Berlin Poland has been in dispute with the EU Commission for years. Because of the controversial judicial reform, the harassment of unpopular judges and interference with freedom of the press and civil rights, billions of euros in the EU Corona reconstruction fund have been frozen. The government is well on the way to solving the problem with Brussels, says Finance Minister Magdalena Rzeczkowska in an interview with the Handelsblatt. In order not to let any time pass, projects worth billions for green transformation and digitization are to be initiated using Polish funds.
Rzeczkowska is critical of Olaf Scholz’ €200 billion “double boom”: it could destroy the level playing field in the domestic market. She is therefore calling for more European coordination in the fight against skyrocketing energy prices and inflation, a quick brake on gas prices and voluntary joint gas purchasing by the EU countries.
Poland wants to be particularly involved in the reconstruction of Ukraine. The $750 billion needed for this is said to come from frozen Russian assets. Polish companies should play a leading role in the reconstruction.
Minister Rzeczkowska, how do you assess the steps taken by the EU member states to deal with the energy crisis and inflation?
All of Europe faces the same challenge with the energy crisis and inflation. It is important to find a European solution to these problems. Because the way things have been going with national solutions so far, this means that countries with greater budgetary flexibility have a better competitive position. This is not a good solution for the EU, for the internal market, for a level playing field and for European values.
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What exactly are you requesting? A joint EU program like the reconstruction fund after the corona crisis?
We could think about that. The most important thing, however, is that we coordinate our national measures first, so that they are not unfair to competition in the internal market. A broad European program like in the Corona crisis is not the solution. We have to take into account the different situations of the Member States, such as the energy mix, if we want to create a European instrument to support the economies.
How do you see the German 200 billion euro aid package?
I’m not criticizing it, I understand that we are all trying to help as much as we can. But we should take into account the values of the EU: the single market, a level playing field. It is therefore really important that we as Member States are coordinated by the EU, agree on a common framework and decide on further measures.
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Which?
A quick gas price cap, i.e. a mechanism to prevent price peaks, and joint purchasing of gas volumes on a voluntary basis. We are skeptical about the obligation currently under discussion that all member states should cover 15 percent of their gas requirements through joint European purchasing.
How badly will the Polish economy and public finances be affected by energy price inflation?
We are feeling the impact and consequences of inflation and the energy crisis quite strongly. At the beginning of the year, the growth rate was eight percent. But then our economy felt the effects of war and inflation. For next year we expect gross domestic product to increase by 1.7 percent, maybe a little less. And we are assuming inflation of 9.8 percent in 2023. We hope there will be no further shocks to the economy.
The country is hit hard by the energy crisis.
(Photo: LightRocket/Getty Images)
How much is your government spending to fight this energy crisis?
We give households and institutions such as schools and hospitals support payments for their energy costs. And we introduced an energy price cap for households, local government and public institutions. All this costs a little more than 40 billion zloty, the equivalent of 8.6 billion euros.
>> Read here: Is Europe on the way to becoming a deindustrialized continent as a result of the energy crisis?
How deep are the budget gaps due to energy price support?
We are planning a budget deficit of 4.6 percent for the coming year. And we are waiting to see what the EU will do about gas prices.
There is a proposal from the EU Commission, but due to the disagreements among the member states, it does not look like it will be implemented. But to your budget deficit: Because of the dispute over the rule of law, judicial reform and freedom of the press, the EU Commission has currently blocked 24 billion euros in subsidies and 12 billion euros in cheap loans from the reconstruction fund. To what extent do you expect EU funds for the 2023 budget?
We have already included all the money from the EU in our 2023 budget because we should get it. We are taking all necessary steps to reach a solution with the EU Commission. We’re close to an agreement.
What if the money doesn’t come from Brussels?
We don’t wait for the money. Instead, we are now realizing the projects that we consider to be the most urgent. We have set up a Polish development fund for this, money is flowing from companies that are repaying the corona aid they previously received. These projects are very important for Poland because most of them serve green transformation and digitization. Both are even more important since the war in Ukraine and the energy crisis. We are initially financing with funds from the development fund and doing our work to get an agreement in dialogue with the EU Commission.
The EU is holding back money from the reconstruction fund to Poland.
(Photo: IMAGO/NurPhoto)
Do you think Brussels will release the frozen billions for Poland next year?
I hope so.
How many projects would you have to cancel if no EU money came?
Hopefully we don’t have to cut anything. I really think I don’t have to answer that question because the money will come to Poland because we did our homework.
But not everyone in Europe sees it the way you do. There is fierce resistance in the European Parliament.
This is politics. I have no cure for politics.
Poland is one of Ukraine’s main supporters. How much support has Poland already given to Ukraine?
Poland is very committed. We take in a large number of refugees from Ukraine, provide military aid and help people in Ukraine to survive the winter, and help build shelters for internally displaced people. We have already provided 7.2 billion euros.
Poland has taken in numerous refugees from the neighboring country.
(Photo: dpa)
How much money is needed to rebuild Ukraine?
The total requirement is 750 billion dollars. Of course, that can be even more, because the bombing and Russian aggression are continuing. A coordinated effort is important for reconstruction, because there are many parties, many countries, many institutions, financial institutions, private entrepreneurs, private institutions that want to get involved financially and also with their companies. This needs to be coordinated.
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How best?
We must create a platform for cooperation in reconstruction. Like the Rammstein group for military aid. The EU and Ukraine must be given the leading role here, because Ukraine is a future EU member at stake.
750 billion is a huge sum, why is so much needed?
When it comes to reconstruction, we already think of Ukraine as a member of the EU. So it’s not just about restoration, but about the build-back-better principle, i.e. reconstruction according to modern European standards, climate protection measures, energy efficiency and all that.
How should the 750 billion come together, who should pay for it?
In addition to aid from public institutions and private companies, the confiscated Russian assets must be used.
The Russian war of aggression has destroyed large parts of Ukraine.
(Photo: dpa)
How much money do you think could come from confiscated Russian funds? So far, these are probably only frozen assets. They haven’t been confiscated yet.
Yes, most of them have not yet been confiscated, but are frozen assets. The amount that I’ve heard recently is about $350 billion. So it’s quite a lot of money. Of course there are some legal issues, but I think they will be resolved.
>> Read here: Is the Ukrainian government overestimating itself? Researchers criticize the reconstruction plan
What role do you think Poland should play in the reconstruction of Ukraine?
Before the war, we were one of the most important partners for Ukraine. Polish companies were among the largest suppliers to Ukraine and at the same time they were one of the most important foreign investors in Ukraine. That’s where we want to go back to the time of reconstruction. Poland has a really big role to play here, I think, to help Ukraine rebuild to become a member of the EU.
As the?
Poland has always helped Ukraine to transform, and now we too can set a good example for the necessary public administration reforms, for the functioning of the financial system and for becoming part of a modern Europe. Polish companies are ready to rebuild roads, bridges, residential areas and energy networks. Our companies know how to do business in Ukraine. And they are ready to return. They are even now open to investing there, despite the risks that still exist. It is therefore important to find measures to protect investors.
Thank you for the interview.
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