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  Gustav
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Friday, February 03, 2006

Is Poland winning with brinkmanship?

The government will tell you it is; European diplomats and legislators will tell you it’s digging itself deeper into an isolationist black hole

Over the past few months Poland has made itself infamous in the halls of Brussels for its outlandish brashness, it’s willingness to break deadline after deadline, its stubborn resistance in the face of the harshest EU threats, and its seeming desire to stand alone and spit in the face of 24 other member states. Ah, Europe. You didn’t know what you were getting when you signed on to Poland’s membership, did you?

The stances Poland has taken on two recent issues in particular have raised the hackles of European lawmakers, who are now beginning to think that every difficult EU negotiation from now on will come down to a standoff between Poland and the rest of Europe.

In the first case, Poland was the last holdout to approve a deal extending beyond 2005 the ability of ‘old’ EU member states to charge lower VAT rates on labor-intensive services such as shoemaking, window-washing and … selling home-improvement goods. The details can be found here.

In the end, Poland got what it wanted, the EU got what it wanted, but the Union was brought to the verge of crisis. Similar concessions were obtained by holdouts Cyprus and the Czech Republic, without such melodrama.

In the second case, Poland yesterday announced that if within three months UniCredit (formerly UniCredito Italiano and HVB) doesn’t sell the Polish branch of HVB it obtained when the companies merged last year, it will look to annul UniCredito’s original takeover of Polish Bank Pekao.

The issue here is that the government doesn’t want Pekao and HVB merging, because it would create a private bank larger than the state-controlled dominant player in the market, PKO BP. But UniCredit, realizing that owning the biggest bank in the biggest new EU member state might be a profitable asset, will never let go. Find the IHT report here.

How Poland could legally annul the earlier deal is a mystery, as experts call the idea “a fantasy”.

All EU institutions have cleared the UniCredito-HVB merger, as has every other EU member state – except Poland, who by itself is holding up consolidation in the EU’s banking market.

This has the rest of the EU fuming. They remember late December’s toil to reach a budget agreement the Poles would accept. They remember Prime Minister Marcinkiewicz, after finally winning the amount of promised structural funding he needed to finance his government’s plans, standing in front of the cameras and jubilantly exclaiming, “YES!” – clenched fist and all.

That’s beginning to lose Poland a lot of political capital in EU circles. Now, newer member states are becoming reluctant to stand by Poland in these disputes as they had earlier, and some suggest that Poland is risking its natural role as a power and regional leader in the Union with such abrasive tactics.

"Poland is missing a great opportunity. Instead of being one of the large members that give the direction to the European Union policy, the government is taking on a role of a defender of its own and others' interests, even against their will," Cornelius Ochmann of the Bertelsmann Foundation in Berlin told Reuters.

And that risk is perhaps the most dangerous: Without influence, Poland will be isolated and left out of decision-making, and lose the ability to defend its citizens’ interests. While a semi-win on EU VAT rates and a tough stance against mega-banks may give it the appearance at home of a scrappy mutt that won’t be bullied by the bigger dogs, in Europe, it is very fast becoming the runt of the litter.

2 Comments:



Blogger beatroot said...

Poland might be seen as the 'runt of the litter' by the Eurocrats in Brussels, but normal people in Europe might see Poland as being a member of the ever growing awkward, against centralisation of power and politics into the hands of unelected, and mostly failed, national politicians and officials which make up the decision making bodies in Brussels.

This is why euroscpetics wanted to see an expansion of the EU. By increasing the number of countries voting it weakens the power of the Germany-France axis. Now Poland - a poor country - has as much power within Brussels as France, Germany, UK. And that's good.

I don't think the image of Poland is endangered by Polish antics in the EU, it's the EU itself that has the image problem with the average European citizen.

2/06/2006 02:41:00 PM  


Blogger Gustav said...

I agree that the Eurocrats have very little recourse to respond to Poland's cheek. But I think that while some outside Brussels see Poland as an admirable rebel, most see Poland as living up to its backward, stubborn image.

This is why euroscpetics wanted to see an expansion of the EU. By increasing the number of countries voting it weakens the power of the Germany-France axis.

- Reminds one of the chaos caused by the liberatum veto, doesn't it?

Now Poland - a poor country - has as much power within Brussels as France, Germany, UK. And that's good.

But not fair. As far as I remember, since the constitution didn't pass, Nice is still in force, isn't it? That means Poland has nearly the same number of votes in the EU as those countries, though it has a far smaller population.

I don't think the image of Poland is endangered by Polish antics in the EU, it's the EU itself that has the image problem with the average European citizen.

The two aren't mutually exclusive. I think you're right that the average EU citizen believes the union is too unwieldy - but they disagree as to weather it should be more centralized or devolved in order to solve that problem. One thing is sure though, Poland's antics in the EU are noticed by international businesspeople - and that's not good for FDI.

2/08/2006 12:43:00 AM  

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