Friday, October 26, 2007

My web column on the result


Leading from the east

Oct 25th 2007

Time for Poland to start punching its weight

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THE ex-communist states of eastern Europe have been economic success stories but political failures in recent years. Since eight former captive nations joined the European Union in 2004, and two more in 2007, they have said and done little to engage the enthusiasm or interest of the outside world. Apart from Estonia’s cerebral and worldly-wise president, Toomas Hendrik Ilves, it is hard to think of any politician in the region with a serious claim to international importance.

The biggest vacuum has been in Warsaw. Poland is the largest new EU member; in both population and economic importance, it is more than twenty times bigger than Estonia. But a dismally inadequate foreign policy since 2005 has meant that it has punched far below its weight.


Donald Tusk, Poland's new prime minister

Now that can change. Poland’s new government has a historic chance to lead the whole ex-communist region in the cause of liberalisation, competitiveness and economic security. Low productivity and fragmentation in service industries, for example, are among Europe’s most grievous weaknesses.

Cross-border competition in goods has already cut prices, stoked growth and raised standards. The same could happen in services: all that is needed is the political oomph to overcome the vested interests that previously derailed discussion of a single services-market. All the ex-communist countries want liberalisation. With effective leadership from Poland, they can get it.

Similarly, Poland should open its labour market more fully to workers from Ukraine, Belarus and Moldova and encourage the other new EU members to do the same. Just as workers from Poland, Latvia and elsewhere have gained skills, contacts and know-how from working in Britain and Ireland, the new EU members can offer the same kind of knowledge transfer to the countries to their east.

That would unsettle the Kremlin too: the worst news for the peddlers of authoritarian crony-capitalism would be a confident, prosperous and well-travelled citizenry in the countries of the former Soviet Union. Poland can make that happen.

Poland should also push for greater fairness in the management of the euro zone. Those who want the European Central Bank to remain a manageable club for rich countries were, scandalously, allowed to rob Lithuania of its chance to adopt the euro in January, when it missed the inflation target by what most economists would regard as a trivial rounding error.

Poland should have been in the forefront of protests about that, but its government was, as usual, distracted. Now Slovakia risks being kept out, heightening the danger of a two-speed Europe in which the ex-communist countries will be perpetually consigned to the slow lane.

One possible tactic would be for Poland to line up half a dozen ex-communist countries behind a goal of unilaterally adopting the euro by, say, 2010. That would concentrate minds in Frankfurt.

Thirdly, Poland should lead by example on energy security. The squabbles and indecision over the planned joint Baltic-Polish nuclear power plant in Lithuania have been startling. If even the countries most menaced by Russia’s energy imperialism cannot agree on the details of this urgently needed project, what chance is there of the rest of Europe taking energy security seriously?

The previous government’s amateurish efforts to diversify gas supply were equally ill-starred. Poland should push for EU money to go towards interconnecting pipelines and power lines between the member states. If international rail and road projects can gain such generous support, why not the energy infrastructure too?

So the EU, after years of introspection, is finally ready for new ideas, just as Poland is returning to the European mainstream. The coincidence could hardly be happier.

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