The American Interest
Policy, Politics & Culture
object(WP_Session)#92 (5) { ["session_id:protected"]=> string(32) "75070a48b1d8b789d3580af425ea99c0" ["expires:protected"]=> int(1411454798) ["exp_variant:protected"]=> int(1411454438) ["container:protected"]=> array(1) { ["ai_visit_counter"]=> int(0) } ["dirty:protected"]=> bool(true) }
This Winter in Warsaw

Poland finds itself on its own more than ever–and liking it.

Published on December 9, 2011

In most countries, history is made when governments are voted into or out of office. In Poland, the opposite is true. In the October 2011 elections, Polish voters returned the same government to power (Prime Minister Donald Tusk’s Civic Platform) for the first time—not just the first time since the resurrection of Polish sovereignty in 1989, but the first time ever. At a time when European politics are in complete turmoil—in certain ways in “old” Europe and in other ways in places like Hungary—Polish politics are relatively straightforward, even calm, if not altogether balmy. For a country that started its journey to democracy with 28 parliamentary parties in the early 1990s, this is a real achievement. This coming winter in Warsaw, things are looking up. Most Poles, ever conscious of their tortured national history and hence always looking over their shoulder for the next calamity, can barely believe their good fortune. 

When predictions flourished in 1989, that remarkable year of falling walls and rising hopes, they centered on which of the then-communist countries would make it through the eye of the needle to the West. Most placed their bets on the multiethnic Yugoslavia and more economically advanced Hungary. Yugoslavia soon went up in flames. Hungary did fairly well at first but has since tied itself up in knots economically; it now lags behind Poland in GDP per capita terms. If Poland were not already in the European Union, it would be credited with the characteristics of an emerging regional power, akin to Turkey. 

How did this happen? Poland’s good fortune rests on its ability to implement free market and democracy reforms in an orthodox fashion, investing heavily in the rule of law, building strong institutions for a market economy and nurturing a corporate culture blessedly free of the excesses seen in other maturing economies, such as Spain. Ideologically, Poland has been among the more resolute free market bastions, which has often made life difficult for Polish leaders, given Europe’s deep postwar welfare state tradition. 

Poland has enjoyed certain advantages along this path. The planned economy of the communist era had failed so miserably that very few people longed for a return of anything remotely like it. The Poles had never found their way under the old system as the Hungarians more or less had, so there was more space for full-fledged capitalism to emerge and succeed, despite the considerable social angst caused by “shock therapy.” Success gave the country a clear sense of direction and happily unleashed the pent-up entrepreneurial spirit of ordinary people. Some vestiges of state control inherited from the grey days of communism still remain, but the country’s dominant discourse today leaves no doubt where Poland stands and in which direction the country is determined to go. 

Thus have millions of small and medium private enterprises sprung up across Poland. The result combines a powerful spirit of enterprise among these businesses with a tight macroeconomic policy and effective, prudential control. This helps to explain why the Polish economy avoided going into recession after the September 2008 fall of Lehman Brothers. As property and consumption bubbles proliferated in the region through most of the past decade, with the Baltic States in particular experiencing unsustainable expansions, Poland remained averse to the temptations of an overheating economy. Inequalities have risen but excesses have been limited by flagship legislation, coming into force in 2000, that capped levels of remuneration for management in large state-owned companies. The outcry among business leaders was loud, but the legislation helped to shape a more sober version of capitalism in Poland as those limits ramified throughout the economy.

There is an obvious difference, too, between the Polish transition from command to market economy and the Russian or Chinese transitions. In the former case, the dynamic has been mainly bottom-up, while in the latter instances it has been much more top-down, with the state retaining a strong, if not decisive say over the economy. Post-Cold War Polish governments never felt tempted to experiment with new forms of state capitalism largely because Poles have never expected anything particularly appealing from the state as such. The jury is still out as to which transition model will prove more durable and rewarding in the long run, roughly summed up by the tension between the Washington Consensus and the Beijing Consensus. But the Poles are much too happy with their hard-won liberties to express much envy for the Chinese.

 

Poland’s economic future is hardly assured, however. The entire Central European region has traced closely the Western and especially West European socio-economic model, and that model is clearly being tested and transformed by crisis to Poland’s west. The Polish formula since 1989 has been to imitate this model albeit with certain creative twists. In the early 1990s, the legend of the Polish Solidarity movement, Lech Wa??sa, spoke of his dream of Poland becoming a second Japan. When Prime Minister Tusk successfully campaigned in the 2007 parliamentary elections, he spoke of his desire for Poland to become the second Ireland. Now, with the economic travails of Ireland, Greece, Spain, Italy and others so obvious, Polish decision-makers have lost their enthusiasm for imitation. They now realize that they are on their own for the first time in recent memory. The Polish Consensus, insofar as one exists, is that after decades of experimentation Poland should chart a slower but steadier, and hence much safer, journey to prosperity. 

