million Poles were out of work. Unemployment hit 20%. Inflation reached 250%.

But Poland stuck to its path, and by 1995 its gross domestic product was outgrowing those of all of its neighbours, at a brisk 7% pace.

“Transformation was an extremely painful process,” said professor Witold Orłowski, chief economist at PwC in Poland and the director of the Warsaw University of Technology’s

29

POLAND TRANSFORMED

Andrew Kureth

is editor of Poland Today. Originally from the United States, Andrew has been reporting on Poland for 10 years, specialising in topics r­ elated 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.

30

Poland Transformed

Journalist Jan Cienski (left)

speaks with Poland Today editor A ­ ndrew Kureth about Poland’s path so far, and where it has to go from here. “No one had ever done it before.

Poland was the first country to break away from communism.”

at COMP Innovation Center: “Sure, the government can simplify rules on grants, make them more transparent, but all we really want from them is not to get in our way.”

photos: Piotr Dziubak, Arkadiusz Chłopik

Conference

Poland Transformed

Julian Kozankiewicz (below), COO

George Friedman (right), founder and

chairman of Stratfor: “Russia is much weaker than it looks.”

XXXName (left)

fromcompany XXXXX: “lorem ipsum dolor sit amet encaditus potente alea jacta est dolor sit eamt”

Jan Krzysztof Bielecki (right), former prime minister: “The political reforms that Poland implemented were the strongest support for the economic reforms.”

Xavier Devictor (above), of the

World Bank: “We have seen a deep and genuine commitment on the part of the government to address problems in a systematic and pragmatic way.”

Joanna Nicińska (left) of Echo Investment: “In the early years nobody knew what the future would bring. No one taught us market economics in school, so we had to figure things out on our own.”

32

POLAND TRANSFORMED

More trust, less red tape

illustration: Jorgen McLeman

Conference

Poland Transformed

As it looks to the future, Poland will have to overcome cultural and administrative barriers to progress

economic and political transfor- Fortunate mix mation, Poland must now overcome new cultural and politi- According to Adam Maciejewski, former CEO of the Warsaw cal challenges on its way to becoming a truly prosperous Stock Exchange, Poland benefited from a fortunate mixEuropean country, according to some of Poland’s most ture of several factors, including large FDI volumes, strong prominent business and economic leaders in a discussion domestic demand, lower labour costs, favourable demopanel at Poland Today’s Poland Transformed conference at graphics and dynamic capital markets. “Perhaps the crucial the end of May. “The main challenge for the Poles is being part was that we understood that we basically had to count able to cooperate and trust each other,” said Jan Krzysztof on ourselves. We knew that no-one was going to help us,” he Bielecki, a former prime minister and current head of Prime said. As for future growth, “We need to focus on three key Minister Donald Tusk’s Economic Council. “We love to blame issues: promoting innovation and making sure the money others without recognizing our own mistakes. There is a fan- we invest in it is spent efficiently, securing talent supply, and tastic excuse culture in Poland, whereas the trust culture helping Polish champions expand globally through economic is very low. This explains why there diplomacy,” he said. are so many business organizations Jacek Socha, a partner in the adviin Poland – they simply don’t trust each sory department and deputy chairman other,” Bielecki said. of PwC in Poland, a former treasModerator Edward Lucas, senury minister and one of the foundior editor at The Economist, asked ing fathers of Poland’s capital market, Henryka Bochniarz, head of the Polish emphasized the importance of the Confederation Lewiatan employers Warsaw Stock Exchange for the transassociation, to share her thoughts formation process. on the past 25 years. She focused on “Although the WSE was created in the poor quality of administration, merely six months, we modelled it after which she said could become a signifideveloped markets. We got the tradcant barrier for future growth. “Back in ing system from the French Finance 1990 it took me 20 minutes to register Ministry and decided not to trade any my business because the bureaucrats physical papers from the beginning. had no idea what to do with us. Now We established only a single central all the procedures are so much more exchange and became the only country troublesome, making life for entrein the region to set up a modern secupreneurs quite hard,” she said, adding rities and exchange commission that properly regulated the market from that many officials are simply afraid to be seen as overtly business friendly. the start and introduced no barriers for “We need a transfer of people from busiforeign investors. This created favourness to administration and better eduable conditions for the healthy developcation for public officials, a much more ment of the Polish stock market, which, ‘project management’ way of thinking.” in turn, facilitated privatization.”

Lucas pointed to the numerous The euro question failed attempts by the Polish government to make the administration more Lucas probed the panelists on their efficient, asking Bielecki about the curviews about whether and when Poland rent state of affairs. “The government should join the euro zone. While is a friend of entrepreneurs – otherwise the businesspeople were clearly in favour of prompt accession, Bielecki they wouldn’t have benefited as they advised more caution. N eve r th eless , did over the past 25 years. The quesPwC’s Socha made a strong case tion is to what extent the problem lies for euro adoption: “Since more than in bad regulation and to what extent it 70% of Poland’s foreign trade is with is a cultural challenge,” he answered.

Bielecki admitted that despite a concerted effort to the European Union [of which approximately 55% with the address the problems listed by the World Bank in its annual euro zone], the faster we adopt the common currency, the betDoing Business report, a lot remains to be done. This is ter for Polish entrepreneurs. It’s hard to make financial modespecially true in sectors such as construction, where the els when you have to predict the exchange rate. So switching deeper you dig into the details, said Bielecki, the clearer to the euro will limit the risk for the Polish economy,” he said. it becomes that the entire legislative framework needs to be “During the financial crisis the fact that we did not have the completely overhauled. euro helped Poland,” said Bochniarz, “but in the long run However, Poland has recently made some huge strides I would like us to join the euro zone in order to be able when it comes to the ease of doing business, said Xavier to shape it from the inside.”

Devictor, country manager for Poland and the Baltic states “We’ll join the euro zone a week after the UK,” Bielecki at the World Bank. “Poland has been a true global champion replied jokingly, referring to Great Britain’s special status in of the Doing Business ranking in the past couple of years. the European Union, and its insistence on maintaining its We have seen a deep and genuine commitment on the part distance from the bloc. “The euro is a political and ecoof the government to address problems in a systematic and nomic project. In political terms, the euro is a big work in pragmatic way. I wish I saw the same amount of eagerness, progress. There is talk of rebuilding, new leadership and new curiosity and pragmatism on the part of public administra- financial monitoring. The big question is the political solution in other countries where we operate,” Devictor said. tion, and we don’t see one yet,” he added. “Economically “Poland’s growth over the past quarter of a century has been it is a huge challenge, because it means that some automatic driven by increasing productivity backed by rapid absorption stabilizers are turned off. And our recent experiences with of foreign technology, with very little capital. Importantly, the the energy union idea, put forward by Prime Minister Tusk, growth has been shared by all with inequality remaining at have proven that economic cooperation between EU meman average EU level. The next challenge will be to stimulate ber states still leaves a lot to be desired,” Bielecki concluded. innovation in order to maintain the growth.”

by Lech Kaczanowski

Following 25 years of

‘The crucial bit was that we understood that we should count mainly on ourselves.

We knew that noone was going to help us’

33

POLAND TRANSFORMED

Lech Kaczanowski

is the editor of Poland Today’s weekly newsletter, Business Review+. From 2002 to 2013 he covered business and economic news from Poland for Sweden's Bonnier Group and other Nordic media. A former Open Society Institute Fellow at Duke University in North Carolina, Lech has degrees in economics, sociology, and journalism.

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Witold Orłowski (below), PwC chief

economic advisor: “The driving force in Poland’s economy has been its people – not just the people, but their activity.”

Poland Transformed

Beata Stelmach (left), CEO of GE in

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Poland Transformed

Poland: “We Poles like to complain but it’s not because we’re pessimistic; it’s because we set very ambitious goals for ourselves.”

Rossen Hadjiev (left), board member

of Integer.pl Group: “It is not about managing a business, it’s all about talent management; how you are going to attract people and make sure they are part of a team.”

Katarzyna Zawodna (right), CEO of

Skanska Property Poland: “In order to understand and meet customers’ needs, companies have to be able to adapt quickly and work as a team. Everyone in the company must feel accountability.”

Jacek Socha (left),

former treasury minister: “Since more than 70% of Poland’s foreign trade is with the European Union, the faster we adopt the common currency, the better for Polish entrepreneurs.”

Adam Purwin (above), CEO of PKP Cargo: “Our company is a perfect example of the impact the transformation had on individual companies.

Once part of a state monopoly, we are now Europe’s first stock exchange-listed rail freight company.”

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Poland Transformed

Henryka Bochniarz (right) , of

Polish Confederation Lewiatan: “During the financial crisis the fact that we did not have the euro helped Poland. But in the long run I would like us to join the euro zone in order to be able to shape it from the inside.”

Rick Lyman (below), Warsaw

bureau chief for the New York Times: “When I got the job (of Warsaw bureau chief ) people were coming up to me and saying, ‘You’re so lucky! The city is so alive. You are coming to Poland just as it is about to take off ’. ”

Adam Maciejewski (left), former CEO

photos: Piotr Dziubak, Arkadiusz Chłopik

of the Warsaw Stock Exchange : “Perhaps the crucial part was that we understood that we basically have to count on ourselves.

We knew that no-one was going to help us.”

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Poland Transformed

pOLAND TRANSFORMED

The Polish people are the strength driving the country’s economic success

Poland’s main strength over

the past 25 years of economic transformation have been its people, and now the country’s future growth rests largely on how it manages this crucial resource.

That was the key message emerging from business-focused discussion panels at the Poland Transformed conference, held at the end of May in Warsaw

by Poland Today.

“We arrived in Poland in 1999 with a single factory and now we have six production sites and more than 3,500 staff here. Can there be a better testament to the country’s attractiveness?” said Fabio Pomella, CEO of Indesit Poland, an Italian home-appliance maker. “What brought us here are Poland’s young and educated staff,” he added.

“In the early years nobody knew what the future would bring. No one taught us market economics in school, so we had to figure things out on our own,” said Joanna Nicińska, senior leasing manager at Echo Investment, a Polishowned property developer. “Perhaps that’s the source of the legendary Polish creativity? Without preconceptions you naturally end up thinking outside the box.”

“We’ve been building a market economy for just 25 years – there was so much catching up to do. It’s a myth that Poland owes its success to low-cost production. In some sectors, for instance in banking, we leapfrogged from the dark ages straight into the future by carefully managing foreign investment. Now we have some of the world’s most innovative banks,” said Beata Stelmach, CEO of GE, which owns several production sites, a banking business, and a huge R&D centre in Poland, employing a total of some 10,000 people in the country.

“In the early years of transformation the challenge was to convince foreign investors to come to Poland. 1992 was the breakthrough moment when foreign investment started pouring in and GDP shot up.”

“The progress we made over the past 25 years boggles the mind,” added Andrzej Dulka, CEO of Alcatel-Lucent Polska. “People tend to forget that back in the early 1990s you had to sign up days in advance to make an international phone call and could never be sure it would actually take place. Now you can’t live without broadband internet. However, we are still lagging behind most of Europe in terms of broadband penetration, so there’s plenty of work to do.”

Although equally positive in the long run, the experience of transformation was clearly somewhat different for former state-owned enterprises, which had to undergo deep restructuring in order to stand the test of free competition. “Our company is a perfect example of the impact the transformation

photo: Keith Tsui

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People power

had on the market as a whole, as well as on individual companies,” said Adam Purwin, CEO of PKP Cargo, Europe’s number two rail freight operator. “Once part of a state monopoly, we are now Europe’s first stock exchange-listed rail freight company, operating in a fully liberalized market.”

Challenges for the future The focus on people as Poland’s key asset was also the main theme in the panel that brought together young business leaders to talk about the 21st-century challenges facing Polish firms. Katarzyna Zawodna, president of property development firm Skanska Property Poland, said that Polish companies had to change from the authoritative, hierarchical nature of the previous generation to a more collaborative approach.

“In order to understand and meet customers’ needs, companies have to be able to adapt quickly and work as a team,” she said, adding, “Everyone in the company must feel accountability, and they must have the power to do what needs to be done.”

Rossen Hadjiev, a board member at Integer.pl Group, agreed. “It is not about managing a business, it’s all about talent management; how you are going to attract people and make sure they are part of a team.”

Integer.pl is currently rolling out a global network of automated parcel lockers. “When we talk to our clients across the world they have a hard time believing they are dealing with a Polish firm and not someone straight from New York or London,” said Hadjiev.

Julian Kozankiewicz, COO at COMP Innovation Center, added that modern companies need to “merge necessary functions with the flexibility that is required in today’s market.”

Since EU accession, some 2 million people have left Poland to seek work in Western Europe, but the panelists were not particularly concerned about the impact of a brain drain on the country’s future. “I don’t necessarily think it’s a bad thing they left. The whole point is to create conditions that would make them want to come back,” said Kozankiewicz.

“It’s essential in business to be able to see what the world looks like through other people’s eyes and therefore the experience of migration could be extremely valuable,” added Jan Kasprzycki-Rosikoń, head of MillionYou, a Polish crowdsourcing-based creative agency.

“Anyone with capital can buy the newest machinery so it’s really the employees that are our competitive edge, our most important asset,” said Skanska’s Zawodna. “The way to keep the best people is to make them feel important

‘It is not about managing a business, it’s all about talent management; how you are going to attract people and make sure they are part of a team’

a POLISH NOKIA? When asked if Poland would ever see the

emergence of a globally recognized flagship Polish business, GE’s Stelmach replied: “A Polish Nokia? We already have such companies.

Former state giants KGHM, PKN Orlen or Azoty are already present in international markets, but there are also some inspiring examples among smaller private firms, for instance Inglot, whose makeup products are present on dozens of global markets, bus maker Solaris, train producer PESA – both winning prestigious foreign contracts, and finally companies such as Asseco, which built their position on innovation and made global expansion their strategic goal.” Hadjiev also pointed to Inglot.

“In a marketplace that’s extremely competitive a small company from Poland found a new way to sell cosmetics and now they have shops in tens of countries across the globe. They came at the forefront of R&D development.”

as individuals but that requires wise leaders who are well versed in soft management skills, capable of providing coaching and feedback. Nourishing such skills is a challenge for the educational system.”

Generational shift, global push Besides learning to harness the country’s human potential, according to the guests, the future of Polish business

depends on how well it manages the transition from the original founders to the next generation of owners. “Polish companies are still very new and small and need to scramble up the technology chain,” argued Hadjiev.

“We are entering an era of consolidation when many of those smaller businesses that are now focused on the domestic market begin to merge and start looking for opportunities abroad.

This is a natural generational shift that will generate many opportunities for private equity.”

COMP’s Kozankiewicz said that many of the businesses established in the 1990s and which are still being managed by their founders face a big challenge. “I believe cashing out is not always the best option, as there is strength in continuity, but the question is how one passes on those large organizations to the next generation.”

Interestingly, the business community is not looking to the government for help, which marks a notable change from a decade or two ago, when entrepreneurs were vocal about their expectations towards politicians. “Sure, they can simplify rules on grants, make them more transparent, but all we really want from them is not to get in our way,” said Kozankiewicz. “I would like to see the public administration better utilize its potential. There are people there with ideas but the system is not yet ready to give them a chance,” added Kasprzycki-Rosikoń.

“As for innovation money and startups – there is plenty of funding available from the EU, government programmes and business angels. It’s now up to the entrepreneurs to show enough diligence to be able to take advantage of them. Business is more than a novel idea – you need a strategy to make it work,” he added.

According to Echo’s Joanna Nicińska, a powerful player could emerge from the business process outsourcing sector, now that Poland has become a hub for European offshoring. “The sector already employs more than 140,000 people and drives job creation in many Polish cities. What started little more than a decade ago with a handful of bookkeeping and contact centres is now a large part of the economy, offering a wide range of complex, knowledge-based services,” she said.

“We Poles like to complain but it’s not because we’re pessimistic; it’s because we set very ambitious goals for ourselves,” concluded Stelmach.

“Poles are stubborn and creative, used to finding solutions where others don’t see any. This is our strength and the challenge is not to lose it,” said KasprzyckiRosikoń. “Keep up the energy and don’t become complacent,” added Hadjiev.

by Lech Kaczanowski

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pOLAND TRANSFORMED

Lech Kaczanowski

is the editor of Poland Today's weekly newsletter, Business Review+. From 2002 to 2013 he covered business and economic news from Poland for Sweden's Bonnier Group and other Nordic media.

A former Open Society Institute Fellow at Duke University in North Carolina, Lech has degrees in economics, sociology, and journalism.

POLAND TRANSFORMED

Through the lens of history How is Poland perceived abroad, and how have perceptions changed?

Why we are together

Euro 2012 kicks off in Warsaw

Poland co-hosted the European football championships with Ukraine in the summer of 2012. The event, which was widely praised as an exemplary tournament, was a huge success. Journalist Derek Scally of the Irish Times said that the positive experience had by fans and viewers, and the goodwill Poland had earned as a result, would translate into a greater realisation among people around the world that Poland had become a modern European nation.

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Poland Transformed

Poland has difficulty

­escaping the shadow of its past. History looms large in Polish culture, but outside of Poland too, the country is often viewed through the lens of past events. How­ ever, when foreigners visit the co­ un­ t­r y, their preconceptions are sma­shed.

Seeing the Polish transformation in person, it seems, is believing.

For that reason, Poland Today asked some of the 50 international journalists that joined the Poland Transformed conference to share their thoughts in a panel discussion on how Poland is pe­r­­­ceived in their home countries, and how perceptions about the country have evolved.

‘Successes like Poland’s are the reason why we are all here, together, in the EU’

Marie Charrel from French daily newspaper Le Monde also hearkened back to the past, speaking of Poland’s “historical connection” with France (Fryderyk Chopin and Marie Skłodowska-Curie both ended up there). However, she offered a more contemporary view of Poland, pointing to the two main contexts in which the French view the country. In France, she said, Poland is seen either as a nation of “Polish plumbers” or as an EU success story – something that she said there should be more focus on. Successes like Poland’s are the reason “why we are all here, together” in the European Union, she added.

Derek Scally of The Irish Times had the most positive things to say about Poland. He told the story of his firstever visit to Poland, in 2001, during which he found himself in a pub being sung to by Leszek Miller – who that very evening had been elected prime minister. Scally said that since his first eventful trip to Poland, the country has steadily become “more and more exciting ... more and more beautiful as a place to visit.” Scally also noted Poland’s image is due to change in light of the UEFA European football championships, which took place in 2012.

Just as Germany became “a place to go” two to three years following the 2006 FIFA World Cup, Scally said he was “confident” that something similar would happen in Poland. As a Berlinbased journalist, Scally also noted that Germany’s impression of Poland is due to change for the better because of Chancellor Angela Merkel’s continuing praise for the country.

himself mistakenly referred to “Polish death camps” two years ago. The New York Times’ Rick Lyman noted that “the very first thing” his editors told him when he began covering Poland was to avoid making that same mistake, ‘Big cemetery’ as well as to never say that Poland For decades, Israelis have viewed is in Eastern Europe (Poles prefer Just taking off Poland as a “big Jewish cemetery” said Central Europe).

When the focus is turned on contemLily Galili, a reporter from Tel AvivVladimir Vodo, from Russia’s Kom­­ porary Poland, it becomes clear that based i24News. This is a result of the mersant newspaper, also spoke at le­­ things have changed. Lyman, who is “bitter history” Israel and Poland share, ngth about history – a sensitive subject heading The New York Times’ newly reshe said, but added that Poland’s image for Poles and Russians. He pointed out established Warsaw bureau, described is changing. More Israelis are coming that Warsaw’s most distinctive edi- how the view of Poland has changed for tourism, and Israeli media are more fice, the Palace of Culture and Science, from within the newspaper. “Before, careful about how they portray Poland, which was originally built as a ‘gift’ from when you became the Warsaw corshe said. Historically inaccurate terms Joseph Stalin to Poland, is seen by many respondent, people would always say, that Poles find highly offensive have Poles as a “symbol of the communist ‘That’s OK, don’t worry, it will all end begun to filter out of the vocabulary enslavement and a tombstone on the soon’,” he said. “But when I got the job, Israeli media uses, she added. grave of all Polish dreams about liberty people were coming up to me and sayBut Israelis are certainly not the only and independence; a most clear indi- ing, ‘You’re so lucky! The city is so alive. ones to use phrasing that Poles find cation that Russia will never abandon You are coming to Poland just as it is about to take off’.” by Piotr Narel hurtful. US President Barack Obama its imperial ambitions.”

photos: Slawomir Olzacki (Forum)

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breaks and at the cocktail party following the conference, participants had ample time to network.

Edward Lucas (right) senior editor

at The Economist: “Poland has become a bigger trading partner for Germany than Russia.”

For more information on this or other Poland Today events, as well as for exclusive news and features content, visit our newly redesigned website at: poland-today.pl

The audience,

which filled the conference hall at Endorfina Foksal in Warsaw, heard opinion and analysis from some of Poland’s most prominent business leaders.

photos: Piotr Dziubak, Arkadiusz Chłopik

Below: During the

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POLAND TRANSFORMED

Poland’s position on the global stage

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Poland Transformed

has changed dramatically over the past 25 years. In 1989, it was a backwater and one of the least promising former Soviet Bloc countries. Today, it is playing a decisive role in forming Europe’s response to the Ukraine crisis, and its erstwhile prime minister, Donald Tusk, has been elected president of the European Council. Poland has high hopes that in this role, Tusk will give greater voice to Poland’s priorities within Europe (see page 22).

Master of its own destiny Poland is well-positioned to become a more active regional leader

Poland’s political

significance in Europe will increase over the coming years, with the country well-placed to become a strong regional leader, said participants in the Poland Transformed conference held by Poland Today Warsaw at the end of May. George Friedman, the founder and chairman of the American geopolitical analysis company Stratfor, and Edward Lucas, a senior editor at weekly news magazine The Economist, argued that Poland will have to take a more active role in safeguarding peace on the continent.

Crucially, the country is finally the master of its own destiny, said Lucas.

Poland emerging

truly emerge on the European scene when the two powers neighbouring it weaken. “We are going to see a very different lineup in Europe in 25 years,” Friedman said.

Lucas agreed that in the long-term Russia will weaken, even if its current policy, which allows for the use of military force even in the face of economic pain, is a major problem for Poland.

But he stressed that Poland currently has very good relations with Germany.

There was a sea change in German opinion about Poland after Foreign Minister Radosław Sikorski called on Berlin to lead in Europe three years ago, Lucas noted, and Germany is a key trading partner. A deteriorating German position in Europe therefore may not help Poland’s rise, he said.

Geopolitics has often been an existential issue for Poland – squeezed between the various incarnations of German and Russian statehoods throughout its his- Leadership needed tory, the country has many times found Europe’s security remains an important itself invaded by aggressive neighbours. issue for Poland, and here the country The vulnerable position of Poland has has a role to play. The United States often made the country unable to carry and NATO in general will continue out a successful defence policy and, at to be guarantors of peace in Europe times, resulted in the loss of independ- but Poland also has to shoulder more ence. The predicament is often referred responsibility for defending the eastern to as Poland’s geopolitical ‘curse’. part of the continent, they said. Poland Today, Poland may still be voicing will need to keep the Americans and fears about an unpredictable, aggres- the British involved in European secusive Russia and an economically domi- rity, but it will also have to do part of nant Germany, but its geopolitical the defence work itself. Poland, as position is arguably much better than a prominent regional (but not global) it has been in centuries. Friedman actor, should take a greater leadership stressed that both Russia and Germany role within the Visegrad Group (comhave their vulnerabilities as they both prised of the Czech Republic, Hungary, largely depend on other countries for Poland and Slovakia), said Friedman. their economic performance. Poland The alliance has been a disappointment could therefore benefit. “Russia is much so far, he said. weaker than it looks,” Friedman said. He The United States will support pointed to the fact that the country is Poland, but Warsaw will have to take dependent on energy exports and has part in the building of a more robust actually little control of energy prices. alliance structure in Europe, Lucas and Meanwhile, other sources of oil and gas Friedman said. According to Friedman, are becoming increasingly available.

Warsaw could head a defence alliance Strange as it may sound given that will predominantly be based on Europe’s current politics, Germany Poland and Romania, potentially with is also a highly vulnerable country, the addition of Turkey. He added that Friedman said, because its economy is the United States expects Poland to largely based on exports. “An export- make more defence commitments. ing country is a hostage to its custom- (During US President Barack Obama’s ers,” he added. According to Friedman, visit to Poland in June, the country Poland, which has a more balanced committed to raising defence spendeconomy than Russia or Germany, ing from 1.95% of GDP to a full 2%.) But is likely to grow in significance and Friedman added that there is a need emerge as a regional leader in the com- for the move away from the ‘symboling years. The country will be able to ism’ of alliance to the nuts and bolts –

The Visegrad Group The Visegrad Group also known as the Visegrad Four (previously the Visegrad Triangle, before Czechoslovakia was dissolved and replaced by two separate countries in 1993), was established in February 1991 in Hungary.

The organization was founded with the aim of advancing military, economic and energy cooperation in Central and Eastern Europe.

Originally, it was also meant to further the European integration of its members. It succeded in achieving that goal: all of them gained membership of the European Union in 2004.

In 2011, it was announced that the Visegrad countries would establish their own ‘battle group’, which is expected to become operational in the first half of 2016. Earlier this year, members of the Visegrad Group signed an agreement on joint military exercises and coordinated defence procurement.

Poland simply needs to purchase more weaponry. Warsaw’s defence readiness will be key since the United States is unlikely to provide the country with as many troops it would like to see on its soil. Foreign Minister Radosław Sikorski recently called for the deployment of some 10,000 NATO troops in Poland.

Lucas pointed to the leadership role that Poland is already playing with regard to the crisis in Ukraine. Poland is the EU country which best understands the situation in Ukraine; it is the “place to go” for expertise, he claimed. However, he pointed out that Poland would also be expected to lead in the early stages of any potential conflict in the Baltic states. The question is whether Poland would be ready to send its troops, Lucas said.

Energy woes Energy security remains a major problem for Poland, with the country being largely dependent on Russian oil and gas, and here the participants in the conference admitted that a good solution will be difficult to find in the shortterm. “There is no single silver bullet,” Lucas said, referring to the big hopes that many people are currently pinning on shale gas. Instead, Poland must take an array of small steps if it is to gain a greater measure of energy security, he added. by Adam Zdrodowski

CONFERENCE & COCkTAIL PARTY

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

Thank you to our patrons & partners for making it possible for us to bring 50 international journalists to Warsaw so they could hear for themselves about Poland’s economic success, and in turn tell that story around the world.

honorary patronage

Under the Patronage of the President of the Republic of Poland, Bronisław komorowski.

patron

S t r at f o r

Global Intelligence

content partner

media partners

partners

42 Telling Poland’s POLAND TRANSFORMED

story to the world

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Poland Transformed

photos: Piotr Dziubak, Arkadiusz Chłapik

Poland Today gives 50 journalists from five continents a first-hand look at the country’s transformation

The Poland Transformed conference hosted journalists from around the globe in Warsaw, ensuring Poland’s success story was heard by an international audience Fifty

journalists from around the world took part in the Poland Transformed conference held by Poland Today at the end of May. Their home countries ranged from Albania to Argentina, Iceland to Japan. The conference aimed to give them the information they needed to tell the story of Poland’s successful transformation to their home audiences – and that they did. Find a sampling of just some of the articles that were written in this section.

Along with attendance at the conference, the journalists took part in a special informational session at the Warsaw Stock Exchange to hear from officials there about Poland’s transformation and the stock market’s role in it.

The conference’s partners received exclusive access to the journalists – special interview sessions were held where they were able to tell their story.

The journalists also received detailed

Publications participating in the Poland Today ‘Poland Transformed’ international press tour were as follows:

– Albania: Monitor – Algeria: L’Echo – Austria: Wirtschaftsblatt – Belgium: De Standaard – Brazil: Folha – Bulgaria: Capital Weekly – China: Renmin Ribao – Czech Republic: Hospodářské Noviny – Denmark: Polennu – Estonia: Eesti Päevaleht information packages about each – Finland: Suomen Kuvalehti of the conference partners.

– France: Le Monde “Since I consider myself to be an – Germany: Deutsche Welle, Suddeutsche Zeitung, ZDF TV advanced Polonophile, the conference for me was an excellent opportunity – Greece: To Vima – Hungary: Magyar Nemzet, Figyelo to enhance my knowledge and con– Iceland: Kjarninn tact base,” said Hospodářské Noviny’s – Ireland: The Irish Times, RTÉ Martin Ehl of the Czech Republic.

– Israel: i24News “It was very interesting to visit your – Italy: La Repubblica, Il Sole 24 Ore country for the first time and now – Japan: Nihon Keizai Shinbun / Nikkei News – Latvia: LETA I can definitely say that I have fallen in – Lithuania: IQ Magazine love with Poland,” said Maria Ivanina, – Mexico: L’Expansion, Revista Proceso a reporter for the Russian ITAR-TASS – The Netherlands: Nederlands Dagblad, De Telegraaf news agency.

