Make or Break: What is the Future of Russian–Polish Relations?

On February 16, 2015, the Russian International Affairs Council held a joint seminar with the Polish Institute of International Affairs (PISM) entitled “Proposals for the Development of Russian–Polish Partnership”. The jam-packed agenda included discussions about political and economic obstacles, and the opportunities and prospects of developing bilateral relations. Anti-Russian sanctions and the impact of the Ukrainian crisis on these relations between the two countries loomed large. Below Stanislav Secrieru, Senior Research Fellow at the Polish Institute of International Affairs (PISM) and Anatoly Leirikh, Chairman of the Business Council for Cooperation with Poland, share their thoughts on the situation.

On February 16, 2015, the Russian International Affairs Council held a joint seminar with the Polish Institute of International Affairs (PISM) entitled “Proposals for the Development of Russian–Polish Partnership”.

The jam-packed agenda included discussions about political and economic obstacles, and the opportunities and prospects of developing bilateral relations.

Anti-Russian sanctions and the impact of the Ukrainian crisis on these relations between the two countries loomed large. Below Stanislav Secrieru, Senior Research Fellow at the Polish Institute of International Affairs (PISM) and Anatoly Leirikh, Chairman of the Business Council for Cooperation with Poland, share their thoughts on the situation.

What has been the impact of anti-Russian sanctions on relations between Russia and Poland?

Stanislav Secrieru: To answer that question, we have to talk about more than the impact of the sanctions themselves against Russia on Polish–Russian relations. We cannot sidestep what is happening in Ukraine, which is a neighbour of both Russia and Poland. Russian-Polish relations are also aggravated by the economic situation inside Russia. These three factors have conspired to slow down the positive economic dynamic and have undermined the trust that the governments and non-governmental organisations had been working to build since 2008. Naturally, it impacts bilateral economic relations as well. In my opinion,the sanctions have been less decisive than the retaliatory measures taken by the Russian government. Russia’s economic crisis undercuts demand for Polish goods, worsening trade dynamic between the two countries. Trade statistics for 2014 give little ground for optimism.

pism.pl
Stanislav Secrieru

Unfortunately, we have gone back to the point where we will again have to work hard to restore confidence and a positive economic trend in bilateral relations. I do not see quick fixes and solutions. Any initiatives that may contribute to restoring trust in bilateral relations must be given the green light so as, hopefully, to return to the 2008–2011 level in the long term.

How have the sanctions impacted the development of Russian–Polish relations?

Anatoly Leirikh: In a very peculiar way. This is because over the past 20 years Poland has heavily politicized its trade and economic relations with Russia. The fruits of the policy that discriminates against Russian business and limits its presence in Poland are that the European Union’s sanctions have only hit those Polish entrepreneurs who have interests in Russia. Russian entrepreneurs, having been denied the opportunity to work in Poland, simply have nothing to lose.

But Russia has a surplus in its trade with Poland. Yet you say that the rights of Russian companies in the Polish market are being infringed upon. How do you square these statements?

Both statements are true. Indeed, Russia exports to Poland much more than it imports, but if we look at the structure, we see that more than 90 per cent of Russian exports are oil and gas supplied to Poland and, via Poland, to Western Europe by Soviet-era pipelines. And the remaining part of Russian exports is energy and raw materials. This is a historical fact, a consequence of the period of socialist integration of the former years that does not reflect the development of economic relations between our countries in the post-Soviet period. So, a correct comparison of the trade and economic relations that emerged during the period when our economies were adopting the market systems should exclude energy supplies. If we do that, we see that Russia is Poland’s biggest foreign market after the European Union.

Before the sanctions were imposed Polish exports to Russia had been growing by about 25–30 per cent annually, and at the end of 2013 exceeded 10 billion euros. These exports are provided by scores of large, small and medium-sized Polish companies, which generate at least 10 per cent of the country’s GDP. The constant presence of such an abundance of Polish goods on the Russian market is a great boost to the Polish economy, but it also makes it more dependent on the stability of these relations. If we look at how private Russian business is represented in Poland, we see that its presence is equal to zero within the statistical margin of error. Consequently, the aftermath of mutual sanctions is likely to be very different for Polish and Russian business. While it spells ruin for many Polish companies, Russian business need not worry because not having stable business operations in that country, they are not risking anything.

Why are Russian business activities restricted in Poland?

It’s all about politics. Nobody hides that. The Polish leaders and media are publicly calling for Russian companies to be kept out of the Polish market. The Russian trade mission in Poland, jointly with our Business Council, has repeatedly drawn the attention of the Polish side at the official level to this inadmissible discrimination against Russian companies. The issue has implications beyond the Russian-Polish trade and economic dialogue. Poland is a member of the European Union, which has many agreements with Russia that preclude such actions. Nevertheless, the Polish leadership has for years been evading the discussion of that problem.