The result is that Poland today is Europe’s largest construction site, with hundreds of miles of motorways, roads and railroads being built as the country struggles to bring its infrastructure up to West European standards. Anyone who visits Warsaw this winter will see the scars of this struggle before their very eyes: Much of the downtown area, its traffic patterns with it, have been thrown into chaos by a massive subway construction project. 

Poland is clearly investing in its long-term economic future, but it will take more than infrastructure modernization to succeed in the years ahead simply because the country is no island. A country of just over 38 million out of Europe’s population of 502.5 million, Poland cannot immunize itself from the economic trends in Europe and in the world at large. Pursuing the capitalist model of the past might be a good strategy for calm times and for an economy that still has room to grow on the basis of long-stifled domestic demand. But in a period of global turmoil the odds on such a strategy change, particularly after the Polish economy has finished picking all its low-hanging fruit. Poland prides itself on being Europe’s largest producer of LCD flat-screen televisions, but manufacturing production lines these days can be easily moved to lower-cost locations. This means Poland needs to leapfrog to a model of economic development based on innovation and creativity, one that privileges export specialization niches. To rest content with any status quo is to invite failure. 

 

Poles increasingly feel themselves on their own not only with respect to economic policy. “We have entered NATO and things started going rough there. We have got into the EU and it moves from crisis to crisis”, one top official complained to me in a recent conversation. “At least when we took over the Vatican with John Paul II, things stayed fine there most of the time.” Clearly, Poland’s reintegration into the West has proved less rewarding and has provided much less psychic security than expected twenty years ago. Happily, however, Poland is not daunted by its partners’ moment of weakness. It still believes strongly in the continued relevance of the West, but it does so without waxing romantic about it and without neglecting to hedge its risks and look after its own interest. 

Poland’s relationship with the eurozone idea furnishes a good example of its approach. Poland would have been in the eurozone by now had it not been for temporary obstacles posed by domestic politics, followed by the protracted crisis of EU institutions that has unfolded since. In September 2008, Prime Minister Tusk announced the fast-track euro entry procedure just days before Lehman Brothers collapsed. Global economic crisis forced the government to shelve these plans, and on the shelf they remain: No sane politician could credibly argue for entry into a eurozone that is itself on fire. 

This does not mean that the eurozone project is off the table, however. If the fallout from Greece, Italy et al. is contained successfully, Poland will want in. There are good economic arguments for membership, from the lower costs of servicing the country’s debt to greater investor confidence. There are also political arguments driven forward by Poland’s traditional paranoia about not being at Europe’s decision-making table. If the European Union moves more firmly toward a two-speed logic with closer fiscal policy coordination in the eurozone, Poland will want hands on the steering wheel as quickly as possible. 

Neal Ascherson, the British historian and writer who knows Poland well, called for the Poles “to be difficult” in Europe after their country’s 2004 entry into the European Union. As he saw it, the Union needed some “checks and balances” to prevent single countries from exercising undue influence. Poland seems to have taken his advice: It has been a tough negotiator on the new EU treaty, EU budget issues, and the energy and climate package that the Union is still struggling to build. But neither Ascherson nor anyone else could have predicted in 2004 how difficult the European Union would be for Poland.

The current eurozone crisis threatens to pose an existential challenge to the European Union, and in that challenge Poland has a lot at stake. Anchoring Poland’s future in the European Union has been of fundamental importance to the country’s political as well as its economic prospects. The European Union that Poland has benefited from and wants to see more of in the future is the old European Union it joined in 2004, with strong community spirit and a strong sense of European solidarity. That European Union, however, no longer exists, and it is not obvious how Poland can do much about it. 

The Polish EU presidency during the second half of 2011 suggested as much. The Poles tried to bring the old European Union back to life by emphasizing the single market, common security and defense and a decent joint pot of money in the EU budget. This formula no longer works, for the European Union has moved—apparently permanently—toward a new contract among member states based on enforced national discipline rather than further political integration. Poland has not given up on its effort to keep the fire burning for the “best the EU can be”, and one of the reasons is that even as Poland looks to heavy weather in the west, it has an eye on rumbling eastern skies as well. 