“The conference was highly inform- – Portugal: Expresso – Qatar: Al Jazeera ative and stimulating. ... A gateway to – Romania: Adevarul, Foreign Policy Romania contacts with Polish managers and – Russia: Kommersant, ­ITAR-TASS others in key positions, and also a great – Slovenia: Business Daily Finance meeting of no less then 50 colleagues – South Africa: SAKE 24 from all over the world. Thoroughly – Spain: El Mundo, El Pais – Sweden: Sydsvenskan enjoying and useful,” said Hilbrand – Turkey: Dünya Gazetesi, Hurriyet Daily News Rozema, a journalist at Nederlands – UK: The Economist Dagblad in the Netherlands.

– USA: The New York Times, Stratfor

Spain

25 years of the Polish miracle

by Pablo R. Suanzes There is a country in Europe where the confidence of the political and economic elite is overflowing. Talk of the future is positive.

That after economic growth of only 2% in 2012 and 1.6% in 2013, while 3.3% is expected for 2014. From 1992 it has recorded an average annual increase in GDP of 4.1%. And since 2003, the beginning of the crisis, it has grown by 3%.

It is a place where unemployment (9.3%) is relatively low. A country that aspires to be the leader of the East, but always speaks of itself as in the centre of Europe. It is a country that looks at the euro fondly, though with interest rates having fallen to a record low (2.5%) and after benefiting from wage competitiveness, is in no hurry to join. That country is Poland. ... Poland is enjoying a sweet moment.

The macro figures are good, major cities are on the rebound and quality of life has improved.

This comes as investment is solid and there are more tourists. ... “We are a very competitive economy, we have a great entrepreneurial spirit and economic policy has been good in recent years. There have been no bubbles, debt is below European standards and our financial system is healthier than in the rest of Europe because of strong regulation,” stresses Jacek Socha, a former finance minister and adviser to successive governments over the past two decades.

Finland

Poland goes from sick man of Europe to EU power broker

by Teppo Tiilikainen At the turn of the 1990s, Poland was still one of the region’s poorest countries, but it has come a long way, becoming the most dynamic state in Central and Eastern Europe. Twentyfive years ago, Poland’s most important export was coal, agriculture was in decline, and high inflation hampered economic development.

Even prospects for Ukraine looked more promising. It had a significant aircraft manufacturing industry and its agriculture sector was in good condition. The Polish and Ukrainian economies at that time were about the same size, but now Poland’s GDP is more than three times higher. ... Behind Poland’s success story stands the daring policy of economic reform called ‘shock therapy’, led at the time by Finance Minister Leszek Balcerowicz and Harvard University economics professor Jeffrey Sachs. The currency was made exchangeable, and subsidies for state-owned firms were discontinued.

The monopoly position of the state in foreign trade was demolished, and the central bank was no longer allowed to fill gaps in the state budget. “Poland was transformed into a market economy in one fell swoop,” said Professor Witold Orłowski, an economic advisor to Prime Minister Donald Tusk. “It was a very difficult process. In the beginning businesses did not succeed on the global market, but now we are competitive.”

Hungary

Respect Warsaw!

by Lambert Gábor Poland’s economic policy, while struggling with many challenges, also sets a good example for how well thought-out and meaningful reforms can be consistently implemented. ... “In the mid 1990s, one could only hear that the region’s capital would be Budapest or Prague, but certainly not Warsaw,” said Richard Stephens, editor in chief of Poland Today.

The publication organised a large-scale conference that commemorated how 25 years ago, on June 4, 1989 – long before the Berlin Wall fell – the partially free elections in Poland began the collapse of the system that had come into being at Yalta. At the conference, journalists from 50 countries around the world heard prominent presenters from Polish economic and business circles express success, self-confidence and satisfaction.

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pOLAND tRANSFORMED

Opposite page:

international journalists pose with officials from the Warsaw Stock Exchange, Colliers International and Poland Today after participating in a seminar hosted by the WSE on the development of Poland’s economy and its capital market.

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POLAND tRANSFORMED

Leisure time:

The press tour also included a picturesque boat trip down the Vistula River in Warsaw. Journalists had a chance to take in the sights, as well as rub shoulders with some of the conference partners.

Czech Republic

The (New) Beginning of a Beautiful Friendship

by Martin Ehl In a year full of historically freighted European anniversaries, a particularly symbolic one will be celebrated this week. Poles voted 25 years ago on 4 June in the first semi-free parliamentary elections in the Eastern bloc. They voted under a (now) famous poster depicting a cowboy from an American Western, High Noon, who, instead of a gun, held a ballot and asked people to vote for Solidarnosc, the Solidarity movement. Thus, from the beginning Polish democracy had an American flavor. This anniversary is especially meaningful for Poland, which is living in stability and prosperity without precedence in its history, according to a study by World Bank economist Marcin Pitkowski.

Conference

Poland Transformed

The Netherlands

Poland is Eastern Europe’s growth tiger

by Rob Savelberg

Ireland

A tale of two Polands: the cowed country that has turned into a European leader

by Derek Scally World leaders, led by US president Barack Obama, will pay tribute to two Polands today.

The first is the Poland that, on this date 25 years ago, went to the polls and changed the course of European history. The second is today’s Poland: a transformed place almost four times the size of Ireland whose time has come. On June 4th, 1989, a landslide vote saw Poland’s opposition Solidarity movement win almost all parliamentary seats made available by the dwindling communist regime to other political parties. After four decades under a Soviet shadow, the result set out shockwaves that, four months later, toppled the Berlin Wall.

A quarter century after the end of communism, Poland is the best student in the Eastern European class. The country is brimming with health and progress. Of all the EU member states only Poland had positive economic growth during the financial crisis. ... Young ladies with high heels parade through the clean, polished streets with fashionable bags in their hands. In the cafés and restaurants you can find exquisite food at modest prices. What a difference from the past, recognizes Andrzej Dulka, CEO of the Polish branch of telecom company Alcatel-Lucent. “In 1989 you had to wait two days to make a call abroad.” Only 12% of the population had a fixed telephone line. Now, there are 145 million mobile phones in Poland.

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The Netherlands

pOLAND tRANSFORMED

Poland celebrates 25 years of freedom and democracy

by Hilbrand Rozema With the huge election victory for Solidarity 25 years ago, the Russian retreat from throughout Eastern Europe began. Regimes began to fall like dominoes. Months later, the Berlin Wall fell. Almost every Pole over 35 years old remembers how the newly elected first Prime Minister Mazowiecki reached out his long arm and made the ‘V’ for victory sign in parliament.

The photo of that moment by the British-Polish photographer Chris Niedenthal has become iconic. Moreover, German Chancellor Merkel points out that Eastern Europe’s liberation from communism really began in Poland, not in Berlin. The images of the fall of the Wall was on the world stage were so powerful and symbolic that many now overlook the fact that the Poles kicked off the revolution on June 4, 1989. Merkel reminds Germans regularly that the victory began not in Germany but in Poland.

She thus emphasizes the friendship between the two countries. Another sign of neighbourly goodwill is the German title ‘Wirtschaft Wunderland’ for Poland – economic wonderland.

Exclusive access:

Partners of the Poland Transformed conference were granted exclusive interview sessions with the international journalists, ensuring that they had a chance to send their message about their participation in the country’s transformation to a global audience.

Turkey

Poland is the EU’s fastest

by Hilal Sari

The United States

In Poland, the Truth Lives in Warsaw

by Adriano Bosoni 2014 is a very meaningful year for Poland because it marks the 25th anniversary of the 1989 elections, which paved the way for the fall of communism in the country. It is also the 10th anniversary of Poland’s accession to the European Union, which gave the Poles the feeling that they had finally returned to Europe.

Few places in Poland are as representative of these changes as Warsaw. Throughout the 20th century, the Polish capital was at the center of Europe’s collective tragedy, suffering the consequences of the murderous and extremist ideologies that defined the century. It’s impossible to fully assess the scale of death, destruction and cultural plunder that took place in the city. And yet Warsaw is one of Europe’s greatest survivors, rising from the ashes and once again standing at the heart of a country that seeks to regain its voice in Europe.

Warsaw is a city of contrasts. The soulless Soviet architecture, which sought to crush the spirit and standardize the mind, coexists with both a carefully reconstructed ‘old town’ and sprouting skyscrapers. The deliberate contrast seeks to achieve a difficult synthesis between the past and the future. At the heart of the city, there’s the magnificent National Stadium, a prodigy of architecture that serves as a colossal reminder of the importance of EU funding in Polish infrastructure.

After its rapid post-communist liberalisation, Poland has separated itself from slow-growing European countries with the continent’s fastest growth figures. Polish political leaders, business people and journalists from 50 different countries, attended the ‘Poland Transformed’ conference, which was organised in Warsaw by English-language media platform Poland Today to discuss the country’s post-communist transformation over the past 25 years. The country is celebrating 25 years since its first free elections after World War II, 15 years of NATO membership and 10 years of being part of the European Union. ... Stratfor founder George Friedman, The Economist’s senior editor Edward Lucas, and former Polish Prime Minister Jan Krzysztof Bielecki, among others, discussed the factors behind Poland’s 25 years of success, the role of bussiness in the country’s transformation and Poland’s role on the global stage.

The man who sat in the prime minister’s seat in Poland between 1990 and 1991, Jan Krzysztof Bielecki, gave the conference’s opening speech.

“The realisation of political reform was the most important factor in achieving economic reform,” he said. Xavier Devictor from the World Bank called Poland a “champion of the region” when it came to economic reform.

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Poland transformed

Delivering change Poland’s transformation has been largely positive, but the country still has a lot of work to do if it is to become truly business friendly

Poland Today sits

free election – there was a lot of excitement with this new start, but that was combined with the difficult economic situation: hyperinflation, all the reforms.

down with Rafał ­Brzoska, CEO ­of InPost

What do you mean by the idea that your family and others faced ‘threats’?

InPost was a partner of Poland Today’s Poland Transformed conference, which took place on May 28 in Warsaw

Integer.pl Group Integer.pl Group is a capital group that comprises companies within the postal and financial services sectors. Its best known brand is InPost, the largest independent postal operator in Poland. The company developed a type of parcel locker service in Poland that allowed recipients to pick up their packages at any time of the day or night, seven days a week. The service became extremely popular, and the company has begun a huge global expansion. According to the company, InPost parcel locker technology can be found in Australia, Chile, Colombia, Costa Rica, Cyprus, the Czech Republic, El Salvador, Estonia, Guatemala, Iceland, Ireland, Italy, Latvia, Lithuania, Poland, Russia, Saudi Arabia, Slovakia, the UK and Ukraine.

I mean there were big question marks: how will the situation evolve?

We were always under the influence of the Soviet Union and then there was this feeling of freedom, but on the other hand there was the question of how Poland would develop between two big blocs – the former Soviet Union and Western Europe.

That was something difficult to grasp – how Poland would exist as a nation between these two huge blocs that were antagonistic toward each other.

This was something that raised a lot of threats.

Also, combined with this geopolitical situation, there was the economic situation in the country – hyperinflation, but also a lot of new experiences, like new goods on the shelves in shops. That was something completely unexpected.

The only question was who had enough money to buy them!

But there were so many pros in terms of the positive changes around us. People were able to start their own business, to start a new way of earning money. That was extremely good.

All the reforms, they were really something exceptional, especially in comparison to other countries like Romania or Bulgaria or the former Soviet Union countries like Ukraine.

So considering these challenges and difficulties, do you believe that Poland has been successful?

What do you remember from 1989, when Poland began its transformation?

I was pretty young, 12 years old.

I only remember the excitement in my parents’ eyes when everything seemed to become new. There was a huge change in terms of daily activities, but there were also a lot of threats facing them as well as all the other families around us. I remember the first really

Yes, definitely, because we made the right choices. Also, in terms of the political consensus, we went the right direction – toward the West – integrating with NATO and the EU. That was probably the only situation where all of Poland’s political parties totally agreed on the goal. So that was something really very good. Despite the mess that came with post-communism, the political parties could at least agree to integrate with NATO and the EU and move forward with all hands on deck as soon as possible.

How did your career in business begin?

I started in 1999 when I was still a student. I was in my third year at the University of Economics in Kraków when I decided to set up my company.

I started with a very simple kind of business – the delivery of supermarket leaflets. Supermarkets were booming in the late 1990s and that was a very good starting position. Thanks to that I gained experience. Within two years we became a market leader with this kind of service, with a 40% market share.

So when my colleagues graduated I already had a valuable asset – a company that was worth millions by 2003.

Really? You had built a company worth millions in just four years?

Yes. A private equity fund offered to buy the business and the valuation was something like 25m złoty. That was a good experience for me. I wasn’t aware of the business’s value, frankly speaking. I refused the offer and I decided to continue growing my own business. The result was that in 2006 we set up the first private postal operator in Poland, InPost. We decided to compete with Poczta Polska (Polish Post), a stateowned company with strong support from the government. Despite that, we were able to build strong competition.

We began our most exciting project in 2010: the parcel machines project. Now we are spending hundreds of millions of euro to develop it in various countries. We are already present in 22 countries. It is definitely the most important project within the company.

So far I am satisfied with the achievements. I think that I have achieved 15 or maybe 18% of my goal. So there is still a lot to do. And I am definitely not planning to cash out or change the interest in terms of the business activity.

How were those early years of starting out when you were competing with a state-owned giant?

There was, and there still is, difficult competition. If someone decides to compete with a state-owned company, they have to be aware that they will face a lot of difficulties. That was exactly what we had starting from the beginning all the way up until now. It’s definitely unfair. Unfortunately it’s an

ongoing story. Nevertheless, we are winning. Some of the battles we have lost, but I think that most of them we have won. And the success is a combination of strong belief, strong execution, good people, teamwork, and also a lot of money spent especially to strengthen our position, both at the beginning and on the ongoing rivalry. We invested widely only this year to protect ourselves, to recover in terms of PR and brand because of the strong attack at the beginning of the year when we and our partners won a big tender run by the Ministry of Justice.

During our history we have faced many problems, but also many positive effects. Only going forward, developing new services, implementing innovative ideas – that is how we are reacting to this kind of issue. We always try to be a few steps ahead of the competition, not only in the postal business. In the parcel business we do exactly the same thing.

Four years ago no one in the global market was convinced that automatic parcel machines would be the future of logistics. Now, we have created the current mania around parcel machines.

We are the global leader. Ninety-five percent of the machines produced over the last two years came from our factories. So that is how we deal with the strong competition that we face.

plex. The thing to understand is that it doesn’t matter who is leading the politics within the country, whether it’s the left, the right or something in between.

Before elections they always say that they would like to change a lot to make Poland a more business friendly, more business-orientated country.

Afterwards there are only a few attempts, and at the end of the day, there is this problem that a lack of money always results in decreasing the competitive advantages of the Polish economy. So there are new taxes imposed on different sectors of the economy. There are always a lot of plans, but unfortunately the outcome is not sufficient or is even worse than before.

So what lessons should others draw from your company’s experience?

In what way do you think Polish businesses will need to adapt if they are to be successful in the future?

So where does that fit in when it comes to the challenges Poland has to face going forward?

We have a lot to do – not even to im­­ prove, but to show to society that businesspeople are not thieves.

Businesspeople provide a lot of jobs.

Within the Integer.pl Group (see box) I employ 10,000 people. I pay a lot of taxes – here in Poland, too, not in (tax haven) Cyprus, for example. So this is still a long journey. We need to prove that Poland and the Polish economy are business friendly.

What do you think should be Poland’s biggest priority in terms of improving the business environment?

You can’t say there is one priority because the situation is very com-

47

So what should be the main change?

I’m not expecting one main change.

Politicians should simply deliver on their pre-election promises. Nothing more.

Now, unfortunately businesspeople are so frustrated that again and again we have the same story that the promises are not even half-delivered. They have completely lost their belief that something might change. So if the politicians can’t deliver, or know that they won’t deliver: just don’t make the promise before the elections. That would be a huge change in terms of expectations.

Especially mine.

We – businesses in Poland – are trying to survive. We are very creative.

And I think that we are very good at it.

Especially in comparison to businesses run by businesspeople in France, the UK, Italy, I see that we are much more flexible. I think that this is the result of the situation that we have here in Poland. We have to be more flexible.

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

I think that we have shown that we were the best example of transformation from communism to a pretty wellpositioned economy in Europe. We probably could have done it better, but it was a really a great success that we achieved what we did. And I believe that the next 25 years will strengthen our position as a country, as an economy. The Polish nation is work-oriented and Polish business is very hungry for success. We will not sit back and defend our territory, rather we will attack – in a positive way of course – other markets, showing them that ‘Polish’ doesn’t mean ‘bad’. And we are on the right path to prove it. Year after year we improve, we are catching up to Western economies. We have a lot of opportunities.

photos: InPost

It won’t be a fair game – that is the main lesson. Second, you must be very consistent in your main strategy.

You can’t change the strategy every quarter or every year, because this is something that will negatively affect the business. You also have to have a resistance to being attacked. You may be attacked, not only from one side, but from every side, even from sides you are not ex­­pect­ing. This year we were visited by all the inspectors from all kinds of authorities.

‘It was a really a great success that we achieved what we did. And I believe that the next 25 years will strengthen our position as a country’

48 Business, POLAND TRANSFORMED

transformed Poland Today takes a look at how various sectors of the Polish economy have changed over the past 25 years in the run-up to its Poland Today Transformation Awards Gala

Jan Cienski is a

journalist and author that has covered Poland for more than 10 years. He writes for several media, including The Economist, and is an analyst at the demosEUROPA think tank. He was the Warsaw and Prague correspondent for the Financial Times from 2003 to 2014. 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. He has a degree in international relations from the University of Toronto.

Twenty-five years ago

Poland was a basket case. The country was bankrupt. Hyperinflation was eating up people’s savings. Infrastructure was a dilapidated mess – with some roads not seeing much maintenance since the war. Toilet paper, close in texture to newsprint, was a rare consumer find. Shops carried grabby names like ‘Bread’, ‘Shoes’ and ‘Dairy’ – titles that failed to properly describe the often empty shelves within. Coal was a leading export, albeit sold for less than it cost to mine.

Forty-five years of communist rule had left Poland poor and trailing far behind western Europe. The challenge facing the non-communist government of Tadeusz Mazowiecki that took power in August 1989 was to try to remake a market economy in that devastated environment.

Adam Michnik, a leading dissident, once compared what communism did to a market economy to the process of turning an aquarium into fish soup. Now, the reformers in the new government had to find a way of remaking the delicate balance of capitalism.

On January 1, 1990, the government passed a radical reform package under the aegis of finance minister Leszek Balcerowicz which freed most prices, ended government support for state enterprises, eased restrictions on for-

eign companies and on imports and made the złoty convertible. The shock therapy programme unleashed a wave of new business.

Within days, goods flooded Poland, as thousands raced to Vienna, Berlin, Istanbul and anywhere else they could get their hands on goods demanded back home. They filled white, striped nylon bags with leather jackets, socks and jeans and then waited in queues lasting days on the German border to come home to legally sell their goods.

Polish farmers slaughtered hogs, cows and chickens and then sold the produce out of the back of their cars on city streets.

That rush of new businesses helped return Poland to growth by 1992 – and the country has not had a recession since, the most successful record in Europe. Many of those sidewalk sellers are now real businesspeople, and the transformation of Poland from a poor and peripheral country into a secure and increasingly wealthy member of the European Union is in large measure due to the private businesses – foreign and domestic – which have reshaped the country. The soup has been turned back into an aquarium.

Poland Today takes a look at how various sectors of the country’s economy have transformed in this rejuvenated ecosystem. by Jan Cienski

Retail Tatty and empty shops were a visible sign of the Communist Party’s failure to supply its population with even basic consumer goods. During the four decades of People’s Poland, the best way to get everything from furniture to cars and laundry soap was to either use corruption and connections, or to spend days patiently waiting in lines outside of shops. A complete culture of line etiquette even sprang up, with punctilious attendance keepers making sure no one jumped ahead. Poles had always had access to farmers markets to buy food unavailable in state shops, and after 1990s bazaars became the country’s shopping malls. Within a few years sellers plying their trade on folding camp beds had moved their wares into more permanent shops, while foreign retailers also started to edge into the country. Today Poland boasts a full retail environment, from mom-and-pop corner shops to gleaming shopping centres.

Malls have strayed far beyond the country’s largest cities, while the outskirts of most towns now feature big box retail, all supplied by a vibrant and very competitive wholesale industry.

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POLAND TRANSFORMED

Infrastructure

Agriculture & food

Back in 1989, Poland’s only highway was a piece of the old Berlin to Breslau (Wrocław) autobahn, built at a time when Adolf Hitler was chancellor and Wrocław was part of Germany.

The road was a potholed mess, forcing drivers to weave desperately from lane to lane to avoid breaking their axles. A glance at the rail network still showed Poland’s 19th century division – with the German bit showing a dense grid, the Austrian sector in the south sparser branches, and lots of white spaces in the east that had been a Russian province. In the first 15 years after the end of communism, the government was too cash-strapped to embark on large new infrastructure projects.

As a result, small country roads were clogged with transport lorries and cars – signs of the country’s growing wealth – while train travel took significantly longer than before the war.

That changed after Poland’s 2004 accession to the European Union. A flood of structural funds allowed for the construction of highways, city bypasses and modernised rail lines, while cities and towns built swimming pools, sidewalks, sewage plants, football fields and stadiums. The construction boom has drawn in both foreign and domestic companies, although many have subsequently been burned by the government’s insistence on choosing the cheapest bidder for big contracts.

Poland’s doughty peasant farmers resisted communist collectivisation, leaving the country divided into a patchwork of tiny farms. Those plots helped keep a lot of people fed during the grim days of communist shortages, but today they are increasingly irrelevant in a sector which is quickly modernising. Domestic farmers and foreign corporations have built modern agribusinesses, from pork production on an industrial scale to making Poland the world’s largest apple exporter – something that caused significant economic pain when Russia closed its market to agricultural imports. Forced to adapt to EU sanitary norms, the days of milk producers leaving cans of slowly decaying milk on the side of the road to be eventually picked up by a horse-drawn cart are long gone. That production is now processed by very modern companies, making yoghurt, frozen foods and packaged meats on an huge scale.

Media Poland had the communist world’s most vibrant underground media. After martial law was declared in 1981, thousands of journalists lost their jobs, and many ended up working for the thousands of illegal newspapers and magazines published on hidden printing presses and distributed around the country. One of the key opposition demands in the Round Table Talks leading to partly free elections was the creation of an independent press. That came true in spades. After 1989 Poland saw the existing state-owned print monopoly broken up, with both foreign and domestic publishers fighting for readers. The number of those readers has been steadily declining for years, causing growing pain for print. Poles have long preferred to get their news and entertainment from the screen, both television and the internet.

At the Poland Today Transformation Awards Gala, which will take

place on Tuesday, December 9 at the Sofitel Warsaw Victoria Hotel, a company from each of the sectors outlined here will be announced as the winner of the ‘Most Transformational Company’ Award, as judged by panels of experts in each sector. Jan Cienski, who is writing a book on Poland’s transformation, is a jury member.

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Healthcare Government-run healthcare systems are the object of complaints for citizens from Belfast to Barcelona, but Poland’s chronically underfunded system has been a particular focus for disgruntled citizens. That dissatisfaction opened the door for private sector competitors. Often starting with clinics aimed at well-earning expats, private hospitals now have a growing share of the Polish health market. Many also cater to foreign patients, eager to take advantage of the high quality and cheap prices of Polish doctors and dentists. Many of the largest private companies have also started providing insurance, while some have expanded across the region.

Transformative future: Preceding

the Poland Today Transformation Awards we will hold the Business Future Forum, a conference where decision makers will explore what lies ahead for Polish business. After all, while Poland's businesses can claim success after 25 years, they must not rest on their laurels. There is still much work to be done, but which direction should the various sectors turn?

Find out at the Sofitel Victoria Hotel in Warsaw on December 9.

IT & telecoms

Transportation

Some of Poland earliest and most successful capitalist businesses first imported and then assembled computers, supplying businesses, gamers and schools. As the capitalist economy grew in complexity and businesses grew in size, there was an increasing need for management software to allow managers to control their enterprises. Polish companies, relying on very cheap but very good programmers, filled that niche. Eventually, they grew large enough to expand outside the country, and now Poland hosts some of Europe’s largest software developers. In telecoms, older Poles remember heading down to the post office to book a phone call to distant destinations like Rzeszów and Gdańsk, not to mention Toulouse and Toronto, and patiently waiting for hours to get a crackling connection. Today, like in almost every wealthy country, smartphones are ubiquitous while mobile providers race to provide ever more and ever faster bandwidth.

A quarter century ago, cars were a luxury available to only a few; most Poles got around using buses and trains – usually very low and rattling buses and trains. On summer runs north to the beaches of the Baltic coast or winter trains south to the Tatra mountains, the crush was so great that conductors didn’t even bother squeezing through the wagons to check tickets.

Every bit of available space, including corridors and toilets were crammed with passengers.

Today the buses, airplanes and trains do not differ in comfort and quality from those found in Western Europe, although travel times can still be longer thanks to road and rail infrastructure that still lags the wealthier western half of the continent. While in the past all of those services were provided by government monopolies, Poland has privatised much of its transport businesses and opened the sector to domestic and foreign competition. That has the post office fending off aggressive rivals, while a host of bus companies vie for business on Poland’s roads.

Energy Poland’s energy system saw very little investment in the first decades after the country’s economic transformation. Now, Poland faces a wave of new plant construction. Moreover, its almost exclusive reliance on coal is being diluted with natural gas and an increasing number of green power sources, from wind farms to biofuels. The sector has been broken up into several large local firms, with a few foreign players also angling for a piece of the market.

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Production Communist Poland was an industrial country.

The Solidarity labour union got its start in the sprawling Lenin shipyard along the Baltic coast, and the Party put great stock in the brawny business of factories staffed with sweat-stained proletarians. Today’s modern nation continues to rely on industrial production for a third of gross domestic product – one of the highest levels in Europe. But unlike the polluting smokestack industries that scorched Polish cities in acid rain before 1989, Poland’s modern factories are some of the most competitive in the world. Instead of workers in overalls, robots and engineers are now a common sight on shop floors. Poland produces car parts and cars, buses, trains, helicopters and furniture – Poland is actually the world’s fourth largest furniture exporter by value. Poland’s industrial base is a mix of foreign – particularly in global products like cars and aviation – and domestic companies making everything from the parts that fuel Germany’s auto industry to finished goods like locomotives and ships.

Finance

Real estate developers

Raw materials Coal, oil and metals formed the backbone of the communist-era economy and they continue to be hugely important to Poland today. Most raw materials extraction and processing is in the hands of state-owned or state-controlled firms, but several of them have managed to expand beyond Poland’s borders, becoming some of the country’s first multinationals. The government continues to keep a close eye on these sectors, usually treating them as strategic.

Poland’s cities are still blighted with the hulking prefab apartment blocks designed to provide cheap and very cramped housing to the working classes. But in the years since the end of communist rule, increasing Polish wealth has drawn in a growing number of real estate developers. They have transformed derelict post-industrial wastelands into office parks and shopping centres. New apartment developments range from cheap high-rises to gleaming skyscrapers filled with luxury flats. The sector was battered by the economic crisis, which saw prices fall and new projects stall. But in recent years lending has again become available, albeit on much more conservative terms than before the crisis, and there are signs that buyers are starting to return to the market. Now many of Poland’s largest cities are ringed with low rise blocks housing outsourcing businesses, one of the country’s most dynamic sectors.

In communist times, cars and houses were bought with bags of cash – often US dollars – while state-owned companies gorged on cheap money supplied by the government.

One of the key reforms after 1990 was the creation of a modern financial system.

The new government raced to open a stock exchange, deciding to import existing models from the West rather than spending time to develop a Polish model. That, plus careful regulation, has turned the Warsaw Stock Exchange into the region’s largest capital market, making it a key ingredient in the country’s modernisation. The first halting steps in creating a non-state banking system were marred with corruption and insider dealing, but allowing in foreign banks opened Poland to the standards and know-how from more advanced banking sectors. That, coupled with a conservative regulatory regime, has left Poland with one of the healthiest banking systems in Europe, one that did not go under during the economic crisis and which continues to supply credit to consumers and businesses without endangering government finances. Working alongside banks and the bourse, Poland has a full range of private equity, from venture capital funds eager to take a risk on startups, to big firms investing hundreds of millions of euro across central Europe.

From fish soup to aquarium:

Many of Poland’s most successful companies today started as scrappy busineses selling their wares on sidewalks. In 1989, ­Poland’s economy was a basket case.

Now, it is the most dynamic in the region.

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Top refiner in the red on Lithuania fiasco

Business

Flying high:

ECONOMY

Hungarian low cost airline Wizz Air has announced a largescale expansion in Poland. It will be flying three new aircraft and is targeting 25% y/y capacity growth for 2015.

Q2 GDP rises 3.3% on domestic drivers

The Polish economy expanded by 3.3% y/y in Q2 2014 on the back of robust domestic demand, announced GUS, the central statistical office. The result was only marginally lower than the 3.4% y/y growth recorded in Q1.

According to GUS figures, Poland’s domestic demand accelerated significantly, to 5.1% y/y, marking the best reading since Q4 2010.

Private consumption growth accelerated in the second quarter to 2.8% y/y. According to economists, consumer demand is likely to grow at a similar pace in the coming quarters, in line with increasing real household incomes.

