Poland, the EU and NATO: Competitors or Partners?

By
News - Honorable Mention
Poland, the EU and NATO: Competitors or Partners? - Polina Gerasimova

Abstract

Poland, among 10 states, is taking an extraordinary step by joining EU on May 1st. The sensitive balance of EU and the future of the new member states are about to change. The vital step in sustaining this balance is the ability and timeliness of adjustment processes for both Poland and the EU.

Introduction

Eastward enlargement of the European Union (EU) is an unprecedented event that will have lasting consequences for Europe and the rest of the world, including the United States. This paper is both a description and argument: I will describe the transition period of an Eastern European nation - Poland - from 1989 to the present; I will discuss major implications of this event but will focus primarily on economic issues and Poland's preparedness for EU accession. More importantly, I will discuss the impact of accession on the candidate and current member states, as well as their respective opinions regarding this issue. I will argue that EU enlargement will benefit both current mem­bers and candidate countries; however, the extent to which Poland will be able to discuss its concerns and share power with other member states, in effect to become an equal partner in the EU, is of paramount importance.

In 1989 the countries of Eastern Europe officially broke their ties with communism. After more than 50 years of communist rule, Poland experienced a so-called "velvet revolution" which marked a new page in its history; relatively bloodless reform. Poland then launched an aggres­sive reconstruction of its political structure, institutional framework, and economic and developmental structure. These changes were further promoted by Poland's commitment to the Europe Agreement (December 1991) and subsequent application for the EU membership in April 1994.

Enlargement will bring more growth but also more unemployment. New member states will likely boost the sluggish economies of EU, even though they will only contribute 5% to the overall GDP of the EU after enlargement; their economies, growing faster than those of the current member states, should spur economic growth in the present-day EU. Candidate countries will offer comparatively cheaper labor costs that will encourage foreign firms to open new production facilities, and therefore, contribute to the trans-border economic efficiency of the EU. This will spur foreign direct investment (FDI) and will serve as an impetus to improving the new member states’ infrastructure and the standard of living.

These are the issues that I would like to discuss in my paper. If EU enlargement is to succeed, a long-term commitment from current mem­bers is necessary. I will start with description of the situation in Poland after 1989 and its accomplishments up to the present: Based on the descriptive part of my paper, I will proceed with an argument of the benefits of enlargement for both current and new member states. I will make a pragmatic analysis on what is to come in May of 2004 and immediately thereafter.

Poland - Transition after 1989

POLITICAL DEVELOPMENTS

Poland's round-table talks in March of 1989 marked the break with the Communist system and the accession of the first non-communist government since the interwar period. Ironically, although the Solidarity movement transformed quickly from trade union status to a political party, it played a political game of musical chairs with the Democratic Left Alliance (SLD), a former communist party, by tradition seats in the parliamentary majority and government leadership. This power game did not disrupt their mutual agreement over the importance of European Union (“EU”) accession and the country successfully took necessary steps towards its acceptance into the EU.

In April of 1994 Poland applied for EU membership but at the time inclusion in the EU was proffered strictly as a political nicety which Poland considered an insufficient, second-class offer.1 Nevertheless Poland was counting on the start of accession negotiations after the 1996 Inter-Governmental Meeting (ICG). However, accession strategy was not discussed until the June 1997 Amsterdam European Council meeting with accession negotiations Poland beginning in March 1998.

Furthermore, Poland adopted a new constitution in April 1997 that diminished the president's executive powers and consequently strength­ened the role of parliament and broadened the government. The new constitution also gave independence to the National Bank of Poland (NBP) with independent committee leadership of monetary policy. The constitution further stressed the government's role in decreasing unem­ployment and the importance of macroeconomic stability through adap­tation of the EU enlargement criteria set forth in Maastricht Treaty.

Following the convincing vote in favor of joining the EU in the referendum of June th-8th 2003, Leszek Miller, the prime minister and leader of the center-left SLD, successfully won a parliamentary vote of confidence in his minority government and subsequently consolidated his position as an unopposed party leader of the SLD at the party's congress. Despite these successes the approval ratings of Miller's govern­ment then fell to its lowest levels and is now under tremendous pressure to secure Poland's EU voting position after failing to acquire additional EU enlargement funding.

