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Pawel Baginski: Poland
In 1989 Poland embarked on a process of profound system transformation. The structures of the planned economy had proven their inefficiency and were incapable of reform. The first democratic government began to construct the foundations of a market economy in the knowledge that the initial result would be a sharp decline in living standards. So-called "economic shock therapy", linked with the name of then Minister of Finance Leszek Balcerowicz, was implemented. After a couple of years the first positive effects of this courageous decision could be discerned, and by the mid-1990s the Polish economy had one of the highest annual growth rates in Europe. Rapid GNP growth was accompanied by the development of different parts of the economy, propelled mainly by the private sector. This positive transformation was reflected in Polands accession to the OECD in 1996, and to NATO in 1999. In 1998 the Polish government commenced negotiations with the European Union, which should be concluded by the end of 2002, with EU membership following in 2004. After EU accession Poland will have access to significant assistance which, properly used, should further accelerate national development.
From the point of view of the geopolitical and geostrategic NorthSouth relationship, Poland, like other Central European countries, has always been part of the North. During the period of "real socialism" the communist countries (although they wanted to play the role of middleman between developed Western states and developing countries) were perceived by the "South" as the poorer, relatively undeveloped part of the developed "Northern", "rich" part of the globe. However, taking into account the character of the socialist economies, restrictions on foreign trade, and lower productivity and living standards, the former Eastern Bloc countries were not able to participate actively in economic relations between North and South. Only the economic transformation of the 1990s, and approaching EU accession in particular, has given them an opportunity to participate fully in the global economy. This coincides with a new, more comprehensive approach to global issues in the 1990s, as well as Polands growing involvement in the UN.
The NorthSouth dialogue in Polish foreign policy
Since the Second World War Poland has pursued cooperation with countries from all continents, including developing countries. It has tried to develop intensive economic relations and has supported within the framework of international organisations and international conferences multilateral activities aimed at resolving complex global issues, such as environmental and demographic problems and the development gap between North and South. The development of good relations with the countries of Africa, Asia, and Latin America has been facilitated by two important historical factors: (i) Poland has never had overseas colonies, (ii) Poland has always, at least verbally, supported the developing countries right to self-determination. On the other hand, due to the moderate size of the Polish economy, its socialist regime, and its lack of experience in cooperating with countries outside Europe, Polish relations with developing countries in the period of "real socialism" were hindered by the fact that the countrys aspirations were incommensurate with its means.
Polands own economic problems and limitations in relation to cooperation with other countries (resulting from the policy of communist Poland, especially under martial law in the 1980s) impelled it to greater activity in promoting economic security and confidence-building
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measures in international economic relations. Poland supported, and sometimes initiated, proposals very similar to the ideas of the New International Economic Order which were popular in the countries of the South in the 1970s. Poland particularly approved of commodity price stability, technology transfer to the South, debt reduction, commercial preferences for the least developed countries, and also the need to take into account both economic and social factors in global development.
Supporting the general principle of increasing the volume of development aid to the South, the authorities of communist Poland emphasised above all the former colonial powers responsibility for the development of their former colonies, as well as the need to redirect a significant proportion of the resources otherwise absorbed by the nuclear arms race towards development purposes. Because of its lack of other means Polands development policy consisted at that time mainly of supply of investment equipment and technical know-how, commercial credits and educational opportunities.
It should be emphasised that before 1989 Poland did not have its own, sovereign foreign policy and it pursued, to a large extent, the interests of the communist bloc in the developing countries. This meant that Poland provided assistance mainly to Southern countries which had embarked on the "socialist path of development" and pursued a policy aligned with Soviet global interests. However, the achievements of that period in relations with Asian, African, Latin American, and Caribbean countries (notably in trade) cannot be neglected.