On the flipside, however, net exports contributed negatively to the GDP (at -1.6 percentage points) for the first time since the end of 2010.

The external trade balance will likely continue weighing on GDP growth in the subsequent quarters, experts say.

Poland sees first ever deflation Polish consumer price inflation plunged into negative territory in July for the first time in 32 years, when the country’s central statistical office started collecting the data. Thanks to lower costs of food, clothing and fuel, Poland’s consumer-price index edged down to -0.2% y/y in July, reversing its 0.3% annual increase in June, in line with average projections. “This result is almost entirely due to positive supply shocks,” commented BZ WBK economist Maciej Reluga. “Because of recent sanctions, oversupply of food on the domestic market will be observed also in the upcoming months, prolonging the period of negative CPI to several months,” he added.

Business review

Unemployment down to 11.9% in July

Poland’s registered unemployment rate fell to 11.9% in July, reaching the lowest level since 2011, according to Central Statistical Office (GUS). At the end of the month the number of registered unemployed amounted to 1.88m and was lower by 1.8% m/m and 10.3% y/y.

Spring and summer often allow for ­seasonal hiring, but this year unemployment has dropped at a faster pace during the warmer months than in the past few years.

PMI data signal worsening conditions in manufacturing

Poland’s manufacturing sector purchasing managers’ index PMI dropped to 49 points in August from 49.4% in July, marking the sixth consecutive month of declines, a survey of 300 industrial companies, prepared by Markit Economics for HSBC, showed. A PMI figure below 50 indicates contraction, while a score above that level signals expansion. The PMI slipped into contraction territory in July following 12 subsequent months of readings above the 50-point threshold.

AIRLINES

Brussels approves state aid for LOT

In a much awaited decision the European Commission concluded that the Polish government’s decision to award PLN 804m (€194m) worth of public aid to the country’s flagship carrier LOT Polish Airlines was in line with EU rules on state aid. The official decision thereby puts an end to the formal proceedings in Brussels related to the Polish national carrier.

In order to get the Commission’s green light for the rescue package, LOT had to implement a far-reaching restructuring plan that involved the closure of several profitable routes, capacity reductions and job cuts. Last year the carrier posted its first net profit in half a decade – it topped PLN 26m (€6.2m).

Wizz Air adds three aircraft to Polish fleet

Hungarian low cost airline Wizz Air has announced a large-scale expansion in Poland with three new air-craft and 25% y/y capacity growth targeted in 2015. With these new services Wizz Air is now offering a combined total of 103 routes to 47 destinations from its seven Polish airports. The airline has also increased frequencies on some of the most popular routes across its Polish network. As the country’s third largest airline, after Ryanair and LOT, Wizz Air expects to carry 4.6 million passengers on Polish routes this year.

ENERGY

State giants join in nuclear plant project

Poland’s top utility PGE has inked final agreements with three other state-controlled giants, which are to acquire a combined 30% of the shares in Poland’s first nuclear power project.

PGE will sell stakes of 10% each in its nuclear energy SPV PGE EJ 1 to listed power groups Tauron, Enea and copper miner KGHM. Each of the three partners is expected to contribute PLN 107m to the project by 2016. As the project’s leader, PGE will retain a 70% stake in the SPV, and pitching in an estimated PLN 700m.

The cost of the project could add up to as much as PLN 40-60bn.

Poland’s top oil refiner PKN Orlen has posted a record quarterly loss after writing down the value of its operations in Lithuania and the Czech Republic. Orlen’s Q2 2014 net loss widened to PLN 5.2bn from PLN 207m in Q1 2014.

The Warsaw-listed company wrote down PLN 4.2bn from the value of its unprofitable Lithuanian unit Orlen Lietuva and cut the value of its Czech subsidiary Unipetrol by PLN 711m. The Lithuanian unit, which Orlen bought for $2.8bn in 2006 from Russia’s Yukos, is currently being valued at $163m in PKN’s books, after its business had been badly affected by global market conditions and local logistical problems. Orlen has had to transport oil to the refinery by rail and sea, rather than by pipeline. When Orlen beat out a Russian statebacked competitor to buy Lietuva eight years ago, a mysterious mishap closed the pipeline in Russia that fed oil to the refinery.

It has never been repaired.

Lotos gets financing for upstream project

Poland’s state-run investment vehicle Polskie Inwestycje Rozwojowe (PIR) has sealed the agreement to provide oil refiner Grupa Lotos with PLN 430m worth of financing for a new offshore upstream project in the Baltic Sea. The project, worth nearly PLN 1.8bn, will enable the Warsaw Stock Exchange-listed Lotos to make use of its license and develop the B8 deposit, thus significantly boosting the group’s own oil production. The financial commitment from PIR enabled Lotos to get additional financing for the project to the tune of some PLN 660m from Bank Gospodarstwa Krajowego (BGK) – another state-controlled entity, as well as Bank Pekao, the Polish unit of Italy’s Unicredit. The recoverable resource potential of B8 is estimated at 3.5m tonnes of crude oil and the launch of commercial production from the deposit is scheduled for late 2015.

Kulczyk merges energy assets, gets Chinese investor

With financial support from a China-backed fund, Polish billionaire Jan Kulczyk will create the country’s largest privately-owned utility by combining his energy assets Polish Energy Partners (PEP) and Polenergia, both of which are controlled by Kulczyk Investments. As part of the transaction, PEP is to take over Polenergia, with CEE Equity Partners acquiring a 16% stake in the new entity at PLN 240m. With a market cap of approximately PLN 1.5bn, the entity will operate under the Polenergia logo, focusing on power generation as well as distribution of gas and electricity.

AUTOMOTIVE

Toyota launches new engine production in Poland

Toyota Motor Manufacturing Poland, the Polish production arm of Japan’s automotive giant Toyota, has officially launched the production of a new 1.0-litre gasoline engine at its factory in Wałbrzych, Poland. According to Toyota, the related capital expenditures have come to €30m (approximately PLN 123m). Starting from October, the Wałbrzych factory, which currently employs 1,600 staff, will introduce a third shift, creating an additional 380 jobs.

Production in Wałbrzych began in 2002 and to date the Japanese giant has invested in excess of PLN 2bn at the site. With an annual capacity of 371,000 engines and 720,000 transmissions, the Wałbrzych plant is Toyota’s largest engine and transmissions unit in Europe.

Nexteer Automotive will invest nearly PLN 335m (€81.25m) by the year 2020 in the southern Polish town of Tychy, where the Chinese-owned firm will build a brand new Electric Power Steering systems (EPS) plant. The construction of the factory, which will be located next to an existing Nexteer plant that has been in operation since 1997, is to start this year and reach completion at the turn of 2015 and 2016. Over the past half decade Nexteer has invested approximately PLN 360m in its two Polish plants, which currently turn out nearly 1.5 million EPS units per year, approximately a half of Nexteer’s global output.

The company employs 1,150 staff at its Tychy and Gliwice sites.

MINING

KGHM launches key project in Chile

Europe’s largest copper producer, KGHM Polska Miedź SA, has launched production at its Sierra Gorda mine in Chile, which remains the largest investment by a Polish company abroad. According to KGHM’s most recent figures, the total cost of the project has come to $4.16bn against initial estimates of $2.9bn. After the ramp-up period, which is due to be completed in early 2015, Sierra Gorda’s annual output should reach 120,000 tonnes of copper, 50 million pounds of molybdenum and 60,000 ounces of gold, the firm said. KGHM acquired the Sierra Gorda project under the $2.9bn takeover of Canada’s Quadra FNX Mining Ltd in 2012 as part of its efforts to cut production costs and raise output. In the first half of 2014, KGHM booked a net profit of over PLN 1bn. The result was in line with market expectations.

CHEMICALS

Billionaire acquires top chemical firm

Polish billionaire Jan Kulczyk has successfully acquired a 51% stake in the Warsaw-listed chemical producer Ciech through a buyout bid, at the cost of approximately PLN 0.8bn.

The Polish state, which had a 38% stake in the company, has thus exited Ciech, cashing in PLN 642m. Ciech is one of Poland’s leading chemical companies with a stock market capitalization of more than PLN 1.7bn. The group includes more than 30 companies that produce soda ash (Ciech is the number-two supplier in Europe), sodium bicarbonate, salt, fertilizers, crop protection chemicals, epoxy, polyester resins and other organic chemical products that are used in glass, furniture, chemical, construction industries and agriculture. Besides several production units in Poland, Ciech owns factories in Romania and Germany. In 2013 Ciech posted a turnover of PLN 3.5bn (down from PLN 4.4bn in 2012) and a small profit (against a net loss of PLN 431m in the prior year).

BASF launches catalysts plant near Wrocław

German chemical giant BASF has opened a new mobile emissions catalysts production plant in Środa Śląska near Wrocław. The 40,000 sqm facility – BASF’s largest emissions catalysts plant in Europe – is part of a €150m investment that will create 400 jobs at the site over the coming two years. The planned 10 light-duty and heavy-duty catalytic converter production lines at the Środa Ślaska site are expected to reach full capacity by 2016.

PRIVATIZATION

Government lists strategic state assets

The Polish government has identified 22 companies that will remain under control of the Treasury due to their strategic importance.

It has also designated 190 fully and partially state-owned businesses for sale. The strategic assets include industrial development agency ARP, banks BGK and PKO BP, defence group PGZ, refiners Grupa Lotos and PKN Orlen, energy groups PGE and Tauron, insurer PZU, oil logistics firms PERN Przyjaźń and Naftoport, gas company PGNiG, fertilizer maker Grupa Azoty, copper miner KGHM, security printing works PWPW, broadcasters Polskie Radio and Telewizja Polska, lottery operator Totalizator Sportowy, seaport operators in Gdańsk, Gdynia and Świnoujście as well as investment firm PIR. As far as the remaining state-held assets are concerned, the government will prioritise IPO-based privatization via the Warsaw Stock Exchange. The most prominent items on this list are listed power groups Enea and Energa, coal miner Bogdanka, a coking unit of listed coking coal miner JSW, real estate group PHN and airlines LOT & Eurolot. “The ministry's priority will be, on the one hand, to professionalise supervision and build value of entities that are crucial to the country's economic security, and, on the other, reducing state exposure in those areas where it is no more essential,” the ministry's communiqué reads.

REAL ESTATE & CONSTRUCTION

State bank BGK sets up rental housing fund

Poland’s state-run special-purpose bank BGK has officially launched a PLN 5bn rental housing fund, under which the institution seeks to buy up to 20,000 residential units in Poland’s major urban markets in a move to stimulate social mobility and provide an alternative to mortgage-backed home buying. The bank has signed the first memoranda of understanding with commercial developers concerning the purchase of 680 apartments in four separate buildings located in Warsaw, Wrocław and the Tri-City area and is reviewing offers for further acquisitions in key Polish cities. According to various estimates, Poland needs some 700,000 housing units in order to catch up with EU standards. Currently, with 365 homes per 1,000 people, the country ranks among Europe’s least developed residential markets.

Cinema City founders to break ground on Park of Poland

The Warsaw-listed Global City Holdings (formerly known as Cinema City International) has officially announced the start of phase one of their flagship amusement park project Park of Poland. The investor has entered a strategic partnership with Germany’s WUND Industriebau GmbH under which they plan to develop a water park in the town of Mszczonów, some 40 km south of Warsaw. The partners plan to start construction in February 2015 and the opening of the park is scheduled for October 2016. Spread across some 20 hectres, the project will cost an estimated €100m to build.

Designed by Forrec, a major player in the global theme park industry, Park of Poland is to gradually evolve into Europe’s second biggest theme park after France’s Disneyland Paris, creating 3,000-3,500 jobs in total. The investor is counting on 4 million visitors a year. The venue will be open year round and include a large indoor pool facility with a retractable roof and a large spa area.

photos: Mariusz Grzelak (Forum), Marian Zubrzycki (Forum)

Steering systems maker expands in Tychy

MERGERS & ACQUISITIONS

BNP Paribas gets approval to acquire BGŻ

After a lengthy wait, France’s largest listed lender BNP Paribas has obtained permission from Poland’s financial markets watchdog KNF to acquire BGŻ, Poland’s 11th largest bank by assets, from Dutch Rabobank. The PLN 4.2bn transaction will make BNP Paribas the seventh largest bank in Poland, where it currently has 230 branches, less than 0.5m clients and total assets of PLN 20bn. By adding BGŻ’s 440 units, 1 million customers and a PLN 37bn asset portfolio, BNP Paribas will become a worthy rival for the likes of Austrian Raiffeisen Bank, Polish Getin Noble, Portuguese Millennium Bank and even Dutch ING BSK.

France’s DPD acquires parcel firm Siódemka

The Polish unit of European parcel delivery operator DPD has agreed to acquire Siódemka, one of Poland’s top parcel delivery companies, from private equity fund Abris Capital Partners.

The deal will create the number-two player in the sector with a market share of approximately 24% and a combined turnover of more than PLN 1bn. A part of France’s Groupe La Poste, DPD’s Polish unit boosted its turnover by close to 6% last year, reaching PLN 707m.

With 50 regional depots, one central hub and four sorting centres, the company is seeking to strengthen its offering for the e-commerce industry, where Siódemka is seen as one of the top players.

Pharma distributor acquires drug store chain

CEPD, the retail arm of Poland’s leading pharmaceuticals distributor Pelion Healthcare Group, has acquired Polbita, owner of the Polish drug store chain Drogerie Natura from Alior Bank and Erste Group Bank. With 258 outlets throughout the country, Drogerie Natura remains one of Poland’s leading drug store chains.

The company employs 1,500 staff and it posted an EBITDA profit on PLN 420m revenues in 2013. With the acquisition of Drogerie Natura, CEPD, which operates Poland’s largest pharmacy chain Dbam o Zdrowie, seeks to diversify its revenue streams and strengthen its position in the health and beauty segment.

Special delivery:

The Polish unit of European parcel delivery operator DPD has agreed to acquire Siódemka, one of Poland’s top parcel delivery companies.

The deal will create the number-two player in the sector in Poland.

54 BPO: the regional BUSINESS

revolution

Poland’s second-tier cities are increasingly becoming the location of choice for many BPO/SSC investors

With some of Poland’s largest regional markets becom-

Lech Kaczanowski

is the editor of Poland Today’s weekly newsletter, ­Business Review+.

From 2002 to 2013 he covered business and economic news from Poland for Sweden’s Bonnier Group and other Nordic media.

A former Open Society Institute Fellow at Duke University in North Carolina, Lech has degrees in economics, sociology, and journalism.

software engineering services to clients around the globe. ing overheated, a growing number of information technology “I am also talking about benefits such as insurance, health(IT), business process outsourcing (BPO) and shared ser- care, and so on. Intelligent and creative people can be born vice centre (SSC) investors are looking at Poland’s second anywhere – the size of a city’s population does not matter. tier regional cities, many of which offer university-educated The company is growing quickly, which requires constant talent and competitive labour costs. Poland is the only CEE recruitment. We are thinking about new locations and at the country that offers as many as 11 cities of more than 300,000 same time we keep hiring for our centres in Wrocław, Zielona residents with a substantial supply of talent and offices. Góra, Koszalin and Szczecin. The migration of talents is not Although investors continue to choose mainly Poland’s always from smaller to larger cities but also in the opposite largest cities: Kraków, Wrocław, Warsaw, Tri-City, Łódź direction. By giving our employees the opportunity to work and Poznań, recently interest has grown in smaller towns, on interesting global projects near their places of residence, we help them maintain better contact such as Bydgoszcz, Radom, Lublin with friends and family, ” he added. and Szczecin.

“The Poles are not as mobile as the Besides access to untapped talent Americans. There is always a certain resources and cost effectiveness, what percentage of people who choose not drives investor interest in second tier to migrate, be it for personal or other cities are attractive office rents, improvreasons,” said Tomasz Krawczyński, ing transport and office infrastructure managing director of Mobica Poland, as well as closer relationships with a British-owned IT outsourcing comcity authorities. A company looking to open an outsourcing centre in Radom, pany that just recently opened a development centre in Lublin. “The quality for example, can hope for more perof life in smaller towns is often better. sonal engagement from officials than in There is also a large group of those who Warsaw or Kraków. Small markets offer left their home towns at some point, companies better brand recognition gained experience elsewhere in Poland Poland: no. 1 for bpo opportunities, which helps with recruitor abroad, but would very much like to ment. Experts believe that some cities “Before the end of 2004 there were return, as long as there are opportu- 96 foreign-owned business services centres situated near major agglomerations nities for them,” he added. According in Poland. Today there are 470 – nearly five can be convenient locations for disasto Krawczyński, there are a number of times as many. They employ 128,000 staff ter recovery centres – special, backup – mainly university graduates, as well as units that allow operational continuity Polish cities still waiting to be discovprofessionals and managers with a few years ered, for instance Białystok, Rzeszów or of experience,” said Marek Grodziński, deputy if the main centre experiences a seriZielona Góra. Lublin, in eastern Poland, chair of outsourcing sector organisation ABSL ous malfunction that prevents it from was chosen by US customer manage- and manager of Capgemini’s European BPO ­working properly. centre network. According to a 2014 report by ment giant Convergys for its second Gartner, Poland is the number one destination Office shortage Polish unit. The company, which already for business services projects in the EMEA reemploys some 300 people in Szczecin, gion. Another global consultancy, Everest, has Despite the growing attractiveness of plans to create a further 250 jobs in listed the country as the most mature location smaller cities, investors often find they in Europe for foreign direct investment Lublin by the end of the year. face a shortage of modern offices, in the business services sector. something that can be a major hurdle Polish pioneers for companies that require large, highThe pioneers in the second tier cities quality, certified spaces. According to a were mainly large Polish institutions, recent report by property consultancy such as Poczta Polska (Polish Post) JLL, the emerging regional markets of with a huge bookkeeping centre in Bydgoszcz, PZU in Opole, Białystok, Bydgoszcz, Kielce, Olsztyn, Opole, Radom, Rzeszów a PKO BP contact centre in Rzeszów and the Ministry of and Toruń offer only 321,500 sqm of modern office space. That Finance in Radom. They were followed by a number of for- is roughly the size of the total volume in Poznań or Katowice eign investors that include Alcatel-Lucent, which has a mas- and represents just 4.4% of Poland’s entire office stock. An sive development centre in Bydgoszcz, Finland’s OpusCapita estimated 50,300 sqm is under construction in the eight locawith a few hundred staff in Toruń, Medicover in Kielce, Intrum tions JLL analysed. Prime headline rents range between €8 Justitia in Białystok, Citigroup in Olsztyn, and Capgemini and €12 per sqm per month and are expected to remain stable. in Opole. Some companies, such as French IT outsourcing Besides mounting interest in new ‘uncharted’ destinafirm Sii and Polish REC Global, have relied on a multi-site tions, there has also been increasing competition between strategy from the start, seeking to tap into as many talent the largest cities. In recent months two companies with wellpools as possible. established positions in Kraków, Norwegian media group “At REC, we understand that it’s not the size of a city that Schibsted and US software services firm Epam Systems, have matters, but the commitment of our engineers and creating chosen to open new branches in Gdańsk. the kind of work conditions they would love,” said Krzysztof “We have been able to recruit some of the absolute best Kuliński, CEO and co-founder of REC Global, which provides programmers in the market in Kraków. Still, we do observe

‘Wages have been on the rise, but they remain competitive from our point of view’

that the market is more ‘heated’ than before and we believe we will be better served by having operations in two locations,” Stig A. Waagbo, CEO of Schibsted Tech Polska, told Poland Today. Nevertheless, his overall experience in Kraków has been very positive, he said. “Schibsted Tech Polska has been growing quickly since the first employees started working in January 2012. Initially the plan was to have a small company with up to 30 staff working on development for four subscription newspapers in Norway. Today, we have 120 staff in Kraków and we are expecting that number to keep increasing strongly. We are a programming hub for 11 different Schibsted companies and one other partner,” adds Waagbo.

“At the moment our growth is restricted only by the supply of suitable candidates. Our goal is to have 3,000 engineers in Poland in three to four years’ time and we have no choice but to tap into several talent pools to achieve this,” Shemek Fedyczkowski, country manager at EPAM Systems Poland, told Poland Today. “In Kraków we currently have an estimated 220 employees between two offices, and our plan for Gdańsk envisages two offices with 500 and 300 employees respectively. We are gearing up to launch operations in another major Polish city.”

by Lech Kaczanowski

Opole (above)

has become one of Poland's regional cities that has successfully attracted BPO investment.

Both Polish insurer PZU and French IT services and consulting group Capgemini have large centres in the southern Polish city.

Białystok (left) and Kielce (below) are

two more Polish regional cities that are attracting a lot of interest from BPO investors. For example, credit management and financial services firm Intrum Justitia has invested in Białystok, and Polish medical company Medicover in Kielce.

photos: Wojciech Wójcik (Forum), Jan Włodarczyk (Forum)

Big-city battles As some low-skill processes are transferred to less mature regional markets, established cities attract more advanced projects from the likes of US-based Brown Brothers Harriman, whose Kraków unit provides accounting, administration, global custody operations and client service for asset managers and financial institutions. In addition, the firm has built out a technology division in Kraków focused on development initiatives closely aligned with its business in Europe.

“Despite the thorough research that led to us choosing Kraków as the ideal location of our new office, the growth we have experienced since opening has definitely surpassed our expectations,” said Michael McDonald, managing director of Brown Brothers Harriman Polska. “We began recruiting around mid-2012, so it’s been just over two years and indeed we already have 600 employees on board and plan for more.

This achievement is a reflection of the deep talent pool available here in Kraków, both among university graduates and in general across the talented workforce in the Kraków market,” he added.

“Since our Kraków office is a business centre fully integrated within the global BBH platform as opposed to BPO/ SSC, we require a variety of different skill sets. Our recruitment efforts have therefore not been affected by any perceived saturation in the market. Surely, wages have been on the rise but they remain competitive from our point of view – and cost was definitely not our reason for opening an office in Kraków. I am comfortable with the Kraków market and thanks to its strong demographics I am confident we can achieve our goals. With a hiring strategy that targets a high percentage of new university graduates, I don’t see that talent pool drying out in the foreseeable future. Our long-term staffing target is 1,000 people.”

Over the past two and a half years Poland’s modern business services sector has grown by 50% and currently employs close to 130,000 people in foreign-owned centres alone, according to a recent report by industry organization ABSL. Including domestic centres and out-sourcing firms, the sector boasts more than 200,000 employees. Since the beginning of 2013 Polish cities welcomed 66 new business services centres, most of which were opened by new investors that included the likes of ThyssenKrupp, Merck, GE Healthcare, RWE, Mars, DFDS, Linklaters and McCormick.

ABSL points out that the sector already employs more people than the coal mining industry, and according to projections it will create a further 30,000 jobs by the end of next year.

56 BUSINESS

A beachhead for the future Poland Today editor Andrew Kureth sits down with Rafał Andrzejewski, an investment director and a member of the management of CEE Equity Partners, a Chinese-backed private equity fund based in Warsaw

What’s attractive about the CEE market to the Chinese? Does the fact that they set up a separate CEE-oriented fund mean that they regard the region as clearly different from the rest of Europe?

‘The Chinese think the best potential is in the CEE region, because there is more to do here in terms of infrastructure’ Your website says that the ChinaCEE Fund was established by China Exim Bank “in partnership with other institutional investors from the CEE region”. Who are those investors and how much have they contributed?

It’s mostly an initiative of China Exim Bank, but it has invited other local entities from the region to participate in the fund as well. The Hungarian ExportImport Bank and the Romanian ExportImport Bank have expressed interest, and the Hungarian Exim Bank has in­­­ vested some money. It is a minute amount compared to what the Chinese have invested. Nevertheless, they wanted to make sure that a chunk of the cash that is flowing out of China will be invested in Hungary. The same with the Romanians.

However in Poland we have been di­­ rected and re-directed to various en­­­­ tities. We received indications that

BGK (Bank Gospodarstwa Krajowego, the bank that supports the government’s economic programmes) would not be receptive. So we were directed to PIR (Polskie Inwestycje Rozwojowy, a government-established investment vehicle), with whom we have been ne­­ gotiating for a year now, with no end sight. So I don’t know if any Polish en­­tity will join us in the fund, but in any case we are fully funded right now. We don’t have any pressure to invest with Chinese companies, or those using Chinese technology, or anything like that.

What kind of investments are you looking for?

We’ve got clear instructions to just invest in the region to the best of our ability in four sectors – energy, infrastructure, telecoms and specialized pro­­­­ duction. But at the same time, those sectors are not chiselled in stone.

If there is a project that’s not in those sectors but it is really interesting, then we have the ability to invest in such a project as well. Nevertheless, the general idea is that we want to invest in things that are solid: not web pages or distribution systems or sales systems.

Basically we are interested in things such as waste-to-energy plants, energy windmills, solar power parks and fibreoptic cable companies, just to mention a few examples.

Yes. The Chinese think that the region of Central and Eastern Europe is much more open and friendly to Chinese business than Western Europe. Western European markets are much more geared toward exporting to China and if not, then blocking China from entering.

The Chinese have a very cordial relationship with Germany, France, the UK, etc. But they think the best potential is here because there is more to do here in terms of infrastructure: not only road infrastructure, but also telecom infrastructure, energy infrastructure.

There is a big variety of things that can be done. Poland is still a work in progress as opposed to Western Europe. The Chinese would rather have this fund to show their good will, rather than forcing their companies in here.

So you could say that we are a beachhead for potential future development.

Your list of target countries spans Poland and other CEE EU member states but also the likes of Albania and Serbia. That’s a real mixed bag, wouldn’t you say?

Yes and no. These countries form a kind of band from north to south.

The group excludes Turkey, Belarus, Ukraine and Russia. The Chinese made the decision that countries of the former Yugoslavia should be included because they have done business in Serbia before, and in Croatia, and they were quite pleased with the response they received. They saw that while those countries were not in the

How much of the fund’s total equity has been designated for Poland?

Right now we have $500m, and most likely we will spend half of that – so $250m – on Poland. The rest will go to other countries, with a clear preference for Hungary and Romania, because those countries are participating in the fund.

Other than taking long-term, minority stakes, how do you see the deals being structured?

The fund itself has been created for 10 years, with the option of an extension of an additional two years. We can­­­­­­­­­ not re-invest the money, so our goal is to invest for the longer term. Rather than investing for three to five years as

CEE Equity Partners CEE Equity Partners is the investment

advisor for the China-CEE Fund, with as much as $2bn available for investments in Central and Eastern Europe. The fund was established by the Export-Import Bank of China (China Exim Bank). The idea for the fund came in 2012, when China’s prime minister at the time, Wen Jaibao, visited Poland. The fund started operations in February this year in Warsaw, and in July announced its first deal.

What is an ‘exim bank’?

Exim banks are usually state-owned institutions that provide financial services for firms that export. The Exim Bank of China’s mandate is to “facilitate the export and import of Chinese mechanical and electronic products, complete sets of equipment and ... high-tech products, assist Chinese companies with comparative advantages in their offshore project contracting and outbound investment, and promote international economic cooperation and trade.”

Polskie Inwestycje Rozwojowe Polish Investments for Development, known in Poland as Polskie Inwestycje Rozwojowy, or PIR, is part of a programme announced by the government in October 2012. PIR acts as an investment vehicle, providing capital for infrastructure projects, while the state-owned Bank Gospodarstwa Krajowego provides loan guarantees. The goal is to maintain a high rate of investment in Poland’s infrastructure.

Do you believe there are interesting targets in the sectors you’re focusing on?

Definitely. Especially when it comes to Poland we have quite a robust pipeline of projects. We have tens of projects related to wind power, fibre optic infrastructure, the 3G, 4G and GSM in­­ frastructure, the recycling plants, the waste-to-energy plants. The thing is that really if you want to look at larger, diversified entities, most of the big power companies are state-owned.

So it is a challenge to find entities that don’t specialize on only in one kind of energy, for example. And it’s difficult not only in Poland, but really across the region.

We are flexible though, because we do not have to have a controlling stake, we are open to being a minority shareholder provided that the partner or partners in a consortium are reliable, and people with feasible business plans. So from that standpoint I think that we have a little bit more flexibility than your typical private equity fund that always wants to have either 100% or a definite majority.

that are snapping up independent projects and paying good money. What’s the role of CEE Equity Partners in the sector?

In the energy sector, there are a number of established players

BUSINESS

Fortunately there are enough projects to go around. We are already in discussions with a couple of larger entities to become a minority shareholder, at first perhaps really a minority with just 15% or something like that, just to see how that flies, and then perhaps increase our stake. But we don’t shy away from looking at independent operators that fall within the size of our target acquisitions, and we are also not afraid to invest in larger companies that are not state owned.

Have you explored investing in public-private partnership (PPP) projects?

We have had a number of meetings regarding PPP projects, especially from people that come from medium-sized cities who want to revitalize their combined heating and power (CHP) plants.

We also talked with the City of Warsaw about the public garages that they want to build around the city. The only thing is that we cannot participate directly. We can be a party that finances the participant, but we cannot participate as an entity that is going to build this stuff, because we don’t build, we only finance.

So it will be up to the people who win the bidding to approach us and see if we can help – and we are willing to help.