Politically speaking, this situation is unfavorable for both Miller's government and the country. Miller's government needs public support to maintain a domestically stable situation and the country needs unity in order to focus on the upcoming accession on May 1st. The nature of domestic political situation pressures Miller's government to further complicate the already complex intergovernmental relations with current EU member states; it causes Poland to be viewed as unreasonably de­manding and uncompromising, thus leaving less room for further com­promises related to enlargement funding and the EU constitution. Re­cently, for example, Germany has taken a harder stance toward addi­tional enlargement funding and the EU constitution voting protocol and is among six member states to reduce the ceiling of member state EU fund contribution from 1.27% of GNI to 1.00% of GNI.2

The complex political and international issues surrounding Eastern enlargement are unlikely to be resolved any time soon; the EU constitu­tion talks in December 2003, for instance, failed to produce meaningful results and domestic political situation in Poland remains unstable. This instability is not only due to a weak government that is unable to com­plete meaningful reforms, but also due to trade union opposition to the costs of reform and the attendant cuts in subsidies, as well as the growing support for opposition parties.

Overall, the chances of solving these problems on the international and domestic political front are close to impossible. Miller's government will have to play a sophisticated and multilayered game, balancing their international interests and domestic stability, with the aim of implement­ing successful and much needed reforms, the success of which will benefit both the Polish electorate and international players.

NATO MEMBERSHIP

Poland, along with the Czech Republic and Hungary, joined NATO during the first wave of its enlargement in March 1999 in order to gain additional political security as well as the political legitimacy of a buffer state between Russia and Germany. There is a clear connection between the EU and NATO integration processes. They are perceived as comple­mentary processes that strengthen European security and it is assumed that there will be a greater convergence between members of the two organizations at the end of the process. The EU integration process covers the full spectrum of social, economic, and political issues. For this reason, EU criteria for the progress needed by Poland and other candi­date countries are far more stringent than NATO's. NATO has, however, enlarged at a quicker pace than the EU.

Some realists argue that expansion of NATO might destabilize the United States-Russia relationship and consequently lead to a strong negative reaction that would constitute an increased threat to Poland. At the same time an equally plausible argument could be made that enhanc­ing NATO's power via enlargement would stabilize the region between Germany and Russia and keep Germany entrenched in NATO.3

NATO membership is important for Poland in terms of domestic political security. It gives positive tone to the recent social and economic changes, and to a certain degree provides legitimacy to the government and its policies. Given the political uncertainty of Miller's government, NATO membership serves as internal political security support. On the international front, NATO membership is important for Poland as a bargaining tool and a source of political legitimacy. Russia, given its political and economic situation, is not a threat to Poland in geopolitical terms. In fact, both sides will only gain from economic partnership; NATO membership for Poland adds a positive emotional tone to Polish-Russian relations. Despite Russia's negative attitude toward NATO enlargement in general, it is more concerned with the upcoming second wave of enlargement rather than the first one. Preoc­cupied with its internal political and economic situation as well as near-abroad conflicts, Russia does not represent any legitimate threats to Poland, and consequently, Poland's membership is only partially justified by this reason alone.

However, as a full NATO member Poland has and will attract more attention in the EU. Given the complexity of US-EU relations, Poland can and should use this membership as a bargaining tool. First, enlargement of NATO has been very popular among NATO members where Germany played a critical role in shaping the NATO debate in Europe. Stephen Larrabee, Corporate Chair in European Security at RAND, thinks that "... in contrast to the first round [of enlargement], there is no strong European leader on whom the U.S. can rely to do the heavy lifting. In the first round, Germany played a critical role in shaping the NATO debate in Europe."4

ECONOMIC OVERVIEW

Economic structure

Under its previous, centrally planned economy, Poland was overbur­dened by heavy industry and underdevelopment of the service sector. Consumer-oriented industry was nonexistent and overall production was characterized by little innovation, wastefulness and pollution. Despite industrialization Poland retained its agricultural sector that was almost entirely privately operated by small farmers but also suffering from inefficiencies that resulting in uncompetitiveness.