After the commencement of the transition in 1989 Polish involvement in the development of NorthSouth relations diminished. On the one hand, this stemmed from the need to devote all available means to the process of system transformation, while on the other hand, Polands relations with its closest neighbours had to be established on a new basis and the country had to be anchored within the framework of the Euro-Atlantic institutions, especially the Council of Europe, the OECD, and the European communities. This represented an important challenge for Polish diplomacy. The thorough transformation of Polish enterprises has not favoured the development of economic contacts with the South because the new market orientation inevitably emphasises competitiveness primarily in Western markets. Modernisation constitutes an enormous drain on resources, forcing the Polish authorities to further reduce already limited development assistance. In fact, Poland has concentrated primarily on obtaining foreign assistance for itself. The foreign economic assistance provided to Poland in the first half of the 1990s, particularly in the form of debt reduction and grants and loans for enterprise transformation and infrastructure projects, combined with a sound domestic policy, has contributed to the success of Polish reforms. To a large extent Poland is now a well functioning market economy, which, according to the European Commission in 1997, will be able, in a mid-term perspective, to face the challenges of EU accession.
In the second half of the 1990s, under the influence of international political changes (such as global conferences organised under the auspices of the United Nations or accession to the OECD), as well as the rapid pace of economic growth, Poland increasingly viewed the problems of developing countries within the framework of its external relations as a whole. Economic growth was 67 per cent a year, and the country had fully regained the confidence of foreign investors and had begun to be recognised by some Western donors as a model for its neighbours. At that time the first principles of Polish development policy were outlined. Plans to step up the countrys engagement in international development cooperation were accompanied by activities aimed at renewing political, economic, social, and cultural ties with many
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countries of Africa, Asia, and Latin America. The renewal of cooperation with Latin America was partly based on historical links with this continent (which for many years has been the final destination of Polish emigrants), and also on the growing importance of the region due to the planned American Free Trade Agreement. The Latin American states have also become more and more interested in Poland, especially because in the institutions of an enlarged European Union it will have a similar position to Spain, a traditional partner of the region. In the case of Asia, the impressive economic development of this region (despite temporary crises in the late 1990s) represents a window of opportunity for Polish enterprises and a great opportunity for investment cooperation. As far as African countries are concerned, activities in recent years on this continent aimed at speeding up economic development and poverty reduction (see New Partnership for African Development or NEPAD), alongside the importance of the continent to the European Union, constitute fertile ground for future Polish participation in Euro-African dialogue.
Although the Euro-Atlantic orientation will continue to be central for Polish foreign policy, there is an increasingly widespread conviction that Poland cannot afford to overlook intensive contacts, at all levels, with the rest of the world. This is rendered particularly important by globalisation and enhanced economic and other interdependences.
Polands development cooperation
In May 1999 Minister of Foreign Affairs Bronislaw Geremek confirmed to the deputies of the Polish parliament that Poland would gradually increase its activities aimed at resolving global development issues. The main policy aim in this field would be to support the economic, social, and political progress of developing countries and countries in transition. Minister Geremek also announced the commencement of work on a comprehensive development cooperation strategy and stressed the need to create a suitable institutional mechanism responsible for aid management and delivery.
Addressing the UN General Assemblys Millennium Session, 15 September 2000, Geremeks successor as Minister of Foreign Affairs, Wladyslaw Bartoszewski, underlined that a new approach to development was required and that there was no more important challenge than sustainable global development, including poverty eradication, particularly in the least developed countries (LDCs). According to the Minister, success in this area necessitates broad use of the principle of solidarity in international economic relations. Development and poverty eradication can no longer be approached only in technical terms. A coherent and effective policy would include, apart from financial and technical assistance, support activities in education, culture, good governance, the rule of law, democratic institutions, and so on. Bartoszewski also stated that Poland supported the European Union proposal concerning the abolition by all WTO members (especially the most industrialised among them) of customs duties on almost all products exported by the least developed countries.
