Polish-Russian Trade: A Constant Tug of War
The February shut-down of the Russian gas pipeline is something that should not have happened at all. And yet it did,
and reminded Poland that economic co-operation with Russia is not fully safe. Fortunately, with the exception of gas,
Poland is not so heavily dependant on imports from Russia. In the case of crude petroleum, 90 percent is imported from
Russia via the "Friendship" pipeline, but the Gdansk port is well equipped to receive petroleum imported by
sea. Petroleum and gas are the two main objects of Polish-Russian trade. Despite the volume, they are not the source of
the largest problems. Coal is the constant trouble spot - imported from distant parts of Russia, it effectively competes
with Silesian coal, especially in northern Poland. This annoys Polish miners, who demand that imports should be blocked.
But when the Polish Economy Minister increased restrictions, introducing special customs charges and import quotas, this
caused an open conflict. The Russians threatened to raise customs duties for many goods imported from Poland which could
mean annual losses of up to $80m. Another hot issue is tied to fish ? Poland would like to send its fishermen to some
areas which are part of the Russian economic zone.
Trade with Russia are not profitable for Poland. Indeed there is a constant and high deficit and nothing suggests a
change. In 2003, the value of imports from Russia reached $5.2bn. During that year, the value of goods exported to
Russia reached $1.5bn. Jacek Piechota, Deputy Economy Minister, says the situation is due to the 1998 economic crisis in
Russia. He claims Polish producers have been pushed out of the market by EU producers, who are heavily subsidised. It
seems that achieving an increase in exports to Eastern markets is equally as difficult as diversifying gas sources ?
plenty of ideas, but no specific actions. In 2003, the Council of Ministers adopted the "program for the recovery
of Eastern markets", which assumes that exports will grow by 30 percent annually. This would be supported by
various government activities ? credits, insurance, export promotion and subsidies, new international treaties -
including agreements on the support for mutual investments - training, support for tourist exchange, and many others.
Entrepreneurs interested in the Eastern market say that even if a fraction of these idea come to pass, then trade would
be much better.
Today, businessmen focus not on government documents, but on Poland's upcoming accession to the EU. Russia has
given the EU a list of 14 conditions. If these are not met, the Russians say they will not cover new members with the
existing rules of trade between Russia and the EU. Some of these claims are political, difficult or impossible. Many of
these conditions focus on economic issues. Russia demands transition periods in its relations with the new members. If
the conflict is not headed off before 1 May, Russia may have easier access to the Polish market ? and close its market
for Polish goods. A former advisor to president Jeltsin says Poles can sleep easily, as both sides have too much to lose
to engage in open conflict. Poland should not worry about the debate between the EU and Russia, and focus rather on how
to use its location and capabilities for better cooperation with its neighbor. "Poland has what the Russian market
needs ? good quality goods for reasonable prices," says the expert.
Many Polish companies already realise this and invest and cooperate with Russian partners. The volume of these
activities is not large ? only about $100m so far. Everybody agrees on the need to improve commercial relations with
Russia. All politicians want Polish exports to the East to grow. However, the climate cools immediately when the
Russians start talking of investing in Poland. Fears surrounding the origins of capital and the true intentions of
would-be investors effectively block most projects. It appears that Poles ? both individual businessmen and state
decision-makers ? simply do not trust potential investors from Russia. Despite that, many experts say Poland should do
business with Russia ? but it should not lose its head in the process.
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RUSSIA IN FACTS