Poland’s seven years in the European Union have produced a dramatic turn-around in its relations with Russia. Poland used to be classified as one of the “new cold warriors”, proponents of a tough stance against the new assertiveness of a post-Soviet Russian leadership awash in oil revenues. Suspicions of Russia have not disappeared in Poland; indeed, more than a few Poles think that the death of their President and a high-level entourage in the April 2010 plane crash in Smolensk was a Russian plot. Nevertheless, a remarkable rapprochement with Moscow has been going on for the past two years. Most of the irritants in the bilateral relationships are now subdued if not eliminated, and this in turn allows the European Union to craft a more united and pragmatic stance toward Russia than would otherwise have been the case. It is a turn of circumstance that also deepens the historic Polish-German reconciliation of recent decades.

There are voices outside of Poland who regret this development. Poland used to be a reliable Russia-basher following human rights abuses and democracy dumb-downs by the Kremlin. But this older reflex has been tempered by two facts: Russia has been cut down to size, its standing in the world reduced to more realistic parameters; and Polish energy dependence on Russia remains very high, with about two-thirds of the country’s gas imports originating in Russia or transiting through the country. The shale-gas “bonanza” feeling rising in Poland may alter this equation in time, establishing a basis for a less equanimous policy toward Russia, but that remains to be seen.

Poland’s single most important foreign policy interest has remained unchanged for years and it has to do only indirectly with Russia: pushing Ukraine and other East European countries to follow the Polish example of successful political and economic transformation. No one in Warsaw in a position of influence can be found who will not argue that Ukraine should one day become a member of the European Union. German friends often say that Poland is doing more for Ukraine’s European prospects than Ukraine itself. This became clear in August and September 2011, when, in the run-up to the Eastern Partnership summit, Ukrainian authorities jailed former Prime Minister Yulia Tymoshenko on charges of negotiating an unfavorable energy deal with Russia for the sake of personal advantage. The animosity between Ukrainian President Viktor Yanukovich and the former Prime Minister is well known, yet it is still close to unbelievable in Warsaw that Kiev would so damage itself in the eyes of its European associates by turning political competition into a bloodsport.

The objective of the Eastern Partnership, a program Poland launched together with Sweden three years ago, has always been conceived as having a long-term rather than an immediate payoff. It is about inspiring structural reform in East European governance systems, much along the lines of what Poland itself had to implement to qualify for EU accession. Ukraine is a corrupt and ineffective economy in need of a radical shake-up. In some categories of the World Bank’s “Doing Business” ranking, Ukraine loiters near the bottom of the barrel, which is deplorable given the country’s huge potential. Poland’s long-march strategy toward Ukraine mirrors its patient, long-term approach to domestic infrastructure investment. With any luck, both will pay off. 

As Poland’s east continues to stagger and stumbles, its southern European neighborhood, broadly defined, seems to hold more promise. The Balkans has more or less stabilized, with some of its parts frozen but others making noteworthy progress both economically and politically. Even the Arabs have awoken from their somnolence, but they have a long way to go before achieving genuine democracy or anything like it. Poland and other Central European countries that have made the democratic and free market transition in the recent past are treasuries of lessons and high morale for those who may follow. These treasuries should be deployed to good purposes not only to help others achieve better functioning polities, but also as a way to break through Europe’s growing psychological insularity. Central European encouragement is liable to be more welcome in the Arab world than squadrons of American officials and NGO-based consultants (though U.S. support for a mobilization and integration of Central Europe’s democracy-promotion resources is probably indispensable).

 

Some say the winter of 2011–12 in Warsaw will be colder and snowier than usual. However the winter turns out, Poles today feel a certain warmth from a sense that history suddenly seems to be going right for a change. Judging from the past half dozen or so centuries, a Pole could be excused for thinking this is as good as it gets. The country’s politics are democratic and stable, its economy is healthy and has proved to be much less accident-prone than others in its neighborhood, and its national spirit is vibrant. Politically independent to a degree little anticipated only a few years ago, its leaders aspire most to be a catalyst of progress in both the European and Transatlantic contexts, for the sake of Poland, the West and the whole world.

There is perhaps a harbinger of real historical transformation in the crisp air here. When one hears the phrase “Warsaw rising” today, everyone beyond the age of twenty thinks immediately of the events of the summer of 1944. If in two or three decades’ time young Poles think instead of an entirely different and much happier scene when those words are uttered, that transformation will have become a reality. It is hard to think of a long-term investment with a higher payoff than that. 

Pawel Swieboda is president of demosEUROPA Centre for European Strategy, an economic and foreign policy think tank in Warsaw, as well as former European Director in the Polish Ministry of Foreign Affairs.