The post-communist transformation changed the structure of the economy. Industrial production and agricultural output fell in relation to GDP. The service industry then grew robustly adapting to the pattern of the developed market economies. These shifts are evident in all the indicators of economic structure: GDP, employment, sales. These changes also have had important spatial dimensions. Industrial output fell from almost 42% in 1988 to 24% in 2001, while the service sector continued to grow to almost 65% in 2001. Within the services sector marketed services grew especially quickly, particularly private business and real estate, which accounted for 13% of GDP in 2001. In this respect, Poland has adapted quickly to the economic patterns of the developed market economies.

Economic shift away from industry was expected to cause the demise of the heavy industry regions of the country, especially in Upper Silesia. However, Upper Silesia survived the economic transition without social upheaval, partly because of the extremely rapid growth of the private sector and the relatively slow pace of restructuring in heavy industry. Conversely, the north-east and other areas that were domi­nated by state farms have suffered from the demise of the agricultural subsidies and continue to have the highest levels of unemployment.

Agriculture remained more resistant to structural change, giving Poland a distinctive employment pattern in which agriculture retained immense social and political importance. Around 26% of the workforce is employed in the agricultural sector whereas 95% of it is subsidized and operates under a special farmer system unique in Europe.5 By contrast, in most of the Western Europe agriculture is an insignificant employer. The importance of agriculture also poses a particular challenge to Polish accession to EU despite the fact that its value added to the GDP has declined sharply from 13% in 1988 to 3.3% in 2001. Although Poland will receive EU funds for restructuring of the agricultural sector, dra­matic decline in farm employment is inevitable and more funding might be required to handle social problems in this sector.

Another important dimension of the economic structure is the private sector. Formerly characterized by state-owned economic struc­tures, the development of private industry is particularly important for Poland as it transitions toward a free market economy. Thus, the private sector contribution to GDP rose from 18% in 1989 to 72% in 2001.6 The private sector also accounts for 98% of the foreign trade. Employment in the private sector outside of agriculture rose from 14% in 1989 to 63% in 2001. Foreign Direct Investment (FDI) plays a minor role in the economy where foreign firms accounted for around 4% of the employ­ment and nearly 6% of GDP in 2001.

Economic policies outlook

Trends: 2004 will see an expansionary budget that contains cuts in business taxes and a significant increase in the budget deficit. Concerns about the rapid increase in public debt - Poland has a constitutional limit on public deficit of 60% of GDP - have forced the government to draw up a politically sensitive program of spending cuts. Debt worries will also increase the pressure for much more rapid progress in privatization in 2004-2005, although receipts in 2003 are likely to be less than half of the Zl 9bn (US $2.3 bn) initially targeted for that year.

Fiscal policy: A state budget deficit of 4.8% of expected GDP (Zl 38.7 bn) is projected for 2003, and the outturn for the first nine months of the year suggests that the target will be achieved. The outlook for the public finances in 2004 and 2005 is more worrying. Spending is set to increase sharply as Poland's entry to the EU in May will impose extra costs on government spending. On the revenue side, the rate of profit from taxes will be reduced to 19% in 2004 in an effort to encourage faster invest­ment growth. The proposed state budget for 2004 has a headline deficit of Zl 45.5 bn. On the European System of Accounts definitions used in the EU, the government expects the deficit to increase from 4.2% of GDP in 2003 to 5.7% of GDP in 2004.

This deficit figure assumes strong economic growth (5% in 2004), but does not take account of the program of spending cuts for 2004-2007 proposed by the government. The clear risk is that many of the spending cuts will be postponed or watered down in the course of parliamentary debate and that economic growth will not be as strong as expected, so that the deficit turns out to be higher and to fall more slowly than the government is projecting.

Monetary policy: Despite the likelihood that inflation will under­shoot the end-2003 target of 3% and the absence of any significant inflationary pressures threatening the 2004 inflation target of 2.5%, the Monetary Policy Council (MPC) has left the key intervention rate un­changed at 5.25% since June 2003. The MPC is worried that the fiscal situation, and the acceleration in economic growth has reduced the pressure to cut rates. Monetary policy in 2004 will be determined by a new MPC, which takes office in early 2004. A majority of its members will be proposed by the SLD-dominated parliament and the MPC is therefore likely to take a more relaxed approach to policy, although the scale of government borrowing and worries about weakening the zloty will limit the scale of cuts in interest rates in 2004.

