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Polish report
by Euro Reporter
2015-03-10 11:27:16
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Poland ends easing cycle with deeper-than-expected rate cut

Poland ended its monetary-easing cycle on Wednesday with a deeper-than-expected rate cut intended to curb deflation and prevent excessive zloty gains as the euro zone begins a massive stimulus programme. The central bank's Monetary Policy Council cut the benchmark rate 50 basis points to 1.50 percent, a record low. Most analysts polled by Reuters had expected a 25-basis-point reduction. The zloty weakened after the decision, then reversed losses and gained up to 0.9 percent after the bank said its easing cycle was over.

poland00_400"There is never a situation that the promise of the MPC in any country is carved in stone," Governor Marek Belka said. "But taking into account the current economic situation ... I cannot see room for further rate cuts and expectations thereof." Belka said the European Central Bank's bond-buying programme was one factor leading to the reduction. "If a major currency ... is a subject to a quantitative easing at a significant scale, then one can expect appreciation pressure at currencies surrounding the euro," he said at a conference following the decision.

Poland has cut its benchmark interest rate by a total of 325 basis points since late 2012 to spur its economy, the largest in central and Eastern Europe. The cut brings Polish rates closer to the level in the euro zone, the Czech Republic and the United States, all of which have rates near zero. Belka said the 50-basis-point cut was backed by a solid majority of the nine council members, eight of whom end their term early next year. Belka's term ends in June 2016, but unlike other members he may be re-appointed for a second term.


Poland ready to back a US move to arm Ukraine

Poland stands ready to assist the US should President Barack Obama decide to send arms to the Ukrainian military in its war against pro-Russian separatists, according to the Polish defence minister. Poland has been one of the most hawkish EU governments during the Ukraine crisis and has led calls for stronger measures against Russia, which is accused of sending troops and heavy weaponry to the separatists in eastern Ukraine. The debate over whether to arm Kiev has gathered steam in the US in recent weeks, with senior officials openly discussing providing defensive weapons to the country. “Russia must take into account that the US, or the West in general, can make a decision to arm Ukraine and that it is a card that is held by the West, that can be used in the future, if not today,” defence minister Tomasz Siemoniak told the Financial Times. “The Polish position is that we should not say that this card will never be played.” Warsaw’s support for any US move to arm Ukraine would put it at odds with Berlin, which is opposed to sending weapons to the conflict zone. Polish officials have previously stressed that they are open to selling weapons to Kiev, but has stopped short of suggesting arms could be provided as military support.

Mr Obama is due to meet German chancellor Angela Merkel on Monday in Washington where Ukraine and the question of whether the West should change its strategy in the country will dominate talks. “The United States is such a close ally to Poland...It is difficult for me to imagine a situation that if there is a question that is important for European security, we would not be supporting the United States,” Mr Siemoniak, who is also deputy prime minister of Poland, said in an interview. “We are not afraid of co-operation with Ukraine in the military area.” The declaration of support by Poland is the most pronounced yet of the US’s European allies, although Britain’s defence minister Philip Hammond said the UK was prepared to consider a broad range of future courses of action, should Washington change its course. This weekend’s Munich Security Conference was dominated by a split in opinion over whether the west should arm Kiev, as support for the shift in strategy gathers pace in Washington as a means to force Russia back to the negotiating table. NATO secretary-general Jens Stoltenberg said on Saturday that members of the military alliance had begun talks over sending weapons to the country, talks that Mr Siemoniak confirmed Poland was party to.

But Mr Siemoniak stressed that no decision had yet been made by the US or other NATO allies and cautioned that military support was not the only option left on the table. He said he still saw diplomatic channels and the use of sanctions as the most effective measure to counter Russian aggression. Mr Siemoniak also voiced concern that any military support for Ukraine by NATO states must take note of a potential escalation of the conflict by Moscow. “Russia is a power that has a nuclear arsenal and western politicians have to keep this in mind, would it not lead to a global war?” he said in Warsaw. Polish officials fear that military support would also require western countries to send military personnel to operate equipment or train Ukrainian forces, which could lead to a further escalation in the conflict, rather than suppressing it. “Russia is coming back to its imperial policy...not just in terms of what has happened in Crimea and Ukraine,” warned Mr Siemoniak, making reference to Poland’s history as a victim of Moscow’s aggression. “Russia is a military superpower and it has nuclear weapons. And there is not a single state in Europe that could stand up to it individually.”


