Monday, January 31, 2011

Kaczynski's zloty dream

Who knew Jaroslaw Kaczynski was such a visionary. Poland's infamous cranky conservative and globally respected economic theorist (not really) said Monday the humble Polish zloty should become a reserve currency for Poland's neighbours, second only to the mighty-for-now dollar and once-mighty euro.

"Some say the zloty should last in Poland for 10 years, but I go further and say it should stay for at least 20 years," the Law and Justice leader told journalists in Warsaw Monday about his euro adoption view. "The zloty should become the third reserve currency in the region, after the dollar and the euro."

Reserve currencies play a key role in the global financial system, as they are a store of supposedly stable wealth and are used to pay for international debt obligations. Globally, the American greenback is in the ascendancy. The euro was once seen as a potential replacement, though the Greeks, Irish and Portuguese largely put paid to that. With the dollar also on the defence as America's global star wanes and Chinese officials question its role, perhaps Kaczynski believes the zloty could play that role.

But the man widely known by the diminutive Jarek undermined his big zloty ambitions with nearly all other statements he made on the economy. Kaczynski said taxing various banking operations could create yearly revenues for the budget of tens of billions of zloty a year. Ahem, ahhh, Jarek, ok, so you will massively tax banks. What do you propose they will lend to create your super strong economy that will allow the zloty to be a reserve currency?

Kaczynski took further aim at banks, saying "Polish" capital needed to increase in the Polish banking sector at the expense of "foreign" capital. The energy sector too should not be privatised to "foreigners."

Oh, those dastardly foreigners. They are ruining Poland by . . . investing billions and billions of euros, dollars, yuan (you name it), buying more and more Poland-made products, transferring know-how of all sorts, and buying the government bonds on which the over-spending that Kaczynski enjoyed when prime minister in 2005-07 and the current government now enjoys was and is largely based.

Finally, aren't those pesky "foreigners" supposed to be the ones using the zloty as a reserve currency?

We'll leave that question to the man himself, a man who took 10 or so seconds in his Monday presentation to realise he was saying "euros" instead of "zloty." Take that to the bank.

Sunday, January 30, 2011


Boy do I wish I were a kid today. Not only is there the internet (heh, heh, heh) but in the future there will be Rydzykland. Radical Polish Priest Tadeusz Rydzyk, a Catholic media mogul (yes, really) frowned upon but tolerated by the local Church, has announced he will build a theme park near his HQ in Torun, north-central Poland.

Rydzykland's real name will be the very catchy Polonia in Tertio Millennio Centre, roughly translating as Give Me Money. According to the Polish state news agency's website, it will be an, er, religious theme park with a fairyland-style church (shown), hotels, huge aqua park, thermal water spa, sports hall, conference hall, shops, restaurants, a marina, and an amphitheatre. Euro-Disney, eat your heart out, er, I mean, turn the other cheek . . .so I can hit them both!

Father Director, as Rydzyk is known, is no stranger to ambition. Already a master of radio and TV, Rydzyk wants the theme park to be Poland's top Catholic destination. He wants it thus to draw visitors away from Czestochowa and its Black Madonna, a 600-year-old icon that is believed to have stopped Sweden (they weren't always so nice) during a 17th century invasion. Easy pickings. He also takes a dim view of the new giant Jesus erected in Swiebodzin in south-western Poland.

As always, money might be the catch. At an estimated cost of several million zloty, one less familiar with Rydzyk's Empire might ask how a priest would find enough money left over for such an outlay after he has helped the needy and the deserving. I'll give you a hint: get on the phone and pledge a little, just a little, and Rydzykland will soon be a reality.

Saturday, January 29, 2011


It was a clever ruse only devious minds pulling the strings in Poland could have devised. The people that move behind the scenes affecting everything that happens in Poland and who without doubt are the True Patriots. It was all very clever because who would have thought they would use Gazeta Wyborcza, the well-known leftist, anti-nationalistic, anti-chauvinist liberal daily to advance their plans aimed at building a Greater Poland?

As you can see, we believed it when Wyborcza reported the sorry state of the Polish armed forces by focusing on soldiers taking sick leave to make a few additional bucks. However, this was all part of a mastermind plan to convince our Enemies we are not a threat, that we are weak, fooling them into feeling safe and all the while us waiting like a crouching tiger and a hidden dragon for them to lower their guard. Then BAM!

Alas, all is for naught. Someone has betrayed the Great Cause. Our Enemies have learned about the Plan. Belarussian President Aleksandr Lukashenka has revealed the True Patriots' plan to rewrite history, redraw the Polish-Belarussian border, and move it to the outskirts of Minsk!

But was Poland acting alone? No! It was acting in concert with Germany and the EU! This further proves the sheer genius of the True Patriots, to use these anti-Polish institutions to further the dream of a Greater Poland! How cunning! How devilishly clever!

Rest assured dear reader the plan might have failed for now, but the True Patriots will find another way to build a Greater Poland. Just you watch!

Friday, January 28, 2011

The week in review...

While Polish leaders joined global big wigs for the world's top schmooze and booze fest in Davos, the political fight died down only to be replaced by an economic one: the Polish government and its pension "reform" versus Leszek "Mr. Shock Therapy" Balcerowicz. The government wants to effectively roll back the previous pension reform that added a private second-pillar to help put off deeper fiscal reform. Mr. Balcerowicz says this is stealing from future pensions and backs shock therapy light. Don't worry, though. No real debate occurred. Instead, the government branded Balcerowicz an idiot and a barbarian.

The Financial Times' Jan Cienski took a closer look at the issue and made a fine point: "Balcerowicz and other economists have become the de-facto opposition" at a time when the main opposition party, the conservative Law and Justice, is fixated on the Smolensk crash that killed Lech Kaczynski. Law and Justice's obsession does play well to a hardcore, but much less well among the majority of Polish voters, thereby creating a nice niche for an opposition party to fill.

