Maintaining growth

President Aleksander Kwasniewski

How would you define Poland's economic and social priorities?

Our top priority is to maintain the high pace of economic growth. It is essential to reform the social services sector, primarily old age and disability pensions. We must proceed more vigorously with the restructuring of our industry: significant changes must be introduced.

What are the greatest obstacles to Poland's economic growth?

Poland's growth rates are currently very high - the highest among the OECD countries. However, threats may appear in the future. Firstly, we will not be able to proceed unless society gives its consent. If society does not approve of economic changes, this may lead to economic instability. Secondly, external factors, for example a deterioration in the Western economy, may also constitute such an obstacle. Moreover, for some time to come, the structure of our industry and the excessively centralised nature of the state will continue to hamper growth. Poland must boost internal reforms: the overall reform of public administration, changes in economic administration, reform of the country's administration, which will enable us to pursue regional policies, and the strengthening of regional self-government. I am strongly in favour of accelerating these transformations.

What are your plans with regard to the European Union?

The process of unifying both parts of the divided Europe is advancing, it is irreversible, the structures ought to be enlarged and we are willing to join them. We have already satisfied most of the legal, economic and social conditions, ushering Poland into the sphere of standards binding in the European Union, with which we have been associated since 1991. Already, the EU is our principal economic partner. Trade with the '15' accounts for over two-thirds of our total turnover. A Poland-EU free trade area in manufactured goods will soon be established. We hope that the EU Inter-Governmental Conference in Turin will lead to a prompt initiation of negotiations with Poland and that our country will become a Union member by about 2000.

Poland occupies a strategically important position at the virtual heart of Europe. How can the government exploit this?

We are open to co-operation with everyone and friendly towards our neighbours. The conclusion of treaties regulating our relations with all our neighbours ranks among the achievements of Poland's foreign policy. Poland's position in the system of international ties that defines the European and world order is becoming ever stronger and more stable. The two pan-European axes crossing in our country - East-West and North-South - not only determine the scheme of transport connections, but also suggest the logic of future continental economic links. It came as a surprise even to ourselves that as early as 1995 Poland became Germany's most important economic partner, more important even than Russia. After a period of stalemate, we are also reconstructing our economic relations with the East. Polish commodities are returning to markets from which they have been absent for decades. Our exports to Russia, Ukraine and the Baltic states are rising. Along with the Czech Republic, Slovenia, Slovakia and Hungary we have formed the CEFTA trade agreement.

You are an ex-Communist, and parliament is led by an ex-Communist party. What is your stance towards continued privatisation?

My views on politics and the economy were shaped by European social democratic and socio-liberal thought. Neither I, nor the political milieu that I come from, has ever opposed privatisation. What I did oppose was only a hasty, 'ideological' privatisation. I am in favour of an orderly, coherent privatisation.

This is already bringing Poland substantial benefits. Today, the privatisation system to a large extent takes into account employees' interests. A private owner manages the finances of an enterprise more effectively, invests skilfully. The expansion of the private sector creates new jobs. Wages grow faster in private companies. Therefore, trade unions as well as responsible political parties perceive continued privatisation as an opportunity.

According to the World Bank, GDP, after a sharp contraction in the early 1990s, has again begun to grow. Does this mean that Poland is over the worst in terms of the effects of the privatisation programme?

Privatisation is a major growth factor. The growth has been due mainly to rapidly growing exports and investment. The growing tendency to save, which has appeared as a result of families' improving financial situation, has restored to the banks the capacity to supply credits to the economy. Increasing foreign investment is also conducive to economic growth.

Foreign companies are interested in Poland, as in most of Eastern Europe, but overall investment remains relatively low (for example, total foreign investment in the whole region is similar to that in Malaysia alone). Why this reluctance?

One must bear in mind that Central and Eastern Europe has never been the most attractive place for foreign investment. Although foreign investment in our country is growing rapidly, one should not compare us to Malaysia. In the early 1990s, foreign capital was hardly interested in our country. A real breakthrough came in 1995. This has been a source of some satisfaction for me, because it was the result of my government's wise economic policy, which enabled considerable GDP growth. In 1995, we saw US$2.5 billion-worth of foreign investment in Poland - a record. We expect this to increase by another US$4 billion in 1996, and the prospects for 1997 are even better. According to some estimates, total foreign investment will have reached US$30 billion by 2000. This is hardly surprising, since, according to foreign analysts, Poland is among the ten big and most promising markets in the world.

What needs to be done to convert investor interest into hard spending commitments?

I think that a lot has been done already to improve the conditions for foreign investors. Legal processes designed to make conditions for business in Poland similar to those in Western European countries are virtually complete, and a service infrastructure for business - advertising agencies and consulting firms, for example - has emerged. Technological infrastructure has also improved and the standard of services has improved. The most important thing for Poland now is to work on strengthening the confidence of foreign investors and their insurers that the current, positive trends in our economy will last.

Finally, are you optimistic for Poland's future?

Of course I am optimistic. And millions of Poles feel the same way. The rebuilding of confidence in reform has been one of the biggest successes of recent years. The indicators of optimism in society corroborate that. The approval of reform is also attested to by a growing drive towards education - Poles are supplementing their education on a massive scale. The most important thing, however, is that this optimistic mood is visible also among young people.

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