A Polish-Ukrainian economic summit with over 100 businesspeople and representatives of both governments in attendance was held in Gdynia. The meeting became a resounding success: two large contracts were signed concerning sales of stock in FSO and Częstochowa steelworks.

Both the Polish and Ukrainian presidents, Aleksander Kwaśniewski and Viktor Yushchenko, came to the Eighth Poland-Ukraine Economic Summit held June 29-30 in Gdynia. The main organizers of the meeting were the Polish Chamber of Commerce and the Eastern Club, in association with the minister of the economy.

“Polish-Ukrainian strategic cooperation and the Polish-Ukrainian reconciliation must remain above all political divisions, anyone who sits in the parliament or takes the office of the president has to look after them,” said Kwaśniewski. “I am convinced the day will come when Poland welcomes Ukraine to the European Union. I believe we will walk the road together and help each other. Together we have achieved a lot, but the struggle for a better future is not over yet. I am confident nobody will lack the energy, conviction and determination to strengthen independent Ukraine and independent Poland and consolidate our strong position in Europe.”

Yushchenko said two nations keeping in touch would always find constructive solutions. “Following the orange revolution, we have a unique atmosphere for economic contacts,” he said. “It is fantastic that 75 percent of Ukrainians consider Poland their partner and role model. I thank you once again for the support you gave us during the orange revolution.”

■ Profitable contracts
One of the most important effects of the summit is the purchase of 19.9 percent of shares in FSO, a Polish producer of passenger cars, by Ukraine’s AvtoZAZ, which controls one half of the automotive market in Ukraine. The purchased stock ensures full control of the car factory, as it gives the holder 84.31 percent of votes at the assembly of FSO stockholders. “We want to produce 150,000 cars a year in Warsaw and sell them in Ukraine, Poland and Europe,” said Tariel Vasadze, chairman of the supervisory board of AvtoZAZ. “We plan to produce cars under a license.”

The Ukrainian investor is purchasing the FSO stock for a symbolic price practically amounting to investment commitments only. These include launching the production of a new car make and retaining current employment (today, the factory in Żerań employs around 2,000 people and another few thousand work in FSO’s subsidiaries and partner companies). Those contract terms do not come as a surprise, as FSO still has financial burdens after collaboration with the Daewoo Motor corporation that went bankrupt five years ago. In fact, FSO has stayed afloat in the past three years thanks to AvtoZAZ alone. The Ukrainian corporation buys 90 percent of cars produced by FSO, which tops Polish exports to Ukraine. The Ukrainian investor is also gaining an outpost in the EU. Taking advantage of modern technologies at the Warsaw factory, AvtoZAZ will be able to compete more effectively with cars from Russia, Romania (Dacia) and the Czech Republic (Skoda) on its home market.

The summit in Gdynia also determined the acquisition of Huta Częstochowa by the Industrial Union of Donbas. The Ukrainian company received the minutes from the general assembly of stockholders in the steelworks who had agreed to sell it. Huta Częstochowa is a key Polish supplier of components for ships and thanks to the investment, Donbas will overcome the barriers with which the EU blocks access to its markets for steel. “We want to develop our operations in Poland,” said Alexander A. Pilipenko, director of the Industrial Union of Donbas, during his visit to Poland. “We are interested in the sector of steel structures and the coking and chemical industries.”

■ Mutual relations
The economic cooperation between Poland and Ukraine is thriving. The value of Ukrainian investment in Poland already amounts to 300 million euros. At the summit in Gdynia, the Polish Oil and Gas Company (PGNiG) invited Ukrainian companies to cooperate in extraction, storage and pumping of oil and mineral gas. In a short time, PGNiG is ready to invest 20 million euros in the modernization of a gas mine in Ukraine which belongs to the company Devon owned by PGNiG and NAK Naftogaz. The Lotos Group is interested in extraction of Ukrainian oil for its refineries in southern Poland. The company Węglokoks is considering resuming exports of coal to Ukraine. LOT Polish Airlines are debating whether to invest in an Ukrainian air society. Chances are increasing for a better utilization of the wide-gauge railway which connects the East with the terminal in Sławków, Poland. Polish tourist companies are interested in Ukraine as well and so a contract was signed concerning cooperation in tourism to protect the interests of travel agents and hotel managers.

During the summit, the group dealing with power engineering primarily discussed the continuation of work on the Odessa-Brody-Płock-Gdańsk pipeline. “We are interested in further diversification of oil and gas supplies to our countries,” said representatives of Poland and Ukraine.

Mutual relations between the two countries are not free from problematic issues, however. Recently, the Ukrainians deprived investors of tax allowances in economic zones literally overnight. Now they are wondering how to compensate for the lost benefits. Polish companies have invested around $200 million in Ukraine, mostly in economic zones. Polish and Ukrainian authorities have also pledged to improve customs clearance. Border crossings these days are plagued with bribes for quicker clearance. Companies working in Ukraine find it hard to obtain VAT refunds.

■ Legal jobs
Kwaśniewski believes the EU should introduce a Polish-Ukrainian visa standard. “I am convinced that we, as the EU, should adopt the standard that has been in use in Polish-Ukrainian relations for months,” Kwaśniewski said. “There should be no visas to Ukraine and no visa fees for Ukrainians traveling to all EU countries.”

For the time being, the Polish government intends to sign an agreement to let a great number of economic immigrants into Poland. Thanks to the agreement, working on the black market, the prevalent form of employment among Ukrainians in Poland, will no longer pay off and the workers will gain legal protection. Poland’s proposal is for tens of thousands of Ukrainians to work in Poland between April and October, for example picking fruit and working in agriculture.

The agreement on legal employment is part of Poland’s strategy to tighten the relations between Ukraine and the West. The first stage was the annulment of payments for visas to Poland for Ukrainians. Facilities in getting jobs in Poland will make the Ukrainian public warm to integration with the EU more than any political declarations.