The FT's main Polish blogger also hits out at the government over its incredible shrinking road-building plans.

The Wall Street Journal's New Europe blog saw Marcin Sobczyk likewise highlight the battle over the pension "reform," including a nice little refresher in paragraph two for the economically challenged. The only thing I might have added is that Monetary Policy Council member Andrzej Rzonca, who he cites criticising the government's plan, is a former disciple of Balcerowicz. Saying Rzonca supports Balcerowicz is kind of like noting Paul supported Jesus.

Also on New Europe, Sobczyk covers -- is this is a blog or news? -- the view of a deputy National Bank of Poland governor, Witold Kozinski, who told the daily Gazeta Wyborcza that the zloty could weaken if foreign investors worry too much about high public debt and a wide budget deficit. Wow, genius stuff.

But I guess the zloty could indeed be depressed on fiscal worries, but is the situation really so bad Poland faces default? This was apparently stated by Barclays in a recent report. Yes, the very same Barclays that during the crisis was bailed out by Persian Gulf investors. Talk about the kettle calling the pot black.

It is, though, undeniable debt is growing (check out the handy Polish debt clock for more) and growing faster than the population, which grew by an absolutely stunning 0.1% to 38,200,000 at the end of 2010. The numbers also show a Poland getting older. Some 16.9% of the population were over 65, up 200,000 from the previous year. Considering how fast Poland will get older, if I were the business type, all I know is I would be investing huge in the haemorrhoidal cream industry (speaking of haemorrhoids, here's one of the weirdest ads ever in Polish).

Finally, for the feel good story of the week, here's a great story/video piece about Baltic, the dog who was heroically rescued a year ago from an ice floe. He just recently celebrated his first anniversary. Dobry pies, Baltic, dobry pies.

Thursday, January 27, 2011

Surprise surprise?

My pardner here believes Civic Platform is set to win the general elections set for October with some ease. He is probably right [as he usually is - Editor's note], but I'd like to go through a list of things that might come back to bite our Numero Uno showman, Prime Minister Donald Tusk, in the ass come October.

Before I begin, I have to mention three things. First, a lot will depend on the campaign. Poles have a short political memory and are easily manipulated into heated arguments about the least important issues. It is entirely possible a "substitute topic" will be brought up just before elections that entirely changes all calculations.

Second, the Civic Platform is a poor campaigner. The party really ran only one decent campaign and that was for the 2007 parliamentary elections it eventually won. Things might be more tricky this time around. Or not. This will depend on how mad Law and Justice leader Jaroslaw Kaczynski really is.

Third, there are varying degress of victory and defeat. For me victory would be a result giving the Platform an outright majority. A tie or the status quo would be when they would have to form a coalition with a smaller party, the current partner the PSL or one of the new parties. Defeat would be to be forced to court the ex-communist Democratic Left Alliance in order to retain power. Utter defeat would be to lose the chance to create a two-party coalition government. 

So here are the things that can blow up in the prime minister's face: 

Arrogance - It is unwise for a PM anywhere to say out loud "there is no one around that I could lose to," but in Poland, where the passion for the underdog runs deep, it might be even more dangerous. And it seriously seems Tusk believes he is invincible, a feeling visible in his handling of issues like public finances, pensions, the Smolensk crash, etc. This could be the harbinger of a poor campaign as the October elections will be seen merely as the rubber-stamping of the Civic Platform's greatness and not as a battle to rule.

Economy - Unemployment remains high, the overall tax burden is heavy, just over half of working age Poles actually do so, and public finances remain a big problem. The government has supposedly hit its 7.9 percent public-finance-deficit-to-GDP target, but it did so despite the fact the economy expanded by some 4 percent, not the 1.2 percent originally forecast. That makes a big difference. The recent proposed pension changes do give the government leeway on the fiscal front and will mean spending won't have to be cut ahead of the elections. But the proposed change itself, in addition to the other problems, has already pissed off some of the Platform's core electorate.

Should macro conditions deteriorate in 2011, especially in terms of unemployment and public finances, the government might face some heat from its electorate and from the media. 

Zloty - Poles love Swiss franc- and euro-based mortgage loans = they hate a weak zloty. FX market volatility tied, for example, to problems in the euro-zone might be interpreted as a government failure. If you add that a weak zloty would increase pressure on public finances (due to foreign debt exposure) all of a sudden Poland could swing from the "green island" of growth in Europe to the "sub-prime of Europe." Or at least the media could present it that way. 

Pensions - And more broadly unkept promises and the lack of promised reform. A direct result of this is a loss of the Civic Platform's core electorate: young, pro-market, well-educated, well-paid, big city Poles. With all the discarded reform plans, with all the botched privatisation attempts, with all the "pragmatic compromises," the Platform is alienating its electoral base. 

Russia - Smolensk and the total collapse of Poland's foreign policy. Clearly Poles now believe reconciliation is not the way to talk with Russia. Tusk is seen as weak; Foreign Minister Radek Sikorski is invisible. It remains to be seen how long the effect will last, but the longer the Smolensk crash will be played out as a political game, the more the Civic Platform's electorate will be fed up with it (Law and Justice's electorate will on the contrary thrive on the issue). 

Turnout - This is one of the biggest question marks. It is believed lower turnout will favour Law and Justice. I would rather say that it will be key how motivated the young, urban electorate will be to vote. Too much Smolensk and it might turn out they will fail Mr. Tusk this time around. 