Your focus is mainly on projects that require good cooperation with the public sector. The creation of CEE Equity Partners came about What else is different about your as the result of inter-governmental approach compared to other playtalks between China and Poland. ers in the private equity market?

Does this government connecThere are a number of differentia- tion make your life any easier? tion points, but when target companies come to us, they tell us about several things that attract them. Number one is that we are one of the few funds that deal with infrastructure. Another important point is that we have a relatively simple decision-making environment. Our investment committee meets every week in Warsaw, so we are constantly making decisions. Other factors include the length of the investments, the reasonable return expectations and the possibility of investing as a minority shareholder. Also, I feel like we are less investment bankers and more like family investors. We don’t shy away from investments in big companies or publicly listed companies. But we also sit down with small business owners and we speak their language.

57

When it comes to the Polish government we have no connection whatsoever. The China Exim Bank is a state-owned bank, so you could say that the Chinese government has an influence on what we do. But we don’t feel like that is the case because they have given us a completely free hand when it comes to what and how to invest.

When you look at our investment committee, it’s three guys here and a Chinese guy that calls in. It’s not like they decide what we’re going to do, instead we decide what we are going to do, with their blessing, of course. And this model has been working for us. There has been a lot of talk about difficulty that funds have in finding the right investment.

We don’t see it that way. We have, I think, an overflow of potential deals.

interview by Andrew Kureth

Energy and infrastructure

aren’t the only sectors where new Asian capital is coming into Poland.

Chinese investors, as well as those from South Korea and the Middle East have set their sights on Polish real estate. For more on the impact of Asian investors on Poland's property market, see page 71.

photos: Maltseva-Korystina Svetlana

European Union, they fit nicely into Central and Eastern Europe, more so than Turkey and more so than Ukraine.

the typical private equity funds usually do, we want to invest for seven, eight, nine, even ten years if possible. That, combined with the low internal rate of return expectation that we have, makes us an interesting partner for dis­­­cussion with a lot of potential targets. In terms of equity we can invest in any given project from $20m-70m.

That combined with debt, which can more than double that amount, gives us quite a bit of flexibility as to what we can invest.

58 BUSINESS

A fashion for technology A Warsaw-based startup is using high-tech solutions to bring businesswomen better choices for professional attire

As an active businesswoman in

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.

there are a lot of ways to make it more the high-powered sector of mergers fashionable without looking unprofesand acquisitions banking in Germany, sional,” said Piasecki. “Many women Katarzyna Piasecki noticed that while have the problem that they don’t know she could stand up to the 16-hour days, what to wear or how to wear it, so we it was her clothes that weren’t living provide women with inspiration about up to the demands of her work. Hours how to dress in a professional way. at the computer followed by meet- When it comes to the design of our ings around town, going from harsh tops, for example, we take into account outdoor weather to temperature-con- the length of the sleeve and shape trolled office buildings, and then long of the neckline.” strategy meetings and telephone calls Another issue, Piasecki found, is didn’t necessarily phase her. But it was that women often don’t have a onedifficult finding professional business stop-shop, like men do, for businessattire that could provide the comfort wear. While a man can walk into a she needed throughout the day – and suit shop and be sure he can walk out she noticed her female colleagues had looking professional from head to toe, the same trouble. “I was always suffer- women often have to take time going ing when it came to business clothes; from shop to shop, mixing and matchnot only their availability, but their func- ing until they have an entire ensemble. tionality and comfort,” she said.

Ennbow aims to eliminate that hassle, So last year, after moving back to offering women jackets, blouses, skirts Poland, she started her own clothing and trousers. “This season we are makline, Ennbow, with the aim of solving the ing our offer wider by introducing problem. The clothes the firm designs a ‘jet-set’ suit. They are classic women’s use technologically advanced, high suits with the distinction, again, that we performance fabrics. Among these are use technologically advanced materials. thermoactive fabrics that up till now They are very elastic and flexible. They had been used almost exclusively for have special features – they are water sportswear. But Ennbow uses these repellent, for example. And they are innovative materials to create business easy to wear and care for.” Ennbow attire that offers both style and comfort. also offers ‘semi-finished’ products For example, the company produces – essentially, a woman can come in blouses that adjust to the wearer’s body for a fitting and have the clothes temperature, keeping her warm or cool adjusted to her specific measureas necessary. “If you leave an air-condi- ments and tastes. tioned office to go out for a hot summer The company uses several lunch, it is not a problem: the clothes different channels for sales – maintain the wearer’s body tempera- including multi-brand shops, ture at an optimal level,” she said. “The promotional events, as well as fibres are specially structured and the direct sales to customers – even technology is based on research done in their own office buildings. on polar bear fur. It has been around for The company has already found some time, but as far as we know, we international success, selling to are the first to use it for women’s busi- customers throughout Europe. nesswear.” And though the technology In September Piasecki will be is typically used for sportswear, the firm travelling to promote her clothuses special finishing on its clothes to ing in Germany and Austria, and give them a professional look and feel. in October she’ll be going to the UK. “Many customers first mistake it for silk,” She has her eyes set on possibly said Piasecki. All of the fabrics come moving to the US market next. from within the EU, and the clothes are The firm also wants to stay on the produced in Poland. cutting edge of fabric technology.

It is cooperating with the Viamoda Providing inspiration Industrial University of Design The company also wants to address Technology & Management in Warsaw other traditional problems women face to research various technologies that when choosing office attire. “The busi- increase clothing functionality. “It will ness dress code can be boring, but be research where we are providing

‘Technology in fashion is something that we usually forget.

But the textile industry is really evolving’

BUSINESS

Katarzyna Piasecki worked for years

in the M&A banking sector in Germany.

After returning to Poland, she established Ennbow, her own line of women’s business attire that uses technologically advanced materials to provide a greater level of flexibility and comfort.

Already the firm has seen success with its products internationally, selling its clothing in countries such as Germany and the UK.

the materials and they provide us with the findings of their research,” said Piasecki. “Technology in fashion is something that we usually forget. But the textile industry is really evolving.”

have any experience in fashion so at the beginning I made a lot of mistakes. Now I have built up much more know-how, I’m making more and more contacts in the industry, and am getting ready for much greater scale.

Poland Today speaks with Katarzyna Piasecki, founder and managing director of Ennbow

Do you have a time line for turning a profit?

by Andrew Kureth

What’s is it like moving from the corporate world to being an entrepreneur?

Nothing can prepare you for the roller coaster of being an entrepreneur.

Running a startup is a dream come true, but it can feel very new and scary at times. If you think that juggling a few multimillion transactions in an investment bank makes you a genius, you haven’t worked in a startup. But it has been a wonderful journey so far, one where I’m learning a lot but also can use the multiple skills I acquired while in banking. The M&A sector has certainly taught me a lot – from company internal processes to international marketing and branding. It is certainly very helpful in my drive to make Ennbow an internationally recognizable brand.

Does it make a difference that you have started a business here in Poland?

For me it is very exciting, being in Poland again. From the beginning, however, I have been running Ennbow as an international brand. The Polish market definitely has potential, it’s not as saturated as other, Western fashion markets. However, it’s not without its own challenges. Because we are based here, Poland is without a doubt my primary market at the moment and I am excited to build a Polish brand that is developing internationally.

Do you feel that being a woman makes entrepreneurship more of a challenge?

I don’t really notice it, after all I did work in investment banking which is very much dominated by men. I also think that women in Poland are pretty entrepreneurial, and historically everybody in Poland is used to the fact that women work. At Ennbow we are aware of man-woman inequalities, and our product addresses it in a way. Our customers are more comfortable and feel more confident.

Not yet – I am crunching the numbers now, actually. I have data that I can analyse and then produce a plan.

This is something that we are really working on.

How are you financing the business?

Currently from my own funds.

We are also applying for an EU subsidy.

It all depends on the business plan and the development of our sales, but to take Ennbow to another level we will need additional investment. We are also taking into consideration other options.

Ennbow has an exciting proposition for a crowdfunding campaign and we are looking into venture capital or business angel investments.

What are your long-term goals for your business for the future?

In the long term I would love to have flagship stores across the EU and be well-recognized as a businesswear brand. In the near future I also want to continue and expand the idea of working with corporations – shop-in-workplace model is very popular in the UK for example, and we are one of the few doing it here in Poland. We are also testing pop-up shops in city centres.

In September we will be launching the second edition in Frankfurt, Germany.

When it comes to expanding to the US market I have some connections there that I can draw upon, especially in New York where I have some friends who work in investment banking and in corporations.

When it comes to our products, I want to continue offering semi-finished clothing. The idea is a client can come here and try on a jacket – we can make it shorter or longer especially for her. Also, we would like to offer customized blouses. There are some tools that we can install on our website and the client will have the possibility to choose the colour and shape of the blouse.

What has been your biggest challenge so far?

Everything has been challenging! (laughs) The biggest challenge is my own character. When you are runHow satisfied are you with ning your own business you see very the business so far? clearly what you have to improve, We are getting there. Our products because your character and mistakes have enjoyed an amazing response, translate into mistakes in the company. almost selling out from the begin- The main challenge is to overcome ning – so that has been very satisfy- your own faults, through persistence ing. However, when I started up I didn’t and determination.

photos: Marek Ennbow

60

‘The technology has been around for some time, but as far as we know, we are the first to use it for women’s business wear’

conference & cocktail party

Business Awards 1989-2014 December 2014, Warsaw

Celebrating the past, envisioning the future

The Poland Today Transformation Awards Gala & Future Business Forum www.poland-today.pl

BUSINESS

has been a key issue on the agenda of the Polish government for a while now, but recent events have brought the issue to the fore. In our new-format ‘Chambers of commerce’ feature, we ask our bilateral chamber partners to give us their opinion on a particular issue. This time, we asked them to tell us how their member companies could help Poland achieve energy independence. The American-Polish Chamber of Commerce (AmCham) and the PolishPortuguese Chamber of Commerce (PPCC) got back to us with some interesting answers.

American-Polish Chamber of Commerce

Tony Housh Member, Board of Directors There are a number of areas in which AmCham companies can help Poland move toward a higher level of energy independence and security in the coming years. This is a stated priority of the government, and I believe it is shared across all political lines in the country.

Obviously, new sources of energy are on everyone’s mind. Our member companies are active in unconventional or shale gas exploration, drilling and extraction potential assessment.

Further developments in this field should see more companies with specialized expertise in flow management, network services and environmental management augment those currently active on the market. We look forward to further developments in the development of the nuclear energy field since a number of our companies have direct and indirect experience in both nuclear technology and the specialized construction and technical experience needed for such a project. Finally, there will be opportunities for companies to work with an expanding market in LNG in the future as the possibility of gas exports from the US develops.

Chambers of commerce

However, it isn’t only the new that is of interest.

Existing gas fired facilities – either for electricity production or industrial use – are prime targets for technology upgrades to improve efficiency on both a gas usage and operating cost basis. The large base of energy produced by coal will continue to be a foundation for Poland’s energy independence efforts and there are a number of areas where our companies are active and will continue to be so with regard to both energy efficiency enhancements in power production and in the critical area of coal use impact mitigation. Great strides have been made in Poland, but more remains to be done as Poland walks the line between using its coal resources and meetings its European and global environmental commitments.

Another very important area, but overlooked in my opinion, where significant improvements can be made with regard to energy security and independence is in energy efficiency and engineering. There is a great deal our companies can contribute in these fields and energy conservation can be equal to or greater than a large new source of energy. It is estimated that nearly 50% of energy produced is wasted in industrialized countries through less efficient generation, transmission and at the end user – private or industrial. Incremental improvements achieved through design, multiple power sources, supplemental power sources (solar, wind, pumped storage), refit or shared facilities can have a major impact at industrial level and the housing and personal user side as well.

Getting the energy mix right is important for the Polish economy and its level of energy security. There is no one magic solution, but our member companies – together with our Polish and international partners – can help the country move forward on a path to a better energy situation in the future.

‘Energy conservation can be equal to a large new source of energy’ Polish- Portuguese Chamber of Commerce

António Castro Vice President The dramatic situation in Ukraine has put the spotlight on the discussion about how European countries, and in particular Poland, are dependent on foreign energy supplies.

Fortunately renewable energy sources, which Poland has in abundance, are independent from fuel imports and can significantly contribute to the improvement of energy security on both the national and local levels. Renewable energy sources can provide a significant amount of energy, although they are still an underestimated natural resource in Poland. The PolishPortuguese Chamber of Commerce has several associated companies that deal with renewable energy.

We believe it is important for Polish decision makers to recognize the crucial role that renewable energy can play in strengthening Poland’s energy security and to include the largescale use of renewable energy in the country’s programme for modernising the energy sector.

We believe that a focus on renewable energy for security of supply will be reflected both in the new energy policy of Poland and in the country’s negotiating position regarding the EU policy framework for climate and energy for the period 2020-2030.

With still-significant coal resources, the Polish economy has one of the lowest energy dependence indicators (amounting only to 30.7% in 2012). However, imports of all conventional energy sources, including coal, as well as electricity itself, is growing. In 2012, Poland imported 13% of its coal consumption, 70% of the natural gas it used, 96% of oil it consumed and nearly 2.5% the of electricity consumed in the economy. Due to the increasing costs of exploiting domestic fossil fuels this trend will continue, leading to a gradual but consistent increase in the dependence of the Polish economy on supplies of energy from external sources.

When we talk about renewable energy it is also important to mention that it can drive: new job creation, innovation, competitiveness, environmental friendliness, social responsibility, new business areas for Polish companies, new opportunities for Polish power plants and the production of new equipment. It also allows Poland to aligned itself with EU guidelines for 2020-2030. It is worth mentioning that the leading economies in Europe (Germany, the UK and the Scandinavian countries) see investment in renewable energy sources as a basis for their independence and balanced GDP growth both now and in the future. The PPCC will therefore support our companies engaged in renewable energy sources, because we believe that this is in the in the best interests of Poland, Europe and the world.

photos: Wojciech Wójcik (Forum)

62

Energy independence

City focus: Bydgoszcz

63

CITY FOCUS: bYDGOSZCZ

64

As Poland’s eighth largest city, Bydgoszcz offers a large, well-educated population that BPO investors have found an attractive asset

CITY FOCUS: bYDGOSZCZ

Contact:

Bydgoszcz Regional Development Agency ul. Mennica 6 85-112 Bydgoszcz, tel.: +48 52 585 8823 fax: +48 52 585 8878 barr@barr.pl www.barr.pl

Bydgoszcz Bydgoszcz is Poland’s eighth largest city.

It is one of the two major cities within the Kujawsko-Pomorskie voivodship (the other being Toruń) and lies at the intersection of national roads and railway routes. The city has a long history, dating back to at least the 13th century, and throughout the years has been ruled by several different powers. Today, it is firmly entrenched as a main Polish metropolitan area, and is home to vibrant business and cultural communities. In business, the city is focusing on attracting investment from the BPO sector (see page 68). Among the cultural highlights is the Opera Nova – one of the largest and most modern opera houses in Poland (see pages 66-67).

Population: 359,428 (as of December 31, 2013) Area: 176 km2 Mayor: Rafał Bruski Settled: sometime before 1238 Town rights granted: April 19, 1346

City focus: Bydgoszcz

In 2008 Bydgoszcz was named ‘The Rising Star of BPO’

and today it is considered a “strong player on the map of BPO in Poland”.

(Source: Colliers International “Improving through moving”)

Total office space for lease:

42,000 sqm

Open-space offices for lease: 22,900 sqm

Distance from Bydgoszcz to main cities in Poland:

Distance from Bydgoszcz to main cities in Europe:

– Poznań: 142 km – Gdańsk: 176 km – Łódź: 220 km – Warszawa: 264 km – Wrocław: 290 km – Kraków: 481 km

– Berlin: 320 km – Stockholm: 690 km – Brussels: 970 km – Paris: 1190 km – Zurych: 1210 km – London: 1240 km – Rome: 1320 km – Madrid: 2680 km

Camerimage, the

International airport: Bydgoszcz

world’s most famous International Festival of the Art of Cinematography is held in Bydgoszcz.

Bydgoszcz is a green city:

it has 830 ha of parks, recreation and leisure parks and squares.

Ignacy Jan Paderewski Airport (distance from city centre: 3.5 km)

Connections to:

– Barcelona – Birmingham – Dublin – Düsseldorf – Glasgow – London – Warsaw

Special Economic Zone:

Pomeranian Special Economic Zone (Bydgoszcz Industrial and Technological Park) Bydgoszcz Industrial and Technology Park was awarded as a Top Technology Park of the Year during 2013 FDI Poland Investor Awards.

Maximum tax exemption: 50% Number of companies: 51

F16 aircrafts of

the Polish Air Force are also serviced in the city.

Foreigner in Bydgoszcz Poland Today talks with Paul D. Brazill, a British-born writer and teacher living in Bydgoszcz: How long have you lived in Bydgoszcz?

– Around six years. Before that I lived in Warsaw for four years.

What do you do there?

– I teach English – mainly business English – in companies and one to one. I’m also a published author. My first book, ‘A Case Of Noir’, came out this year from the Italian publisher Lite Editions. Part of it takes place in Warsaw.

I’ve been published in lots of anthologies alongside people like Neil Gaiman, Ian Rankin and Lee Child. My writing has been translated into Italian, German and Slovene, but not Polish – yet!

What is your favourite thing about living in Bydgoszcz?

– The green areas and natural beauty. Bydgoszcz is the greenest city in Poland and since I have a one-year-old child the abundance of great parks makes it a great place to live.

Major investors:

– Alcatel-Lucent – Asseco Poland – Bank BPH – Grant Thornton – Livingston International – Pesa – Poczta Polska (Polish Post) – PZU – Tyco Electronics – Unilever

NATO's Joint Force Training Center for tactical level commanders operates in Bydgoszcz.

Poland’s largest

manufacturer of rail vehicles – PESA originates from Bydgoszcz.

What are your favourite places to visit and things to do in the city?

– I like music, so the Opera Nova and Philharmonic are a great experience. There are some great bars such as Mózg, Eljazz and PRL. Then there are the aforementioned parks, especially Myślęcinek. Also, Mill Island, the Marina and Bydgoszcz Venice – the canal.

I also enjoy trips on the water tram.

What do you think makes the city distinctive?

– The parks, forest, canal and river. Natural areas that have been utilised well.

Age structure in Bydgoszcz:

Working age: 63.8% (229,244 inhabitants) Pre-working age: 15.7% Post-working age: 20.5%

Average age in Bydgoszcz: 36 Size of labour market: Over 1 million people within 50 km

Unemployment rate: 8.8% (as of December 31, 2013)

Total number of universities: 15 Number of students of higher education:

42,730 (over 12,000 graduates each year)

Major universities:

– Kazimierz Wielki University – University of Technology and Life Sciences in Bydgoszcz

A mathematician and cryptologist

who was instrumental in decoding the Nazi “Enigma”, came from Bydgoszcz.

Is there something about Bydgoszcz that you think not enough people know about?

– Definitely: Myślęcinek park, the Jazz festival, the Busker festival, and most of all the Camerimage festival, which attracts guests like David Lynch and Terry Gilliam.

You can learn more about Paul D. Brazill’s books at pauldbrazill.com

65

The rising star

CITY FOCUS: bYDGOSZCZ

The city’s focus on attracting modern business is paying dividends in the form of investment from large global firms

Bydgoszcz

is transforming. Like many cities in Poland, until recently heavy industry and manufacturing had been its economic backbone, a tradition that in Bydgoszcz goes back as far back as the 15th and 16th centuries.

But city leadership is making a big push to put the city on map for more modern industries, especially business process outsourcing (BPO). The strategy comes at an opportune time, as outsourcing investors look to find value in Poland’s regional cities. Poland is Europe’s undisputed capital for BPO investment and cities such as Kraków, Wrocław and Warsaw have heated up, pushing up wages and office rents.

Poland’s mid-sized cities, with their lower labour and business costs, have spotted the opportunity and are stepping up to the plate (see pages 54-55).

And Bydgoszcz is leading the pack: as early as 2008 it was named a ‘Rising Star of BPO’ by property consultancy Colliers International.

Already, several companies with global weight have invested in Bydgoszcz. These include telecom infrastructure firm Alcatel-Lucent, IT services corporation Atos, search services company Eniro, accounting firm Grant Thornton, customer experience and contact center technology specialist Genesys, customs brokerage services provider Livingston International and software solutions provider SDL, among others. Some of Poland’s biggest companies have invested there too, including IT firm Asseco, Bank BPH, train maker PESA, Poczta Polska (Polish Post) and insurer PZU. “The city offers a stable environment when it comes to the availability of skilled resources, both in IT and multiple languages,” said Maciej Ruszkiewicz, managed services global factory director at Atos IT Services. “Furthermore, competitive costs of employment combined with a low attrition rate makes this place more attractive than other well-known BPO cities in Poland.” Ruszkiewicz added that cooperation with local authorities had been positive: city officials supported the company when it applied for funding from Poland’s investment authority for creating new jobs.

City officials have also set Bydgoszcz on an innovation-focused path. Three years ago, the city’s industrial park

was transformed into the Bydgoszcz Industrial and Technology Park. Part of the Pomeranian Special Economic Zone, which offers incentives and tax breaks for investment, it also provides modern IT infrastructure and fibre-optic networks. They have also established a Regional Innovation Centre with a modern information distribution system for innovation, a platform for establishing and strengthening links between academia and business that allows for technology, innovation, and know-how transfers. There is even a Bydgoszcz IT Cluster, which aims to intensify cooperation between the local IT firms and the University of Technology and Life Sciences in Bydgoszcz.

Recipe for success Add that to some of Bydgoszcz’s other inherent benefits, and you’ve got a recipe for a very attractive investment des-

‘The main benefit from operating in the city has been the increase in our competitiveness’

tination. As Poland’s eighth largest city, it boasts 230,000 people of working age. There are over 40,000 students of higher education each year and over 12,000 graduates, most of whom speak several languages. In the 2011/2012 academic year, more than 35% of these students were enrolled in economicsrelated areas of study, while over 17% studied information technology and related specialisations. The city is wellconnected to the rest of the country by modern expressways (Bydgoszcz lies at the intersection of major east-west and north-south roads), railways, and flight connections from Bydgoszcz airport – which also offers several international destinations. The average wage in the city is 13% lower than that of Kraków and 32% lower than in Warsaw. Class-A office space in Bydgoszcz costs between €8 and €9.50 per square metre per month, while in Warsaw prices range between €14 and €25.

“The main benefit from operating in Bydgoszcz has been the increase in our company’s competitiveness in the global and domestic markets,” said Alcatel-Lucent Poland CEO Andrzej Dulka. “Nearly 1,000 people employed in our Bydgoszcz site work in six centres, providing services at the domestic, European and global levels. These include remote service and customer support, design, integration and supervision of telecommunications networks, industrial and R&D centres.” He added that the city has a strong work ethic culture, meaning not only are his firm’s employees loyal and hard working, but his business partners in the city are as well. That allows the firm to maintain its positive reputation with its end-customers, he said.

“The city offers a stable environment with skilled resources. It also creates a good climate for investments, business development and entrepreneurship,” said Waldemar Jasiński, operations director at Livingston Poland. “In addition, competitive employment costs combined with low attrition rates make it attractive compared to other, bigger BPO cities in Poland. We have built our European business around talented individuals and the businessfriendly culture of Bydgoszcz, placing key management staff in this location.

It is a great place to do business.”

Average monthly gross remuneration (in złoty):

– Katowice: 5,309.69 – Warsaw: 4,842.79 – Gdańsk: 4,629.39 – Poznań: 4,148.48 – Lublin: 3,891.93 – Kraków: 3,774.48 – Szczecin: 3,774.29 – Wrocław: 3,651.53 – Toruń: 3,451.83 – Bydgoszcz: 3,272.71

Unemployment rate in selected cities in Poland:

– Szczecin: 11.1% – Toruń: 10.2% – Lublin: 10.1% – Bydgoszcz: 8.8% – Gdańsk: 7.0% – Kraków: 6.4% – Wrocław: 5.8% – Katowice: 5.4% – Warsaw: 4.9% – Poznań: 4.4%

Moscow trams:

Bydgoszcz-based company PESA presented its first tram for Moscow in February this year.

The contract between PESA and the city envisions the delivery of 120 trams in total.

66

Left: The Pomera-

nian Philharmonic in Bydgoszcz hosted the 9th International Paderewski Piano Competition in November last year.

CITY FOCUS: bYDGOSZCZ

Below:

Contact:

The Bydgoszcz City Stadium was renovated at a cost of 80m złoty as the city prepared to host the 2008 World Junior Championships in Athletics.

Bydgoszcz Regional Development Agency ul. Mennica 6 85-112 Bydgoszcz, tel.: +48 52 585 8823 fax: +48 52 585 8878 barr@barr.pl www.barr.pl

Jazzed up The city has held the Bydgoszcz Jazz Festival since 2003. Prominent Polish jazz artists, including Urszula Dudziak and Tomasz Stanko have performed there, as well as big names from the US, such as Billy Harper, Al Foster, Vincent Herring and many others. This year Richard Bona and Randy Brecker will headline festival between October 26 and November 1.

More info: bydgoszczjazzfestival.com.pl

The Eagle Hotel

is one of the best examples of the city’s 19th-century architecture. It was designed by Bydgoszcz-born architect Józef Święcicki.

The façade is Neo-baroque in style.

World-class acoustics

City focus: Bydgoszcz

Bydgoszcz’s Pomeranian Philharmonic, built in 1953 is also well-known – particularly for its excellent acoustics. The building boasts a concert hall that can seat 880 people. There is also a chamber music hall that seats 150 Behind the concert hall stage sits a 47-pipe mechanical organ, built by the Rieger-Kloss company from Krnov, Czech Republic. The stage itself is large enough to hold a grand orchestra and a choir.

More info: filharmonia.bydgoszcz.pl

City of music

Athletic prowess

Though not often included among the most

Bydgoszcz boasts some well-developed sports infrastructure for both professional and amateur sport enthusiasts. It offers seven stadiums, 12 sports halls, 56 tennis courts, a golf course, 10 swimming pools, an archery range, speedway and go-cart tracks. The city regularly organises sporting events and has held the World Junior Championships in Athletics, and the European Men’s and Women’s Basketball Championships.

prominent cultural cities in Poland, Bydgoszcz has a surprisingly rich cultural offering. Music is especially well represented. The Opera Nova, one of the largest opera houses in Poland, is the city’s cultural showcase. Located on the bank of the Brda River, the opera house promotes itself as one of the most modern and versatile theatres in Poland. The building, comprising six floors, a theatre-style auditorium with 803 seats and a modern equipped stage, a small theatre-style auditorium seating 189 and two congress that can hold 230 participants, as well as a library, workshops and coaching rooms.

According to the city, the large hall boasts “near perfect acoustics”. Notable productions staged at Bydgoszcz’s Opera Nova include ‘Nabucco’, ‘La Traviata’ and ‘Il Trovatore’ by Giuseppe Verdi, ‘Tosca’, ‘Madame Butterfly’ and ‘La Bohème’ by Giacomo Puccini, ‘Die Zauberflöte’

by Mozart, ‘Carmen’ by Georges Bizet, ‘Der Zigeunerbaron’ and ‘Die Fledermaus’ by Johann Strauss as well as ‘Rusalka’ by Antonin Dvorak.

More info: opera.bydgoszcz.pl

The Church of the Assumption of the Holy Virgin,

commonly referred to as ‘The Church of Poor Clares’. It boasts Gothic-Renaissance and including Neo-Renaissance architecture. It was built between 1582 and 1602.

Poland’s biggest city park The Myślęcinek Forest Culture and Leisure Park is Poland’s largest city park,

measuring about 830 hectares. The park offers golfing during the spring and summer, and skiing in the winter. The woodland park features rolling hills, bubbling creeks and steep gorges.

The park also features a zoo, a botanical garden, a horse riding centre and a dinosaur park.

More info: myslecinek.pl

67

CITY FOCUS: bYDGOSZCZ

A stroll along the canal The Bydgoszcz Canal is 27 km long and was originally built between 1773 and 1774 on the orders of Fredrick II of Prussia, which had annexed the region in 1772. It links the Vistula River basin with the Oder River basin, and today forms part of the E70 waterway which connects Kaliningrad, to Berlin. It was rebuilt in 1908-1915, and has recently been renovated.

Cinematography in focus Bydgoszcz holds a film festival

aimed not at celebrating actors and directors – but cinematographers. Called ‘Camerimage’, the event is the world’s biggest cinematography festival and has carved out a niche for itself in the industry by awarding films for their visual, aesthetic and technical values. Aside from the main competition, the festival comprises a competition for students, documentaries, music videos and Polish films. As with other film festivals, there are workshops, screenings, premières and retrospectives. The festival is popular among film students, who attend seminars by well-known filmmakers and presentations of the latest filming equipment.

This year’s edition will take place from November 15-22. More info: camerimage.pl

Historic island Just a few steps away from the Bydgoszcz Old Market Square is Mill Island, which at one time was the industrial heart of the city. It also became the seat of a royal mint, which operated for nearly 100 years, from 1594 to 1688. Now it is a historic area – most of the buildings on the island date from the 19th century, though the ‘White Granary’ dates back to the 18th century.

