Thursday, August 04, 2005

Corruption shadows Polish growth
By Joe Lynam
BBC World Service business reporter

Most Poles do not perceive their country as corrupt

Poland has enjoyed growing economic success since joining the European Union in 2004.

Polish farmers and manufacturers have benefited from membership of the enlarged EU, and access to a market of more than 450 million people that that brings.

Poland has also been sucking in the most foreign direct investment in central Europe, mainly because of its educated and cheap workforce.

But behind the rosy headlines lurks the spectre of corruption, which, some argue, is already diluting growth in the Polish economy.


It's hard to open a newspaper or watch a TV programme in Poland without hearing reports of corrupt politicians or business people.

We will enjoy 5.4% GDP growth this year, but if our system was clearer we would probably have 10%

Jerzy Brniak, BP Poland

The most symbolic of those corruption scandals indirectly led to the resignation of the previous prime-minister, Leszek Miller, and to the jailing of a high-profile film-maker when it emerged that he had suggested to a media group that he could get legislation changed in its favour in return for almost $18m (£10m).

Such scandals have made themselves felt in some of the country's top business circles.

"Corruption is a real problem in Poland, but it's been created by unclear laws and unstable tax systems, which provide a lot of space for unfair behaviour," says Jerzy Brniak, the head of British oil giant BP's Polish operations.

"I'm glad that you can read about it in newspapers. Now we know the names and faces and I'm convinced it will only get better," he says.

"We will enjoy 5.4% GDP growth this year, but if our system was clearer we would probably have 10%. We would be able to use our assets and our capabilities in a far more efficient way."

Communist throwback?

Smaller companies paint a slightly different picture.

Poland's PM believes corruption isn't a legacy from the communist past

Dariusz Chmielewski, from the cosmetics exporters Dr Irena Eris, says: "I know (corruption) exists but it doesn't affect us in the way we conduct our business every day."

Communism collapsed in Poland in 1989 and the government has gradually opened up its economy since then - culminating in its accession to the EU in May 2004.

The question for politicians now is whether corruption in Poland is a throwback to the old communist system.

Poland's Prime Minister Marek Belka argues that it isn't a legacy from the past.

"This is a new kind of corruption, grown out of endemic tendencies to which the market economy has given new impetus," he says.

"We're serious about it, maybe for the first time in years, and that's why you hear about it in the media. It's a cleansing process but I wouldn't say it's from a post-communist era.

"We've modified our laws and borrowed from Western institutions and so now our police and our prosecutors are more efficient in getting on top of it."

New policies

A casual visitor to Warsaw or Krakow would unlikely come away with the feeling that Poland is a corrupt country.

Poles themselves do not perceive themselves as corrupt.

But they've been emboldened to speak out about it and report bribery incidents to the police, something they didn't do before corruption became a major issue in the media.

Sleaze and stubbornly high levels of unemployment - currently at around 18% - mean that Poles look likely to throw out the current government in September's national elections.

And it's likely that the parties which will do well are the ones already canvassing on platforms of probity and tackling joblessness.