Bogeyman strategy - This is the biggest IF. Clearly at the moment the Platform is focused on repeating its tried and true winning strategy of scaring its electorate with Jaroslaw Kaczynski, a strategy that has given it parliamentary and presidential election victories. However, the 2010 presidential win was really close, partly because Kaczynski was surprisingly soft and moderate. That would probably be the best strategy for Kaczynski to beat the Platform at the moment.

Luckily for the Civic Platform, Kaczynski has gone in the totally opposite direction since the presidential election. Can he change yet again? Unlikely, but Law and Justice has always found a way to reinvent itself during election campaigns, tends to run strong ones, and it cannot be ruled out it will do so again.

Update: Day without Day Without Smolensk

The dream is over. The Day Without Smolensk, set for February 3, has been cancelled. Even though over 100,000 Poles signed up to the Facebook group in agreement politicians were abusing the memory of the April 10 plane crash in Smolensk, Russia that killed President Lech Kaczynski and scores more, the organisers have decided to cancel the day, somewhat ironically, because of the abuse of politicians.

"Our initiative is being used to deepen the chasm that divides Poland," the organisers pleaded. "We have become pawns in the game. . .," they concluded, somewhat existentially I might add.

The cancellation comes, unsurprisingly, after one member of parliament from Law and Justice, guardians of Polish Patriotism (registered, copyrighted to Law and Justice), called the Day Without Smolensk "disgusting." Like-minded Facebook users even launched their own counter-group: 'Say No to a Day Without Smolensk.'

One wonders why they didn't copy my oh-so-witty Day Without Day Without Smolensk (though this could have been because of the worry the organisers would go with a Day Without a Day Without A Day With Smolensk . . . .").

At any rate, if you are in Poland, get ready to hear Smolensk every minute of every hour of every day. . . .

Queue - the board game!

Poles are absolute masters at queuing (waiting in line, my North American readers, waiting in line), so I would warn any non-Pole from potentially playing this game with a Pole: The Queue. You will be beaten, severely.

Seeking to take advantage of this aptitude, Poland's Institute for National Remembrance has devised a game to teach foreigners and non- alike about daily life in Poland before Communism finally was heave-hoed out in 1989. Players will have to send family members to various stores on the game board to buy all items on a shopping list. Deviously, the stores are empty (though all Poles of the right age will tell you could get the two Vs: vodka and vinegar).

I'm a big fan of great writing in strange places and this is brilliant, tense stuff from the game's rules: "The players line up their pawns in front of the shops without knowing which shop will have a delivery. Tension mounts as the product delivery cards are uncovered and it turns out that there will only be enough product cards for the lucky few standing closest to the door of a store." You can almost feel the sweat dripping as the cards are turned . . .

The brilliance of Poles' queuing strategy is also hinted at in the game's special cards: "Mother carrying small child," "This is not your place, sir," or "Under-the-counter goods."

The strange culture -- and sheer number -- of queues struck me right away when I first travelled to these distant shores so many years ago. I would go to the pharmacy, look for the aisle with the cough syrup and instead see a huge line running from a small plexiglass hole through which the pharmacist and the customer "communicated." Angry, mostly elderly women stomped angrily, flashing sharp eyes and warning me off (successfully usually). The post office always provided a good lesson in patience, or lack thereof, and still does in many areas.

But best was probably the foreigners' office, a place with nary an English speaker where I first learned the phrase "kto ostatni" - "who's last." Who needs a number machine with such a brilliant strategy. You walk in, ask who's last and then stick to that person like a glove. Of course, I did see a few fights while queuing for the office as people attempted to snake their way higher in line, but it did provide for drama.

The game's premiere is set for February 5 in Warsaw. Make sure to, er, queue up.

Wednesday, January 26, 2011

Pushing the limits

I wonder what one has to do to get fired from Prime Minister Donald Tusk's liberal, reformist government. Looking at the entire term, the cabinet has turned out to be surprisingly stable given that it is also a coalition government. There were no dramatic "exits" from the coalition partner or no "last minute" talks to save the coalition. In fact, only five ministers were dismissed in the more than three years the government has been in office. But was it really that peaceful? Or are these guys just welded to their posts?

Looking at the latest events it is stunning what a minister can get away with these days. The defence and infrastructure ministers stand out from the crowd in this regard, and it is hard to believe either of them still has a job.

Defence Minister Bogdan Klich probably has the worst track record in post-communist history with two major air crashes of military airplanes, one the ill-fated Smolensk flight in which President Lech Kaczynski was killed; the second a military transport crash back in 2008 that left 20 high-ranking air force officials dead.

This is not just a matter of bad luck on the minister's part. Reports following both accidents have painted the picture of a largely incompetent air force that is ill equipped, ill trained and insufficiently paid. This forces pilots to take extra duties and flights, making civilian jobs for the most competent ones ever more tempting. Over the course of Minister Klich's term nothing has changed. NOTHING. Not even in the supposedly most elite squadron responsible for flying VIPs. The Smolensk crash is a direct result of that.

One has to ask themselves, WTF? What is so special about this guy that such mistakes are tolerated?

The second example is not as clear cut, but anyone who has driven in Poland, especially in the spring, will know that the infrastructure minister's job is a hot seat. Poles always complain about the state of their roads, and with some reason. For all those who have not had the pleasure, check this link out.

Infrastructure Minister Cezary Grabarczyk has always looked to be on the chopping block. He seems doomed again as he announced anew yet another delay in Poland's road-building efforts (you know the roads that were supposed to be ready for the Euro 2012 soccer championships but will now be done in 2015) because "there is no money."

The delays come on the back of utter chaos in the Polish railways during the early winter: trains stopped in the middle of nowhere, multi-hour delays were the rule, fake schedules were published, and chaos reigned supreme. Just the uproar from people trying in vain to get home over the Christmas period sparked a massive debate on the minister's future. In the end, he was given a yellow card, a last chance to redeem himself. Humbled, he promised Polish state railways would be fixed.

