A WEAKNESS FOR EURO
Wiesława Lewandowska talks with dr. Piotr Naimski about (not) big EU funds and passiveness of the European policy of the Polish government
WIESŁAWA LEWANDOWSKA: - The Prime Minister Donald Tusk has experienced the happiest day in his life’ recently, and Poland – as he announced proudly – gained a big success, because it became the biggest beneficiary of new European budget which - as it should be assumed – is certainly a result of negotiating skills of the Polish government…Are we really dealing here with a negotiating miracle?
DR PIOTR NAIMSKI: - Analysing the results of the EU budget negotiations, we should, however, speak mainly about what belongs to Poland for the reason of negotiating competence of representatives of particular countries, but proportionally to their size of their areas and population and the degree of development of particular regions in the EU. So tough negotiations could take place not on the level of tens and hundreds milliards but negotiators could fight for a dozen or a few milliards.
- Is it the reason for which we receive a bit more than we expected?
- We received less! It has been decided in the present budget that 105.8 milliards euro are given to Poland for 7 years. However, it is worth comparing this sum with the proposal of the European Commission from the beginning of the negotiation which was 111.5 milliard euro and resulted from an estimated calculation of what Poland received in the previous budget perspective (102 milliard euro) with consideration of inflation. So, practically speaking, we received by 6 milliard euro less.
- And is this an effect of cuts in the EU budget enforced by the crisis, not a failure of Polish negotiators?
- To some extent it is so, because the EU budget for the years 2013-20 is lower than the previous one because it influences proportionally also its Polish part, especially the one intended for agriculture. The prime minister Donald Tusk returned from Brussels with the budget reduced by money for agriculture and announced a success.
- Why did agriculture fall a victim to the cuts? Can it be said that also this time the Polish government was not fighting hard enough for money for the Common Agricultural Policy in Brussels?
- There has been a problem with it since the beginning of our membership in the EU when Polish farmers received lower subsidies than their colleagues from old EU countries. Compensation for direct payments was supposed to be till the year 2012, but it did not happen, despite a clear writing of the Treaty. Therefore this issue should be raised by the Polish government in a more definite way, but the prime minister Tusk agreed to the failure very easily in this matter.
- European commentators regard the prime minister Donald Tusk as a member of the three winners in these negotiations, after the chancellor Angela Merkel and the prime minister David Cameron.
- An undoubted success was gained by the prime minister of the Great Britain because he had postulated the cut of the EU budget which happened, although not in a proportional scale. The prime minister Cameron also defended the so-called British discount. The chancellor Merkel could also be glad with the results of these negotiations because in fact Germany, as the main net payer, gained reduction of its payments by reducing the budget. These negotiations resulted in the fact that everyone can somehow announce a kind of their success.
- And the prime minister Tusk gained the biggest success because he can say now that he bargained even more than the gigantic sum of 300 milliard zlotys promised in the electoral campaign!
- Donald Tusk is practising numbers juggling. Calculating everything calmly, he did not gain more at all. We must consider the membership fee which is about 16 milliard zlotys for Poland for the year 2013, and in the next years it will be rising to nearly 20 milliard zlotys annually. So, when we divide these gained 440 milliard zlotys, then in particular years it will be approximately 40 milliard zlotys of net of real flow of EU funds. Moreover, we should remember that EU funds are used in Poland, in much extent, by companies coming from the countries of main net payers, so they return to them…But, first of all, we should realise the fact that Polish budget for the year 2013 is about 300 milliard zlotys with deficit of 35.5 milliard zlotys. So, these 40 milliard zlotys are more or less as much as the annual deficit of the Polish budget is.
- So shouldn’t we revel too much with the ‘flood’ of EU funds?
- Definitely we shouldn’t. Although EU funds are important, they are not a significant part of the Polish budget. On the other hand, the annual value of the Polish Gross Domestic Product in Poland is about 1550 milliard zlotys, so the net grants are below 3 per cent of the Polish National Domestic Product. The strength of this extra money may lie in their rational usage. They should be wisely spent on specific investment and development purposes and the government of Tusk has got problems with it. Moreover, we should not get used to them so much – because, as nearly all experts and analysts show today – it may turn out that this long-term budget is the last budget considering the necessity of solidary subsidies for less-developed regions.
- What is the conclusion for Poland?
- We must be prepared to live without this money. Investments will have to be undertaken without relying on the EU support. A financial drip from outside, made many decision-makers addicted psychically.
- And did it make them lazy?
- Yes. We must think about how to conduct a development policy, develop infrastructure in particular, without the EU money. A dangerous habit has already rooted in Poland, that new investments are discussed only in the context of the EU subsidies. If there is no chance for financing, then investments are not made. It is a bad habit of clerks and managers which is really difficult to overcome. A scandal is the fact that we are not able to work out specific projects and organise an investment process in order to use the EU completely. We must also consider a black scenario – there is no guarantee whether the present decided budget will be fully realised by a payer, that is the EU.
- Is it quite probable?
- Yes. It turned out that on the level of the annual budget from the last year the EU has 10 milliard of the euro deficit. The economic crisis in the sphere of euro can be a danger for realisation of the future budget. It may simply turn out that there will not be any money or there will be quite less money.