Preparedness for EU membership

As Central and Eastern European Countries' ("CEEC") biggest economy, Poland is under close scrutiny as accession approaches. Since the onset of transition, Poland has in many ways been the region's most successful economy: it was again growing by 1992, the first CEEC country to do so, and has seen sustained growth since then. By 2002, Poland's real GDP was 29% greater than in 1989 - the greatest rebound among all candidate transition countries, half of which still register real GDP below 1989 levels.

However since 2001 Polish economic growth has slowed signifi­cantly: growth in 2001 was i.1% and in 2002 - i.4%, the lowest in all candidate states. Declining domestic demand lay at the root of the problem. In particular, fixed investment fell by 9.8% in 2001 and 6.5% in 2002.7 This is a worrying trend given the contribution of investment to the reorientation of Polish exports toward higher value-added, more capital and skill-intensive products that enabled Poland to significantly increase its penetration of EU markets. Germany remains Poland's largest trading partner importing over 32% of Polish goods and exporting over 24% to Poland.

Although Poland has the region's largest stock of FDI, it lags behind other transition countries (listed second to the last after Lithuania) in terms of FDI per capita. This is an indication that foreign investors continue to find the Polish business environment difficult compared to its neighbors.

Polish problems have been intensified by a combination of over­expansionary fiscal policy and restrictive monetary policy, including high interest rates. These have subsequently been cut from February 2001 peak of 19% to 8% in August 2002. The government deficit, reinforced by low growth, increased to over 5% of GDP from around 2% in 1999. Measures taken in August 2002, including an amnesty on tax and social security arrears, state credit and tax deferral for small enterprises and additional state guarantees for enterprise debt, will intensify upward pressure on the budget deficit. In fact the deficit is expected to reach 5.3% in 2004 according to one Polish statistical agency.

The economic slowdown also helped push unemployment to 18% during 2002. However, not all Poland's employment problems are cycli­cal (some result from increases in the size of the working population, whereas others reflect certain labor market rigidities). In February 2002, some limited measures were taken to increase labor market flexibility. Stronger growth, the lagged effect of labor market reforms and ongoing industrial restructuring could begin to reverse the rising unemployment trend.

Slower growth has helped control the macroeconomic imbalances arising from strong domestic demand. The current account deficit has fallen from its peak of 7.5% of GDP to 3.8% in 2000. Inflation has fallen to a post-1989 low of 2.1% and is still falling - a factor that also helped reduce interest rates. Falling inflation has also been helped by currency appreciation. One of the encouraging features of the Polish economy is that, despite this appreciation and slowdown in its major markets, Polish exports, although inevitably weakening somewhat, still grew by almost 4% in 2002.

Although the world economy is beginning to recover from its recent slowdown, the economic conditions in Western Europe are likely to improve only slowly. Real GDP growth in the EU, which takes 70% of Polish exports, was just 1% in 2002 and o.6%. The German economy, Poland's main export market, is not likely to grow at all in 2003. Accord­ing to the Economic Intelligence Unit, real GDP growth in the UE will gradually recover in 2004 and will return to trend only in 2005.8

Challenges of Accession

STRUCTURAL CHALLENGES AND ACQUIS IMPLEMENTATION

As a result of accession negotiations, Poland will adopt the entire acquis of the EU with only a few transitional phase-ins, such as those pertaining to the sale of land and the movement of persons. Accumu­lated over a period of up to a half-century, acquis often represented the amendment or incremental adjustment of prior policy, and very often results from political negotiations among the member states and within the EU institutions.9 Poland is committed to accept the entire acquis on May 1 and transform itself entirely with regard to both the processes and outcomes of policy across virtually every domain of policy. Poland will have to virtually fuse their own policy making structures and institutions with new processes of acquis no matter whether or not these processes bear little or no relation to its domestic policy-making processes and prior policy decisions.