Today the headline hit that Mr. Grabarczyk has been hiring friends and political allies from his region to work at his ministry. His response? "I don't deny knowing these people. They are experts."

Yeah, probably railway and road building experts.

Tuesday, January 25, 2011

Day Without Smolensk

Polish newspapers, newscasts and newsfeeds have been dominated by one thing in recent days: clashes over who's to blame for the April 10, 2010, plane crash near Smolensk, Russia, that killed President Lech Kaczynski and dozens of high-ranking officials. But it seems an ever-expanding group of Poles has had enough.

"Are you already tired of the words Smolensk, Katyn, catastrophe, air controllers, MAK? Do you not want to incite an uprising? Are you tired of the hunt for blame? Yes? That's great!!! . . . We announce February 3 as the Day Without Smolensk!"

Over 107,000 like-minded Poles have already signed up to the new Facebook group, the number rising exponentially from just 600 on Saturday and still growing. The group appears to be dominated by young, seemingly cosmopolitan Poles turned off not so much by the crash itself, but by the political handling of it as the main political parties bash each other over who's to blame or how they are blamed.

As elsewhere, these dissidents of sorts turned for organisation to Facebook, the social network par excellence and increasingly the subject of debate of whether it can have a real political influence. Experts cited by the conservative daily Rzeczpospolita scoffed on Tuesday at the potential for the petition to have any effect.

But Facebook has already had a big impact in the aftermath of the Smolensk crash. In the immediate wake of the crash, FB was used as an organising medium, among others, for those protesting against Lech Kaczynski being buried in Krakow's Wawel Castle, the traditional burial place of Polish kings. Public protests were lightning fast, and very surprising considering the crash was still very recent.

Moreover, the "Day Without Smolensk" group doesn't need to attract any real followers for the pseudo-boycott either. The connection of the like-minded and the expression of dissatisfaction with the course of public debate are already achievements. Whether the group will be motivated to push for actual political change is another question entirely. But being able to organise extremely quickly and gather large numbers together never hurts. Just ask the Tunisians.

Monday, January 24, 2011

Conspiracy anyone?

Poland's top tennis player Agnieszka Radwanska, the twelfth seed at the ongoing Australian Open, just overcame her rival Peng Shuai from China to make the quarterfinals after a thrilling match. Radwanska has reached the quarters at a Grand Slam thrice before but can now top that by making the semi-finals. An all-court player, the Polish tenisistka uses her wits more than her brawn to outclass opponents.

Radwanska is thus well-placed, er, to give her view on the April 10 plane crash in Smolensk, Russia that killed President Lech Kaczynski and a raft of other leading political and military figures. In a recent "news" post on her website, she and her family "condemn the baseless insinuations in the recent MAK report [Russian Interstate Aviation Committee] regarding the plane's crew and Gen. Andrzej Blasik."

The MAK report alleged the Polish crew was solely to blame and said an autopsy showed the general had alcohol in his blood. Poland's government has since objected to the report as well, noting it did not take into account possible mis-instructions from the tower in Smolensk.

Family Radwanska, for good measure, brands the report's "insinuations" as "violating the standards of western civilisation." PM Donald Tusk's government does not get off lightly either. Radwanska and family "condemn the too slow and inadequate reaction of the Polish government" to the MAK report.

The Radwanskas don't stop there. She and her family invite everyone to view a film, "Fog," about Smolensk that was backed by the most radical, nationalistic side of the Polish media and which goes into full-court insinuation mode to basically blame the Smolensk crash on Russia and on the Civic Platform-led government. The far-right daily Gazeta Polska, one of the main backers, has reported all sorts of bunk on the crash, even clearly falsified reports that Russian special services finished off alleged survivors of the crash.

Agnieszka Radwanska and her family have every right to believe whatever they want. The freedom to do so should be cherished, especially in a Poland that has long suffered from the lack of such. But I do not believe a little public spotlight gives you the right to espouse an opinion on everything. Or, if you do give your opinion, you should damn well ensure it is informed and not just propagating ill-thought out conspiracy theories designed to support one political option at the cost of everything or anyone else.

Sunday, January 23, 2011

Civic Platform on the precipice of . . .victory?

Prime Minister Donald Tusk's Civic Platform has cruised the past 3 or so years, ducking the mounds of mud thrown at it by a crabby incompetent opposition and capering over each and every potential political pitfall. Its support has remained well above 40% and has often bested 50%. This is unprecedented stuff. Polish ruling parties have traditionally seen a support bump right after they take office but then see voters slowly drift away until they lose the next elections. Tusk's party has defied this, at least so far.

The Platform's support sank a painful 9 points to 45% in a survey from GfK Polonia done on January 13-17. Rival Jaroslaw Kaczynski's Law and Justice rose 4 points to 30%. Another just released survey that was done January 21 put the Platform at 37% and PiS at 28%.

Could the Platform's decline mark the beginning of the end of its apparent invincibility? A neck-and-neck race between Tusk's and Kaczynski's respective parties ahead of the planned October general elections could unleash a wave of uncertainty, particularly considering the parlous state of public finances and market players waiting to punish Poland for fiscal incontinence.

That Tusk's party can even talk of 50% is special: the challenges have been many and the escapes special. Poland was 'the only EU country to grow in 2009...blah, blah, blah' but its GDP growth still slowed sharply, from 5.1% in 2008 to 1.7% in 2009. Nearly 1 million people hit the unemployment rolls, wage growth stagnated, and the Platform needed something of a miracle to escape with its neck. It got that courtesy of a personal income tax cut actually passed before the party took office but that went into force in 2009 and some intense zloty weakening that made Polish goods cheaper abroad.

