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The Warsaw Voice » Business » May 31, 2012
Business & Economy
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European Economic Congress
May 31, 2012   
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The sixth European Economic Congress held in Katowice in mid-May was attended over 6,000 prominent politicians, businessmen, financiers and scientists from around the world.

One of the most discussed topics at this year’s congress was the financial crisis and its future impact on Europe. During the opening ceremony, Polish President Bronis³aw Komorowski said that Europe could not afford to make any more mistakes and live under illusions. “Without economic growth, it will head for a fall,” Komorowski said. “Its riches will suffice for years to come, but this does not change the fact that the world’s economic center of gravity will shift.”

Crisis-related problems were also addressed by ex-president Aleksander Kwa¶niewski. “These are without a doubt interesting times that we live in,” Kwa¶niewski said. “Questions about the future outnumber the answers, which is only natural when there is so much uncertainty. We know history and we should know how to draw conclusions from it. Some are comparing this crisis to the market crash in the late 1920s and early 1930s. The conclusions can be pessimistic, because that crisis led to World War II.”

Kwa¶niewski named five key factors that triggered and shaped change: rapid technological progress, demographics, the economy, the media, and politics. “If we define the forces like that, the question is what the world will look like,” Kwa¶niewski said. “To begin with, we will be dealing with a multipolar world and it is important that the EU is, for example, a top-three player globally. The technological revolution will continue. It is vital to open up to new technology and innovation. Here is where education emerges as the prerequisite. Education needs to be provided at the best possible level.”

Ways to overcome the crisis were also sought by several focus groups debating the financial and fiscal problems of EU member states, European funds and the banking sector. European Parliament member Danuta Hübner, the chairwoman of the parliament’s committee on regional development, said that Europe should be prepared for years of slow economic growth. “If we look at economic forecasts, we are in the middle of a stagnation period,” Hübner said. “The right balance must be maintained between fiscal burdens and public spending. Individual member states as well as the EU as a whole will without a doubt increasingly consolidate their budgets.”

Poland has escaped the crisis relatively unscathed. Forecasts for the coming months are looking reasonably good. “Poland’s GDP may grow over 3 percent in 2012,” said El¿bieta Chojna-Duch of the Monetary Policy Council (RPP). “Inflation should slow over the next several months. It might temporarily and locally rise in June in cities hosting Euro 2012 soccer matches, but we hope it will not spread to the rest of the country and even in the host cities, it should not rise above 4 percent. I believe that towards the end of the year, inflation will drop near the [2.5 percent] inflation target.”

Debates at the European Economic Congress also focused on the new fiscal rules in the EU ushered in by the so-called Fiscal Pact and on the impact of stricter financial governance on the economic growth, stability and prospects of EU member states.

Not everyone in Europe is enthusiastic about a plan to unify tax rates across the EU. Zoltán Cséfalvay, deputy economy minister of Hungary, said his country opposed such a move. Hungary wants to be competitive in terms of foreign investment, for example, and a country’s tax system is an economic policy tool, Cséfalvay said.

Polish economist and lower house deputy Dariusz Rosati, a former minister of foreign affairs, said that the very foundations of the corporate tax system could be unified, for example by specifying what kind of tax breaks could and could not be used. “But the key question is what each EU country offers in return for the taxes it collects,” Rosati said. “It’s enough to compare the transportation infrastructure in Germany and Poland and then see how this relates to the countries’ investment appeal.”

Other topics discussed at the congress included the future of Europe’s energy sector, climate protection policies, investment in power generation in Poland, and joint European projects dealing with the transport of natural gas, energy and liquid fuels.

According to Philippe Castanet, president of EDF Polska, Europe excessively depends on fossil fuels. A large part of the fuels are imported and the prices are highly unstable, Castanet said. “Nobody can tell how much a barrel of oil will cost 10 years from now.”

The congress participants also talked about the future of Poland’s arms industry. The past four years have been a time of restructuring and layoffs in the sector. Dariusz Bogdan, undersecretary of state at Poland’s Economy Ministry, said the ministry was working new legislation to restructure the arms industry and strengthen its competitiveness. “We have to think what needs to be done to make the sector mobile and competitive,” Bogdan said. “This is the chief objective. In order to be capable of successfully competing on the market, our products have to be innovative.”

According to Krzysztof Krystowski, president of the Bumar Group, a top arms producer, instead of seeing one another as competitors, Polish companies should consider working together. The Treasury Ministry would like the Bumar Group to be ready to become a publicly traded company by the end of 2013 or in 2014 at the latest, Krystowski said.

Participants in the discussion agreed that consolidation and concentration of capital would make it easier for businesses to work together, for example by carrying out joint research projects. Without innovation, there is no way for Polish companies to become competitive, whether in Poland or abroad, conference participants said.
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