In January 2001 the Government of Poland adopted the document "Assumptions of Polands participation in the Stability Pact for South-Eastern Europe", in which three objectives of development assistance to the region were formulated: (i) strengthening the process of democratisation and respect for human rights, (ii) supporting economic stabilisation, and (iii) continuing humanitarian aid. In the Polish Parliament, 6 June 2001, Minister Bartoszewski stressed, in the context of a presentation of the main directions of Polish foreign policy, that Poland would develop political dialogue with important (from the point of view of Polish economic interests) countries in Africa, Asia, and Latin America, striving at the same time to encourage
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them to invest in Poland. In his statement at the UN Conference in Monterrey on Financing for Development in March 2002 the Polish deputy prime minister and Minister of Finance Marek Belka underlined the importance of adopting the Monterrey Consensus and emphasised that the Government of Poland and Prime Minister Leszek Miller considered cooperation with the developing countries as a foreign policy priority. He added that Poland would increasingly expand assistance for developing countries, taking a holistic view covering trade, debt relief, technical assistance, and integrating private investment flows.
The main objective of Polands development policy is to support the economic and social progress of developing countries and countries in transition. In particular, Polands development activities are aimed at supporting post-war rehabilitation, enhancing human rights, promoting human capacity building, strengthening the institutional capacity building of local government, and reinforcing civil society, and education and health care systems. In the years to come Poland also intends to a greater extent to integrate goals and principles elaborated by the international community, including Millennium Development Goals, in its development policy. In the short term poverty eradication should be made the focus of Polands comprehensive development cooperation strategy based on partnership, ownership, and mutual responsibilities of developed and developing countries.
The development assistance provided by Polish governmental and non-governmental organisations is concentrated on the Balkan states, other countries in transition, and selected developing countries. The Minister of Foreign Affairs accepted the initial choice of Vietnam, Kazakhstan, and Yemen as prospective priority partners of Polands development cooperation. The following factors were taken into account when selecting primary recipient countries: existing project proposals, intensity of previous links with Poland, and prospects for maintaining them in the future, as well as the existence of a Polish diplomatic mission in the country in question. Countries in transition predominate in terms of the number of assistance programmes, delivered mainly by NGOs. The large share of Southern countries in Polands development cooperation results from the important debt reduction initiatives undertaken by the Ministry of Finance in respect of developing countries. However, most Polish NGOs involved in developing assistance projects have declared that they intend to concentrate their efforts on neighbouring countries and they do not seem much interested in the developing countries for the time being.
To begin with, Polands development cooperation system was limited to scholarship programmes, debt relief, soft loans and cooperation with international organisations. Since 1999, however, the Ministry of Foreign Affairs and the Polish Know-How Fund (a para-governmental body set up under the auspices of the Ministry of Finance to transfer abroad Polish expertise gained from economic transformation), have implemented new forms of development cooperation. This extension of activities consisted in launching a number of technical assistance projects for countries such as Vietnam, Albania, Macedonia, and Yugoslavia. These projects have focused on the transfer of Polish experience of system transformation, mainly in the form of workshops and conferences on different topics concerning the functioning of market-economic institutions (such as the Warsaw Stock Exchange, Polish Securities Commission, insurance companies), Polish tax system reforms, development of local government, and building civil society. Projects related to health care (Kosovo, Albania, Kazakhstan, Venezuela), education (Kosovo, Albania, Indonesia, Cambodia, Vietnam), and poverty eradication have also been initiated.
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Humanitarian assistance programmes also constitute an important part of Polish development activities. In 2000 they mainly took the form of food supplies (Mongolia, Moldavia), medicine and medical equipment supplies (Lebanon, Palestine), and sending rescue teams (Hungary, Romania). In 2001 Poland provided important humanitarian aid to Ukraine (after a devastating flood), India, Peru, and El Salvador, after severe earthquakes. Poland also participated in international action aimed at reconstructing Afghanistan and helping Afghan refugees in Iran and Pakistan. In 2001 Poland earmarked more than USD 100 thousand for bilateral assistance programmes in Afghanistan.