Scandal has dogged and been dodged as well. A parliamentary caucus leader and the sports minister kept strange gambling industry bedfellows and looked to be peddling influence. An interior minister tripped up. Other deputy ministers entangled themselves. Canny political operator Tusk has always met scandal with immediate dismissal: giving the public its pound of flesh in return for forgiveness.

Yet Tusk's delayed reaction to Russia's Interstate Aviation Committee (MAK) report that fingered the Polish crew for blame in the April 20 plane crash in Russia that killed President Lech Kaczynski could be different. Tusk was skiing in Italy when the committee unleashed its, er, big MAK attack. Though he cut short the schussing, his and his chancellery's reaction was deemed insufficient by many, even by allies. Tusk tied to go on the offensive last week, but then it turned out the Platform's number two criticised the prime minister, making the reaction look late and the party appear divided.

Other problems also exist. The Platform was at one time "pro-reform." On the back of a reform track record that only sets the standard for lethargy, many of its more ambitious voters are disappointed if not downright irate. Failure to tackle a too tight labour market, to tax farmers more, and to direct more spending to education and health and away from pensions and ancient industry provide sufficient room for a long litany of complaint. The proverbial straw could be the announced reform to pensions that looks to many like a money grab to avoid painful policy choices ahead of the elections.

None of this augurs well for its popularity, or at least would in another dimension. Let's say they are 11 dimensions. In most of those, the Platform is getting its behind booted. But in this one, the gibe about the "crabby incompetent opposition" is not just offhanded criticism. It is reality.

The reality is the Platform's support will probably sink since 50% of Poles don't support the party and its goals. But at least 35-40% do likely reckon Jaroslaw Kaczynski is nuts, his party should never be allowed back into power, the leftist SLD is not the answer, and the new groups trying to make it look like pale imitations of the old ones already extant. 

Winning by default isn't much of a pedigree, but for the Platform it's the secret of its success, at least for the next elections. After that, it's anyone's game.

Friday, January 21, 2011

The week in review...

It was beaucoup busy this past week in Poland. On the economic front, the Polish economy was shown to be humming along, though price pressures could be building. In a pre-emptive move, the Monetary Policy Council raised interest rates for the first time in over two and a half years. This won't be the last hike either. Dominating the air and virtual waves this week, though, was the continuing fallout from the April 10 plane crash that killed President Lech Kaczynski and a big swathe of the political elite.

Sometimes it is easy to lose sight of the forest. Here, Ngozi Okonjo-Iweala looks at the Polish growth model and asks what's the secret to its success: 20 straight years of economic growth and recent move into the World Bank's group of high-income economies.

Tip for travellers: don't carry crocodiles in your luggage. It is not only illegal, it is cruel.

The Financial Times' Jan Cienski curtain-raised for the Wednesday Monetary Policy Council sitting that produced the 25 basis point rate hike, but he got carried away. He says the "overwhelming majority" of analysts expected a hike, later clarifying this to be 17 of 25 economists. Hmmm, let's look at this in another way: 17/25 is also 68%. Let's toss this again. If your doctor said you had a 32% chance of dying, I doubt many of us would find that underwhelming. His talk of the zloty being weak is a little loose as well as from the MPC's December 22nd policy sitting to the January 19th policy decision, the zloty strengthened 2.6% to the euro and 4.8% to the dollar.
Dow Jones' Leon Rousek covers Polish Deputy Finance Minister Dominik Radziwill as he looks at the flip-side of the woes afflicting the euro-zone's periphery: Poland's standing has grown. Investor interest in 'the only EU country that grew in 2009' is said to be big as Europe mostly stumbles. One just wonders when 'the only EU country that grew in 2009' will turn itself into the 'country that puts its public finances in order.'

In a week that started out with the announcement Poland's favourite pope, the late John Paul the Third, er, Second, will be beatified in the spring, I found a winner for this week's 'ahh, are you sure you meant to say that.' The Toronto Sun runs a Reuters article entitled, and I quote, "Nun says late pope gave her 'second birth.'" Ahem. The pope was well-loved, but, er, not in that way . . . .

And of course there's the internal and external rows over the Smolensk plane crash. The ruling Civic Platform, which seems internally divided on its strategy, is battling it out with the opposition Law and Justice, led by Jaroslaw Kaczynski, twin brother of Lech Kaczynski, who died in the crash. The Poles this week struck back at the Russians, who framed the issue as being Poland's fault. The Polish release made the Russians look a lot more culpable, though of course, as in all plane crashes, the real blame should be laid on all the tiny little events that amassed until the tragedy. Here's one take on it from Time magazine.

The mighty Economist, however, felt that duelling reports between two historical enemies about a crash that killed a president and scores of the ruling elite was not news. Instead, the biggest story in Poland this past week was some sort of souring of relations with Lithuania. . . zzzzzz, oh, I'm sorry I fell asleep writing.
The final link of the week shows the heroic side of Poland based on its stormy history -- bloodlands indeed. A new movie is out now about the escape from Siberia of a group of Polish prisoners. Here's a taste: "It's not our guns or wire or dogs that form your prison. Siberia is your prison" . . . cue evil Russian laugh.

Thursday, January 20, 2011

Yet More Bad News for Polish Pensions

Poland's pension system has it rough these days. First Prime Minister Donald Tusk announced his "liberal" government would partially dismantle the reformed pension system by cutting the amount of money each Pole transfers to private, but obligatory pension funds to 2.3 percent of a salary from 7.3 percent. Of course, the move isn't designed to support the budget, which has to spend billions to pay those still in the communist-era "pay as you go" system. No, he did it, very obviously, in order to secure higher pensions in the future, as some officials attest. Well, who cares if people will learn those can't be afforded in 20 years; elections are coming this autumn.