It is popular for its red-brick tenement houses, footbridges and abundant chestnut trees.

David Lynch,

a regular attendee of the Camerimage festival in Bydgoszcz, is pictured here at the opening of the 20th edition of the festival in 2012 at the city’s Opera Nova. This year’s edition will take place in late November.

Military history The large Pomeranian Military Museum focuses on the military history of the Pomerania region and the Polish armed forces. It features permanent exhibitions including: – The Bydgoszcz garrison from 1920 to 1939 – Polish armed forces in the Red Army (43-45) – Polish resistance during the German occupation of World War II – The Katyn massacre More info: muzeumpmw.pl

The St. Peter and Paul Church

boasts a lovely Gothic Revival entrance.

It was built between 1872 and 1878, and can be found in the city centre. Some 2,500 people can fit inside.

Below: The three granaries

in Grodzka Street, located on the Brda River right next to the Old Market Square. These buildings are the official symbol of the city and now house exhibitions of the city’s Leon Wyczółkowski District Museum.

CITY FOCUS: bYDGOSZCZ

Contact:

Bydgoszcz Regional Development Agency ul. Mennica 6 85-112 Bydgoszcz, tel.: +48 52 585 8823 fax: +48 52 585 8878 barr@barr.pl www.barr.pl

A name to remember Bydgoszcz may be difficult to say, but it is easy to see why investors consider it an attractive location, says Mayor Rafał Bruski in this interview with Poland Today

Why has Bydgoszcz decided to focus on attracting investments from the BPO/SSC sector?

The BPO/SSC sector is currently the fastest growing sector of the Polish The difficulty of pronouncing the economy, so one of the elements of name of our city can often lead to some the city’s development strategy is to funny situations. Last year, we decided attract these investors. We have con- to use this to our advantage, and we sistently implemented this strategy by started the project ‘Say Bydgoszcz’. continuously taking action to create an The programme encouraged foreigners investment climate that is conducive to to submit short films of their attempts both business development and entre- to pronounce the name of our city. They preneurship. One example of good impressed us with their courage – and I cooperation between the city and an have to admit that they did pretty well. investor from this sector is the invest- We take a positive view of this chalment of Atos IT Services, which cur- lenge: when foreigners put effort into rently employs more than 2,200 people learning to pronounce ‘Bydgoszcz’, in its Bydgoszcz office. they are unlikely to forget it!

What do you believe is the city’s strongest point when it comes to attracting investment?

City focus: Bydgoszcz

Foreigners find the name of your city difficult to pronounce. Do you see this as a handicap? How have you worked to overcome this?

Bydgoszcz isn’t known for tourism, and yet there are several really great sights and activities. What are some of your favourites?

Bydgoszcz is the eighth largest city in Poland, with some 360,000 inhabIf I had to pick my top three, they itants. Around 1 million people live would be Bydgoszcz Canal, Mill Island within a radius of 50 km. We attach and the reconstructed Deluge Fountain. great importance to the development This year the city is celebrating the ‘Year of higher education, as well as the links of the Bydgoszcz Canal’ because of the between universities and business, so 240th anniversary of the completion of that the curricula match the demands its construction. It is part of the internain the labour market to the greatest tional E70 waterway and connects the extent possible. Another advantage Vistula and the Oder rivers through their of the city is its convenient location in tributaries. You can admire the antique the central part of the country and the locks on the canal during a cruise on the short distances from major cities such city’s water tram.

In fact, one of the water tram’s stops as Gdańsk, Poznań and Warsaw. This makes the city an excellent alterna- is Mill Island, one of the top places to tive for investors seeking a good loca- visit in the city. People often refer to it tion with attractive cost levels: average as ‘Museum Island’, because it hosts the office rents and employee salaries are Gallery of Modern Art, the European lower than those in larger cities.

Money Center, the Leon Wyczółkowski House and the Archaeology Collections.

Why should investors choose The island also hosts the modern Bydgoszcz over better known outBydgoszcz Marina, which also functions sourcing destinations in Poland, as a hotel and conference centre. It has won numerous awards in architectural such as Kraków or Wrocław?

Bydgoszcz’s main advantage is its competitions. This year, in another part overall positive business environment. of the city centre, in Casimir the Great We offer educated staff with strong for- Park, the last element of the reconeign language skills, competitive labour structed Deluge Fountain was unveiled. costs, relatively low staff turnover and Now visitors can see the fountain in all low operating costs. All of this makes its glory after more than 70 years. In us very attractive compared to other 1904, when the original sculpture went cities in Poland. We really treat inves- up, it immediately became a tourist tors in Bydgoszcz like partners: we give attraction. Unfortunately, the original them all the support we can. Each com- version did not survive the war. Now, pany interested in investing in our city once again, locals and tourists can is treated as a priority, and not as just enjoy its beauty, just as they once did one of many. decades ago.

‘We treat investors in Bydgoszcz like partners. We give them all the support we can’ photos: Marek Maruszak, Marek Ślusarczyk, Jarosław Pruss, Jerzy Pawleta, Tytus Żmijewski, Wojciech Wójcik, Renata i Marek Kosińscy, Maciej Rozwadowski (all Forum), Arkadiusz Chłopik

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The slow tsunami

URBAN ISSUES

Slowly but surely, Asian capital is increasingly becoming active in Poland

Capital coming

from Asia is now tant, investments from markets such starting to have a meaningful impact as Australia, Singapore, South Korea, on the commercial property invest- Japan and Taiwan are as relevant for ment market in Poland, with a number Central Europe as the region gains of Asian investors bidding for office greater prominence as a core European and retail real estate across the country. market,” he said.

South Korea’s National Pension Service, for one, has recently announced its Indirect investments plans to invest approximately $800m Asian money is rarely directly invested in property in Poland in the near future in the region and capital flows are thus The assets that the entity wants to acqu­ often difficult to track. “Poland is still ire include two shopping malls, with no too small a market for Asian institudetails having been revealed yet. tional investors to invest directly,” said “For prime investment sales, targeting Jakub Jonkisz, head of capital markets the right Asia-Pacific and Middle Eastern at Knight Frank. capital is now a key element to any suc- He added that Asian investors are cessful process,” said James Chapman, primarily focused on mature markets partner, head of Central European cap- including the UK, France and Germany, ital markets at Cushman & Wakefield. where other Asian financial instituThe top bid for one of the most high tions have already been present for profile office buildings in Warsaw has many years and where there are largerecently come from an Asia-Pacific in­­ scale ‘trophy assets’, which are quite vestor and similar groups can be seen rare in Poland. bidding on large retail assets in major For that reason, it doesn’t pay for Polish cities, Chapman said.

Asian investors to establish separate “There is a lot of institutional invest- Poland-dedicated teams, and they ment vehicles in Asia, predominantly will rather continue to invest through sovereign or pension funds, which do fund managers who are already active have a very significant allocation of in Poland. Moreover, there is no large money for real estate,” said Tomasz Asian diaspora in Poland which so the Trzósło, managing director and head of country will not be a major market capital markets for Poland at JLL. He for private Asian investors in the near added that the amounts of money grow future, Jonkisz said. each year with new premiums coming Michał Ćwikliński, head of investinto those vehicles. “It will take time ment at Savills, noted that this trend before we see such capital spending can already be seen, with Asian inveswidely across CEE, but I would not be tors entrusting their capital to entities surprised if this happened sooner rather that specialise in real estate investthan later,” Trzósło said. ment. One example of this is the South Korean National Pension Service, Expanding abroad one of the largest pension funds in In the past 12 months, Asia-Pacific inves- the world, which invests in Poland tors have increased their spending out- via LaSalle Investment Management side of their region by 88%, surpassed and Rockspring Property Investment only by that of Middle Eastern investors Management, Ćwikliński said.

The Asian capital coming to Poland which has grown by 96%, Chapman said.

“The initial focus was key gateway cities mostly flows from South Korea and such as London and New York, but we China. Ćwikliński stressed that in the are increasingly seeing knowledgeable case of Asian investors, the outlays are Asia-Pacific and Middle Eastern inves- usually very large. The invested sums tors looking towards Central Europe as generally amount to a total of seva target region,” he added. eral hundred million euro, often even There is a perception that the Asian exceeding €1bn. Asian investors focus money is primarily Chinese but accord- on investments valued at hundreds of ing to Chapman, investors from the millions of euro each, Ćwikliński said. other Asia-Pacific countries are now also increasingly having an impact in Private wealth the region. “The reality is that, while According to Trzósło, private Asian Chinese capital is increasingly impor- investors should not be underesti-

Asian investors: the track record so far A number of major office and retail assets in Poland have already been sold to Asian investors. One of the first transactions of this kind was the sale of the Miasteczko Orange office complex in Warsaw. The complex was delivered last year by developer Bouygues Immobilier, as a built-to-suit development for telecom operator Orange, and offloaded to Qatar Holding, an entity that belongs to the Qatar Investment Authority. “We have already seen transactions done by institutional Asian capital in Central Europe, including big ticket shopping centre transactions in the Czech Republic and Poland,” Trzósło said, without revealing any details of the deals. Also, a Chinese investor took part in the Allianz-headed consortium which last year acquired the Silesia City Center shopping centre in Katowice from Immofinanz Group for €412 million.

mated. In their home markets, they are already able to compete and even beat out institutional investors for major real estate assets. It is now not uncommon for ultra high net worth individuals or family groups in Asia to bid for and acquire large (valued at over $100m) and very large (valued at over $500m) assets, Trzósło said.

He pointed out that a prime retail and hotel asset in Singapore was recently sold to a private Chinese group for approximately $900m.

“This is clear evidence of new private investor groups with very significant buying power coming into real estate,” he added. The increase in private wealth has been well visible in Asia, in particular in China.

“I am certain we will see some of this money in Poland, and the wider Central Europe, soon, too,” Trzósło added.

Adam Zdrodowski, Poland Today’s real estate editor, takes an in-depth look at the landscape of Poland’s property market.

Asian money is

making an impact in Poland’s private equity market too.

The entrance this year of CEE Equity Partners, the investment advisor for the China-CEE Fund, has made a splash – it committed funds of $500m for Central and Eastern Europe.

The fund was established by the ExportImport Bank of China.

Poland Today spoke with a member of its management team in an exclusive interview. see page 57

by Adam Zdrodowski

‘I am certain we will see some of this private Asian money in Poland, and the wider Central Europe, soon’

CONFERENCE & COCkTAil pARTy

Primetime Warsaw III 15 April 2015, The National Stadium

The right side of the river?

Too long in the shadow of its dynamic other half, will the capital’s eastern bank live up to its potential? www.poland-today.pl

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Regions on investors’ map

URBAN ISSUES

Record investment volumes this year will be driven by investors heading to Poland’s regional cities

Total commercial property investment in Poland is expected to reach a record level this year, making 2014 the fifth year in a row that the country has seen investment growth. According to analysts, the positive performance of the Polish investment market can largely be attributed to the increased interest of international real estate investors in some of the largest regional cities.

Record volumes Property consultancy JLL says that Poland remains the leading investment market in Central and Eastern Europe and forecasts that investment volume will reach around €4bn this year, significantly outperforming last year’s €3.3bn mark. According to Soren Rodian Olsen, head of office and industrial investments at consultancy Cushman & Wakefield Poland, interest in the Polish market remains robust. “We continue to see very strong investor activity in Poland in all asset classes,” he said.

In the first half of the year, 28 investment transactions, valued at a total of approximately €1.43bn, were closed in Poland, which accounted for 50% of the total investment volume in the region (around €2.87bn), according to JLL. The €1.43bn transacted in Poland in H1 was the best result since the precrisis boom year of 2007 and marked a 40% increase on the investment volume recorded in the country in the same period of last year.

The figures mark a strong overshoot of the major consultancies’ earlier predictions for this year. At the beginning of this year, JLL had forecast that commercial property investment volume in Poland would reach a similar level to that of last year. Tomasz Puch, head of office and industrial investment at the firm, said that the company has upgraded its forecast because a number of new, large transactions that were previously not taken into account have appeared in recent months.

Regional growth Property market experts argue that the expected record commercial real estate investment volume in Poland this year will to a large extent be driven by increased investor interest in the major regional cities in the country. “In line with our 2014 predictions for the

Trophy assets changing hands By the end of this year, two of the most

prestigious state-of-the-art office buildings in downtown Warsaw – Rondo 1 and the Metropolitan – will have been acquired by new owners. The sale of Rondo 1, an iconic 40-storey skyscraper comprising approximately 60,000 sqm of office space, was the largest singleasset office transaction ever closed in Poland and one of the biggest in Central and Eastern Europe. Two funds managed by Deutsche Asset & Wealth Management acquired the tower in April from Blackrock Europe Property Fund II for almost €300m. Meanwhile, the upcoming sale of the Metropolitan should be one of the biggest deals in the second half of the year.

The building, which offers around 34,000 sqm of office space, is currently owned by Aberdeen Asset Management Deutschland. According to capital market experts, the sale process is already underway, though the list of potential buyers has not been revealed.

office segment, we are experiencing increasing investor interest in regional cities and expect several best-in-class transactions to close during the second half,” said Olsen.

In the office sector, the vast majority of transactions had, until recently, taken place in Warsaw. “We are witnessing a gradual diversification of the investment market in Poland,” Puch said. He pointed out that since the beginning of this year, assets including Quattro Forum in Wrocław, Winogrady Business Center in Poznań, Red Tower in Łódź and Alfa Plaza in Gdynia have already changed hands. The trend results from both the limited supply of product in Warsaw and the strengthening position of regional agglomerations.

Wrocław, Kraków, Tri-city and Poznań are established locations with growth prospects and attractive investment product, Puch pointed out.

Jakub Jonkisz, head of capital markets at Knight Frank, argued that the increasing investor interest in the regional markets is not surprising, considering the fact that the vacancy rate in Warsaw is at a historically high level and there is downward pressure on rents there. Meanwhile, BPO/SSC sector companies continue to generate a strong demand for office space in the regional cities. “Even the hitherto conservative German funds have rec-

ognized the growing strength of the regional cities,” Jonkisz said. Michał Ćwikliński, head of investment at Savills, said that a number of large office buildings in the regional cities, including several in Kraków, be transacted by the end of this year.

Polish capital more active The capital deployed into the Polish commercial real estate market continues to be dominated by international investors, in particular money managers and funds based in Germany, the UK and the United States. However, according to Olsen, locally based investors are increasingly active – a very positive sign for the Polish market. “We expect that trend to continue into 2015,” he said.

Puch agreed: while Polish capital still accounts for a relatively small share of total commercial property investment volume, Polish investors have indeed recently been more visible, he said.

Puch added that a good example of this trend was investment fund Octava FIZAN’s acquisition earlier this year of a total of six office assets in Warsaw, Gdynia, Łódź, Poznań and Wrocław.

According to Jonkisz, Polish investors, who still account for less than 10% of the total transaction volume, find it difficult to compete with experienced foreign investors who have lower expectations when it comes to yields. There is also a need for new legal and tax regulations which would allow individual Polish investors to invest through structures such as Real Estate Investment Trusts (REITs).

These would certainly prove an attractive alternative to the stock exchange for many investors, Jonkisz said.

Adam Zdrodowski, Poland Today’s real estate editor, takes an in-depth look at the landscape of Poland’s property market.

by Adam Zdrodowski

‘Even the conservative German funds have recognized the growing strength of the regional cities’

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Emerging opportunities Poland Today sits down with Stanislav Frnka, Country CEO at developer HB Reavis Poland, to talk about the condition of the office market in Warsaw and the plans of the company in the sector

One of the most often voiced concerns about the office market in Warsaw regards the huge amount of space which is in the pipeline.

Do you see the large new office supply in the city as a major threat?

The Polish real estate market continues to be one of the strongest and fastest developing in CEE and, honestly speaking, I don’t really think this will change in the upcoming months. The macroeconomic situation in Poland is still very good and Warsaw remains the top investment destination, not only in Poland but also in the whole region.

There is still a lot of room for new investments. However, not all of the planned office projects scheduled for completion in the upcoming years will be launched and delivered on time, especially if the vacancy rate in the Warsaw market keeps rising and ultimately reaches the level of 17%-20%. There are still tenants in this market, looking for space in new buildings, but it seems that the total net take-up this year will be lower than last year. One can also see a downward pressure on rents.

photos: HB Reavis

Will this make you review your development plans?

Stanislav Frnka, country CEO for Poland at HB Reavis, points out that Warsaw remains the top investment location in the entire Central Europe region.

‘Looking into the future, I think the Praga district has a chance to become attractive for developers, but currently, its road infrastructure leaves a lot to be desired’

No, at the moment our development plans remain unchanged. Our business model has been working well. We still have the same under-construction and planned office projects in Warsaw in our portfolio that we had last year: Postępu 14, the second phase of Gdański Business Center, West Station and the Chmielna project

A number of new office locations seem to be currently emerging in the Polish capital. What are now, in your view as a developer, some of the most promising destinations in Warsaw?

There is an ongoing discussion about Praga as an office location, especially in the context of the upcoming delivery of the second subway line. Looking into the future, I think this area has a chance to become attractive for developers, but currently, its road infrastructure leaves a lot to be desired and, as a result, it is really difficult to secure good sites within this district, especially for large schemes. Mokotów still remains quite attractive, with numerous sites for new investments and several developments

that are already planned. The only problems in this area are the constant lack of parking spaces and insufficient road infrastructure. As far as I know, Warsaw City Hall is currently working on effective solutions to those issues.

Without a doubt, from the developers’ point of view, another interesting part of Warsaw is the Wola district, which is set to become a second Mokotów.

The office hub in the surroundings of Rondo Daszyńskiego is developing relatively fast – however it is important to remember that currently several large projects are being constructed in this area, which could become a problem in terms of securing tenants. Taking this into account, we are not planning any projects in this district in the near future.

Last but not least, I see some attractive locations in northern Warsaw, including in the vicinity of the Gdański railway station. At HB Reavis we noticed its significant development potential as early as a few years ago. Now we are developing our second project in Warsaw there – the two-phase Gdański Business Center. The investment’s construction started in June 2012 with the first phase completed in June 2014. The completion of the second phase of the project is expected in the first quarter of 2016. After the completion, the total leasable area (phase I and II of the investment) will exceed 97,000 sqm. Gdański Business Center is one of the largest office space investments currently under way in this part of the city. The best proof of the growing popularity of the Gdański railway station area is the high interest of tenants, which we have seen in the course of the investment’s commercialisation processes. This confirms that our decision to choose this location was a real bull’s eye.

CHMIELNA AT THE HEART OF WARSAW HB Reavis Poland’s Chmielna office project

will go up in the very heart of Warsaw. The excellent location “will guarantee our tenants a perfect connection not only with all Warsaw districts, but also many other cities in Poland.

The investment will be distinguished by its unique design, the highest standards and the most state-of-the-art technical and ecological solutions,” said company CEO Stanislav Frnka.

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Is it now difficult to secure bank financing for new office schemes?

Generally speaking, bank financing is available but this pertains to projects with a pre-lease level of at least 30%. Banks are usually ready to lend from 65% to 70% of the value of a given scheme. However, acquisitions of plots for new office developments usually need to be financed with equity.

urBAN ISSUES

What is the situation in the building land market like when it comes to office sites?

HB Reavis Poland is a partner of Poland Today’s Special Edition of Urban Issues for Expo Real.

There are new investment opportunities emerging all the time, with new plots being put up for sale by entities including state-owned companies.

However, I would say that the expectations of those selling the land are still relatively high and inadequate.

HB Reavis is preparing its flagship office project in downtown Warsaw that will be located on ul. Chmielna and will comprise several buildings.

How is work on the scheme going?

HB Reavis’ ­ dański Business G

A star architect, whose name I cannot reveal yet, is now working on the final concept of the project which we plan to unveil in late autumn. The scheme will comprise three buildings – for all of them we have already secured planning decisions.

At the moment, the planned development includes one 140-metre building and two lower buildings. However, we are now discussing the possibilities of changing the existing building permit for the complex’s high-rise – in fact it could even stand more than 200 metres tall. The whole investment, which will be developed in phases, could thus comprise a total of 120,000-130,000 sqm of office space. We hope that construction on the first phase of the project could start in the second quarter of next year but this will depend on how quickly we get through the administra- that we’ve already signed the first tentive process. The official commerciali- ants for the first phase of the investment sation of the planned scheme has not – PKP SA, PKP Informatyka and PKP been launched yet but there is interest Intercity, companies of the PKP group, in the complex and we have already will move their offices there. had preliminary talks with a number of potential tenants.

Are you already looking for

When are you going to launch construction on the West Station project?

We have already gone through almost all the formalities and hope to be able to launch construction on the railway station and the first office phase of the project in November. The railway station will be completed first – within a year from the start of construction work – and the first office phase, comprising 27,000 sqm of space, should be ready in 2016. In the future, we will also develop a second phase which will comprise approximately 36,000 sqm of office space. Right now, we can say

sites for future projects?

Yes, we are constantly looking for sites for both office and retail projects.

When it comes to retail, we are interested in sites for a new large shopping centre scheme in Warsaw, comprising at least 40,000 sqm of leasable space

What about sites for new office projects?

We are interested in office sites located in the very downtown of Warsaw. I do not mean boutique office projects but schemes comprising at least 20,000 sqm of leasable space.

There are still some good plots to be

Center is one of the largest office space investments currently underway in ­northern Warsaw.

The investment’s construction started in June 2012 with the first phase (pictured above) completed in June 2014. The completion of the second phase of the project is expected in the first quarter of 2016. The total leasable area of both phases combined will exceed 97,000 sqm.

developed in the downtown. We will see how the situation develops with regard to the plots around the Palace of Culture & Science. There are also other plots, including the Poczta Polska (Polish Post) site on ul. Chmielna. At the moment, we are looking at a number of plots in the downtown but have not yet decided to buy any particular property.

Are you planning to develop any residential projects in Poland?

So far, we are not interested in purely residential projects. However, we might be quite interested in the development of some mixed-used investment featuring a residential component. We are keeping an eye on the market and if the opportunity arises, we’re ready to launch such a project on our own or with an experienced and reliable partner. Currently, we do not have such a scheme in our pipeline in Poland.

High hopes

by a series of ­obstacles from the onset.

Orco Property Group first launched construction on the development in March 2008, just six months before the global financial crisis hit. Work had to be put on hold the following year due to financial problems within the company.

Later, the inhabitants of a neighbouring development took the company to court, challenging its building permit and claiming that the tower was blocking sunlight to their residences. Ultimately, the permit was upheld and construction was restarted at the beginning of 2011. Sales of the luxury apartments in the project were re-launched last year, with prices ranging from 25,000 złoty to 65,000 złoty per sqm. The scheme is already approximately 90% completed and was scheduled to be delivered this year. However, towards the end of last year, the board of directors of Orco Property Group decided to suspend work on the development and sell the building. In a report published in March, the company admitted that the project had proved a major financial failure for the group, due to reasons including financing problems and unsuccessful apartment sales.

Can a new owner reverse the fortunes of Warsaw’s most prominent real estate failure?

The Złota 44

high-rise luxury residential project in Warsaw got a second lease of life at the end of August when American real estate investment manager Amstar Global Advisers and Warsaw Stock Exchange-listed developer BBI Development jointly acquired the mothballed project. The tower, a prominent feature of Warsaw’s skyline designed by world-renowned Polish-born American architect Daniel Libeskind, has up till now widely been considered a failure for its inability to attract tenants and its drawn-out construction process.

Beleaguered Warsaw Stock Exchan­ ge-listed developer and investor Orco Property Group, which according to unof­ficial sources invested some €160 million in the scheme, ended up offloading the unfinished development for a measly €63 million. The acquisition marks Amstar Global Advisers’ first investment in Poland. Amstar president Jason Lucas said the investment manager has been monitoring the market in the country for several years due its well-balanced growth and economic stability.

“The off-market acquisition of Złota 44 was the ideal opportunity to acquire a high-quality project at a significant discount to replacement cost,” Lucas said. He added that his company believes its efforts will help establish Złota 44 as the pre-eminent residential address in Poland. The acquisition was financed by Amstar Global Advisers, while BBI Development is expected to invest a further €2 million in the project in the coming months. The entities are also planning to secure bank financing to finish the scheme. BBI Development will manage and oversee the development process, with its responsibilities including selecting a general contractor for Złota 44, as well as managing apartment sales and commercializing the retail areas in the building.

photos: Andrzej Bogacz (Forum)

Growing pains At 192 metres and 54 storeys tall, Złota 44 is one of the tallest residential skyscrapers in the European Union. The development was Orco Property Group’s flagship investment in Poland and was touted as the most prestigious residential project in the country. But the scheme was beset

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URBAN ISSUES

The Złota 44 building in the very heart of Warsaw, one of the tallest residential skyscrapers in the European Union, was designed by renowned architect Daniel Libeskind.

Financially, however, it was described as a ‘failure’ by the company who built it.

New start

MORE RESIDENTIAL TOWERS COMING? According to Marcin Krasoń, an analyst at Home Broker, a few more high-rise residential projects may yet appear and even find success in the Warsaw market, as long as the apartment prices charged by their developers are not prohibitive.

Developer Tacit Development Polska last year finished construction on its Cosmopolitan Twarda 2/4 residential tower in the Polish capital, which delivered 252 apartments.

According to the company, sales of the homes in the building are proceeding apace.

Meanwhile, listed developer Atlas Estates

is planning the construction of a new residential skyscraper in Warsaw. The investment will be located on ul. Grzybowska in the Wola district of the city, near the existing Hilton hotel building.

Construction on the skyscraper is now scheduled to relaunch in the first quarter of next year and finish in 2016. BBI Development plans to make some adjustments in the project, the details of which will be determined within the next few months. Sales of apartments in the tower are expected to be restarted soon. Orco Property Group managed to sell approximately 20% of the more than 260 units in the skyscraper before offloading it. Apartment prices in the development are expected to become cheaper, though no one knows yet by exactly how much. BBI Development wants to come up with a new sales policy by the end of this year.

According to Marcin Krasoń, an analyst at Home Broker, the assumption that ‘the more expensive apartments are the better they sell’ evidently proved wrong.

“In Poland, such a sales model simply could not work,” Krasoń said. However, the problems that Orco Property Group had with Złota 44 do not mean that there is no room for luxury apartments located in residential towers in Warsaw, even if the number of the potential buyers is relatively small, he added.

Michał Skotnicki, president of the management board at BBI Development, said that the company is optimistic about the future of the Złota 44 project since Poland’s residential market is seeing a rebound, while the country’s market for luxury goods continues to grow steadily.

by Adam Zdrodowski

Adam Zdrodowski, Poland Today’s real estate editor, takes an in-depth look at the landscape of Poland’s property market.

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URBAN ISSUES

The subway surge The development of the second line of the Metro is giving a boost to formerly neglected districts of Warsaw

The central stretch of

Adam Zdrodowski, Poland Today’s real estate editor, takes an in-depth look at the landscape of Poland’s property market.

Seven stops will

open by the end of this year, marking the completion of the central section of the second line of Warsaw’s subway. This section will stretch from east to west from the right side of the Vistula across the river to the Wola district west of the centre of the city. The line will be extended in coming years – the yellow dots in the map to the right show future planned subway stations.

The black dots show the existing stations of both the first (north-south) and second subway line.

the second subway line in Warsaw, which has been under construction since 2010 and will feature seven new stops, is scheduled to become operational by the end of this year. The planned opening of the stretch has already led to increased acti­vity from developers in the Wola, Śródmieście and Praga Północ districts of the Polish capital and is now giving a major boost to a number of neglected parts of the city.

The Wola development boom The impact of the second subway line has so far been most evident in the Wola district, where the abundance of post-industrial land provides developers with many opportunities. For over a year now, Wola has been one of the districts with the largest number of new apartments under construction and on sale in Warsaw, Marcin Krasoń, an analyst at the Home Broker advisory, pointed out.

For the potential apartment buyer, access to the subway network is an important factor in the decision-making process. It is also an attractive factor for investors in buy-to-let schemes, said Maximilian Mendel, director of the transaction advisory at residential property advisory Reas. According to Mendel, investors can expect long-term price appreciation for new residen-

tial projects located close to the second subway line. However, the market remains very price sensitive, and prices will not rise as much as during the postcrisis boom, he said.

New investments are mostly springing up in the Czyste and Odolany neighbourhoods of Wola, on sites which were until recently undeveloped or housed old warehouse and industrial buildings.

According to a recent market forecast

by Reas, which looked at the plans of developers, land transactions, planning processes and market cycle projections, Wola will continue to be a residential hotspot for at least a decade.

The development boom in the Wola district has been even more spectacular in the office sector, with the area of the Daszyńskiego Roundabout set to become one of the main business hubs in Warsaw in the near future. The delivery of the second subway line will further strengthen the already strong trend that has seen the Warsaw’s Central Business District expanding westwards, said Marcin Mędrzecki, associate director, CEE investment services, at Colliers International.

Michał Lis, associate director in the office leasing department at JLL, pointed out that the Daszyńskiego Roundabout area alone has already attracted a number of major developers, including Ghelamco Poland and Skanska Property Poland. The planned opening of the central stretch of the second subway line has already had an impact on the building land market. The prices of plots have not fallen despite quickly growing new office supply.

