Poland’s Economy is in Good Shape

 By Henry Srebrnik, [Saint John, N.B.] Telegraph-Journal

The Polish economy rebounded sharply in 2024. Real GDP is expected to pick up from 0.1 per cent in 2023 to three per cent this year. Private consumption is set to be the main growth driver, supported by rapidly rising wages, increased government spending on support to families, improved consumer sentiment, and receding inflationary pressures.

The news was welcomed by Prime Minister Donald Tusk. “Everyone was surprised by the growth of the Polish economy,” he wrote on X. “We are better than all the big European Union (EU) countries, and we beat the Germans by a long shot.”

Poland is the largest country in eastern Europe and the sixth largest in Europe. For most of eastern Europe, the 1989 fall of Communism and the 2004 accession to the EU came as a long-awaited escape from the decades of economic stagnation.

Joining the EU meant higher standards of living, unprecedented economic growth and life chances. It opened a cashflow for governments, freedom of movement and a vast labour market for workers. And it supercharged Poland’s economy. Its GDP has increased tenfold during that time.

Twenty years ago, Poland’s GDP per capita was 48 per cent of the EU average. Today it stands at 82 per cent. “What has happened in 20 years is a miracle,” remarked Brunon Bartkiewicz, the president for Poland at Dutch bank ING, at the European Economic Congress held in Katowice last May.

The fact that Poland was the only country in Europe not affected by the 2008-2010 recession testifies to its exceptionally healthy development foundations. Despite suffering a setback in 2020 due to the global coronavirus pandemic and another slowdown in 2023, it has done well.

The nation economy has weathered global and regional external shocks thanks to a well-diversified economic structure, integration into regional value chains, a commitment to macroeconomic stability, a sound financial sector, and domestic labour markets that have supported significant wage growth and private consumption, feeding into long-term poverty reduction and median income growth.

Polish products and companies figure strongly in the European production chains, and the priority for the Polish authorities is to provide solid foundations for business development and entrepreneurship. Currently, the main drivers of economic growth are exports and domestic consumption.

A Polish-Finnish firm recently launched pioneering satellites with cloud-penetrating technology. Some Polish start-ups, such as molecular diagnostics firms, are being sold for hundreds of millions of dollars. And the Polish electric car Izera will hit the market in 2026 with plans to produce 60 per cent of components locally.

Historically, Poland has not been a major destination for migrants, but its growing economy has become a significant pull factor. That success creates new responsibilities that those in power did not have to worry about before.

Poland is facing significant threats to its economic prosperity due to severe labour shortages. Some of the reasons include low fertility rates and an aging population. Over the past 30 years, the birth rate decreased by 40 per cent. The country’s statistical agency forecasts that the population will continue to shrink in the coming decades and that by 2060, the number of people of working age will decrease by at least seven million.

Approximately one million foreigners are employed in Poland right now, making up 6.6 per cent of the total workforce. Of these, 68.7 per cent come from Ukraine, followed by 11.4 per cent from Belarus and 2.5 per cent from Georgia.

That is not enough. In the first quarter of this year, Polish employers reported 112,000 job vacancies that could not be filled despite active recruitment efforts. Estimates suggest that Poland's labor shortage could reach up to 1.5 million workers by 2026.

More than 80 per cent of small and medium-sized enterprises report that they are struggling to find enough workers. In some industries, such as construction, manufacturing, transportation, hotel and catering, staffing shortages affect half or more of the companies.

According to a June study by the Polish Economic Institute, half of the companies surveyed said that labour shortages were a significant barrier to their operations. The problem is particularly severe in the construction industry, where nearly seven out of ten businesses are affected. The country also needs about 150,000 IT specialists and the same number of professional drivers.

Polish businesses seeking to employ migrants face many bureaucratic hurdles. Andrii Arkaniuk, employment legalization specialist at Contrain Group, a recruitment agency, reported it can take eight to 10 months for a worker from outside the EU to receive a permit.

So Polish companies will need even more workers going forward as a result of demographic challenges. In Poland, almost two million documents giving foreigners the right to work were issued in 2023 alone. But more needs to be done. Poland has changed from a country of emigration to a country of immigration.

In August, eleven business associations urged the government to adopt a “favourable approach to legal, sustainable labor immigration.” Developing a comprehensive, responsible, and selective migration policy should be one of the government’s most urgent priorities.