The shift has touched off an uproar on the part of the pension funds themselves, unsurprisingly, and even led to them setting up an online petition to halt the changes under a "defend your pension" slogan. But given a recent poll showed 54 percent of Poles did not understand the changes proposed by the government and 45 percent only had "more or less of an idea" I would not get my hopes up if I were the pension funds.

But bad news just keeps piling up for future pensions. Poland has begun taking an administrative turn towards a healthier society. It recently imposed a strict smoking ban that practically eliminates smoking from most bars, clubs and restaurants.

The final piece of bad news relates to vodka drinking, that is, increasingly lack of. This report notes that the once national sport of vodka drinking for Poles and other Slavs is on the downhill. By 2015 consumption is expected to drop 8 percent or 275 million litres. Beer, a not so long ago favourite substitute, is not expected to gain either. That is great news for longevity, if what my doctor tells me is true (though I don't totally trust him -- there's no way pączki are bad).

Given that pensions in Poland for the average Jan Kowalski rest on accumulated capital over working years and life expectancy at the moment of retiring (and Poles retire at among the youngest age in Europe, before 60 on average) any factor that boosts longevity is, er, bad news.

The only hope now for the level of our future pensions now lies in the ever underperforming public health care sector and the poor quality of Polish roads, which killed "only" 3,902 people last year.

Wednesday, January 19, 2011

Jaroslaw Kaczynski, PO bogeyman

In 2005 to 2007 Poland was swept by a blaze of political accusation, fires of conspiracy and doubt and betrayal, an inferno of finger pointing and special services and aggression. One man was to blame: Jaroslaw Kaczynski, bogeyman.

Polish Prime Minister Donald Tusk, the soccer-loving leader of the co-ruling Civic Platform (PO), is not a dumb man. Fear is the best motivator in politics, he knows, and thus fear he does fan. That fear is all related to Jaroslaw Kaczynski, leader of the kooky conservative Law and Justice, aka, the devil incarnate to many PO voters.

Fear has basically allowed the Civic Platform to win every election since the 2007 parliamentary polls Jaroslaw triggered in a gambit that blew up in his face. Scare-mongering related to Jaroslaw Kaczynski and PiS likewise helped current President Bronislaw Komorowski (PO) fend off a surprisingly spirited challenge from Jaroslaw in the June-July 2010 presidential elections. Dread of Jaroslaw also helps keep the PO's public support high. It is very likely the Civic Platform will ratchet up the fear going toward the next general elections to be held this October.

But ironically Tusk and his Civic Platform are more and more bound to the fate of the very man and party they profess to hate. In fact, nearly half (47%) of respondents to a recent poll said the single biggest reason to vote for the PO was simply to prevent Law and Justice from taking power. That is hardly a vote of confidence in the Platform's, er, platform.

It also makes the PO vulnerable. If Jaroslaw Kaczynski were ever to step aside and/or the Law and Justice would moderate, the Civic Platform could be a lot less successful. In fact, it is possible -- maybe even likely -- that if PiS softened its message, it could actually challenge Tusk's party, as in the recent presidential elections.

Luckily for Tusk, Jaroslaw shows no sign of stepping down. Following the April 2010 Smolensk plane crash that killed his twin, President Lech Kaczynski, he treats the political battle as a way of honouring his late brother. Having totally thrown aside the kindlier, gentler image sold in the 2010 presidential election, Jaroslaw piles one radical statement upon the other. The bogeyman thus seems to accept his role, seemingly ensuring Civic Platform electoral success for many years to come.

Tuesday, January 18, 2011

Polish Soldiers Take Ill En Masse

Stop the presses! Polish soldiers have come down sick in droves. Nerve problems and back aches are also sending troops to the infirmary. Have nefarious secret forces unleashed a virus but one happening IRL? Is this the prelude to an impending invasion by supposedly benign neighbours? Will all Poles be speaking Lithuanian soon?

The truth, as so often, is a tad bit more mundane, and definitely more embarrassing for a military that is supposed to be professionalising.

It turns out Polish soldiers are calling in "sick," as it were, in order to miss military exercises, according to a report in the Polish daily Gazeta Wyborcza. The problem is relatively simple: money.

"Before 2010 for a month of training soldiers made nearly 750 zloty, making going to training profitable. At present, I don't want to sit in the woods for 150 zloty," one officer said of the per diem cut to 5 zloty from 25 zloty. A soldier doesn't only get to stay at home but can even moonlight, he added. The total of 750 zloty is worth about 260 dollars and the 150 zloty some 50 dollars, meaning the soldiers are refusing to train over 110 bucks.

If this were a problem of one or two soldiers malingering, it might not be a big deal. But up to one-third or more of a unit call in "sick" for exercises. One officer said the plague of sick leaves was so big training exercises were severely disrupted.

The Defense Ministry vows to combat this new enemy. It wants to change regulations so that, like mere civilians, pay is cut to 80% of normal from 100% for sick leave and limits are set. The onslaught could come this year.

Poland's borders are safe these days, even if some on the quackier right believe in Russian coups and Lithuanian language blitzkrieg. But as proud members of NATO, Poland has buty on the ground in a relatively tense part of Afghanistan and its soldiers did a long tour in Iraq. Peace-keeping missions elsewhere firm up Poland's attempt to do its part for global democracy. Considering the real threats out there, military malingering seems like a parade-march in the wrong direction. Halt, about turn, and forward march!

Monday, January 17, 2011

How low can you get?

This one really pissed me off. I generally have little tolerance for state-controlled, market-dominant companies, of which Polish power group PGE is a perfect example. But I do understand the specifics of the energy market and thus am able to cut them some slack.