The church as opposition in Poland

Before the Solidarity trade union emerged in 1980, Poland's primary non-state institution -- and often anti-state institution -- was the Catholic Church. Catholic intellectuals created discussion clubs and published periodicals. Churches were relatively safe places to voice dissent. John Paul II, originally Karol Wojtyla, became the first Polish pope in 1978 and inspired many in his home country to take a public stand against the Communist regime. One of the most prominent voices of Catholic opposition was Tygodnik Powszechny (Universal Weekly), which published some of Karol Wojtyla's early writings as well as the poems of Czeslaw Milosz even when he was in exile. Established after World War II, Tygodnik declared its independence by refusing to publish Stalin's obituary in 1953. Under the editorial direction of Jerzy Turowicz, the newspaper served as both a forum for discussions of reforming the system and, later, a place to push for more radical change. Poland's first non-Communist Prime Minister, Tadeusz Mazowiecki, came out of the Tygodnik milieu, as did a number of leading politicians.

Maciej Kozlowski, when I met him in Krakow in 1990, was a prominent journalist and editor at Tygodnik who had just joined the ministry of foreign affairs as a newly minted diplomat. He served in the Polish embassy in the United States, became the ambassador to Israel, and was responsible for Middle Eastern affairs on his return to Poland. "The whole Catholic Church was a kind of opposition," Kozlowski told me in an interview in August 2013 in Warsaw. "The major question was: How far would we in Tygodnik and the church engage in anti-government activity? When Tygodnik was closed [during Martial Law], the office wasn't closed. It became a kind of underground saloon. People were going there from all over Poland. Underground literature was being distributed there. We knew that the authorities know about it. But they were pretty reluctant to go very openly against the church. We had a kind of shield, particularly because of the pope. Arresting someone from Tygodnik would have crossed a line." Kozlowski joined Tygodnik when it reopened in 1982. "When it was reopened, Tygodnik walked a fine line between publishing officially and supporting the opposition," he continued. "We changed the layout of the front page. At first our name, Tygodnik Powszechny, was in black letters on white background. Then we changed it to white letters on black background, as it is done in obituaries. It was a distinct sign, but censorship couldn't do anything about it. Also, Krzysztof [Kozlowski] had a column, Events of the Week. At the top he put, 'the 43rd week of Martial Law.' It was a kind of a game."

Tygodnik was very supportive of the Round Table process. "Now the war cry is to 'abolish the republic of the Round Table,'" Kozlowski said. "But at Tygodnik we were all for it. Tygodnik was always for peaceful transformation. It's now attacked for that, for cooperating with the Communists. Publishing a legal paper under Communism is called collaboration. In any case, we were very engaged as a result." After the convulsive years of 1989-90, Tygodnik began to suffer increasing attacks by the right wing of the Catholic Church, the same constituency that listened to Radio Maria, an ultra-conservative radio station. The content of the periodical began to edge to the right as well as it took more conservative positions on social issues. More recently, Kozlowski said, it has veered back toward the centre. "I read Tygodnik from time to time, not regularly, and I see that the paper is trying to come back to its previous positions," he reported. "It writes about paedophilia among the clergy, for instance. Of course, they are strong enthusiasts of the new pope. And once again Tygodnik is attacked by this part of the church. Tygodnik, though, lost its credibility in the eyes of a certain group of people." Kozlowski also has had to endure attacks for his purported collaboration with the Communists. Indeed, as a result of these charges, he was forced to retire from the foreign ministry. "One of the employees of Tygodnik, Roman Graczyk, a right-wing activist, wrote a book about the prominent figures of Tygodnik and their collaboration with the secret police. He accused four prominent people of collaboration. This book had a big impact. Some people condemned Graczyk. Others said that these people at Tygodnik claimed they were opposition, but look, they were collaborationists. Graczyk read my files very carefully, and he defended me. He said, 'This is a person who refused to collaborate.' The judge said that the law is such that even one contact with the secret police is enough. And I had three. I said, 'No, I'm not going to cooperate.' But I met with him, so I'm an informer."


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