This is producing results. To attract more foreign workers and fill labour market gaps, the government has developed its first comprehensive migration strategy, “Regaining Control. Ensuring Security,” which was unveiled Oct. 17. It is expected to simplify the process of hiring foreign citizens. 

 

Trump’s Victory Reverberates in Europe

 By Henry Srebrnik, [Charlottetown, PEI] Guardian

Most European politicians on the political right of the spectrum have hailed the return of Donald Trump, the former and future president who shares their tough views on issues like immigration.

Herbert Kickl of Austria, France’s Marine Le Pen, Hungary’s Viktor Orban, Germany’s Alice Weidel, Italy’s Giorgia Meloni, and the Netherlands’ Geert Wilders, all reject progressive universalism at home, embracing the cultural distinctiveness of their own countries. They see Trump’s election victory as a sign that political fortunes are moving in their direction.

In Austria, Kickl’s Freedom Party on Sept. 29 won the largest share of votes in the national election. Founded by former Nazis, it wants to “remigrate” Austrian nationals with migrant roots to create a more “homogenous” society. However, all the other parties have ruled out forming a coalition with them.

“This might seem like a slap in the face for many of you,” Kickl wrote to his supporters. “But I promise you: the last word has not been spoken. Today is not the end of the story.”

In just over two years’ time France could have its Trump equivalent in the Elysée Palace: Marine Le Pen of the National Rally, should she win the presidential election. She wished Trump “every success” after his victory and added: “This new political era should contribute to the strengthening of bilateral relations and the pursuit of constructive dialogue and cooperation on the international stage.” 

Hungary’s Viktor Orban greeted the election results with glee, and toasted the outcome with a drink of vodka to “share our joy at this fantastic result.”  The prime minister referred to it as “A much needed victory for the World” on X minutes after Trump declared victory.

Italy’s prime minister, Giorgia Meloni, has long cultivated ties to Trump’s camp, and has praised him. Her party has advocated controversial measures to control immigration, including a plan, stalled by Italian courts, to send would-be asylum seekers to detention camps in Albania.

Geert Wilders, the Dutch politician whose Party for Freedom came first in an election last year, but was shunned by establishment parties whose support he needed to form a government, could barely contain himself.

“Patriots are winning elections all over the world,” he exclaimed. “The liberal-leftish woke driven nihilists are full of disbelief and hate and unfit to give the people what they truly want: freedom and their own nation first.”

In Germany, the Alternative for Germany (AfD) leader, Alice Weidel, called Trump “of course a model for us.” His slogan of “Make America Great Again,” she told Deutschlandfunk radio, was no different from her party’s program of “making Germany great,” because “we as the AfD stand up for the national interests and for the people.”

It seems entrenched political elites who largely control education, mainstream media and the bureaucracy, both nationally and at the European Union level, are being told that their expertise does not make them sovereign. But it comes down mostly to immigration and the cultural identity of the nation.

The lax border enforcement of progressives, instead of promoting immigration, has helped undermine its support. The movement of populations, with few controls, has fuelled this pushback.

Western multiculturalists regard Europe’s asylum system as an axiom of political virtue, whatever its degree of dysfunction. Criticism is equated with xenophobia. But the debate is about control, about who decides who should come into a state, and about the rules or obligations for the people living on a territory that is ruled by, and accountable to, the nation.

 These parties often share Trump-style protectionist policies, aspects of which have been more traditionally associated with the left: supporting pensions and social services, backing trade tariffs, raising some taxes on the wealthy while lowering them for the working class, and price controls on rent and food during periods of high inflation.

But their most distinguishing feature is not just their opposition to immigration, but also their suggestion that European culture and values are being replaced by those of others.

The populist and nationalist revolt is, in their minds, a backlash against institutions and policies that have undermined democracy. Their voters are backing once fringe parties to ensure that social questions long ignored or dismissed by elites are dealt with.

Peru Remains a Dysfunctional and Polarized Country

  By Henry Srebrnik, [Saint John, N.B.] Telegraph-Journal

Peru was in the news this month. China’s President Xi Jinping attended the inauguration of the new China-backed Chancay megaport on the Peruvian coast, while he was at the Asia-Pacific Economic Cooperation summit. The $3.5 billion project, built by China’s state-owned Cosco Shipping, has, we are told, turned a fishing town into a logistical powerhouse set to transform the country’s economy.