Poland has agreed to accept this remaking of the state and its policy processes as the necessary price for the putative benefits of membership. Although the Copenhagen European Council in December 2002 con­cluded that Poland is ready to implement acquis, the practical matter of implementation still lies ahead. Given politically unstable situation in Poland, it is by no means apparent that coalition government will have the political capacity to adopt policies required by or consistent with the acquis in the face of domestic opposition. Nor is it apparent that it will have the administrative capacity to implement the acquis and the policies that follow from it.

Besides acquis implementation domestically, after May 1st the fifteen-member union will become a twenty-five-member union and thus substantially increase the bureaucratic load, complexity of policy-making processes, and number of policy choices within the EU. Ten new Com­missioners will be added to the current team between May and Novem­ber 2004, ten new member states will participate in the parliamentary elections of 2004 (this agreement goes back to Nice in December 2000), ten new member states will participate in the next ICG as members, not as observers, and a new Constitutional Treaty will be signed after May 2004 accession date.

The EU has many internal issues to confront. Inherently this means that the EU may overestimate the chances of success of the candidate states' accession as well as its own capacity to deal with ten new acces­sion states. According to Peter Norman, Giscard, one of the co-founders of European Council " ... admitted... that a European Council with twenty­-eight member states won't work. He now says the EU needs both the Commission and the council and 'perhaps a more original cooperation between them.'"10

Given that December 2003 EU Constitution meeting failed to present a workable constitution draft, it is a painful sign that the May enlargement will bring more wasteful arguments, power games and less cohesive decision-making, policy agreements and policy implementa­tions. Current member states will be busy holding on to their spheres of power while the new member states will be striving to increase power­sharing while hoping to develop equal political relationships with the fifteen current member states based on compromise and civility.

FINANCING ENLARGEMENT

If the challenges of implementing acquis while also extending the economic reforms and dealing with the high levels of unemployment and structural imbalances in the economy were not enough, Poland will also confront a challenge of financing the costs of adjusting to membership.

Financial arrangements finalized during the Copenhagen European Council meeting in December 2002 offered terms far less generous than those provided in the earlier enlargements.

Poland will be required to make full payment on various funding resources as of May 1 and will not receive, as Greece, Spain, and Portugal did upon their accession, a partial reduction of payments in the first several years of membership.11 Moreover, Poland will not receive lump­sum compensatory payments from the budget over several years similar to those received by Austria, Finland, and Sweden from 1995 to 1998. Commenting on the results of the Copenhagen European Council meet­ing in December 2002, Peter Ludlow noted "the Danish Presidency...the candidates were repeatedly told in the run-up to the Copenhagen meet­ing that they should expect 'no more money.'"12

Given its domestic situation, Poland was particularly dissatisfied with these results. As the largest country in this accession wave, Poland was always the toughest negotiator. Before the Copenhagen European Council in December 2002 the political situation in Poland deteriorated to the point where EU skeptics in coalition with other groups put pres­sure on the Miller government by accusing it of selling out Poland vital interests. Consequently, the Polish government toughened its position by arguing that the macroeconomic environment in the country would deteriorate if the financial package remains unchanged. Poland needed at least 1 billion euros to escape macroeconomic destabilization. Accord­ing to Leszek Miller, this is the amount of money needed to help the Polish government survive cash flow pressure immediately following the recession.

After the German Chancellor's remark with regard to Poland's importance in this enlargement and further associated negotiations, the settlement came to 108 million euro available immediately to Poland for border control in addition to minor adjustments in milk quotas.13 Out of these funds 100 million euro was the "old" funds reallocated from the Structural Funds that were not available to Poland for several years and 8 million euro in new funds.

In addition to requiring full payment of revenue obligations and providing no budgetary compensation, the EU will provide Poland considerably less in appropriations under the Common Agricultural Policy (CAP) than Poland would have received if it were treated in the same way as EU members in the 2004 to 2006 period. In fact, in January 2002, the European Commission proposed an appropriations schedule that, in effect, deprives the new member states of full participation in the CAP until 2013. A major component of CAP is the reimbursement of direct payments to farmers made by the member states in the previous year. The Commission proposed that Poland and other candidate states receive no reimbursement in 2004 for the direct payments they made in 2003, that they receive reimbursement in 2005 for payments in 2004 equivalent to 25% of the amount they would normally receive as mem­bers, and that they receive reimbursement in 2006 for payments in 2005 equivalent to 30% of the amount they would normally receive. That figure would gradually increase over the following seven years until finally reaching 100% in 2013.

