Thriving Warsaw forces EU to rethink club rules

Date: 21/03/1996

WHEN pundits and politicians say that enlargement will force the EU to change, the country they are really talking about is Poland.

With a young and still growing population of 38.5 million, the Union's big eastern neighbour has practically twice as many inhabitants as Hungary and the Czech Republic combined.

By the time it joins, Poland should be more populous than Spain, second only to the four biggest EU powers: Italy, UK, France and Germany.

Yet if size alone were the problem, politicians in Brussels, Paris and Bonn would breathe a sigh of relief.

The real trouble with Poland is that 25 to 30&percent; of its working population is employed in agriculture and, if Eastern Europe's farmers were subsidised at current EU levels, the farming budget would, according to some estimates, have to be increased by 10&percent; for the Poles alone.

Poland, one of the very few countries in the developed world with such a large and labour-intensive agrarian sector, thus offers the Euro-club four equally unpalatable alternatives: keep it out; take it in, but exclude it from the Common Agricultural Policy; dramatically increase budgetary contributions from other member states; or drastically cut subsidy levels to existing EU farmers.

The first of these alternatives - to deny Poland membership - is not a practical option at all. Moral and historical duty aside, the whole purpose of enlargement, from western Europe's point of view, is to make and keep the East stable.

To exclude the biggest of the EU's aspiring members from the enlargement process would almost certainly trigger even worse tensions than postponing enlargement altogether.

Germany's Chancellor Helmut Kohl knew what he was doing when, on a visit to Warsaw early in 1995, he held out the prospect of Polish EU membership by, or soon after, the year 2000.

At the time, Kohl's promise, the first such commitment given to any accession candidate, raised many a European eyebrow. However, since the December summit in Madrid, this time-frame - which only a year ago was considered wildly optimistic - seems increasingly realistic, provided enlargement negotiations progress smoothly and the IGC does not drag on past 1997.

Option number two, to exclude Poland temporarily from all or some CAP benefits, seems a tempting solution to the dilemma and is being discussed in Brussels. The trouble is that the Polish government fiercely resists the idea, as the country's ambassador to the EU, Jan Kulakowski, readily points out.

While Warsaw would agree to some transitional arrangements to facilitate accession, such as those negotiated with Spain in the Eighties, a second-class membership excluding the country from key areas of EU policy would not be acceptable, he insists.

As a result, member states are left with two unappealing options - a reduction in their own levels of agricultural and regional support, a solution bound to trigger electorally-damaging grassroots anger, or a massive increase in the Union budget, an option which the EU's present net contributors are determined to avoid.

The most likely outcome will be a finely-balanced compromise, negotiated to share out the bitter medicine of Polish accession between all the Union's current members.

Once Poland has joined, the richer EU members, however much they protest, will almost inevitably have to pay a bit more, while the poorer countries will almost certainly receive a bit less.

Under such circumstances, pro-accessionists in Poland - almost all of the political establishment - must consider themselves lucky that, in every other respect, their country serves as a model for the successful transition from a badly-run socialist to a thriving capitalist economy.

Rigorous shock therapy which initially sent GDP plummeting and triggered mass poverty and social discontent is now delivering impressive growth rates of between 6 and 7&percent;.

This improvement has been achieved on a tight budgetary deficit of under 3&percent;, an achievement which most EU finance ministers would view with envy.

Inflation remains high, with rates exceeding 20&percent;, but has been decreasing steadily, while the number of workers in the private sector has gradually grown to two-thirds of the workforce. Privatisation, although fairly slow and sometimes opaque, is progressing continuously, a strategy Warsaw justifies as the most likely way to bring in maximum revenue.

This successful performance, which is attracting more and more initially-wary foreign investors, has earned Poland the respect of western economists.

The economic boom has been matched by a political evolution which has been equally positive. Lingering doubts about the country's political maturity, triggered by the early electoral successes of a few mavericks (and also by former President Lech Walesa's sometimes bizarre interpretation of his constitutional powers), have all but vanished.

The country's new Social Democratic leadership under President Aleksander Kwasniewski which emerged from last year's election comprises recycled former Communists, as in Hungary, and has moved swiftly and decisively to reassure western partners and investors as to the firmness of their commitment to European integration and further market reform.

And inspite of its proud and sometimes touchy brand of patriotism, bred by a history of oppression set against memories of a powerful past, Poland has managed to avoid a revival of old historical tensions. Relations with Lithuania, whose claims to EU membership are strongly supported by Warsaw, are at an all-time high.

Moreover, while local fears persist that rich Germans could use their economic clout to buy back some of the land their parents abandoned or were expelled from in 1945, Germany's advocacy of Polish membership of the Union has led Warsaw to view Bonn as its surest ally.

As is the case with other EU aspirants in Central and Eastern Europe, the Commission is currently finalising a detailed questionnaire, which Warsaw is expected to return by the end of June.

This will serve as the basis for the Commission's avis (opinion) on Poland's readiness for membership, which Ambassador Kulakowski hopes will be prepared before the end of the year.

Echoing his eastern colleagues, Kulakowski is keen to point out that the Association Agreement between the EU and Poland already foresees free trade in industry and services by the year 2000. He rejects the EU's argument that Poland should, for her own good, be protected from joining the Union too early.

He argues that the comfortable trade surplus, amounting to roughly 2.5 billion ecu a year, which the EU is running up in booming trade with Poland is a clear indication that the country is already exposed to, and is dealing with, an onslaught by western competitors.

Experts in the Commission and the Paris-based Organisation for Economic Cooperation and Development (OECD) - which Poland hopes to join before the year is over - tend to agree, although some continue to stress the many problems the country still faces.

These include the restructuring of its large coal and steel sector and a substantial shrinking of its large agrarian workforce, which is certain to aggravate the current unemployment rate of around 14&percent;.

But its fierce resolve to end centuries of threats and uncertainty and to live securely in unchallenged borders will ensure that Poland will do all it can to make EU membership a reality.