Praga stands to gain It remains to be seen how the second subway line will influence the residential and commercial property market in the Praga Północ district, located just across the Vistula River from central Warsaw. So far this much-neglected part of the Polish capital has seen relatively little development activity.

However, real estate experts predict that this will ultimately change when the subway makes the location much more attractive for potential apartment buyers and office tenants.

The second subway line will boost investment activity in the Praga Północ district, but this will likely require more

Downtown locations benefiting too Some areas of Warsaw’s centre have already benefited from the planned opening of the central stretch of the second subway line, while others are expected to gain from it in the coming years. Property located in the Powiśle neighbourhood of the Śródmieście district of Warsaw, where one of the new subway stops is now being built, will become more popular with investors and tenants, Mędrzecki said. Lis pointed out that Hochtief Development Poland is already developing a major office and residential project called EC Powiśle in the vicinity of the Centrum Nauki Kopernik subway stop. He added that the subway line could also have positive effects for retail property in the centre. One of the new stops will be located close to ul. Nowy Świat and should thus contribute to the further development of the street as a high-street destination, Lis said.

time than in districts on the other side of the river, Colliers’ Mędrzecki said.

Reas’ Mendel argued that the experience of the first subway line indicates that developers have different investment strategies: some launch developments prior to the opening of the subway, while others wait until the operation starts.

BBI Development is already building new apartments on the site of the historic Koneser factory in Praga Północ and is also planning to soon launch construction, in cooperation with Liebrecht & Wood, on several office and retail buildings within the same complex. Another historic post-industrial site in the district – Pollena – will likely be redeveloped by Okam Capital (see page 81), which wants to build new commercial and housing space there.

Mendel noted that a large-scale investment is also planned in Port Praski, next to the National Stadium stop.

According to a recent report by Reas, Praga Północ is set to undergo a process of gentrification and revitalization, similar to the processes previously seen in many other large European cities including London (the Docklands) and Berlin (Prenzlauer Berg). In the future property prices in the district will likely increase much faster than in the other parts of Warsaw, the Reas study said.

by Adam Zdrodowski

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Construction has

been a torturous process, with the deadline for completion being missed several times. Everything from poor sewage system maps to unexploded World War II ordinance has hindered building. Now however, the line is nearly complete, and Varsovians eagerly expect the opening of the line before the end of this year.

photos: Jan Anderman (Forum), Tomasz Adamowicz (Gazeta Polska, Forum)

‘The second subway line will boost investment activity in the Praga Północ district, but it it will require more time than in the districts on the other side of the river’

EvENt

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Spanish ‘distress’ means developers gain Rising demand for building land is driving acquisition of distressed Spanish-owned assets in Poland

Heady days seem to be returning to the development market in Poland, with investors from around the world lining up to pick up Polish assets. But as developers look to keep up their building pace, land for construction is in in­­ creasingly short supply. This is forcing them to turn to distressed assets – even if some of those cannot immediately be developed for legal or urban planning reasons. The prime targets are big plots in Warsaw that Spanish developers acquired during the pre-crisis boom years but never managed to develop.

A number of these have recently been sold or are expected to change hands in the near future.

Large transactions Warsaw Stock Exchange-listed develo­ per Echo Investment recently acquired the former Warsaw Brewery (Browary Warszawskie) site in the Wola district of the Polish capital from the Spanish Banco Financiero y de Ahorros for €42m. The plot totals 4.4 hectares.

Echo Investment wants to develop a total of approximately 100,000 sqm of office and residential space there, with the investment valued at around 1bn złoty. The Warsaw Brewery site was acquired in 2006 by Spanish developer Grupo Prasa for approximately 170m złoty. The company planned to develop a number of high-rise buildings, housing residential and commercial space, on the land. However, after the outbreak of the global financial crisis, the company found itself in financial trouble and was no longer able to launch the investment. The site was subsequently taken over by the bank.

For its part, investor Griffin Real Estate earlier this year announced the acquisition of the Jupiter shopping centre in the Wola district of Warsaw, along with 2.5 hectares of land, from Spain’s Catalunya Banc. The value of the transaction was not disclosed but according to market experts, it likely amounted to between €30m and €40m. Originally, Spanish developer Torca wanted to build skyscrapers on the site, but the economic crisis thwarted those plans.

Rising demand Emil Domeracki, a senior ­associate in the land department at Colliers International, said that after a number

‘Plots for residential projects are selling like hot cakes’ Pollena-Uroda site next?

One of the next transactions of a distressed ‘Spanish’ asset could take place in the Praga Północ district of the Polish capital. Developer Okam Capital is now planning to revitalize and redevelop the historic Pollena-Uroda post-industrial site there. The company is negotiating the acquisition of the site, which measures approximately 4 hectares. Originally, Spanish developer Restaura planned to develop approximately 1,000 apartments and around 6,000 sqm of commercial space on the land.

Construction was never launched because the company was hit hard by the outbreak of the global financial crisis. Okam Capital wants to build both residential and commercial space on the former Pollena-Uroda site. Construction on the planned project could launch next year, said Michał Skwarek, marketing and sales manager at the company. The architectural studio that prepared the design of the project planned by Restaura has recently announced that it has resumed work on the scheme and that the original design will be modified.

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Warsaw Brewery and Jupiter sites, for instance, will still take some time since the status of those sites is still unclear, be it for legal or urban planning reasons.

But not all investors can afford to go through the long preparation process before launching construction, so developers need to weigh the costs and benefits very thoroughly. He added that plots owned by Spanish investors could be more attractive in regional markets, including Wrocław and Tri-City.

However, demand in these markets is still too small for such spectacular transactions as those re­­cently closed in Warsaw. According to Domeracki, it is difficult to say whether the prices of those plots have already reached an acceptable level. The price of the former Warsaw Brewery site, for example, has not changed much since 2006 when it was bought.

Investment opportunities

Nevertheless, developers argue that more transactions involving the sale of the properties that Spanish companies acquired in Poland in the previous decade should be expected.

The first such transactions closed in the last few years have already resulted in new projects. Martynuska noted that HB Reavis was one of the pioneers in this regard. The company is currently developing its Gdański Business Center scheme in Warsaw on part of a former of slower years, there is now increased bus depot site that Spanish developer activity in the building land market in Lubasa bought in 2006 .

Poland, with land prices having staOf the many properties that were bilized. “Plots for residential projects bought by Spanish developers are selling like hot cakes, especially in in 2004-2007, the majority were Warsaw, Wrocław and Tri-City,” he said. acquired by developers whose investHe added that developers from the other ment assumptions were over-optimistic, sectors have also gone on a spending said Waldemar Lesiak, vice president spree. In the capital, it has become dif- of the management board at Echo ficult to find plots where projects can Investment. The banks which financed be started quickly, so investors’ main the acquisitions took over the propergoal is often to secure good sites before ties and are now in the process of selling someone else does. them. This situation generates investWith recent months having seen re­­ ment opportunities for companies such cord investment levels in the building as Echo Investment, which are looking land in the country, developers are now to acquire well-located pieces of buildturning to large but problematic sites, ing land at attractive prices, Lesiak said.

“It seems that before the end of this including distressed Spanish assets, de­­­­ spite the fact that they are some year, we could yet see several transacof the more difficult sites in the mar- tions in which Spanish banks or develket. Mikołaj Martynuska, senior director opers will be the sellers,” said Piotr in development consultancy at CBRE, Fijołek, partner – investments at Griffin argued that the development of the Real Estate. by Adam Zdrodowski

Adam Zdrodowski, Poland Today’s real estate editor, takes an in-depth look at the landscape of Poland’s property market.

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A never-ending market Poland Today sits down with Leszek Sikora, managing director at developer ECE Projektmanagement Polska, to talk about the condition of the retail property market in Poland

Developers are announcing and launching all kinds of new retail projects across Poland. How sustainable is the current demand for retail space in the country?

Retail chains continue to expand.

Admittedly, they have become more selective and the process of choosing new locations takes more time than in the past. The growth today is slower than it used to be.

The times when any new project in the market could easily and quickly be filled with tenants are over, which is good. Tenants are now much more careful when it comes to their expansion strategies. This is not a problem for us as we ourselves are very selective with regard to the locations we want to be in as a developer.

photos: ECE Projektmanagement Polska

Many of the new retail schemes in Poland are relatively small projects, including convenience shopping centres. Is there still room in the market for the regular large-scale shopping malls?

Leszek Sikora,

managing director at ECE Projektmanagement Polska, says that public investments in Warsaw could benefit through retail development and a PPP model.

‘We have a new fund which will spend almost €2bn on existing retail facilities in Germany, Poland, the Czech Republic and Slovakia, as well as in southern Europe’

There is still room for large shopping centre projects in the largest cities, in good locations which allow for the development of an investment that will remain dominant in a given city for many years. We are currently developing a large-scale shopping centre scheme in Bydgoszcz. Of course, there is more risk involved in these kinds of developments. Small retail formats are growing in Poland, but this is not a segment of the market that we would like to be present in.

All or most of the large cities in Poland probably already have at least one large dominant shopping centre. How can developers compete today with those existing malls?

The best sites in the largest Polish cities have probably already been developed. However, I think that there is a lot of development potential in new locations, created through the constant improvement of transport infrastructure. For example, the construction of new ring roads in Poland’s largest cities, and the second subway line in Warsaw, will create new areas with a high concentrations of pedestrian and car traffic and thus generate new investment opportunities.

Has the size of new, large shopping centre projects in Poland changed in recent years?

There are fewer new large shopping centre projects – but they have become larger. Statistics shows that the average size of new shopping centres in Poland and elsewhere in Europe has grown by approximately 30% over the last 10 years.

Why is that?

It is because developers, who want to make sure that their projects will succeed in a competitive and relatively saturated market, focus on the development of dominant schemes – and those need to be large.

Do you see potential in the redevelopment of the existing malls in Poland?

Definitely. Last year, our owner actually decided that when it comes to the development of new shopping centre projects in Poland, ECE Projektmanagement will be very selective and will practically limit its choice of locations to Warsaw. In the regional cities, the company will mostly focus on the redevelopment and repositioning of the existing shopping malls, which is, in some respects, even more difficult than the development of a new centre because you have to remodel a centre that continues to operate. This also per-

ZIELONE ARKADY According to its website, ECE Projektmanagement’s new shopping centre development in Bydgoszcz, Zielone Arkady, will stand out in particular as a result of its architecture. “The most prominent architectural feature will be the west entrance.

Visitors enter the building through an entrance hall which is almost 30 metres in height and is shaped like a rising crystal.” This architectural element, which features huge windows, will flood the food court contained therein with light. According to the firm, yet another architectural highlight will be ‘The Glade’ – an atrium at the south entrance of the mall.

“Its design resembles a theatre with loges and stands on three levels arranged around a large promotional space on the first floor which can be used for centre promotions or shows,” the company says.

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tains to our own centres – in Gdańsk, for instance, we will be redeveloping and expanding the Galeria Bałtycka mall, which will get another 16,000 sqm of leasable space. This market never ends and new opportunities are emerging all the time.

URBAN ISSUES

What are the latest trends in designing new shopping centre projects?

First of all, shopping centres today have to be multi-functional and satisfy both the shopping and entertainment needs of their visitors. When it comes to the architectural aspect, people increasingly expect that a new shopping centre will be integrated with the neighbourhood it is developed in.

Green building solutions have become a standard in the sector. Another thing is the application of modern IT technologies in shopping centres – studies are now underway on the use of applications and devices including smartphones as sales and marketing tools.

ECE Projektmanagement Polska is a partner of Poland Today’s Special Edition of Urban Issues for Expo Real.

Has the e-commerce market already had a major impact on shopping centres in Poland?

There are tenants who have decided to withdraw from shopping centres.

In Germany, which is the main market for us, around 16% of all shopping is now done online and in Poland we can see things going in the same direction.

We are thinking of ways of addressing the issue, of how shopping centre developers and investors could benefit from the development of e-commerce.

I do not think that e-commerce is or will ever be a major threat for shopping malls that offer a unique shopping experience. I would rather call it an evolution of shopping habits.

ECE Projektmanagement Polska is one of the companies that want to redevelop the former Warszawa Główna railway station site in Warsaw. What is your vision of the place?

We are focusing on the retail function because the site is in a very good and well-connected location, on the fringes of the Central Business District of Warsaw, which continues to expand westwards, and close to a stop of the second subway line. We are thinking of a dominant shopping centre with at least 80,000 sqm of leasable space that would be integrated with the railway station. We would probably decide to develop the office and residential functions in cooperation with another developer.

What if Polish State Railways selects one of the other bidding developers? Will you still be looking for a site for a large shopping centre scheme in Warsaw?

Yes, we will. We are actually looking for such sites all the time. We are looking at opportunities to acquire existing facilities in Warsaw and in the largest regional cities across Poland. We have a new fund which will spend almost €2 billion on existing retail facilities in Germany, Poland, the Czech Republic and Slovakia, as well as in southern Europe. The fund is not going to finance the acquisition of sites for new projects.

We are looking at major existing centres which can be redeveloped and repositioned. It does not matter so much which generation such a facility would belong to – what matters is whether we could add value to it. The problem is that it is not that easy to find good retail product in Poland at the moment.

What about sites for a completely new project in Warsaw?

We are looking at a number of locations, both in the centre of Warsaw and on the outskirts of the city. I think that what would be worth considering is a public-private partnership (PPP) formula. There are many potential public investments in Warsaw, including the construction of sports facilities, which would be much easier to develop if they could be financed through the development of retail facilities near them. This is a win-win situation – you can deliver something that serves the

local community and finance it with private money. The first attempts to carry out such projects have already been made in Poland but they have failed.

Nevertheless, I think that with a little bit of determination and a well thoughtout PPP formula, this can and will one day be done.

What are your development plans for the regional cities in Poland?

We are already present in Gdańsk, Katowice, Kraków, Łódź, Poznań, Szczecin and Wrocław. The plan is to be present, as a shopping centre operator, in all the major regional cities in Poland.

For the time being, we are not planning any new shopping centre projects in the regional cities – the underconstruction Zielone Arkady mall in Bydgoszcz will be the last development of this kind. Of course, I cannot rule out the potential development of another regional mall in the future if we manage to find the right location, but we do not have any concrete plans in this regard at the moment. Our main focus in the regional cities is currently on the redevelopment of the existing centres. These do not have to be the shopping centres that we manage. ECE Projektmanagement is a service company and we are also ready to redevelop shopping centres that someone else owns.

Unique architecture is expected to be the distinguishing factor of the Zielone Arkady shopping centre that ECE is developing in Bydgoszcz. The west entrance (pictured above) of the mall will rise 30 metres and resemble a rising crystal.

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Rank Progress selling regional shopping mall project to Immofinanz

Warsaw Stock Exchange-listed developer and investor Rank Progress has sold its under-construction shopping centre project in the northwestern Polish city of Piła to WSE-listed real estate firm Immofinanz Group. The transaction is valued at PLN 57.7m. Austrian Immofinanz has refinanced the outlays made by Rank Progress and will finance the construction of the scheme through to its delivery. The company will additionally pay Rank Progress for finishing the development and commercialization processes.

Expansion of Wola Park shopping mall in Warsaw underway

Echo Investment acquires prime downtown Warsaw site

Warsaw Stock Exchange-listed developer Echo Investment has acquired the former Warsaw Brewery (Browary Warszawskie) site in the centre of the Polish capital from the Spanish Banco Financiero y de Ahorros for €42m. Echo Investment is planning to develop a total of approximately 100,000 sqm of office and residential space on the plot within the next five to seven years. The developer estimates the total value of the investment at around PLN 1bn.

Griffin Group acquiring more land in downtown Warsaw

Real estate investor Griffin Group has announced the acquisition of a total of over 16,000 sqm of developed land in downtown Warsaw from Zakłady Graficzne ‘Dom Słowa Polskiego’. The two plots are located on ul.

Pańska and ul. Miedziana in the Wola district of the Polish capital and neighbour the Jupiter shopping centre site, which Griffin Group bought from the Spanish Catalunya Banc in December last year.

Investment market

Standard Life Investments selling Polish logistics portfolio

Standard Life Investments Select Property Fund has sold its Polish logistics portfolio to Logicor, the European logistics platform of Blackstone, for over €118m. Cushman & Wakefield represented the vendor in the sale process. The portfolio was developed by Standard Life Investments and PDC in 2007-2008 and includes seven completed logistics assets with more than 200,000 sqm of GLA, located in three parks in Mysłowice (Silesia), Stryków (central Poland) and Robakowo (Poznań area).

Ghelamco finalizing major package office building sale

Developer Ghelamco Poland has finalized the sale of three existing office buildings – T-Mobile office Park and Łopuszańska Business Park in Warsaw, as well as Katowice Business Point in Katowice – to an affiliate of the global private investment firm Starwood Capital Group.

The value of the transaction has not been revealed. However, the German bank Helaba has announced that it has provided Starwood with a long-term €136m loan in support of the acquisition.

Office

Phase II of Silesia Business Park under construction

Developer Skanska Property Poland has launched construction on the second building within its four-building Silesia Business Park office project in Katowice. The building is scheduled to be completed at the turn of Q3 and Q4 next year. Construction on the first building within the scheme has been underway since November last year and should finish within the next few months. The project has already been 65% commercialized, with tenants including PwC and a local unit of Skanska.

HB Reavis launches second phase of GBC project in Warsaw

Developer HB Reavis has launched construction on the second phase of its Gdański Business Center office project in downtown Warsaw. This phase of the scheme is expected to deliver a total of more than 50,000 sqm of class-A space in two buildings in the first quarter of 2016. The Gdański Business Center investment will comprise a combined 98,000 sqm of leasable space when fully developed.

HB Reavis recently delivered the first phase of the development, which is leased to tenants including KPMG, SNC Lavalin and Provident.

Retail

Griffin gets building permit for Hala Koszyki in Warsaw

Real estate investor Griffin Group has obtained permission to build its Hala Koszyki retail and office project in Warsaw. Construction on the scheme has already launched and is scheduled to finish in 2016. The investment, valued at approximately €80m, will involve the reconstruction of an eponymous historic marketplace. The project will deliver 6,000 sqm of retail space and 15,000 sqm of office area.

HB Reavis has

launched construction on the second phase (pictured) of its Gdański Business Center office project in central Warsaw.

This phase is expected to deliver a total of more than 50,000 sqm of class-A space in two buildings in the first quarter of 2016.

Logistics

Panattoni buys land for new logistics park in western Poland

Industrial space developer Panattoni Europe has recently acquired 18 hectares of land at Komorniki near Poznań on which it will build a new logistics project called Panattoni Park Poznań IV. The scheme is expected to comprise three buildings and offer a combined 116,500 sqm of space when fully developed. Construction on the first phase of the development has already been launched and is scheduled to finish in February next year.

Goodman developing new warehouse building near Kraków

Industrial space developer Goodman has launched construction on the fifth warehouse building within its Kraków Airport Logistics Centre complex in Modlniczka near Kraków.

The facility is being developed on a speculative basis and will deliver 11,000 sqm in November this year. It will be the fourth speculative development within the complex, with the previous three having been fully leased out before completion.

Residential

Robyg planning new large residential scheme in Warsaw

Warsaw Stock Exchange-listed developer Robyg is planning a new large-scale residential project in the Polish capital, which will comprise approximately 1,000 apartments and around 6,000 sqm of commercial space.

The company has just announced the acquisition of 85,000 sqm of land in the Mokotów district of Warsaw for PLN 68.5m. The land is located between ul. Puławska and Al. Sikorskiego, with Robyg not revealing the exact location.

Real estate review

Building land

Real estate developer and investor Inter IKEA Centre Group Poland has launched the expansion of the Wola Park shopping centre in Warsaw, which it acquired from an AEW Europe-managed fund in October last year.

The area of the mall, located on ul. Górczewska in the Wola district of the Polish capital, will be expanded by 17,500 sqm to a total of 77,500 sqm, thus making Wola Park the second largest shopping centre in Warsaw.

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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.

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EVENT rEViEw

conference

Bydgoszcz’s BPO assets The city is showcasing its attractiveness as a location for business process outsourcing investment see page 88

conference

The sky’s the limit

In this issue, we review Poland Today conferences that examined investment An attractive location and motivated workers are luring opportunities for BPO/SSC investment investors to Radom, Warsaw’s ‘satellite’ city. see page 90 in Bydgoszcz and Radom, the state of the market in Poland’s home appliance and hotel sectors, as well as the prop- conference erty investment climate in Poland and Room to grow the wider CEE region. We also provide our reports from Madeleine Albright’s Investors and industry executives see room for new speech in Poland and JLL’s charity vol- hotel developments in Poland. see page 92 leyball tournament.

conference

More R&D needed in Poland’s appliance sector Poland is the largest producer of home appliances in Europe, but now it needs firms to invest in innovation see page 94

conference

Growing, stable, attractive New capital is streaming into the CEE region, due to improving growth and a record of stability see page 96

Media Patronage

From chess to billiards Home appliances

are a key industry for Poland, which remains one of Europe’s biggest producers of the devices. But with competition for production investments increasing, experts point out that Poland needs to focus on increasing R&D activity in the sector.

see page 94.

Poland is a beacon

of hope and democracy in Europe, and serves as an example of how both economic and political reforms can be implemented while including all of society’s stakeholders, says former US Secretary of State Madeleine Albright.

Poland has an important role to play both politically and economically in the complicated new reality of international relations see page 98

upcoming events.

For more information, visit poland-today.pl

Media Patronage

Event serves up an ace for kids charity JLL’s 5th annual charity beach volleyball tournament raised a record amount for the financing of a new children’s home see page 100

see page 98.

Andrew Kureth

writes on Madeleine Albright’s view that the ‘Polish boar’ will soon join the Asian tigers, and on Poland Today’s Radom Calling conference on investment opportunities in the city.

Adam Zdrodowski

writes on investment opportunities in On Poland’s hotel market, the home appliance industry, and the property investment climate. He also reports on Bydgoszcz’s BPO assets.

Join us for our

Richard Stephens

writes on JLL’s hugely popular charity volleyball tournament, which this year raised a record amount of money for a Polish children’s home.

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Bydgoszcz’s BPO assets The city is touting its attractiveness as a location for business process outsourcing investment

photos: Arkadiusz Chłopik

EVENT rEViEw

conference

‘Bydgoszcz open for outsourcing’

was the title of the conference held by Poland Today in the northern Polish city.

Participants heard about the advantages of investing there, from officials including Mayor Rafał Bruski.

The city of Bydgoszcz, which has already become a major outsourcing destination in recent years, could attract more investments from the BPO sector in the near future. Participants in the recent ‘Bydgoszcz open for outsourcing’ conference, organized by Poland Today in the northern Polish city, said that the area has many of the assets needed to lure large international and domestic businesses.

Bydgoszcz Mayor Rafał Bruski argued that the city has become a very good place to do business. Crucially, the transport infrastructure in and around Bydgoszcz has recently been greatly improved, with the city now benefiting from a new motorway and a new airport.

Bydgoszcz can also boast of a very strong performance when it comes to the efficient granting of administrative permits, as well as of an easy access to competitively priced and well-qualified labour force, Bruski stressed. Meanwhile, it is the quality of employees that really matters for companies planning the opening of new operational centres, said Marek Zuber, an economist and financial markets analyst. It was noted that cities like Bydgoszcz nowadays not only compete for investments with the largest BPO markets in Poland, including Kraków and Wrocław, but also with destinations in the other countries in Europe.

are or would like to be active in Bydgoszcz.

Representatives of some of the universities in Bydgoszcz said that indeed, much has already been done to that effect in recent years. They pointed out that some of the university professors in Bydgoszcz are also employed at local firms.

There are currently 21 operational BPO centres in Bydgoszcz, according to data presented by Wiktor Doktór, CEO of the Pro Progressio foundation, which promotes outsourcing in Poland. Major companies present in the city include Alcatel-Lucent, Atos, BPH, Grant Thornton, Mobica, Poczta Polska and PZU. More BPO sector investors are likely to come.

Iwona Chojnowska-Haponik, foreign investment department director at the Polish Information and Foreign Investment Agency (PAIiIZ) said that companies regularly inquire about the city.

The participants in the conference said that Bydgoszcz has many assets, but the city should make a better use of them.

There is also the need for a closer cooperation between Bydgoszcz and the other major city in the region, Toruń.

It is crucial that the image of Bydgoszcz be changed in the eyes of some investors. Today some people still think The participants in the conference of Bydgoszcz as an industrial and stressed the need for quality education drab city, said Piotr Andryszak, PPS and good cooperation between univer- Center Europe Director at Philips.

by Adam Zdrodowski sities and the companies which already

Bydgoszcz lies in north-central Poland, within reasonable distances from major Polish cities such as Gdańsk, Poznań and Warsaw.

The city lies at the intersection of major north-south and east-west roadways and has seen a raft of infrastructure investments over the past few years, including a new motorway and a new airport.

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Participation in the conference was outstanding, with presenters and panelists addressing a packed, standing-room-only conference hall.

Right: Lucyna Chwastowska of Tieto, Jolanta Jaworska of IBM Polska, economist and financial market analyst Marek Zuber, Roman Lubaczewski from PwC and Paweł Poncyljusz of Avio Polska

Below: CEO of Alcatel-Lucent Polska Andrzej Dulka

Right: Iwona Chojnowska-Haponik of the Polish Information and Foreign Investment Agency (PAIiIZ)

Above: CEO of the Bydgoszcz Agency for Regional Development Edyta Wiwatowska and Bydgoszcz Mayor Rafał Bruski

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The sky’s the limit An attractive location and motivated workers are luring investors to Radom, Warsaw’s ‘satellite’ city

Above: Iwona Chojnowska-Haponik

photos: Arkadiusz Chłopik

of the Polish Information and Foreign Investment Agency (PAIiIZ); Magdalena Zagrodnik of People Sp. z o.o.; Jan Bednarczyk of the Kazimierz Pułaski University of Technology and Humanities in Radom

Personal flight:

Participants in Poland Today’s Radom Calling conference in June had the opportunity to take a short sight-seeing flight around the city.

Over the last 20 years, investors from an hour by car. Radom also has its own the business process outsourcing (BPO) airport, just 5 km from the city centre, industry have generally chosen to locate with the number of passengers expected shared service centres in large urban to eventually reach 3.2 million annually. areas. Recently however, that trend has begun to change, and investors are now While Radom’s location and infrastrucincreasingly looking to smaller cities situ- ture were cited as important advantages, ated as far as 150 km from major metropo- its educated and committed employlises. In these cities businesses can benefit ees were identified as the city’s greatest from lower costs of everything from office resource. The city is one of the youngspace to labour, as well as a greatly moti- est in Poland, with 16% of the population between 20 and 29 years old. Some 15,000 vated workforce. students attend the city’s 12 schools of One such city to have gained investors’ higher education. When those students attention is Radom, which has become become employees, they demand salaa so-called ‘satellite’ of Warsaw, at just ries that are lower than those in Warsaw, an hour’s drive away. Industry leaders and while staff turnover is also lower. city authorities discussed the advantages of investing in Radom at Poland Today’s ‘People want to work’ “In Radom, people want to work,” said Radom Calling conference in June.

Kamila Krawczyk-Strawińska, CEO of Radom is located just an hour's drive south On investors’ radars Multi Interactive Solutions. Her statement of Warsaw, making it an ideal location for “Radom has begun to appear on investors’ was backed up by the results of a survey business. Its low office rent levels and low of labour – along with low staff turnover radars,” said Maciej Piwowarczyk, a sen- conducted by Hays and PwC which found costs levels, has put the city on the map, especially ior director and head of the EMEA shared that people from Radom are more moti- for BPO/SSC investments. service centre business at CBRE. Panelists vated and have a more rational approach at the conference all agreed that the city’s to salary expectations than most of their location, lower costs of doing business, peers throughout Poland. Investors in the educated employees, openness and sup- city can count on an educated labour pool port from city authorities were some of with good language skills. the advantages Radom offers.

Izabella Anuszewska, research unit Wanting to build on its momentum, the city Radom is located near the centre director at Millward Brown, pointed out has launched ‘Modern Business Services’ of Poland at the intersection of major that it is becoming increasingly diffi- postgraduate studies at the Kazimierz north-south and east-west expressways. cult to find a large number of employees Pułaski University of Technology and Now, thanks to improved road infrastruc- in Warsaw. Businesses are beginning to Humanities in Radom. The course is preture, the city boasts a smooth, speedy move call centres from Warsaw to Radom. pared and conducted in partnership with connection to Warsaw. The capital’s inter- This has proved a sound strategic business business services association ASPIRE and PwC. by Andrew Kureth national airport can be reached within decision, she said.

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Left: CEO of Pro

Below: John Gabrovic of AIG/ Lincoln and Rafał Grzegorczyk of the City of Radom's centre for investor services

Progressio Wiktor Doktór, Maciej Nuckowski of Xerox Global Document Outsourcing and CEO of of Multi Interactive Solutions Kamila KrawczykStrawińska

Below:

Dariusz Domański of AIG/Lincoln straps himself in.