Since the establishment of its development cooperation system Poland has made voluntary contributions to international organisations such as the World Food Programme, the UN High Commission for Human Rights, the UN High Commission for Refugees, and the International Committee of the Red Cross. For some years Poland has also been co-financing the Ignalina International Decommissioning Support Fund.
Over the last four years Polands foreign assistance has grown systematically, despite the temporary slowdown of its economy. In 1998 Poland provided assistance to developing coun-
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tries and countries in transition in the amount of USD 29 million, which increased to USD 37 million USD in 1999 and nearly USD 40 million in 2000. In 2001 public expenditure on foreign assistance programmes and projects amounted to more than USD 43 million, of which more than USD 35 million (81 per cent) was spent on Official Development Assistance (ODA) to developing countries. An increase in the assistance earmarked for Asia in 2001 is partly due to the important preferential loans for two countries from this area (Yemen and Vietnam).
In 2001, according to OECD criteria, Poland provided foreign assistance to more than 90 countries. However, in the majority of cases this assistance was limited to scholarship grants. Yemen, Lithuania, Belarus, Kazakhstan, Vietnam, Ukraine, and the Federal Republic of Yugoslavia were among the major individual recipients of Polands development assistance.
Although Poland has been a member of the OECD since 1996, it is still not a member of the OECD Development Assistance Committee (DAC), participating only as an observer. However, this gives Poland an opportunity to benefit fully from the rich OECD experience in development cooperation. Participation in the DACs activities allows Poland to profit from the experience of other OECD donor countries as well as to employ the guidelines and recommendations elaborated and adopted by this organisation. Polish representatives take part in the seminars and conferences organised by different OECD development bodies. The documents published by the OECD Secretariat, especially the Development Cooperation Directorate, are of major importance in the construction of Polands new development cooperation strategy. Every year since 1999, the Ministry of Foreign Affairs has produced, in accordance with OECD/DAC statistical directives, a statement of Polish development assistance. Again annually, some basic information about Polish activities in this area is published in the OECD Development Cooperation Annual Report. Poland aspires to be a full-fledged member of the Development Assistance Committee in the near future.
Polish development cooperation is highly decentralised among a number of different institutions, including the ministries of Foreign Affairs (responsible for grant-funded technical assistance and training projects), Finance (in charge mainly of financial assistance to developing countries), Education, and Health, as well as agencies and non-governmental organisations. Until the creation of the new institution which will manage, on behalf of the Government of the Republic of Poland, development cooperation issues, the pivotal role in this area falls within the responsibility of the Department of the United Nations System and Global Affairs in the Ministry of Foreign Affairs. The Department deals with the conceptual guidelines of Polands development cooperation, as well as with the practical supervision of foreign assistance projects and programmes. These projects and programmes are implemented either by the Ministry itself or, more frequently, by non-governmental organisations acting on behalf of the Ministry, using public funds specially allocated for the purpose. Polish embassies and missions to international organisations are also involved in the process of implementing projects abroad. Ministry of Foreign Affairs aid projects are financed from a special budget line, and the Minister of Finance, at the instigation of the Minister of Foreign Affairs, puts the funds at the disposal of the implementing institution.
For the last two years or so development cooperation activities have been implemented on the basis of the most recent model of Polands development cooperation system. In 1999 the first draft document entitled "The Strategy of Development Cooperation" was elaborated within the Ministry of Foreign Affairs. In connection with changes in the global development cooperation environment, however (including adoption of the Millennium Development Goals) and the progressive integration of Poland in the European Union, work is continuing on a new
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version of the document, which should be presented to parliament for debate by the end of 2002. The experiences of different OECD countries are also being drawn upon in the course of drafting Polands new development strategy.