The conclusions of the Brussels European Council in October 2002 reflected the importance of CAP reform for the EU. According to Peter Ludlow, "In his pre-Council press conference, the Danish prime minister remarked ... sympathy with those that wished to reform the EU's agricultural policy. CAP reform should not however be allowed to become yet another precondition of enlargement... the business of this Council... was to make the conclusion of the enlargement negotiations possible..."14 The net contributors to CAP direct payments have taken a hard line· approach regarding direct payments to the candidate states. Among 4 net contributors, Germany took the firmest position when Chancellor Schroeder announced his opposition to direct payments until after the budget negotiations in 2006. He went even further by announcing that Germany could not increase contributions to EU budget in general. The Netherlands too was quite firm in its position. Ever since it became a net contributor in the 1990s, it has taken a harder approach on this issue due to internal political instability. The culmination of its position happened when the Dutch Parliament almost succeeded at postponing accession of Poland, Latvia, Lithuania and Slovakia.15 The remaining two contribu­tors, Sweden and the UK, are more flexible but hardened their positions recently.

During the Brussels European Council the Commission, determined to proceed, secured the short- and long-term structure of financial assistance for the candidate countries. As per the Franco-German Agree­ment, the near- and long-term structure of the CAP direct payments during the period 2007-2013 would not exceed 2006 levels agreed upon in Berlin in 1999 with the increasing portion of these funds going to the candidate states. CAP phased direct payments starting in 2004 would remain at levels previously agreed upon levels in Berlin in 1999.

The Commission claimed that such a scheme is necessary to avoid creating disincentives that would delay the restructuring of agriculture -a process that involves eliminating many small, marginal farms and shifting labor our of that sector. In addition, such a scheme is undoubt­edly convenient for the EU given the budgetary ceiling. At the same European Council the Commission also agreed to decrease, virtually without any comment or objection, availability of the structural and cohesion funds to the candidate member states by reducing commitment on the total amount from 25.5 billion euros to 23 billion for the period 2004-2006. A number of countries,16 led by Spain, tried to argue against reduction of the benefits they derive from the cohesion and structural funds.

Whether reflection of economic wisdom or political convenience, the scheme will not only treat the candidate states as less than full mem­bers of the EU, but also will deprive them of a substantial amount of revenue. As a result, while attempting to restructure the agricultural sector and the entire economy, developing administrative capacity, fighting unemployment, structural imbalances, and high deficit, Poland will find itself having to divert funds that could otherwise be used for these purposes to make payments that current member states would have reimbursed.

PUBLIC AMBIVALENCE ABOUT ACCESSION AND ENLARGEMENT

As daunting as these challenges are, another challenge is largely political in character. As the Polish government endeavors in imple­menting acquis, reforms and dealing with financial situation, it will find its capacity to act effectively constrained by the considerable ambivalence about enlargement that exists in many of the current member states and in Poland itself.

The Brussels European Council in December 2002 and most recent events related to the EU constitution reflect a growing ambivalence among current member states toward upcoming enlargement. A direct measure of the extent of ambivalence about or opposition to enlargement in the current member states is found in the most recent December 2003 Eurobarometer survey. The results of this survey revealed three interest­ing changes.

First, although Denmark, Greece, Spain, and Portugal remain the most active supporters of the upcoming enlargement, their support decreased as they try to protect their vital interests in the EU, especially when it comes to Common Agricultural Policy ("CAP") and financial aid package. Spain and Portugal continue to receive substantial appropria­tions under CAP that puts them in direct competition with Poland whose economy is overburdened by underproductive and inefficient large agricultural sector. This is a sensitive issue for both sides; Poland has to position itself so that its well established relations with Spain and other small states within EU are not threatened by negative developments related to CAP appropriations.

