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The Warsaw Voice » Business » March 1, 2013
Politics & Society
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EU Budget: Triumph for Tusk
March 1, 2013   
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Poland is set to receive an extra 4 billion euros from the EU’s new budget after a deal hailed by Prime Minister Donald Tusk as a major victory amid unprecedented belt-tightening by European leaders.

With the specter of recession hanging over Poland’s once seemingly crisis-proof economy and unemployment rising, analysts say Tusk badly needs a PR success as his ruling Civic Platform (PO) party struggles to stay ahead of the opposition Law and Justice (PiS).

In a budget deal hammered out at a Brussels summit Feb. 8 after all-night bargaining, European leaders decided to cut the bloc’s spending for the first time ever in real terms.

Under pressure from countries like Britain, which demanded that Brussels should reflect the mood for austerity in individual member states, politicians agreed on a 2014-2020 budget of 960 billion euros, slashing the EU’s spending plans by 3.3 percent compared to the budget for the previous seven years.

But Poland is set to receive 105.8 billion euros in the coming years, up from 101.5 billion euros for 2007-2013, meaning that it will remain the biggest beneficiary of EU funds.

The budget, officially called the Multi-Annual Financial Framework, must still be approved by the European Parliament. Some MEPs have threatened to veto the new deal, which is considerably lower than the spending the European Commission wanted.

If the plans are approved, Poland will receive 72.9 billion euros in Cohesion Policy funds and 28.5 billion euros in Common Agricultural Policy payments.

After the marathon talks in Brussels, an effusive Tusk told reporters: “This is one of the happiest days of my life.”

“I don’t think that I will be capable of doing anything so great for Poland at any time in the future,” he said at a press conference.

Tusk added, “In a situation where Europe has decided to cut back, the fact that Poland has gained a clearly bigger budget than in previous years is our biggest success.”

Moody’s rating agency said the increase in EU funds was credit positive for Poland because it would support the government’s efforts to expand infrastructure investment in order to stimulate a slowing economy and boost long-term economic growth.

Polish President Bronisław Komorowski, who hails from Tusk’s Civic Platform party, said the budget was a historic victory. “With this huge amount of money, not only our children and grandchildren, but also we ourselves have a chance of witnessing a moment when Poland is a better and more prosperous country,” Komorowski said.
When the deal in Brussels was struck, Polish Foreign Minister Radosław Sikorski wrote on Twitter: “Congratulations. This is a historic moment.”

But Mariusz Błaszczak, head of the opposition Law and Justice (PiS) party’s parliamentary caucus, said that Poland had managed to negotiate the “absolute minimum” it was entitled to.

Błaszczak told reporters, “Instead of writing on Twitter, it would be better if the foreign minister traveled around Europe seeking support from other countries. Those who conducted tougher negotiations negotiated higher amounts.”

Fresh from the summit talks, Tusk announced that he would soon crisscross Poland, visiting every province, to consult with regional authorities on how to best spend the EU money. According to analysts, the cash injection will be the last on this scale that Warsaw—still lagging far behind Western Europe almost a quarter of a century after the collapse of communism in Poland—can expect from Brussels.

Tusk promised a spending spree that would help Poland catch up with more affluent countries.

“We’re going to do some building around here,” Tusk said in an address to the nation screened by public broadcaster TVP Feb. 10. “We’ll complete a network of roads, we’ll modernize the railways and urban public transport, we’ll invest in healthcare and education.” He added, “There will be money for small and medium-sized enterprises.”

The promise of an extra 4 billion euros from Brussels cheered Poland’s political leaders, who have been nervously eyeing the country’s increasingly lackluster economic data.

Polish GDP growth slowed to 2.0 percent last year, down from 4.3 percent in 2011. In the fourth quarter, GDP growth decelerated to under 1 percent. Meanwhile, unemployment hit 14.2 percent in January, the highest level in six years.

A survey by the CBOS polling agency found that voter support for Tusk’s Civic Platform party nose-dived six percentage points to 25 percent in February, while backing for Law and Justice, the biggest opposition party, rose two percentage points month on month to 24 percent. Other polls give the ruling Civic Platform a wider lead, on around 33 percent, with Law and Justice on 29 percent.

Sociologist Andrzej Rychard told the Voice that the EU budget deal “is a success for Poland, and not just a PR success.” He added, “The government needs a success and should capitalize on this. If they don’t, the poll results may be worse for the PO.”

Rychard said the extra money from Brussels was an unprecedented opportunity in Polish history to modernize the country. “The government would be completely irrational if it didn’t make the most of it,” he said.

Other commentators, however, were skeptical. An article in the Gazeta Finansowa business weekly headlined “The Success That Never Was” said that, with support for the Civic Platform falling, “what counts above all is the strongest propaganda message possible about another success” for Tusk.

Leszek Pietrzak, who penned the article, said, “Poland got only what it was entitled to [in Brussels]... and not an euro more.”

Pietrzak added, “There was no mention in Brussels of equal payments for Polish farmers... Polish farmers will be not able to get direct payments totaling 90 percent of the EU average until 2020.”

Peter Kononczuk


Deputies Vote to Ratify EU Fiscal Pact
Polish deputies Feb. 20 voted in favor of ratifying the European Union’s fiscal pact, which aims to impose stricter budget discipline in the euro zone.

The treaty must now be signed by President Bronisław Komorowski for the ratification process to be complete.

The EU fiscal pact was agreed in Brussels last March by 25 out of the 27 member states in an attempt to prevent a new debt crisis. The pact imposes sanctions on countries that breach European Union budget deficit limits.

Poland’s opposition Law and Justice (PiS) party opposed the ratification of the pact, claiming it would undermine the country’s sovereignty. Law and Justice announced that it would ask Poland’s Constitutional Court to examine the treaty.

Finance Minister Jacek Rostowski argued that, by ratifying the pact, Poland, even though it is not in the euro zone, would bolster its position in the EU.
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