EU cool over Polish privatisation vote

Date: 08/02/1996

By Elizabeth Wise

EU officials are studiously avoiding involvement in Poland's forthcoming referendum on privatisation, labelling it as a matter of “internal Polish politics” and sitting back quietly, waiting to see the outcome.

But the resulting silence is almost deafening.

When Poland privatised 460 companies in November last year, cheers resounded through EU headquarters, where officials had been pushing for just that sort of economic reform.

European Commission officials still champion privatisation, but they appear unimpressed by Poland's most recent scheme, apparently doubting the approach being adopted.

On 18 February, Poles will vote on whether they want all remaining state-owned enterprises - with the exception of utilities - to be 'commercialised'.

Under the corporatising scheme, the companies' legal basis would change from being state-owned to joint stock or limited liability.

But the plan's authors have not yet finalised the next chapters. Ownership would move from the government ministries to the state treasury, but it is not yet clear who would run the companies.

Commission officials hint that they think the scheme has not been thought through properly.

“Normally, privatisation takes more than one step,” said one, pointing out that a move such as that offered by the referendum should normally be followed by the creation of a board, such as the Treuhandanstalt in former East Germany, to oversee company sales to private owners.

“It's clear - and most observers agree - that if you change legal status but don't improve management, you don't accomplish much,” he added.

While reiterating its support for Poland's economic reform process and a more open economy, the Commission's lukewarm endorsement of the corporatisation scheme seems even more tepid when compared with its praise for the mass privatisation that took place in November. At that time, citizens were given share certificates in one of 15 national investment funds set up to manage the newly-privatised firms. They could either trade or float their shares in what was effectively a mutual fund.

Privatisation is causing real political friction in Poland, pitching the pro-reform Democratic Left Alliance (SLD) against its coalition partner, the Peasants Party (PSL), which openly says the state has given too many assets away already.

But whether the public votes Yes or No in this month's referendum, Commission officials say it will not affect Poland's march towards EU membership.

“The referendum is only one possible path,” said one, adding that even a negative outcome would not indicate back-peddling on economic reform.