Second, the net contributors to CAP became more ambivalent over the last year and a half toward upcoming May enlargement. This is not surprising given the results of December 2002 Brussels European Coun­cil meeting where the Commission approved less advantageous CAP appropriations terms for the ten candidate states in comparison with those during the previous enlargements.

Third and not surprising, large and senior member states such as Germany, UK, and France have shown even more ambivalence toward upcoming EU enlargement. This is an interesting fact since the number of small states will increase by ten in May when CEEC joins EU. Unques­tionably, the balance of small states vs. big states will have new dynamics. On this point, Peter Ludlow points out the importance of the seniority membership and further reflects that "... the size of a country matters. Big states do not rule and, as the debate... illustrated, even a position spon­sored by all five big states can be blocked. Large states leaders neverthe­less start with significant advantages which even... small state champions rarely challenge."17 This point further emphasizes the fact that Poland, as a new member of EU, should learn to exercise patience and persistence in attaining its goals.

In Poland the support for EU membership declined from 1996 to 2001 while rising slightly in 2002.18 Karen Henderson argues: "By the late 199os. .. Poland was the first candidate state in which Euroscepticism took root."19 Ethnically homogeneous and the largest accession state, Poland has a strong sense of nationalism that has been nurtured by a historical dependence on Prussia and Russia. After over fifty years of communism and dependence on the Soviet Union, Poland has gradually developed pro-Western views and eagerly joined NATO in 1998 to escape eastward dependence.

After the initial excitement and projected bright future as an EU member faded with its 1994 application, Poland has yet remained largely pro-EU. However, the start of membership negotiations signaled in­crease among EU skeptics primarily for two reasons. First, the existence of conservative Catholicism with a strong traditional family status throughout Poland clashes with the liberal ideals of Western Europe. The second reason relates to the importance of agriculture for the Polish economy. Poland is the only Soviet-bloc state whose agriculture re­mained largely private and remains a vital part of the GDP. As negotia­tions progressed Poland's demands for agricultural subsidies clashed with EU protectionism over the agricultural sector.

Conclusion

In general, the economic performance of Poland has been fair, given its unpromising internal and external environment. The problem lies in the fact that it is a small open economy in which economic growth largely is generated externally, that is through exports. Unlike current member states that are small economies, Poland does not have a stable economic performance, a long-term record with democratic rule, corporatism, or even appropriate economic aid from EU funds. Many sectors still require major improvements in the quantity and quality of infrastructure to enable them to take further advantage of its integration with the EU and to help it address its wide internal regional disparities.

Poland's position within EU is unlikely to change in the near future. Given internal EU predicaments, Poland will have to defend its position through consensus. "We are ready for compromises and to seek mutually acceptable solutions, but we will not give in for the sake of short-term interest or peace of mind," Polish Prime Minister Leszek Miller said on television over the weekend.20 This is a strong statement that shows Poland's seriousness to defend its position in the EU. Given contentious issues surrounding EU constitution and finances, Poland will have to learn to be patient.

Enlargement entails adjustments on both sides where EU needs to provide adequate adjustment for an incoming shock of ten new members that needs to be expressed in terms of profound institutional restructur­ing within EU. According to George Blazyca, Poland is disappointed in EU leadership that views enlargement as a one-way street. Blazyca believes that "... adjustment strategy should not simply be viewed as a unilateral imposition of existing EU legislation."21

How much time will this process take and how much pressure will the EU exert on Poland and vice versa? Poland is in position to exert a fair amount of influence in order to defend its interests. As long as a constituency provides domestic support for the Polish government, Poland should be able to follow its present course. Unfortunately, Poland will not be viewed as an equal among other EU member states in the short-term. The long-term situation might change depending on how much influence Poland can successfully exert in the EU. Ambivalence of its position translates directly from the unpredictability of the balance of power within EU and within Poland itself. A predictable domestic situa­tion will improve the Polish situation within the EU. Now is the time for the Polish government to act.

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Notes

Polina Gerasimova, born in Moscow, has lived and worked in the United States since 1993 and is currently completing a masters degree at the SAIS Bologna Center.