But we’ve seen such stories before, yet the country never gets out of the morass it’s in.

Peru was the last South American country to attain independence from Spain. Lima, the capital, was a royalist stronghold. After gaining independence, Peruvians struggled to agree on the most efficient form of government, resulting in unstable and short-lived constitutions. The country’s early years of independence saw political divisions, social inequality, and economic dependence lead to frequent military coups.

Society remained deeply unequal, with race and class determining social privilege and access to resources. A semi-feudal network of Creole landowners, known as “the forty families,” controlled vast areas of the countryside, creating one of the most skewed land distributions in Latin America.

This oligarchy, supported by powerful institutions like the military and the Catholic Church, prioritized their economic interests, which fueled political instability. Early on, military leaders, or “caudillos,” frequently clashed for power, using force as a common means of resolving political conflicts.

The resulting cycle of coups and economic ups and downs made military intervention routine. In the thirty years following colonial rule, there were a staggering twenty-four regime changes.

Peru remains a deeply polarized and fractured society, and between 1980 and 2000 experienced one of the most violent armed conflicts on the planet, waged between the Peruvian state and the Shining Path and Tupac Amaru Revolutionary Movement (TARM) groups.

Amnesty International documented widespread systematic violations of the fundamental rights of large sections of the population. These included forced disappearances, extrajudicial executions, violations of due process and acts of torture and ill-treatment perpetrated by state officials, committed by the Maoist Shining Path and the TARM.

 

According to the Truth and Reconciliation Commission (TRC) established in 2001, these two decades produced 69,000 deaths, not counting 20,000 disappeared persons, of which the Shining Path Maoists were responsible for 54 per cent, state military forces 37 per cent, rural campesino self-defence groups seven per cent, and the TARM two per cent.

Even following the capture of Shining Path’s leader, Abimael Guzman, and the dismantling of the TARM, the country remains far from any meaningful reconciliation, despite the TRC’s collection of testimony from more than 17,000 individuals.

The guerrilla movements were finally defeated by President Alberto Fujimori, who governed Peru between 1990 and 2000 before being forced from office amid allegations of corruption. His time in office was marked by many dramatic twists and turns.

He was lauded for ushering in one of the most economically stable periods in Peru with his radical austerity measures, credited with putting the economy back on track and reining in skyrocketing inflation. It included selling off of hundreds of state-owned enterprises and replacing the country’s troubled currency. And his very tough stance against the insurgent movements, also won him plaudits from many.

But in 1992, two years after taking office, Fujimori shut down Congress, accusing lawmakers of preventing him from taking the measures the country needed. The move was denounced as undemocratic. His opponents called it a “self-coup.” His government also oversaw a campaign of forced sterilization that targeted women in the country’s poor and largely Indigenous rural areas.

The former president was convicted in 2009 on charges related to the murder of 25 people by government death squads during his tenure. He was released by a Peruvian court due to his age in December 2023 and died this past September. Many in the nation view him as a corrupt, authoritarian figure who weakened the country’s attempts at democracy.

His daughter Keiko was one of his most vocal defenders throughout his life and is also his political heir. She leads Peru’s conservative Popular Force party and has tried to follow in her father’s footsteps, running for president three times, while leading the country’s largest Congressional faction.

But she too is in legal trouble, accused of having led a criminal enterprise that laundered some $17 million to fund her presidential campaigns in 2011 and 2016. Prosecutors are asking that she be sentenced to up to 30 years in prison. She has already spent time in pretrial detention between 2018 and 2020.

Being the president of Peru seems like a certain pathway to prison or worse. In October, a court in Peru sentenced former president Alejandro Toledo, who was in office between 2001 and 2006, to 20 years and six months in jail for corruption and money-laundering. Prosecutors charged him with taking $35 million in bribes from Odebrecht, a Brazilian construction company which was awarded a contract to build a road in southern Peru.

In 2019, another former president, Alan Garcia, shot himself when police arrived at his home to arrest him over bribery allegations. Two other former Peruvian presidents, Pedro Pablo Kuczynski and Ollanta Humala, are also under investigation in the same Odebrecht case.

The current president, Dina Boluarte, succeeded Pedro Castillo in December 2022, after he was impeached for an abortive “self-coup” and detained for sedition and high treason.