Why is Poland paranoid about Russia?

Poland strongly opposes the "economic expansion" of Russia and inhibits the penetration of Russian business into the country at the political level, behind the scenes. Mistrust towards Russia is boosted by Polish journalists publishing polls on the subject, comments of prominent politicians and questionable verdicts of the Polish security service.

This raises the question whether Poland is a democratic country with a free market economy. According to a survey conducted for Puls Biznesu newspaper, 62 percent of Poles believe that the government should block any attempt of the Russians to take control over Polish companies. Only 19 percent believe that Russian companies may invest in Poland without restrictions (the remaining 19 percent were undecided).

The survey was conducted after the bloated media scandal caused by the purchase of the Polish Chemical Holding Group Azoty Tarnow by the Russian AKRON. In May, the Internal Security Agency of Poland warned the government about the transaction that, in their opinion, was a threat to the country's energy security. The agency stated that Tarnow group generated approximately 10 percent of the Polish demand for natural gas it was getting from Russia. The agency concluded that by buying out the largest consumers of Russian gas in Poland, AKRON was trying to interfere with the planned migration of the Polish economy to its own shale gas production.

As a result, the Polish government urgently merged Tarnow with another chemical group, Pulaw, its main and only competitor. They increased the capital share, artificially reducing AKRON's share from 66 to 12 percent. The second large transaction, the purchase of a Polish construction company Polimex-Mostostal by the Russian group "VIS," was blocked altogether. The Government explained that Polimex performs contracts in the energy sector seen by Poland as a strategic.

"In the case of Russia, it is very difficult to separate business from politics," Igor Chalupec, former head of the largest Polish oil company PKN Orlen told Reuters. "If we add an emotional burden created by the complex history of the Polish-Russian relations, we get an explosive mixture where even the simplest thing grows to the size of a national issue," Shalupek said. He believes that even the government of Prime Minister Donald Tusk, who five years ago was determined to establish working relationships with Russia, was not able to resolve the issue.

This expert has a more positive attitude, while others are afraid not only of the Russian capital, but also tanks. "I once dealt with the boyars, now I am dealing with the oligarchs. I am worried about Soviet tanks in Poland, not the capital," newspaper Rzeczpospolita quoted Robert Gviazdovski, an economist at the Center for the Adam Smith in Warsaw who is seemingly removed from the Polish politics. Politicians, however, are not far behind. "We have been trying to normalize the situation in Poland for 20 years, increase transparency and reduce corruption. I do not want these (Russian) oligarchs to destroy it all over again," said Peter Naimsky, a former deputy economy minister in the government of the "Law and Justice" (PIS).

Should Poland fear the "Russian oligarchs", backed, as they think, by the Kremlin? Of course, one cannot discount the political component in the economic expansion of Russia to the West, but the horror movie in the spirit of Cold War - "Yesterday tanks, today oligarchs" - is ungrounded, and the situation is grossly exaggerated.

Due to the crisis in Europe, the situation for Russian investments is favorable. Russian acquisitions in Eastern Europe over the past three years have been close to $3 billion, which is more than in the previous 17 years. But this is not the only place Russia is investing in as it ranks eighth in the ranking of global investors. This indicates a stable financial situation in the country. As for investment in Poland, they are minimal. Last year, $63 million was invested, compared to $1.96 billion revenue from German business, Reuters reported.

Polish direct investment in Russia in 2011 was greater that the Russian one and totaled $450 million. At the Warsaw Stock Exchange shares of several Ukrainian companies are traded, and none of Russian companies. Among the largest foreign companies operating in Poland, only five represented Russia, while Germany was represented by 389 companies, France - 124, and Austria - 52. Naimsky objected to this statistics by saying that he did not want Warsaw to look like Karlovy Vary whose Russian population is greater than the Czech one.

Mr. Naimsky may be unaware of the fact that the Russians do not buy property in places where they are treated with hostility. Poland is not on the list of their preferences. Russians, according to the Chamber of Commerce Russia-Greece, prefer to buy property in Italy (35 percent), Bulgaria (15 percent), the U.S. (12 percent), Czech Republic (9 percent), Spain (8 percent), and Turkey (3 percent).

The Polish government is conducting a tacit policy of blocking Russian investments, which can be costly for the country as it has nowhere to look for other sources of capital. The Polish economy is declining and can no longer count on the interest of investors in the Euro zone. It will not benefit from the struggle with its most important trading partner. In addition, there is a fair question of whether it is worth considering Poland a democracy with free and open economy.

Lyuba Lulko


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Author`s name Dmitry Sudakov