Has Russia raised this issue at the interstate level?

The issue of the discrimination against Russian companies on Polish territory was raised at the initiative of our Council in 2009, and has been constantly on the agenda of the Russian-Polish Intergovernmental Commission on Trade and Economic Cooperation since 2010. In 2012 and 2013 the topic was raised at the meeting of the Committee for the Russian-Polish Cooperation Strategy headed by the Foreign Ministers of our countries. Unfortunately, at the interstate level the Polish side has chosen to delay a hands-on discussion of the problem and to evade answers to the questions raised. And contacts in the framework of the Commission and Committee were suspended in 2014 at the Polish initiative.

But doesn’t that mean that Poland sanctions against Russian business have been in force for a while now?

yabloko.ru
Anatoly Leirikh

You put your finger on it. Unilateral sanctions against Russian companies make it impossible to harmonize Russian–Polish relations. Russian investments in Poland provide a vivid example. Any international activities of companies involve investments. If I want to export a product, I put in place a goods support network in that state and create a hub. This is impossible to do in Poland.

As of today, there is not a single positive example of Russian investments on Polish territory – all the examples are negative. And even here we often speak about major enterprises and companies whose problems have become known to the public. The failures of small and medium-sized companies are almost impossible to count. They simply stop working in Poland after early negative results. They don’t have the clout to counter the state’s policy. Even big companies are unable to do that.

The EU sanctions have unexpectedly exposed the fallacy of official Polish policy to discriminate against Russian business people. Because of that policy the Polish government today has no leverage on Russian interests in Poland and it has no way of protecting its entrepreneurs who have suffered and continue to suffer losses due to Russia’s retaliatory sanctions against the European Union.

You are talking about the political factor, but why do the Polish people need all this?

The image of Russia plays a very important role in Poland’s domestic policy. During its transition from a planned economy to a market economy, Poland has taken an anti-Soviet and later anti-Russian stance, making Russia an important political topic in its politics. It is very difficult to abandon that course.

This topic looms large in every election campaign of every political party in Poland. If you open a Polish newspaper, the internet or look at any media outlet, you will always find negative information about Russia. Very seldom will you find information that is neutral and never information that is positive. It is considered to be normal for the Polish Minister of Ownership addressing Parliament to say that during his tenure of office not a single Russian company managed to buy anything in Poland. The Prime Minister and the President of Poland constantly urge the need to be “watchful” with regard to the activities of Russian companies.

Perhaps Poland’s negative political perception of Russia has some other reasons? The Poles always speak about the complicated historical legacy linking Russia and Poland.

You know, we had some complications with the Czechs quite recently, in 1968, and with the Germans in 1945. Nevertheless Russian-Czech and Russian-German relations are much more positive than Russian-Polish relations. More than 15,000 companies with Russian capital are working in the Czech Republic and there are about 3700 large and medium-sized companies in Germany which have Russian capital. “You see, Poland is a dependent state which has to take into account others’ opinions,” I was once told by a former high-ranking member of the Polish government. When they quit big-game politics, Polish officials often change their rhetoric with regard to Russia making it more positive, constructive and helpful for their country.

This is an old political and social affliction of the Polish elite that it is struggling to overcome in spite of the many achievements our peoples have made during the period of their common history. Hundreds of thousands of people with Polish names live in our country. Many of them have made notable contributions to science, culture, industry and military affairs. These people have become the pride of Russia, but they have been erased from Poland’s official history. It is a very complicated problem, but it is a Polish, and not a Russian problem. It is up to the Poles to solve it.

There is no discrimination in Russia of Polish companies on the basis of nationality just like there is no discrimination against other countries. The problems Polish businessmen face in Russia are well known to German, American and Russian entrepreneurs. But in spite of the complexities and inconveniences of Russian life the number of those who want to work in our country is not diminishing because the profitability of doing business in Russia outweighs all the shortcomings from which we businessmen all suffer regardless of our national affiliation.

I have a high opinion of Polish entrepreneurs. They can adapt themselves well to the discomforts of Russian life because they have similar experience of work in the transitional period. This provides the basis for successful development of their business in Russia.

Many of Poland’s internal economic achievements, especially as regards small and medium-sized businesses, could profitably be used on Russian soil in finding and determining the place and significance of private business in Russia’s economic setup. This has been the subject of discussion for many years, but our country has never implemented it.

I consider that an open and impartial discussion of the state and prospects of business cooperation between Russia and Poland at the RIAC seminar can make a positive contribution to Russian-Polish economic cooperation which will undoubtedly have the support of both of Russian and Polish entrepreneurs.

Interviewed by Maria Gurova, Editor of RIAC website