Below: Mayor of

Radom Andrzej Kosztowniak, and CEO of AIG/Lincoln Mirosław Szydelski

Above: Rafał Grzeszczyk of the City

of Radom's centre for investor services, Aneta Kłodaś of Poland Today and Mieczysław Budzik of Impel Business Solutions

Left: Radom Deputy

Mayor Krzysztof Ferensztajn at the controls

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Room to grow Investors and industry executives see room for new hotel developments in Poland

photos: Piotr Dziubak, Nikada

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Right: Christoph

Hager of Starwood Hotels and Resorts Worldwide, Christian Hribar of Worldhotels and Adam Konieczny of Christie + Co

With the tourism industry picking up in Poland, there is room for new hotel developments in the country, said participants in the Spotlight Hotel Investment Poland conference organised by Poland Today in Warsaw at the beginning of June. A number of international hotel chains plan to enter the country in the coming years, the participants in the conference said.

The last few years have been a good period for the Polish tourism industry.

Approximately 15.8 million foreign visitors came to Poland last year, said Katarzyna Sobierajska, an undersecretary of state at the Ministry of Sport and Tourism.

Meanwhile, the demand generated by the domestic market has also been rising in recent years, pointed out Sebastien Denier, vice president of Central and Eastern European operations at Louvre Hotels.

Canfield, there is also room in Poland for hotels located near hospitals, which could Ralph Steinert, development director But despite the rising numbers of tour- be used by both patients and their fami- for Germany and CEE at Louvre Hotels ists, Poland remains a country with a rel- lies. Such facilities already exist in the Group, said that there is opportunity atively low saturation level for hotel space, German market, he said. However, plan- for growth through both development Sobierajska said. She estimates that there ning- and property claims-related issues and takeovers. Mikhail Kolesnik, senior are only about 30 hotel rooms per 1,000 sometimes pose problems for hotel inves- director of development for the Russia, CIS and Eastern Europe area at Marriott inhabitants in Poland. Hotel investors rec- tors in Poland, Chełchowski said.

International, said that the company is ognise the growth potential of the Polish market, with around 170-200 building Adam Konieczny, country head for Poland actively looking at new sites in Poland. permit applications having been filed in at Christie + Co, said that a number of Poland last year. international hotel chains, including Warsaw and Kraków are now the most InterCityHotel, Motel One and Leonardo attractive cities for hotel investment, Astrid Schafleitner, who is responsible Hotels are expected to enter Poland in with Wrocław being a difficult marfor development at Motel One, said that the near future. At the moment, Accor/ ket, said Rudolf Grossmayer, asset manPoland now offers a lot of opportunities Orbis, Best Western, Louvre Hotels and ager at UBM. He and Stephane Obadia for the conversion of old office buildings Hilton, which respectively have 64, 20, 16 of Algonquin stressed that international into modern hotel facilities. According to and 10 hotels in Poland, are the four larg- brands bring recognition and value to Andrzej Chełchowski, a partner at Miller est chains in the country, Konieczny said. hotel facilities. by Adam Zdrodowski

Below:

Przemysław Wieczorek of PURO HOTELS, Dr Andrzej Chełchowski of Miller Canfield and FransJan Soede of Hotels Asset Management

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Below: Kathryn Miller of STR Global, Ireneusz Węgłowski of Accor Hotels and the Polish Hospitality Chamber of Commerce, Sebastien Denier of Louvre Hotels Group, Dr Krzysztof Łopaciński of the Institute of Tourism, and Undersecretary of State in the Ministry of Sport and Tourism Katarzyna Sobierajska

Right: Anna Wożniak of mLeasing, Izabela Kuszner of Bank Pekao/UniCredit Corporate & Investment Banking, Edmund Cumber of PKO BP and Hubert Mańturzyk of Aareal Bank AG Below: Małgorzata

Dybaś, Managing Director Poland, Hotels Asset Management, was a content partner of the event along with Adam Konieczny of Christie+ Co

Right: Ralph Steiner of LHG and Frida Hansen of Steigenberger Hotels AG

Above: Mikhail Kolesnik of Marriott International, Susanne Friedrich of The Rezidor Hotel Group and Ralph Steiner of LHG Below: Wojciech

Szybkowski of CMS Cameron McKenna, Dominic Seyrling of Host, Dr Rudolf Grossmayer of UBM Realitätenentwicklung Aktiengesellschaft, Ascan Kokai of INVESCO Real Estate, Stephane Obadia of Algonquin and Andreas Scriven of Christie + Co

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More R&D needed in Poland’s appliance sector

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Poland is the largest producer of home appliances in Europe, but now it needs sector firms to invest in innovation

Right:

photos: Arkadiusz Chłopik

Maciej Potulski of Poland Tokai Okaya Manufacturing, Paweł Poncyljusz of Avio Polska and economist Marek Zuber

Right:

Anna Polak-Kocińska of the Polish Information and Foreign Investment Agency (PAIiIZ) and CEO of Indesit Company Polska Fabio Pommella

growth in 2013, with exports accounting for 86% of production. More than 20,000 people are employed in the home appliances sector in Poland, Konecki said.

The home appliances market has become very competitive of late and much of the discussion during the conference focused on what could be done to make Poland outshine its competitors elsewhere in Europe.

Poland’s home appliances sector is boom- The panelists pointed out that a number of Left: Tomasz Rączka ing, but it needs investment in research factories in the consumer electronics marof Value Added and development to become more com- ket, which also saw a boom several years Logistics petitive, said participants in the second ago, have recently been closed. There are Forum for Home Appliances Producers, fears that the same scenario could materiBelow: held in May by Müller – Die lila Logistik alize in the home appliances sector.

Zygmunt Łopalewski and Fabio Pommella, and Poland Today. The companies organof Indesit Company ised the forum in order to create a plat- According to Paweł Poncyljusz, former Polska form where firms active in the home deputy minister of economy and now vice appliances market could meet and discuss president at Avio Polska, more investment the various issues which are important in R&D in the sector could allay those for the sector, said Michael Müller, CEO fears to a certain degree. When compaat Müller – Die lila Logistik. nies invest in R&D facilities – and not just production facilities – it is more difThe home appliances sector is a crucial ficult for them to withdraw from a country industry for Poland, said Anna Polak- and move production to another location, Kocińska, vice president of the manage- Poncyljusz argued. ment board at the Polish Information and Foreign Investment Agency (PAIIZ). She He added that the problem with many pointed out that Poland boasts 27 home of the consumer electronics factories appliances factories, which support in Poland was that they are merely assem- The global economic crisis is over, he said, a huge number of subcontractors. bly facilities. More qualified engineers with a majority of European countries should be employed in the home appli- now recording positive GDP growth. Also Wojciech Konecki, CEO at the home ances market in Poland, Poncyljusz said. the current crisis in Ukraine could, ironiappliances producers association CECED cally, bring some benefits for the Polish Polska, said that with its 19.7 million home Marek Zuber, an economist and financial market as it is becoming increasingly appliances manufactured per year, Poland market analyst, said that when it comes clear that investors will not be moving has already become the largest producer to macroeconomics, the prospects for eastwards. “There is too much risk there,” in Europe. The sector recorded 11% the home appliances market are good. Zuber said. by Adam Zdrodowski

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Right: Economist

Marek Zuber poses with Romualda Kmiecik of Die lila Logistik Polska.

Right: Jan

Barbasiewicz of Colliers International Poland

Below: Wojciech Waryszewski of SIRMAX and Arkadiusz Dopierała of Electrolux

Right: CEO of Müller – die lila Logistik Michael Müller Below: Guests

have a bit of fun with players of professional Polish football team Piast Gliwice

Left: Arkadiusz

Rudowicz of Müller – die lila Logistik Polska and Wojciech Waryszewski of SIRMAX

Above: Volker

Sudbrink of Lila Consult

Left: Marta Borows-

ka of Poland Today and Marek Skrzydlak of Prime Industrial

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Growing, stable, attractive New capital is streaming into the CEE region, due to improving growth and a record of stability

photos: Piotr Dziubak

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Above:

The conference split into smaller groups for several informal breakout discussions.

Central and Eastern Europe remains a highly attractive destination for real estate investors, said participants in the Poland & CEE Real Estate Summit, organized by Poland Today and Property Investor Europe at the Bristol Hotel in Warsaw in June. They agreed that there are still many top-notch investment opportunities in Central and Eastern Europe, with new investors coming from markets including Asia now showing a great deal of interest in the region.

In terms of the macroeconomic situation in Central and Eastern Europe, the growth prospects are improving, said Anna Zabrodzka, an economist at Moody’s Analytics. In addition, the crisis in Ukraine has had little impact on the investment sentiment in Poland, said Jan Cienski, a former Financial Times correspondent market. In the next few years, investors Above: Dennis Dart representing Secure Legal Title, Eric Assimakopoulos of Revetas in Poland and now a senior fellow at the will go to the regional cities in the country, Capital Advisors and Philipp Stampfer Demos Europa think tank. He argued that rather than further east, Zajdel said. of Benson Elliott Capital Managers the crisis has actually strengthened the discussed who the investors in CEE image of Poland as a safe country: inves- When it comes to drawbacks, Robert are, and what they want. tors are now decamping from Ukraine Martin, principal, head of Central Europe and those planning to enter CEE will at Europa Capital, noted that the region be choosing Poland over Ukraine, he said. is a relatively small market compared to those in Western Europe, accounting for Otis Spencer, managing director at just 3% of the European property investPeakside Capital, emphasized that Poland ment market. Dieter Knittel, director the increased interest of Asian capital in has a growth story to tell investors. Tomasz of international real estate finance for the region, said Allan Saunderson, manPuch, head of office and industrial capital Europe at pbb Deutsche Pfandbriefbank, aging editor at Property Investor Europe. markets at JLL in Poland, pointed out that said that another problem for the Polish Not much of that capital has been allocated yet and Asian investors have been while Warsaw is now a real hot spot, there market is its lack of product. is also a lot of growth potential in Poland’s reluctant to reveal their investment stratregional cities. Maciej Zajdel, president of Meanwhile, new money is coming to CEE egies. However, they have a lot of money the management board at IVG Poland said from countries including the United States. behind them and are looking for opporthat Warsaw is already perceived as a core However, the real game changer could be tunities, he said. by Adam Zdrodowski

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Left: Robert Dobrzycki from Panattoni

Europe, Otis Spencer from Peakside Capital and Maciej Zajdel from IVG Poland discussed whether global investors are ready to go further east than Poland.

EVENT rEViEw

Left: The ‘speed dating’ session proved popular. Here Lech Wodecki from Strabag Property & Facility talks to Stratos Chatzigiannis from NBGI Private Equity Limited.

XXXCaption iLis quis rem estotate pa vollo

commodias ellecupta dolorempel illati volores spicius, exerum fugiasit ad molute offic tem sinatiur sam qui nonet rem essitam essimus et eost, ulparchil ilit quam, soles pe consequam ame eate.

Left: Allan Saunderson from Property

Investor Europe (PIE) makes a point during the conference.

Below: Tomasz Lisiecki, Chief

Development Officer at TriGranit Development Corporation.

Below: Jan Cienski,

former Warsaw & Prague correspondent for the Financial Times, closed the conference with some insights on the future of Ukraine.

Below: Anna Zabrodzka of Moody’s Analytics told the conference that prospects look hopeful for the CEE region.

Left: Dieter Knittel of pbb Deutsche Pfandbriefbank, Robert Sztemberg from JLL and Helge Sehorz from Erste Group Immorent investigated whether the financing banks are playing ball.

Above: Dieter Knittel from pbb Deutsche

Pfandbriefbank, Joanna Kowalska-Szymczak from Kulczyk Silverstein Properties, Robert Martin from Europa Capital and Tomasz Puch from JLL debated whether Poland is already overbought and overpriced.

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From chess to billiards Poland has an important role to play both politically and economically in the complicated new reality of international relations

photos: ABSL

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Media Patronage

Former US Secretary of State

Madeleine Albright says that officials in the US see Poland as the anchor of NATO and an example of the success of combining political and economic reforms.

The analogy of international relations as a game of chess where two sides sit quietly on either side of the board contemplating their moves against each other has become outdated, said former US Secretary of State Madeleine Albright during a speech she gave in the western Polish city of Poznań in late May. Today international relations is more like a game of billiards, she said, where opponents trying to knock their balls into particular pockets tend to hit other balls that move, bounce and spin around the table, creating chain reactions that are often hard to predict.

In this environment, where it is no longer the large powers that set the agenda and where smaller powers can reach further

‘Countries cannot simply tweet their way to democracy, prosperity and peace’

and create a bigger impact, Poland has an important role to play, said Albright.

Speaking at the 5th Annual ABSL Conference, she said that Poland had “cracked the code that has bedevilled so many other countries” attempting to transition to democracy and a market economy. Poland has managed “to get the gears of economic and political development to turn in the same direction at the same time,” she said.

Redistribution of influence Poland can use its successful model, which consists of an inclusive attitude toward all of the stakeholders in society and an understanding that economic and political development must go hand in hand, to set an example for other countries

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The Polish beacon: According to Albright,

Poland stands as a beacon to the rest of the world – a country that has taken on the burdens of security responsibilities that come with being a member of NATO, and which has taken advantage of European Union membership to raise GDP per capita to 62% of the EU average. “The Asian tigers have been joined by the Polish wild boar,” she said.

has also allowed people to choose to consume information that makes them most comfortable or that already confirms their own opinions. This narrows, instead of broadens, people’s perspectives, making it much more difficult to resolve disputes.

“Just because we are better connected doesn’t mean we are better informed,” she said.

Moreover, while many pro-democracy movements around the world have made the Poland-US use of technology, they are usually una- relationShiP ble to achieve success without economic her speech at the 5th Annual ABSL development and broad participation After Conference in Poznań in May, members of the from all stakeholders in society – again, audience were keen to ask Madeleine Albright here Poland can be an example that shows about her assessment of the Poland-US reother countries that they “cannot simply lationship, especially within the context of tweet their way to democracy, prosperity the current global situation. “Americans and the rest of the world are taking note” of what and peace,” said Albright.

Poland has achieved, Albright said, though The Polish ‘wild boar’ For these reasons, we should be wary not that our international institutions are too strong, but that they are too weak, she said, adding that post-World War II institutions have not kept up with the changing international environment where non-state actors such as NGOs, large corporations or pension funds can have a huge impact on geopolitics. She pointed out that global drinks giant Coca-Cola has an annual revenue of around $50bn – more than the GDP of Lithuania ($42bn in 2012), which currently sits on the United Nations Security Council.

– particularly Ukraine – Albright said. She called the situation in Ukraine “the most significant geopolitical crisis since 9/11”.

But people around the world were taking note of Poland’s success, and with the redistribution of global influence, Poland has an opportunity to shape the outcome “The world is a mess,” she said jokingly, in the conflict next door, she said. “that’s a diplomatic term of art.” But in Nevertheless, Albright pointed to several this environment, Poland stands as a bea‘megatrends’ that could complicate mat- con – a country that has taken on the burters. One of them, globalisation, means dens of security responsibilities that come that the world is more interconnected, with being a member of NATO and which and that trouble anywhere in the world has taken advantage of European Union can quickly transform into problems on membership to raise GDP per capita a global scale. For example, sanctions on to 62% of the EU average. “The Asian Russia could reverberate on financial mar- tigers have been joined by the Polish wild kets in London, the military equipment boar,” said Albright. industry in France, the energy market in Turkey and Russia’s interactions with Poland faces many challenges – among its neighbours. them the necessity to make its private sector more innovative and improving the Technology, another of Albright’s meg- business climate, she said. Nevertheless, atrends, has allowed us to become more she added that Poland’s sun “is still on connected, but has also exacerbated dis- the rise.” satisfaction with economic backwardness and made vivid the chasm between “Whatever challenges you may face, the world’s haves and its have-nots. This I know your brightest days are still ahead,” can lead to greater instability. Technology she said. by Andrew Kureth

the US has long recognised the country’s potential. Poland is seen as “an example of what can happen in terms of devotion to democracy and expansion of opportunities for people, as well as the combination of political and economic development,” she added.

“What is interesting now is that Poland is seen as the anchor of NATO in terms of Central and Eastern Europe. The strength of Poland’s commitment to NATO is important and the strength of its commitment to the EU is very important,” she said, adding that it was no mere coincidence that US leaders such as Secretary of State John Kerry and President Barack Obama continue to make visits.

In general, Poland is viewed as an important player in the region in US government circles, she said. “The US government understands the difficulties that come out of Russia’s actions (in Ukraine). What Putin did in Crimea is a game-changer. A lot of the previous decisions are now being put to the test. So Poland is viewed as an important actor, and you have a huge role to play.”

When it comes to economics and business, Albright said she expected the relationship to develop through the framework of the Transatlantic Trade and Investment Partnership (TTIP), a wide-ranging trade agreement that is now being worked out between the US and EU. “The White House is focused on TTIP and a trade agreement with Europe is seen as an underpinning for the relationship for the future,” she said.

But she also said she sees opportunities for development of economic relations particularly when it comes to energy. The US, which has the potential to become a major global exporter of energy with its newly successful shale gas industry is a natural fit for Poland, which is looking to diversify its sources of natural gas.

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Event serves up an ace for kids charity JLL’s 5th annual charity beach volleyball tournament raised a record amount for the financing of a new children’s home

photos: Jones Lang LaSalle

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Media Patronage

Party time: The event raised the highest amount for charity yet in the five years it has been held.

After the matches, participants partied the night away, some staying as late as 3 in the morning.

JLL managing director for Poland Tomasz Trzósło joked: “I don’t think the real estate sector was very productive the next day.”

The eastern bank of the Vistula River in Warsaw took on the look of a Californian beach movie on the last day of July, as 224 players representing 33 companies took part in real estate consultancy JLL’s 5th annual Charity Real Estate Beach Volleyball Tournament. The players were later joined by about 1,000 colleagues and friends to party the night away. The event raised nearly 187,000 złoty for the Happy Kids Foundation to help finance the construction of a new children’s home in Dąbrówka Wielka near Zgierz, in central Poland. A joint TriGranit Development and TPA Horwath team beat warehouse developer Prologis in a closely contested final, with MLP – another warehouse developer – claiming third place.

“It was pretty hot – some moments we were struggling because of the sun, but we made it,” said Agnieszka Turowska, finance director at TriGranit Development.

“We came with high hopes but still we were pretty surprised that we won.

The team had only met together once, one month before, and we hadn’t trained.

The atmosphere was very friendly, both during the competition and at the party afterwards, but the greatest part of the whole thing was that we raised a lot of money for the kids,” she said. Tomasz Trzósło, JLL’s managing director for Poland, said he was happy with the event.

“It was a great atmosphere, and we raised the highest amount of money to date. Last year the money went to a clinic for kids who have cancer and I went there with some of our team to see for ourselves,

so we know the good the money can do.”

Each year a different charity is chosen, but the event always supports a children’s cause, he added. “It was also great to see people in the market get together over a few drinks – even at 3 a.m. there were still about 300-400 people there. I don’t think the real estate sector was very productive the next day,” he joked.

The players represented both international and Polish companies from the real estate sector, including Adgar Poland, Balmain Asset Management, BlackRock, BNP Paribas Real Estate, Capital Park, CBRE, Colliers, Cushman & Wakefield, Dentons, DTZ, Echo Investment, ECI, Evigo, Ghelamco, HB Reavis, Heitman, JLL, Knight Frank, Kulczyk Silverstein Properties, MLP Group, Multi Development Poland, NAI Estate Fellows, Neinver, Panattoni Europe, Prologis, PZU Inwestycje, Savills, SEGRO, Skanska, TriGranit, Unibail-Rodamco and Warbud.

The sponsors of this year’s event were: AB FOTO, Batida, Cinnabon, Copy General, Europilot, F1Karting, Flyspot, Fundacja Tesco Dzieciom, Grycan, Helios, of Tudor, La Playa Music Bar, Medicover, Mielżyński Wine Spirits Specialities, Och-Teatr, Portico Investments, Prime Celebration: A player from the winning Property Marketing, Prologis, Radisson team – a group that combined players from Blu, Salad Story, Sign System, Stewart TriGranit Development and TPA Horwath celebrates the victory. Second place was Title Limited, Stamm Sport Promotion, –taken by warehouse developer Prologis, Tara HR Consulting, Teatr Guliwer, but the real winners are the children who Teatr Kamienica, Top Secret, Valad, will soon have a family-type home that Warszawskie Centrum Atletyki and would otherwise have been impossible the Westin Warsaw. Poland Today was to build without the money raised by the tournament. a media patron. by Richard Stephens

102 history

Eyewitness: The Warsaw Uprising Uprising veteran Edmund Baranowski offers his memories of the battle that would change Warsaw forever

The atmosphere in Warsaw

Edmund Baranowski, codename ‘Jur’

was a soldier in the ‘Miotła’ battalion of the Radosław Group within Poland’s Home Army during the Warsaw Uprising.

He sat down for an exclusive interview with Poland Today.

Here, he describes his experiences surrounding those fateful 63 days in August, September and October 1944.

just before the Uprising broke out on August 1, 1944 had been shaped through five years of German occupation. Those had been terrible, cruel years. There was nothing that could have prepared us for the horrors that it brought. Poles had already experienced a German occupation, in 19151918. Then the Germans were harsh, but they were good managers, they allowed the local administration to have certain amount of independence.

So we didn’t expect the terror that followed the German invasion in 1939.

After the first announcements from the Germans started appearing on the walls of Warsaw in the autumn of 1939, we knew we were in for something terrible.

In November a German military court sentenced two women to death for some minor offences. Both were shot.

For Varsovians, that type of introduction in the first weeks of the occupation was really surprising.

A few weeks later there was the brutal execution of 107 people in Wawer (now a district of Warsaw but at that time just outside of Warsaw), after two German non-commissioned officers were shot by two well-known Polish bandits. Everyone knew who had done it – the Germans could have arrested them immediately. But the German police rounded up 120 people from

‘Nothing could have prepared us for the horrors of the German occupation’

their flats. They organised a kangaroo court right there out in the open air, and they immediately shot everyone (13 survived). All of this told us that these were completely different Germans than we had known, and that we had to deal with a reality that transcended our imagination.

Later, throughout the occupation, incidents that were intended to terrorise happened over and over: massexecutions of Polish intellectuals and political activists. Executions occurred behind the Sejm building, in gardens, in Palmiry just outside of Warsaw. They included hundreds of people. Around 4,500 people were executed on the streets of Warsaw. As a result, young people began to organise themselves in resistance. We had a deeply rooted desire for retribution. By the summer of 1944, we had been preparing for a long time. I, for example, had been receiving military training for three years. So we knew that the moment when we would be able to settle our accounts was nigh.

Unwelcome surprises However, from the beginning we encountered a series of unpleasant surprises. For example, when we gathered to receive our paraphernalia, we were very enthusiastic. We received redand-white armbands with number of our platoon and so forth. But when we walked 15 metres farther down the line to pick up our firearms we were sorely disappointed. It turned out that there were only enough rifles for every fourth soldier. The rest of us were armed with grenades.

Just two days before the Uprising was to start, there was another unwelcome surprise. On the outskirts of (the Warsaw district of) Wola, and in Pruszków and Piastów, German armoured divisions arrived

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History

Only intended as

an operation to usher out the Germans from Warsaw as the seemingly unstoppable Soviet army quickly advanced, the insurgents expected the Russians to push into Warsaw within days of the outbreak of the Uprising. Instead, the Russians were defeated at Radzymin and retreated. Stalin made it known that he had no interest in the “adventure in Warsaw�. The Russian Army therefore waited within striking distance as Warsaw burned, only to march into the city after the Uprising had been crushed and Warsaw almost totally razed to the ground.

104 history

The ‘Miotła’ unit

to which Baranowski belonged,was part of the Radosław Group.

It also included units such as Zośka, Pięść and Parasol.

Their names are well-known among Poles, and modern Polish military units continue to wear the same insignias today.

‘Amongst ourselves, the atmosphere was full of mutual trust and friendship.

The friendships I made during the Uprising last to this day’

to strengthen the front on the Vistula.

The Russian offensive had continued without any significant resistance from the German side up to that point. So it seemed that nothing stood in the way of the Russians’ further march West.

But the Germans decided to defend Warsaw. Several battle hardened divisions were brought in to reinforce the German position at the front. On July 27 the Russian 2nd Tank Army received orders to head west and capture Praga (the district of Warsaw across the river from the centre of town). That was one of the best Russian formations.

But with the German reinforcements, they encountered stiff resistance in Radzymin, just outside Warsaw.

At the same time, the leadership of the Home Army had based their plans for the Uprising on the assumption that the Russians would reach the Vistula line and even perhaps take the bridgeheads. But on July 31, the very same day that the decision to launch the Uprising was made, the Russians came to the conclusion that they had lost the battle. They were ordered to transition to defence and retreat to the east.

Doomed to fight alone So we were doomed to fight alone – but we didn’t know that in the first two days of the Uprising. We constantly heard the roar of the cannons beyond

105

will ever determine exactly how many Uprising, there were 252. By that time, we were already pretty used to death. people were killed in those days.

There weren’t too many civilians After all, often when we were up against History left after that. It happened from time the enemy we were unarmed. And the to time that in the burning streets of Germans had brought every type of Wola, we would see the silhouettes of weapon into the battle of the Warsaw people who managed to escape the Uprising, along with the gigantic ‘Thor’ executions emerge. But that was very mortars – 600 mm calibre guns, with rare. There weren’t really a lot of ways shells that weighed 2,170 kilograms. to escape. Those execution divisions They used all of that against the city. were so battle-seasoned, especially When it comes to Warsaw today, the divisions led by Oskar Dirlewanger I can say that I am generally satisfied (a Nazi officer notorious for his sad- to see how it has developed. There has ism). The really cruel stuff was their been a lot of work done to rebuild many hallmark. We had a number of encoun- of the older parts of the city. These are ters with them and we were able to beautiful achievements.

I have some doubts about the places take some of them prisoner. So we saw how they were equipped – we knew where new, modern high-rises have what they were up to. Those are some been built. These are proper places that painful memories. could really lend to Warsaw’s charm.

So for the next 50-some days, we Will they just become a kind of tinsel fought alone. We could have surren- that allows us to show that we can build dered, but nobody took that possibil- high buildings? Still, when I look around ity under consideration. We were really I still see the Warsaw of the 1930s. counting on air support. But that was You could take a walk down Nowy Świat, Poorly equipped a tough task for the Allies, who had to have a look at some great exhibitions, and fighting against the full force of take off from bases in Bari and Brindisi some great magazines, stop and have the German army, in southern Italy. They had to fly 1,400 a look at the film posters – there were the Uprising wasn’t kilometres to get to Warsaw – and then several great cinemas on Nowy Świat expected to last more than a week without fly back. On top of that, they had to in those days. outside assistance.

As with many of my fellow soldiers deal with artillery fire both ways. In all In the end however, 260 airmen were lost on those flights. – the Warsaw Uprising had some real pos- the fighters used their Nevertheless, amongst ourselves, the itive outcomes for me. As I mentioned ingenuity to hold out atmosphere was full of mutual trust and I made friendships that last to this day. for over two months – 63 days in total. friendship. The friendships I made dur- But also, after I came back to Warsaw, ing the Uprising have lasted to this day. I met my wife. We met and fell in love as In many instances our children’s chil- a direct result of the Warsaw Uprising.

We have lived together happily for 68 dren have become friends themselves. years. We have children, grandchilA measure of hope dren and great-grandchildren. It was Finally, our leadership decided it had to these dramatic events that brought us capitulate to the Germans. Throughout together. I always tell my wife that she Poland half of the Home Army had been is my ‘spoil of war’. So, as it turns out, lost. When it comes to my group, when the Warsaw Uprising had its pluses, too. we had a briefing on August 2, there So even when it comes to war, we have were 2,200 of us. When we gathered to to look at things with a certain measure be sent to the camps at the end of the of hope.

by Andrew Kureth

photos: FoKa (Forum)

the Vistula. That told us that the battle between the Russians and the Germans was ongoing. And up to that point, the Russians had always come out victorious. We took it for granted that the Germans would be beaten. But as I said, things turned out quite differently. The Germans won that battle.

By the third of August we knew we were alone. That was when we started to look toward the sky. Would the Allies fly over and drop supplies or not? The Uprising depended on the plan that it would last two or three days, that we would win, that the small amount of firearms that were available to us would still allow us to win. But no one expected what was going to happen next: The order was handed down by Hitler to destroy the entire city and to murder its entire population. The murders started on August 2. The violence and sadism increased in severity on August 4 – the Germans began a policy of destroying entire districts of the city. They began going from house to house, exterminating their inhabitants. They didn’t even spare pregnant women. One woman, nine months pregnant, was brought to a mass execution with her three children.

The children were shot dead, but their pregnant mother was able to crawl out from underneath the corpses. She gave birth to her son just a few days later. He is still alive today.

Perhaps the district of Warsaw that was hit hardest was Wola. I was born in Wola, I lived in Wola, and I started the Uprising in Wola too. Our group, the Radosław Group, was made up of soldiers born in Wola. And before our eyes, Wola was burning. We heard the shots of the execution platoons. We knew that entire families were being executed – our families, friends and neighbours.

No one knows now if it was 40,000 or 50,000 people who were killed. No one

photos: Janusz Fila (Forum)

It happened in ...

October

107

HISTORY

October 9, 1980.