However, when I hear its chief executive, who happens to be at the helm of the largest market player on the Polish energy market and one of the biggest companies on the Warsaw bourse, say "we are an instrument of  government policy," then I just think something is amok.

I understand any manager who gets a 2.6 billion US dollar merger blocked by the anti-monopoly office is unhappy, to put it mildly, but to go on TV and whine about it is pretty low. To say you should be allowed to carry out a transaction that will turn a four-sided oligopoly into a three-sided one just because you "are an instrument of government policy" means you sink even lower imo. But if you resort to rumour-mongering and add personal innuendos to the mix about the regulator head's state of health, it means you are...well, dear reader, you be the judge of that.

What tips the scale in my books is that the aforementioned executive used one-sided data -- to be polite and not to say outright lies -- to present his side of the argument. He basically said that since there will be a joint European energy market, we Poles should suffer having one national champion or we will have one foreign champion. His other argument is that prices are regulated and therefore further consolidation does not carry the risk of higher prices.

The CEO unsurprisingly did NOT mention the following:

* A common market is a European project slated to come into life in 2015; but will it come on time, in the EU? Anyone want to take that bet?
* Poland has some electricity interconnection capacity with countries like Germany and Czech Republic, but it is not used. Why not? Because the internal grid needs so much investment and such investment takes so long it physically cannot import energy. Think of a highway with no exits that suddenly turns into a gravel road.
* Credit Suisse estimates the interconnection capacity compared to energy demand is at 4-5 percent, that is, at the UK level. The UK, as in the United Kingdom, as in an ISLAND.
* The CEO's contention a combined retail market share of over 40 percent will not impact household prices since they are regulated is true, but at the same time all energy companies are lobbying for price liberalisation, the sooner the better. Isn't it a little cynical to use something you want abolished as an argument in your favour for a merger that will clearly restrict competition?
* De-regulating business-sector prices led to double-digit price growth as companies pushed for ever higher margins to compensate for losses on households. How much do you want to bet they won't touch these rates once household prices are freed?

Sunday, January 16, 2011

Monetary Policy Chillin'

Irie, man. Life's good when all you have to do is chillaxe at a monthly meeting, say a bit of bunk to the hounddog reporters, it doesn't really matter what, and then go home to count up the lucre, a lot of lucre.

One can almost hear Poland's rate-setting Monetary Policy Council saying the above words as it ponders a, er, lazy-faire policy.

Nine of its 10 members were all appointed to very well-paying, super prestigious jobs in early 2010 and proceeded to basically do nothing for 12 months. Tragedy reared its always ugly head in April with the death of the former chairman Slawomir Skrzypek, leading to the naming in June of the current chairman Marek Belka.

The MPC noobs have mistepped along the way. One member released information that technically she should not have regarding the result of a vote. Another member staged a hissy fit, didn't show up at a couple of meetings, later took a very hawkish voting position and incomprehensivly reversed it. This has even led some to posit whether this is the Worst Monetary Policy Council Ever?

Another question is whether this is the laziest council ever? Whereas previous incarnations sat once a month to discuss the level of interest rates, the current bunch last year decided to take a summer vacation. Though money may never sleep, clearly interest rates can't be changed in August. Irie, man.

The current gang is also bringing forward in March the rate-sitting session from the last Wednesday of the month to early in the month. This means it is dropping the February sitting. It traditionally avoids taking decisions for the festive December sitting, meaning in 2011 it will decide interest rates only 9 of the 12 times. MPC members also have a media blackout the week before a sitting and in the week after a sitting.

Naturally, rate-setting is not a matter of the quantity of sittings, but the quality of decisions. And at long last the sitting set for Jan 19 will finally see the council spring into action and nearly everyone expects the council to hike rates by 0.25 percentage points to 3.75%.

Whether this council is the laziest or the worst remains to be seen. The easy part of settling in is over. Now comes the hard part of trying not to make a hash of the job.

Saturday, January 15, 2011

Mood Swings

This is so typical of Polish TV. No more than two days ago the entire media establishment was in a state of outrage discussing whether Poland should first bomb Russia and then send in the tanks or send in the tanks first. OK, I jest but you get the picture.

The Smolensk crash report (see my take here) was all over the news. Everybody was pissed off about how unfairly Poland was treated. The prime minister spoke out against the report, the president made demands, and journalists roared for two days. Even early on Friday the report and government reaction dominated front page news and discussions. But then, everything changed, like that (snap fingers).

The Vatican said that John Paul II, good ole Jan Pawel, the Polish Pope, will be beatified this spring. Moods swinged from vengeance to love, peace, forgiveness and compassion. Clips from the Pope's historic visits to Poland replaced pictures of the crash site. Fighter pilot interviews were cancelled in favour of priests, and moralists were in high demand. Journalists who were aviation experts in a flash turned into scholars of the holy scribes, the Vatican and the Catholic Church. Everyone felt better, enriched, forgiving, caring.

Well, almost everyone, Law and Justice called for the dismissal of the defence minister....

Thursday, January 13, 2011

Exercise in futility

It is hard to write anything about Poland today NOT related to the release of the Russian report about the causes of the April 2010 plane crash in Smolensk that killed President Lech Kaczynski, the first lady and dozens of other high ranking officials, among others, the head of the central bank and the chiefs of armed forces. The report released on Wednesday has dominated newspapers and TV reports and captured Poles' minds. It even forced Prime Minister Donald Tusk to cut short a skiing trip in Italy. Although I do believe the crash was a great tragedy, the whole hassle, damning comments, the report itself are really an exercise in futlity. Why? Let's look at the findings and the potential effects of the report.

