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Polish report Polish report
by Euro Reporter
2012-03-28 07:41:23
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Embracing Europe but not the euro

Here in Poland, where dreary communist-style apartment blocks still dominate the landscape, the euro was once hailed as a fast-track ticket to the economic big league. Now, after years of problems in the euro zone, Poles have realized that the big league ticket was in their pockets all along. Their own currency, the zloty, has buffered Poland from the turbulence surrounding it, and few here are in any rush to adopt the euro, even though Poland agreed to do so when it joined the European Union in 2004. The euro, currently shared by 17 of the 27 E.U. countries, used to be a status symbol of economic success, endowing those who gave up their pesetas and lire with cheap borrowing and quick growth. Today it’s a burden, and Europe’s debt crisis has turned upside down old assumptions about the benefits of wider integration.

In Greece, whose weakness is at the heart of Europe’s troubles, policymakers privately say they never should have adopted the euro but are now trapped, with the economic consequences of leaving the currency more perilous than the pain of staying on. Other euro members rue having to contribute to the bailouts that are propping up Portugal and Ireland as well as Greece, and resent that giant Germany is calling many of the shots. Newer E.U. members that have not yet adopted the euro, such as Poland and the Czech Republic, are no longer lining up to do so. In 2008, Polish Prime Minister Donald Tusk trumpeted that his country would join the euro zone in 2011; now the diminishing enthusiasm for the idea makes the prospect so remote that few policymakers will hazard a guess about when it might happen.

“It’s not a simple decision, and for the time being in Poland, it’s not under discussion,” said Jan Krzysztof Bielecki, the prime minister’s top economic adviser. “We Poles are now maybe a little more pragmatic than before. We were historically very romantic.” With 38 million people, Poland is the largest E.U. country besides Britain not to use the euro. Boosted by the strength of the zloty, its economy is the fastest-growing among the E.U.’s 27 countries, with robust exports and a burgeoning consumer sector. It is on track to continue on that path, with growth forecast at 2.5 percent this year, even as its peers on the euro sink into yet another recession.


Poland to tax shale gas more lightly than super-profitable copper

Poland’s Environment Ministry will present its proposed bill on taxing shale gas production in mid-April; Deputy Minister Piotr Wozniak told Dow Jones Newswires Monday, adding the government's planned levy on hydrocarbons will be lighter than on copper and silver. Oil majors such as Exxon Mobil Corp. (XOM), Chevron Corp. (CVX) and ConocoPhilips (COP), as well as state-controlled Polish companies, are just beginning to explore for shale gas in Poland, but the country hopes the natural resource will free it from dependence on gas imports from Russia and make it a gas exporter. Government officials have floated 2014 or 2015 as the possible start of commercial production, but want to put a tax system in place to remove uncertainty for companies. "The current regulations on geology and mining did not fully take the interest of the Polish Treasury into account," said Wozniak. "Companies expect the current fiscal regime to change, to not be so light."

The Environment Ministry will be ready to present the government's brand new bill on hydrocarbons in mid-April for public consultations, he added. Holders of shale gas exploration licenses and analysts are concerned Poland will tax shale gas production too heavily, making it not commercially viable to produce, especially after the government proposed a relatively high tax on copper and silver mining due to go into effect this year. "Some expect us to really tighten the screw, but that's not how it's going to be," said Wozniak. "People are looking at the copper and silver tax as an example, [but] the hydrocarbons tax approach will be different."

The two commodities differ in that state-controlled company KGHM has been profitably mining copper and silver for decades, tax-free, with the government sharing in the growth and success of the natural resource through annual dividend payments on its shareholding, a relic of Poland's formerly centrally planned economy, while shale gas is not yet being produced commercially. The Polish government wants to give potential gas producers some breathing room. "It's not our intention for the sector to pay right away," said Wozniak, meaning the fiscal part of the new regime may not go into effect "before 2015". Under the present tax regime, the government's take is no more than 20% of a license holder's net profit.


Charges ex-official over CIA prisons

A leading Polish newspaper said on Tuesday that prosecutors had charged the former head of Poland's intelligence service for helping to set up CIA prisons for al Qaeda suspects in the country at the height of the U.S.-led "war on terror". Despite reports by the European Parliament and the Council of Europe stating Poland and Romania hosted CIA detention centers, Polish officials have repeatedly denied the existence of such bases on its soil and say U.S. planes were only allowed to land for refueling. "Warsaw prosecutor’s office has already presented charges to the former intelligence head on January10, but did not disclose it publicly as the matter is top secret," Gazeta Wyborcza daily wrote.

Contacted by Reuters on Tuesday, the prosecutor’s office, which launched a classified probe into the matter in 2008, declined to comment on the report. Zbigniew Siemiatkowski, who headed Poland's intelligence service in 2002-2005, also gave no comment. Two prisoners of the U.S. military jail in the Guantanamo Bay in Cuba, Abd al-Rahim al-Nashiri and Abu Zubaydah, have said they had been held by U.S. agents in Poland.

Poland's smaller neighbor, Lithuania, was the first country in Europe to acknowledge it had worked with CIA in establishing two secret detention facilities in 2002-2006. But Leszek Miller, one of Poland's three prime ministers at the time of the alleged CIA operations, reiterated on Tuesday no such thing ever happened on Polish soil. "According to my knowledge, and as I have told you many times before, there were no CIA prisons in Poland," he said.

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