Czesław Miłosz wins the Nobel Prize for Literature

Arguably more than any other artist of his time, Polish poet and public intellectual Czesław Miłosz – who won the Nobel Prize for Literature 24 years ago – wrote with an acute awareness of the uniquely modern horrors of the 20th century. As cited by the Nobel Commission, he was a writer who with “uncompromising clear-sightedness voices man’s exposed condition in a world of severe conflicts”. Miłosz, who died in 2004 at the age of 93, lived through the Nazi invasion, the destruction of Warsaw and the subsequent Communist rule of Poland. He lived most of his life in exile; a perpetual refugee who fled the radicalism of both the left and right. John Updike called him “a strange migratory bird … with his heart in Lithuania and his mind in a vanished Warsaw.”

Miłosz was born to ethnic Poles in Šeteniai, Lithuania in 1911, and was educated in Vilnius. During World War II he lived in Warsaw, where he joined the socialist resistance and began publishing his poetry through the underground press. Miłosz did not, however, join the Home Army because of what he saw as its right-wing leadership; nor did he support the Warsaw Uprising, calling it a “doomed military effort,” and a “political fantasy”. After the war, Miłosz became a cultural attache to the Polish Communist government, serving in Paris and Washington, but grew disillusioned and in 1951 sought political asylum in France. There, Miłosz, dismayed with the glorification of communism among French leftists, wrote ‘The Captive Mind’, perhaps his most well-known work. The book attempts to understand the totalitarian mindset and its attractiveness to Western intellectuals. In 1961, at the age of 50, Miłosz moved to the United States, where he accepted a Slavic Languages professorship at the University of California.

Just two months after the Solidarność trade union was formed, Miłosz won the Nobel Prize for Literature. In his acceptance speech, Miłosz described the spirit of a poet as “the desire to describe that which he sees.” Indeed, Miłosz’s poetry never strayed far from the stuff of his life: his birth, his Polish ethnicity, his life under repression, and his identity as an artist in a world not easily understood.

by Gabriel Rom

Nobel Prize winner Czesław Miłosz wrote of the

unique horrors of the 20th century. He once described the spirit of the poet as “the desire to describe that which he sees”.

Indeed, the Nobel Commission praised his “uncompromising clear-sightedness”.

108

Poland is punching above its weight in Europe’s big high-tech projects, and Polish scientists are reaping the benefits

photos: Thomas Pflaum (Visum), www.eso.org

SCIENCE

Megaprojects, mega impact

The Large Hadron Collider at CERN:

Poland joined CERN back in 1964 and was the only Soviet Bloc country to be involved in the organisation’s research.

Today, at least 90 Polish scientists and students work fulltime at CERN’s Large Hadron Collider (the world’s largest and most powerful particle collider). In 2012, professor Agnieszka Zalewska of the Institute of High Energy Physics in Kraków was elected president of the CERN Council.

The air is cold and humid,

the lights in the long, wide corridor dim.

The distant rumbling of machinery on the far end of the modern-day dungeon only adds to the atmosphere. Walking down the cavernous passage you halfexpect a dragon, Minotaur or some other mythical hell-spawn to come charging from the darkness. Very soon this underground lair will be home to a true beast the likes of which the world has never seen. A beast borne of science and technology, not magic and myth. An immense, two-mile-long laser.

This is the XFEL facility in the town of Schenefeld just outside Hamburg, Germany. It’s a €1.15bn scientific enterprise co-financed by 12 countries. While the bulk of the funding comes from Germany, Poland is one of the largest minority stakeholders in the consortium. Despite the country’s comparatively modest science budget, it’s just

one of a number of scientific megaprojects that Polish scientists – and taxpayers – are involved in.

Limits of modern technology Despite its size, the XFEL, or, to use its full name, the European X-ray Free Electron Laser, is not a Death Star-like cannon. Once it’s fully operational, it will instead become the world’s largest video camera. The pulses of x-ray radiation created by the behemoth will allow scientists to film actual chemical reactions on the molecular level. For the first time scientists will be able to see chemistry happen live: not as dry schematics, but as nano-scale videos of moleculeon-molecule action. This could potentially revolutionize many scientific fields, and it could happen as early as 2015.

But first there’s the minor matter of building and testing the mammoth machine, and Polish scientists, engi-

neers and companies are involved at every step. Last February, engineers from Wrocław installed a space-age cryogenic system that will serve as a test rig for the laser’s hardware. “Satellites in high Earth orbit are exposed to temperatures of about 2.7 degrees Kelvin,” said Maciej Chorowski of the Wrocław University of Technology during a tour of the newly installed machinery. “The temperature in the cryostats (devices used to maintain low cryogenic temperatures) we supplied is actually one degree lower than that. We’re creating conditions that do not exist in nature, not even in outer space. We’re reaching the limits of modern technology. No more than 10 organisations in the world have the capability to create devices of this complexity.”

For Polish scientists, international cooperation is the best opportunity to showcase their expertise – and to learn

from the experience of others. But it’s also a welcome financial shot in the arm for the whole high-tech sector in Poland.

“Out of the over €20m that Poland will contribute to the project, €16m will be delivered in the form of complete elements of the machine,” said professor Grzegorz Wrochna, the director of the National Centre for Nuclear Research in Świerk. “These are instruments and devices designed and produced in Polish laboratories and Polish factories. It’s not just the money that stays in Poland. The knowledge, the technology and the know-how will also remain.

That will let us build a similar device in Poland in the future and, obviously, use the technologies for various other projects, including commercial ones.

Elite Polish presence In fact, Polish scientists have always been one of the few groups allowed to foster international ties, even when the whole country was behind role is far bigger than the country’s the Iron Curtain. Poland joined CERN, modest financial contribution to those the European nuclear research organi- projects should theoretically allow. sation, way back in 1964. While until 1991 it only served as an observer, A step up it was the only Soviet Bloc country Right across the border from Szczecin, to be involved in the organisation’s a group of scientists and engineers research, including in the construction try to light an artificial sun. The of the first large underground facilities Wendelstein 7-X stellarator is one near Geneva. Today it’s impossible to of the world’s largest nuclear fusion have lunch in the sprawling cafeteria on facilities. Still under construction, it is the CERN campus without overhearing designed to allow researchers to creenthusiastic conversations of young ate and sustain a fusion reaction for Polish researchers. At least 90 Polish minutes at a time. That’s quite a step scientists and students work full-time up, since today we can’t reliably sustain at the Large Hadron Collider facility. the required superhot plasma for more Hundreds more use the data incoming than fractions of a second. The main from Geneva to conduct their research part of the device is a vacuum chamber, in Poland. In 2012, professor Agnieszka where hydrogen particles will be microZalewska of the Institute of High Energy waved like popcorn – very hot popcorn.

Physics in Kraków was elected presi- The temperatures inside the chamber dent of the CERN Council. will reach 100m degrees Celsius, but The influence that the half-century- the superconducting magnets that long presence of Polish physicists create the field containing the plasma among the continent’s elite has over the have to function at temperatures of country’s science cannot be overstated. -270 degrees. The cryogenics are, again, It offered a window to the world in the largely of Polish origin. days when such opportunities were rare To emphasize the massive scale of and allowed Polish scientists to keep up the problems faced by the researchwith developments in their fields on the ers, the device is still under construcworld stage. Poland may not have had tion, nearly 20 years after the project one of its scientists receive the Nobel was officially launched. It took 10 years Prize since Marie Skłodowska-Curie, but to develop the design and another Poles often form the backbone of major 10 to actually build and install all the international scientific efforts, and their required elements. As with many sci-

109

SCIENCE

The Wendelstein 7-X stellarator

is one of the world's largest nuclear fusion facilities. The advanced cryogenic technologies involved in the project are largely of Polish origin.

Hot stuff: When

complete, the Wendelstein 7-X will allow researchers to create and sustain a fusion reaction for minutes at a time. Today it is impossible to reliably sustain the required superhot plasma for more than fractions of a second.

Polish contributions to scientific megaprojects CERN What is it? An international experimental physics facility, home to the Large Hadron Collider.

When will it be complete? In operation since 1954, the upgraded LHC is due to be re-started in early 2015.

What is the Polish contribution? 100m złoty per year contribution; 30m złoty per year research budget.

ESO What is it? The European Southern Observatory, one of the largest astronomical complexes in the world.

When will it be complete? The organisation currently operates three facilities in Chile’s Atacama desert. Later this year it will start construction of the 30-metre E-ELT telescope, the largest optical telescope in the world.

What is the Polish contribution? Currently Polish astronomers are working with ESO, but the country is still negotiating its formal access to the organisation. If those are completed successfully, Polish companies would be able to bid for contracts for E-ELT’s construction.

European XFEL What is it? A giant laser that will allow researchers to film chemical reactions on a molecular level.

When will it be complete? It is scheduled for completion in 2015.

What is Poland’s contribution? €29m

‘We’re creating conditions that do not exist in nature, not even in outer space. We’re reaching the limits of modern technology’

Wendelstein 7-X What is it? A €2bn nuclear fusion reactor, the largest device of its kind.

When will it be complete? The launch of operations is expected in early 2015.

What is Poland’s contribution? €6.5m

Wojciech Brzeziński is

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.

110 SCIENCE

The European Extremely Large Telescope (E-ELT)

will be the largest optical telescope in the world. Sited at the European Southern Observatory (ESO), construction on the project is due to begin this year. Pictured (right and inset below right) is a three-dimensional model of the structure inside the E-ELT enclosure.

Polish astronomers currently work with ESO, but the country is still negotiating formal access to the organisation. If those are completed successfully, Polish companies would be able to bid for E-ELT construction contracts.

entific megaprojects, the time scales in about 20-30 years, will be the develare so long, the successors to this stel- opment of fourth-generation nuclear larator are, in fact, already on the draw- reactors. That will increase our energy ing boards. There is a clear roadmap for supplies to 2,500 zettajoules, allowing nuclear fusion research and it’s drawn nuclear power to supply us with about up for the next 50 years. The scientists 80 percent of our energy needs. The don’t expect practical, commercial step after that, fusion, will make other fusion reactors to show up any sooner energy sources, like oil or gas, essenthan in the 2060s, but the potential gain tially meaningless.” is well worth the effort and expense.

“Let’s establish some facts,” said pro- Clear appeal fessor Włodzisław Duch, an undersec- That has a clear appeal to a country retary of state in Poland’s Ministry of forever struggling with energy supply Science and Higher Education, during diversification. The fact that Poland is a press tour of the Wendelstein facil- a stakeholder in the facility means it can ity. He’s a physicist himself, and, with partake in the results of its research. his wild hair and rapid-fire speech defi- But in the much shorter term, it means nitely looks the part. “Currently our plenty of work for Polish scientists and main source of energy is fossil fuels. companies right across the border. But That won’t change for a while. We esti- the experiences that Polish researchers mate that our fossil fuel supplies contain bring home from these massive, interabout 37 zettajoules of energy. That – in national research facilities serve another scientific terms – is a lot. The next step, purpose. They have already managed to whet the appetites of researchers who hope that one day soon it will be others who will come to do world-class research in Poland.

“We’re in need of large-scale research infrastructure in Poland,” said Wrochna during a tour of XFEL. “We need that for our science to be at the cutting edge.

The fact that we’re making a big contribution here, that we’re actually more involved than many other, richer countries – that shows that we’re closing the

‘It’s not just the money that stays in Poland. The knowledge, the technology and the know-how will also remain’

gap. It’s time for us to start building similar facilities back home.” He intends to build something of a mini-XFEL in Świerk.

But a scientific megaproject of a different breed might soon tower over wild forests of northern Poland. It’s not just the nuclear physicists who aspire to be on the cutting edge of science. Polish astrophysicists have been there for a long time and have been behind some of the most spectacular astronomical discoveries of recent years. Some of them hope to build a monument to those achievements, in the form of a massive, 100-metre radio telescope in the Bory Tucholskie wilderness.

If completed as planned, it would potentially be the largest moveable radio observatory in the world – and a clear statement of the ambitions of not just Polish astronomers, but Polish science in g ­ eneral. by Wojciech Brzeziński

112

BOOKS & ARTS

August 1, 2014

marked the 70th anniversary of the outbreak of the Warsaw Uprising.

For an eyewitness account from Polish Home Army soldier Edmund Baranowski, see page 102. Also be sure to read our interview with the author of ‘Rising ’44: The Battle for Warsaw’, Norman Davies, see page 18.

Warsaw 1944, remembered In ‘Rising ’44’, Davies overturns the traditional Western narrative of the Warsaw Uprising

‘By weaving into the narrative intimate episodes of life during the Uprising, Davies paints a portrait of wartime Warsaw with a novelist’s touch’

Norman Davies’

‘Rising ’44: The Battle for Warsaw’ is more than a historical retelling. It is a passionate and polemic memorial of the Warsaw Uprising against the Nazi German occupation. In one of the great tragedies of the 20th century, Poland’s capital was razed while hundreds of thousands were killed in just over two months. The book was published just over a decade ago, but with this year marking the 70th anniversary of this hugely significant event, Poland Today felt Davies’ opus on the battle deserved another look.

Certain defeat?

For many Poles, the West’s response to the Uprising, or lack thereof, was a betrayal that reverberates to this day.

During the summer of 1944, across German-occupied territory, underground resistance movements watched the Allies march on Berlin from east and west. The moment seemed ripe to launch a surprise attack against the occupying Nazi forces.

Davies writes of the Polish Home Army’s valiant stand, resisting the far more powerful Wehrmacht for over two months, using light weaponry, urban guerilla warfare, and sheer wit and will. By weaving into the narrative intimate episodes of life during the Uprising, drawn from first-hand accounts, he paints a portrait of wartime Warsaw with a novelist’s touch.

Davies describes with admiration the Poles’ patriotism, bravery and piety in the face of near-certain defeat. And yet defeat did not have to be certain.

For most of the Uprising, Polish fighters held out hope that the Allies would come to their aid. Sporadic airdrops were not enough; Davies persuasively argues that Allied intervention – either by the Soviets stationed a few miles away, Allied air power, or some combination of the two – could have made a decisive difference. Instead, the Allies watched as Warsaw burned.

imprudence of the Uprising and its political and military directors, Davies distributes the blame upon each of the three main allied powers (the UK, the US, and the Soviet Union).

London, to its credit, was generally supportive of a free Poland from the first days of the war. But “like a love affair that faded,” the Poles were spurned by the British for more attractive and powerful allies. The Americans likewise had their focus elsewhere. By 1944, President Franklin Roosevelt began turning fully to the Pacific, where he needed the Soviet Union’s cooperation. Despite early support for the Polish government-in-exile, Roosevelt refused to press Soviet leader Joseph Stalin on assistance for the Uprising.

Stalin himself was coldly unimpressed by the Uprising. In the future empire Stalin was planning, independent Poles were to be seen above all as seditious enemies. Stalin’s troops were in an ideal position to intervene on behalf of the Uprising, and made the deliberate choice not to. But Davies holds the self-proclaimed democratic nations to a higher standard. His indictment is aimed at the Western Allies at least as much as the Soviet Union.

Malice or necessity?

Like all ‘what-ifs’, Davies’ argument has its limits. He pays lip service to some of the more defensible reasons the Western Allies might have had for not pressing Stalin harder, especially the need to maintain Stalin’s cooperation through the end of the war. This leaves readers wondering whether Western inaction was the result of necessary appeasement, poor judgement, or malice. (Davies might argue it was a combination of all three.) Another misstep is Davies’ preoccupation with comparing the suffering of Jews relative to non-Jews. His intentions may be to remind modern readers how brutally non-Jewish Poles suffered. But this could have been accomplished without A history rewritten petty comparisons.

Davies unabashedly rewrites the comThe end of war brought ‘liberamonly accepted narrative of the tion’ for most of Allied Europe; but for Uprising. He directs his animus not only Poland, one tyrant was simply replaced toward those who allowed Warsaw to with another. Seventy years later, be destroyed, but also the West’s sim- and 11 years after the publication of plistic narrative. While much of post- ‘Rising ’44’, these lessons are still alive. war historiography has focused on the

by Gabriel Rom and Yoni Wilkenfeld

114 FOOD

The roots of Poland’s potato traditions Potatoes aren’t just healthy and delicious, they also show off Poland’s latent culinary diversity

The end of summer

will always smell like baked potatoes to me. When all the work was done at the end of potato harvest day and the evening grew colder, there was always a bonfire in the middle of my grandfather’s field. The bonfire was made of dried potato plant stems. Potatoes baked in the ashes had a very charred skin hiding that smoky, starchy, sweet taste beneath. Orange sparks glittered in the air and smoke wafted over the fields, reminding us that the summer holiday time was coming to an end, ushering in the nostalgia of autumn.

grateful Emperor Leopold I of Austria.

Indeed, potatoes literally saved Polish villages from famine in the 19th century.

And did I mention distillation? They are the main ingredient in many types of vodka.

Culinary conservatism

But sadly, Poles all too often make a dull side dish out of potatoes. Over-boiled, slathered in butter or lard, drowned in thick sauces, poor and mistreated, they end up as a stomach-filler rather than a Michał Kuźmiński is head of weekly tease. They are sacrificed at the alter of Tygodnik PowszePolish culinary conservatism. chny’s online Moreover, Poles shouldn’t be too edition and its sciPotato country quick to associate potatoes with patence section. With Małgorzata FugielGrills have ousted bonfires countrywide riotism. That’s not only for the obvious Kuźmińska he has since then, but potatoes still occupy reason that they originate from South written two cirme pole position on Polish plates. This America, but also because potatoes novels ‘Sekret Kroke’ (‘The Secret of Kroke’, is potato country. Potatoes are an clearly reveal Poles’ own latent culi2009) and Klątwa obligatory side dish for a typical Polish nary diversity. No matter how wellKonstantyna (‘The dinner. Poland proudly remains among established potatoes are in traditional Curse of Constantine’, the world’s top 10 potato producing Polish cuisine, Poles owe various kinds 2009). A food enthusiast, he blogs about nations, and by the end of 2014 Poles of potato dumplings to the Silesians food as Facet are expected to consume 107 kg per and Lithuanians. For their beloved z Nożem (Guy capita – whether baked, boiled, fried potato pancakes they should thank the with a Knife) at Jews, who used to fry their latkes and ... or distilled. www.facetznozem. blogspot.com.

There are two potato monuments bake their kugel. And Poles’ cherished in Poland (in Poznań and in the north- potato soup? Ask the Germans about western village of Biesiekierz) and yes, Kartoffelsuppe.

This is by no means to suggest that there is a Potato Institute, too. You can tell a person’s regional provenance by Poles did not bring a lot to the table the word they use for potatoes. They when it comes to potatoes’ culinary are called “ziemniaki” in central and heritage. Cultural influence is a two-way southern Poland, Silesians tend to use stree, of course. “kartofle”, a word of German origin, But more importantly, it makes no whereas those from Poznań say “pyry” sense to draw national divisions when and the Highlanders call them “grule”. it comes to such a universal ingredient.

Besides their deliciousness and The potato allows us to celebrate comdietary benefits, Poles have plenty of mon tastes and traditions. reasons for their love affair with potaAnd now that consumers have toes. The very first are said to have become bored with fast food (includbeen brought to Poland by King Jan ing over-dried, tasteless, industriIII Sobieski in 1683, marking Poland’s ally produced French fries), they have glorious victory in the Battle of Vienna. started looking for something new and Legend has it they were a gift from the more refined.

Kraków, for example, has recently seen the appearance of Turkish kumpir – a whole-baked potato cut into two halves and filled with a pile of goodies.

It’s a mean made of a whole, baked, unskinned potato. And it tastes surprisingly familiar, bringing back memories of what was hiding under those late-summer bonfire ashes: something with a sweet and simple taste, preferably with a dash of salt and a pinch of ­nostalgia. by Michał Kuźmiński

‘There are two potato monuments in Poland ... and yes, there is a Potato Institute, too.’

RECIPE: ROSEMARY POTATOES SERVED WITH MIZERIA If properly cooked (that is: not overcooked and not too greasy) potatoes make for a healthy, low-calorie food. And they certainly deserve to be singled out for their deliciousness. Here is my favourite simple dinner, perfect to invoke summer when autumn comes.

Ingredients:

1 kg potatoes 5-6 garlic cloves 2-3 rosemary twigs 2 large cucumbers 1 cup yogurt or buttermilk mint leaves fresh thyme fresh-ground pepper olive oil sea salt optional: smoked salt, chili flakes

Boil a large pot of water and heat up

an oven to 200 degrees Celsius. Rinse and clean the potatoes. If cooking with new potatoes, leave them whole (and never peel!).

Otherwise, cut into wedges. Throw into boiling water and cook (blanch) for few minutes. Rinse them well, drizzle with olive oil and mix with finely cut rosemary needles and garlic cloves – both are potatoes’ best friends. Put into a baking pan, sprinkle with salt and, if you wish, with smoked salt and chili flakes. Bake until golden.

Slice cucumbers, drain a bit, mix in a bowl with yogurt or buttermilk, finely cut mint leaves, thyme, salt and pepper. This is Poland’s answer to Greek tzatziki and it is called mizeria (‘misery’). But don’t read too much into the name: let these simple, delightful summer flavours speak for themselves.

photos: Nataliya Arzamasova, Marbury

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It has been a historic summer for Polish Leading by two goals in the 86th minute cyclist Rafał Majka. Other­­­­wise known as of their third qualifying round matchup the ‘King of the M ­ ou­ntains,’ Majka is the with Scottish club Celtic, Legia Warsaw first Pole since 2003 to win the Tour de were already looking ahead to the play- Pologne. Between ­Au­­gust 3 and August off round of the Champions League. But 9, 21 racing teams cove­red 1,200 km a last-minute substitution of defender over seven stages. True to form, Majka, Bartosz Bereszyński, who was ineligible racing with the Saxo Bank-SunGrad to play after receiving a three-match team, dominated the two mountain ban during last season’s Europa League, stages, winning both and finishing the would prove fatal. Despite winning the race with the fastest overall time. match 2-0 on Scottish soil, UEFA overThe biggest victory in the 24-yearturned the result the following day and old Pole’s career came just one month awarded Celtic a 3-0 walkover victory, after his performance at the Tour de which brought the aggregate score of France, where he won two gruelling the two-leg clash to 4-4, and allowed mo­­­­un­­­tain stages and captured the Celtic to advance on away goals. Legia, climber’s polka-dot jersey, an award the 2014 Ekstraklasa league champions, given to the racer who first reaches had won the first leg 4-1 in Warsaw’s the mountaintop.

Pepsi Arena. Outrage from Legia fans, Majka, born in the small village management, and ownership fell on of Zegartowice, has quickly asserted deaf ears at UEFA, which rejected an himself as one of the best cyclists in appeal from Legia chairman and owner the world. His victory in Poland cataDariusz Mioduski. A subsequent appeal pulted him up the UCI World Tour rankto the Court of Arbitration for Sport in ings from 30th to 12th. Czesław Lang, Switzerland, also rejected, gave Legia the Tour de Pologne general director, no further recourse. told CyclingNews.com that he believes Bereszyński had sat out three Cham­ Majka could be “the first Polish rider pions League matches prior to the to win the Tour de France one day.”

August 6 game, including the first leg To finish the season, Majka came in with Celtic, but due to an administrative an impressive fourth in the USA Pro error, he was not formally registered for Challenge in Colorado. two of the games, and so the absences The Tour de Pologne, which dates did not count towards his three-match back to 1928, paid tribute this year to ban. On August 21, Mioduski said that the Solidarność (Solidarity) Trade Union. the board “already knows that Legia will The race began at the Gdańsk Shipyard, have a new administrator.” where Solidarność was founded in 1980.

Meanwhile, the club’s European “My fa­­­mily, my girlfriend, my teammates, title dreams are not quite over. Sent to and my Polish public, I dedicate this win the Europa league, Legia can march to them,” Majka said. towards a new championship with the comfort that it could end in friendly territory – the final will be played in Warsaw’s own National Stadium in May 2015.

by Gabriel Rom and Yoni Wilkenfeld

photos: Arnd Wiegmann (Reuters), Adam Litwiniuk (Forum), Sebastian Kocon (Forum)

Poland’s summer cycling star

Poland impresses at European Athletic Championships Team Poland had a strong s­ howing at the 2014 European Athletics Cham­ pion­ ship on August 12-17 in Zurich, Switzerland. During the c ­ompetition Poland received 12 medals – two gold, five silver, and five bronze, finishing sixth out of 23 nations on the medal table. Adam Kszczot and Anita Włodarczyk captured gold medals in the men’s 800 metres and the women’s hammer throw respectively, while Ethiopian-born Yared Shegumo, who obtained Polish citizenship in 2003, picked up Poland’s first ever medal – a silver – in a European Championship marathon. Kszczot, now the fastest 800-metre man in Europe, told reporters, “I knew I was able to win, but it’s not enough if you know it.

It’s not enough at all.”

Sport

Late Legia sub ends Champions League run

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IMPRESSIONS

A wish for unity Poland Today sits down with foreigners living in Poland with a unique perspective

Was anything surprisingly familiar?

Poland and Ukraine have a lot in common, like food and traditions. The dominant religion is different of course.

Catholicism, I think, is one of the reasons why people here feel more united.

The Catholic Church has brought people together and maintained a sense of community in Poland. In Ukraine and the rest of the former Soviet Union religion has only recently become popular – and frankly to me it seems fake, false.

Here I see people who really believe.

What was the thing that was hardest to adjust to when you moved to Poland?

Mykola ­ Yanchukov was

born in Crimea and brought up in a Russian-speaking family in central Ukraine.

He first visited Poland in 1990 when he was 16 but returned to the country several times thereafter. After receiving a scholarship from the student development organi­ sation AIESEC in 2000, he found a job in Poland and made the country his home.

He lives with his wife, a Colombian citizen, and their daughter in Warsaw. He is currently in the process of starting his own advertising company.

When did you first come to Poland?

I came with my high school classmates to sell various goods – walnuts, washing powder, vodka, whatever we could bring from Ukraine that we could sell for a profit in Poland. We wanted to buy things too – jeans, gum, cassettes.

How closely did your preconceptions of Poland match your first impressions?

I was really surprised to see some of the products they had here. Ukraine did not have anything in terms of these more Western goods. I mean, we had come partly to get our hands on these, but the amount and extent to which they were here in the shops still surprised me.

What else about Poland was unexpected?

I have to admit that I was really surprised by Poland’s independent women.

I remember being shocked by how Polish women insisted being independent of men – carrying their own bags, even quite heavy ones, for example.

But I have been here for a long time now, and I can say that I never expected that Poland would develop so quickly.

It has prospered and has become a leader in Europe. The speed of Poland’s development has exceeded all of my expectations.

The bureaucracy. Of course in the Soviet Union there was bureaucracy too, but I was a citizen. Here I was a foreigner, and that meant jumping through all of the hoops that come with that.

Ukrainians still need work permits, and at this point this is really unnecessary, because Poland needs the cheap labour that Ukrainians can provide.

What was the strangest or most memorable experience from your time in Poland?

How Poles react when they learn I am Ukrainian. Poles and Ukrainians haven’t always shared a happy history, and there are some Poles that have very strong anti-Ukrainian feelings.

But I have also met many more – the vast majority I would say – that have a positive attitude when it comes to our shared history, and have positive feelings for Ukrainians.

What Polish thing do you wish they had in Ukraine, and vice-versa?

most striking is our love for vodka.

It may sound negative and cliché, but that vodka naturally accompanies a friendly get-together is something that is pretty ingrained in Slavic culture.

When it comes to the differences, I would say that Poles are less ostentatious than Ukrainians. Polish people are more modest. They don’t like to show off as much as Ukrainians do, with expensive cars and clothes.

What advice would you give someone from Ukraine coming to live in Poland?

Learn Polish, even if you speak English. You may come to Poland and see lots of people communicating English – and you may think you can make a living just speaking English in Poland. But speaking Polish is a must.

What advice would you give a Pole going to live in Ukraine?

Language again. I would advise Poles moving to Ukraine to learn Ukrainian. Be prepared to be less comfortable, too. Be ready to have to solve problems creatively and think outside of the box. I remember an American guy who lived in my town who was shocked when the water was cut off to the entire city. There was no water in his building, and he really suffered. So the next time it happened, he was ready.

He had collected buckets of water beforehand, and he was so happy that he had thought to be prepared for the situation. Times when there is no water or electricity can be really shocking for people from the West.

In what ways has Poland changed

In Ukraine, I wish that our political you for the better or for the worse? system – our democracy – was as wellI have become more international developed as it is here. I also wish that it – my wife is Colombian and my daughter had the allies that Poland has had, and speaks four languages. of course the money that EU memberMy views of the people around me ship brings with it. In Poland, I miss the have changed a lot as well. People’s untainted, natural food from the coun- characters are now much more importryside, which is still more available tant for me than their nationalities.

What the government tells me does in Ukraine than it is in Poland. not define what I think of others any more. It wasn’t always that way for What are the most striking similarities between Poles and peome. I used to hold a lot of prejudices ple from Ukraine, and what are against various nationalities. Now, since the most striking differences?

I have seen more of the world, I see Well, as I said there are many simi- how nationalism and prejudice are built larities, I would have to say that the up by g ­ overnments.