Polands external relations and EU accession
In the document "Partnership for Membership", elaborated in the process of consultation with the Polish authorities, the European Commission stressed that, as regards the chapter on external relations, preparations must be made to apply, on accession, the Communitys various cooperation and preferential agreements, multilateral and bilateral commercial policy commitments and its autonomous commercial defence instruments. At the same time, conflicting national legislation must be repealed. Preparations must also be made to apply, on accession, the Lomé trade regime to the ACP states and, together with other member states, to finance the European Development Fund. Customs legislation must also be aligned with that of the EU and fully implemented.
As regards negotiations with the EU, the official position of the Polish government is that Poland will adopt the acquis communautaire on 31 December 2002 (declared date of readiness for accession) and will not apply for any transitional period in the chapter on EU external relations. This means that on accession all agreements between Poland and third countries concerning areas of EU responsibility will be dissolved and automatically replaced by the bilateral and multilateral agreements of the EU. This concerns, among other things, the General System of Preferences (GSP), the Lomé Conventions, and the Cotonou Agreement, as well as free trade agreements between the EU and third countries. On accession the European acquis in this area will be directly implemented. Poland is also ready to cooperate with the EU in presenting common positions towards third countries within the OECD and WTO forums, as well as at international conferences.
Trade with countries of the South
Polands trade relations mostly involve OECD countries; the countries of Asia, Latin America, and Africa are not strongly represented. However, in an increasingly globalised world economy, Poland is very interested in developing trade cooperation with countries from all continents, particularly those offering significant opportunities to Polish firms. Polish trade cooperation has been shaped by WTO membership since 1995, as well as by some bilateral agreements, including, among other things, free trade provisions. In the 1990s Poland concluded free trade agreements with a number of developing countries, including Israel and Turkey. After EU accession the rules and mechanisms of the EUs Common Trade Policy will replace all the aforementioned agreements.
For Polish trade Asia is the most important "Southern" region of the world. Trade between Poland and Asian countries (including the Middle East, but not Japan, Israel, and Cyprus) amounted in 2001 to USD 5.3 billion, of which Polish exports constituted USD 954 million, while imports amounted to USD 4.37 billion, giving Poland a trade deficit of USD 3.4 billion. Asia accounts for 2.6 per cent of Polish exports and 8.7 per cent of Polish imports. The main Polish trading partners in Asia are China, India, Singapore, Thailand, Malaysia, and South Korea.
Trade between Poland and Africa in 2001 amounted to USD 954 million. Poland exported goods and services worth USD 518 million and imports were worth USD 436 million. Trade with Africa is not very important in Polands trade balance: 1.43 per cent of exports and 0.9
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per cent of imports. Among the major trading partners are the North African countries of Algeria, Morocco, and Egypt. Poland also maintains commercial relations with Nigeria, Liberia, and Ivory Cost.
For the last couple of years trade relations with Latin America have been stable: USD 9701,300 million per year. Exports have been growing slowly but surely, reaching USD 440 million in 2001. Imports from Latin America have been growing much more rapidly, from USD 700 million in 1996 to USD 908 million in 2001. Traditionally, the lions share of trade is with Brazil, Mexico, Venezuela, and Argentina.
Since 1989 Poland has concentrated its diplomatic and commercial activities on the countries of the northern hemisphere. Relations with developing countries, including its engagement in resolving global development issues, were significantly curtailed in the first half of the 1990s and have not yet returned to previous levels. Indeed, over the same period Poland, alongside other Central and Eastern European countries, competed with many southern-hemisphere countries for foreign economic assistance. It is inevitable that the position of southern-hemisphere countries in Polish foreign policy to a certain extent reflects their international political and economic status. However, many important factors linked to globalisation and, above all, EU integration will favour Polands engagement in many regions of the world: membership of the most important economic organisation in the world not only will make Poland more active on the global stage, but also will extend the scope of its cooperation with many developing countries.
© Friedrich Ebert Stiftung | technical support | net edition fes-library | November 2002