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Poland on the brink?

Posted by Richard Friday, June 25, 2004

In the wake of Marek Belka’s surprise confirmation as premier, some very disturbing reports are coming out of Poland, underlining the parlous state of the economy that Belka was elected to deal with.

In recent weeks, farmers have been suffering a two-way squeeze as the effects of the EU's single market begin to bite. On the one hand, the country seems to be coming what one commentator described as a "designated dump for EU over-production" while, on the other, large consignments of staple products are being trucked to western EU destination.

Pork is a basic staple food in Poland, but their huge pig farms – with up to 20,000 breeding sows - are now mainly under the control of US Smithfield corporation, with feed supplied by the multi-national Cargill group, while meat processing companies are gearing up to invest further in the export market – some companies showing 20 percent growth.

Thus, rather than serving the domestic market, much of the output from these companies – at highly competitive prices - is being trucked into East Germany, and onwards, creating local shortages.

As a result, the prices of some foodstuffs have increased to such a degree that farmers are complaining that they can't afford their own food in the shops. The last two weeks have seen up to 30 percent increases in staple foods such as pork, chicken, dairy products, vegetable and bread. As farmers see convoys of lorries heading out of the country loaded with cut-price produce, there is talk of blockades, with Lepper's Self-Defence party in the forefront.

The economic situation is further distorted by the effects of accession. Consumption after the first four months of 2004 increased when Poles bought up commodity goods to beat the expected rises in prices, increasing retail sales by more than 20 percent. However, in May the rebound brought sales crashing by 20 percent compared with the previous month and the growth of previous years has slowed.

Meanwhile Belka seems to be backtracking on his commitment to introduce much-needed economic reforms, reflecting the deal struck with the leftish SDPL, giving rise to rumours that Economy Minister Jerzy Hausner is about to resign.

All this points to further political instability, with Belka enjoying none of the political honeymoon from which incoming administrations so often benefit. And once again, a situation is developing where the fate of Poland could determine the outcome of the constitution – with the anti-EU feeling amongst ordinary people – as opposed to the political elites - intensifying.