The Polish airforce basically sucks - One element of the report not really being disputed by the Polish side is this one. The report clearly shows the whole flight was a series of pilot errors, mismanagement and disregard for security protocols. Only one of the pilots, even though they were military pilots from an ex-Soviet bloc country, spoke Russian! I would understand if they didn't speak English, French or whatever, but Russian?

Anyway, are the potential failings of the Polish airforce entirely new? No. All of this was known after a military transport carrying high-ranking air officials crashed back in January 2008 (Details). Reports after that crash read earily similar to the Russian's version. Was enough done following that crash? Clearly not.

Report tells one side of the story - Poland's biggest complaint is that the report entirely disregards the impact of how the Smolensk airport was prepared to handle the flight and any potential errors of Russian air controllers. Well what should one expect?! This is Russia we are talking about. The land of Vladimir Putin and Khodorkovskiy. Of course the report is one sided. How could anyone with an even remote sense of reality expect Russian officials to come out and say "we are partly to blame for a crash that killed the Polish president and nearly 90 other top officials. Sorry guys." Pleeease.

Doesn't tell the truth - This is funny in a dark way, but no one in Poland really cares about the truth behind the crash. It has become a political issue. It is yet another pawn in the ongoing Tusk-Kaczynski war of attrition. Tusk wants this chapter closed, it hurts its main foreign affairs project which is an improvement of relations with Russia. He of course damned the report as "unacceptable." After all Poles are outraged about this issue, elections are slated for October, and Tusk is ever the saavy politician these days.

Kaczynski doesn't care either: it will all be considered lies unless it shows the Tusk government is actually responsible for the crash. The vast majority of Kaczynski's supporters believe this was either an assassination or at least the result of major negligence on Russia's part. They will not hear otherwise and no report -- Polish, Russian, international... -- will change their minds.

There is also a silent majority. People who think it is a great tragedy that should be let go....

Me personally, I feel sorry for the families of the 95 people who have to re-live the crash through all of this and listen to us squable over the coffins of their nearest and dearest.

Wednesday, January 12, 2011

Dividends don't lie, but ministers can

"We are not going to drain state companies of cash by paying dividends." - This is a mantra each Polish treasury minister* repeats, for a time at least. It is very likely the current Treasury Minister Aleksander Grad will say much the same in coming weeks as state-controlled companies announce 2010 results. Grad will be mindful of any criticism of the government using corporate cash as part of the never-ending attempt to plug the always wide budget gap. Of course, later it turns out the reality is different and dividends end up flowing to the budget.

But is the criticism really justified? Not necessarily. It might be if state companies had any idea of what to do with their hard-earned cash. But looking at the sorry state of investments in the heavily state-dominated energy sector, railways, or any other industry dominated by state players one has to wonder. Maybe using that cash to finance the ever growing appetite of the central budget is not that much worse. The cash is wasted anyway, but if it is paid as a dividend to the state, then at least some of it finds a way to the private sector since the heaviest dividend payers have a growing share of private minority shareholders.

* The Treasury Ministry is a funny beast. Unlike in some other countries it has nothing to do with state finances, which are the domain of the Finance Ministry. Previously named the Privatisation Ministry, due to the glacial pace of privatisation in the early 2000s, it was renamed the Treasury, as all state assets are preciousssssss, my precious, . . ., er, I mean, treasure.

Law and Justice plans to host a Tea Party

Polish conservative crew Law and Justice (PiS) has long fashioned itself as Poland's answer to the US Republicans. Now PiS and the party's prickly frontman Jaroslaw Kaczynski want to take a page from the Republicans' book: they want to host their very own Partia Herbaciana, that is, Tea Party.

Kaczynski and gang will reportedly organise before end-March conferences entitled "How to correct the liberals' mistakes." Top Tea Partiers from the US will take centre-stage joined by purse-string tying colleagues from the UK Conservatives and others. Sounds like quite the fiscally conservative love-in, but can it work?

PiS is similar to the Republicans in that it is very socially conservative. Neither party would argue about banning abortion (PiS only grudgingly doesn't oppose abortions in the event a woman has been raped or her life is in danger) or forbidding homosexual unions. PiS doesn't like abortion or gays. If Poland had an immigration problem, PiS would surely be up in arms about the threat and would probably back building a wall. PiS likes walls and barriers. The Republicans' paranoid wing likewise has its mirror in PiS. Ask any PiS member who's to blame for problem a, b or c in Poland (or anywhere else for that matter) and the Russians or Germans are likely to place high on the list. Rich people and liberals come close behind. PiS likes conspiracies.

But if you turn to economics, PiS and Republicans, especially the Tea Party wing, are like chalk and cheese. Whereas the Tea Party wants to shrink government, PiS wants to expand it into this ever-present paternal guiding hand for the silly normal people who just don't understand what's right, moral or just. The Tea Party wants private businesses in the vanguard; PiS seemingly wants anyone who made too much behind bars, particularly if they are foreign.

In the end, we very much hope the Polish Tea Parties do happen. We are crossing our fingers and toes (and ask you to cross your fingers and toes) that Sarah Palin is invited and accepts. Seeing the Caribou Barbie meet the Duck in Chief Jaroslaw Kaczynski would be priceless.

Greetings and Salutations

Welcome all and sundry to Poland X, a blog about Slovenia. Kidding. As X always and everywhere marks the spot, we will endeavour -- we're well beyond mere trying -- to find the hidden angles behind stories on Poland, both those prominent and more obscure. We will push for humour at every turn and irreverence, but hopefully we can put it to good use to add context and condition a better, funnier view of Poland and all things Polski.

The blog is designed very much as a work in progress -- we aren't even in beta mode, more like lambda. We thus welcome all comments and suggestions and corrections and rabid fandomness.