- And the EU will simply finish, which is still trying to maintain the rule of solidarity as it is shown by the results of the budget summit …
- Thinking about the future of the EU today, we must clearly separate negotiations about budget from negotiations and talks about institutional changes and its future form. The prime minister Tusk wants to mix these matters in order to discount his budget ‘success’ in a debate about the European matters in the Seym. This is everything in order to create a ‘friendly atmosphere’ for the debate on ratification of the fiscal pact. The matter is very serious, because the joining of Poland into this pact will take place in the context of very essential institutional changes of the EU.
- There has been silence since the declaration of the prime minister about the joining in March and being accepted by the government in November 2012 – till 19 November 2013, as if it was hardly important. Why?
- Because any discussion in this matter is inconvenient for the government. The fiscal pact is unbeneficial for Poland; it restricts economic sovereignty and, as a result, also the political one. There is no good reason for which we would ratify this pact. The argument of the government that in this way Poland secures itself a place in a group of European decision-makers, is illusionary. We should remember that Donald Tusk defined ‘participation without the right of vote’ as the purpose of the negotiation about the fiscal pact. In addition – participation only in a few meetings. And he achieved it, but nothing more. It is worth reminding that this pact is the beginning of changes which have already been further planned. It has its continuation in the project of supervision of the bank whose consequence is the union of the bank. This plan of the European Commission is to cause a federal European country. It is not a beneficial policy for Poland. Unfortunately, this thread has not been undertaken by the governmental party in a debate of the Seym and on 19 February the Seym accepted the ratification document with the opposition of 155 MPs, mainly the Law and Justice party.
- However, the Polish government insists that we should move on and go after the blow after the success of the budget, till the sphere of euro, which will be another success of Poland, otherwise we will be on the European margin!
- Using a political blackmail that Poland must join the sphere of euro as soon as possible, because it is a condition of participation in cooperation in Europe, is an abuse. Cooperation of the EU countries is really possible without the common currency. Anyway, today the project of the common currency seems to be doubtful and some people argue that it is simply bad and unsuccessful. It happened so that countries which are not in the sphere of euro, are coping with the financial and economic crisis much better. It is the sphere of euro which cracks. There are more and more problems between rich countries from the north and poorer countries from the south, which got into the sphere of euro regardless of analysis and anticipations of experts from the beginning of the 90s of the last century. At that time it was warned that including economies of various degree of development like German, Greek, Portugese economies into the common currency, will end badly. Poland, may share its fate with today’s Spain or Portugal, when accepting the euro.
- Whereas today in Poland it is assumed that there is no other way to happiness – politicians in the government and media are persuading us into this belief – as the possibly shortest way to Euroland.
- When asked about it, Poles, in majority (over 60 per cent) answer that Poland should not join the sphere of euro. It seems that there is more and more scepticism also among experts. For a long time many economist dealing with the analysis of financial markets and economy, express their opinions publicly that we should not hurry in this matter because facing the international uncertainty of economy, and depriving oneself of influence on the monetary domestic policy is a mistake. The euro is not really a necessary condition for the existence of the EU and our existence in it. Now we are in such a historical moment in which – I do not hesitate to say – it is not known what the form of the EU will be in two years’ time…Poland can and should have an influence on this form.
- How if not through a closer, deeper integration?
- We should formulate our postulates in this matter, present our vision.
- Standing aside?
- And maybe – if we accept a different narration – is the sphere of euro aside? It is really worth thinking over a suitable path of development and over ways of the EU cooperation, which will not be conditioned by joining into the block of euro.
- And suggest a debate on such one’s own solutions on the level of the whole EU?
- Yes. The problem of the crisis in the sphere of euro, the problem of a political form are open for the nearest months and years. So, now it is worth asking questions. Is it reasonable to support the EU with the sphere of euro and its ambitions to dominate economy and impose the common currency on all members? Can it work out a model of cooperation between the countries of the sphere euro and those countries which want to maintain their own currency and conduct their monetary policy on the national level? Is the evolution of the European Union necessary which leads to a loss of national countries and creating an European country without a nation? Poland needs an elastic cooperation with European partners, a mechanism of correction of mistakes on the level of EU institutions, actions increasing economic freedom, not restricting it like now. Such forms of cooperation are possible; there is no obligation to act under pressure of political forces in Brussels. The linear development of the EU in the direction of a federal country is a dogma which should be questioned for the sake of Poland.
- Which political forces in Poland are aiming at the sphere of euro the most?
- Paradoxically, no forces are visible here, only the government of Tusk.
- …which is not a force?
- I would say that it is weakness which is aiming at the euro. One could have a feeling that Donald Tusk wants to join the sphere of euro as quick as possible, not for the reason of feeling a force but weakness.
- He says that he wants to strengthen and appreciate Poland in this way.
- It is only an alleged appreciation. But there appears one more important aspect of this weakness. For, there is a danger that Poland, although with delay, will experience a crisis. Donald Tusk may think that it would be better to survive this crisis in the sphere of euro.
- And isn’t it so?
- Most experts state that it is easier to cope with a crisis when there is a possibility to control a rate of exchange when there is a possibility to act independently. So, it is a choice between a policy of passiveness and policy of activity. Donald Tusk chooses the policy of passiveness.