In the last 20 years, Poland and Central Europe in general have changed their economies and societies on a unique scale compared to other EU countries. These newer EU countries can teach the others lessons on how to conduct and implement reforms, Zygmunt Berdychowski, chairman of the Krynica Economic Forum Programme Council, tells EURACTIV Poland in an exclusive interview.
The 22nd Krynica Economic forum will be held from 4 to 6 September (download the programme here). Zygmunt Berdychowski spoke to EURACTIV Poland’s Judyta Skowro?ska.
The 22nd Economic Forum in Krynica will focus on New Visions for Hard Times. Are we short of a vision or stuck with visionaries, with EU leaders agreeing on more EU integration without knowing how to get there …
It’s hardly ever politicians who are visionaries and that’s why in their thinking – especially in the recent years – it was clearly visible that the most important issues are of a short-term, technical and tactical nature. However, in the public debate the voices have already appeared indicating the necessity of a completely new approach to the way of planning and carrying out the process of European integration.
After the experience of the 2008 and 2012 crisis, I think that – both economically and politically – it is all about considering completely new solutions which have not been taken into account so far. The demand to speed up European integration is a demand that [former Germany Foreign Minister] Joschka Fischer has raised lately in his several speeches. Also Polish minister of foreign affairs Rados?aw Sikorski speaks about it openly. This is a demand which enables to resolve the problem of the crisis with which Europe wrestles the most. It is about a free formation of economic policy in the EU which causes trouble.
The past year has been tough for the EU, both economically and politically. Do you think we are moving forward, backward or not moving at all?
I am convinced that the very fact that the European Community didn’t collapse is already a success. The policy concerning formation of budgets in some member states is irresponsible. We haven’t bankrupted, started up the European Financial Stability Facility and began a serious debate about necessary changes in the European treaty – this all proves that we are moving forward on this way towards repair, although we are moving very slowly.
Secondly, we certainly argue about the sequence of actions which we have to undertake to rescue the European Community. Should we save or stimulate the economy first? Those who have taken decisions which led to “stretched” national budgets would like to stimulate the economy first and then save.
I think this is one of the elements of this slow march but regardless of how much we argue at this moment, the slow march ahead occurs.
What lessons can be drawn from the crisis for countries like Poland, outside the eurozone?
Two fundamentals, and everyone has to remember them. Firstly, we cannot live on credit because this always ends. Each of us individually cannot borrow indefinitely and also the state cannot do it. Secondly, there is this simple observation that Europe is ageing so we have to take actions which will extend the retirement age in all countries, which will facilitate stimulation of professional activity of the elderly and which will bring changes when it comes to public spending for this part of the financial sector. Without significant changes there is no chance for permanent solution to our current problems.
Poland is one of the few EU countries that did not experience recession and severe financial problems …
This is not a result of having euro or not. Our situation is not a simple derivative of solutions adopted in other European countries and of the way that situation of the Greek, Portuguese, Spanish or Irish economy influences our economy. This current situation is – in my opinion – the consequence of reforms which we have undertaken to secure our economy. So firstly, our debt is not big, secondly our social spending is not big in comparison to spending of other European countries. Thirdly, our budget deficit in comparison to “real” budget deficits in other countries is also not big. So this is the first part of these fundamental reasons which differentiate our situation from the situation of our Western partners.
The second part is that after our accession to the EU in 2004, we received huge assets – for modernisation of the infrastructure, for regional policy and all of the other policies in which we participate. So these are those billions of euros which we get from the European budget. And on the other hand we have also billions of euros from our nationals who work abroad – in Great Britain, Ireland, Germany, Norway, etc. This is the second, fundamental reason why we are in a different situation than the other member states. I think that without those two most important reasons, our situation would be completely different.
So what lessons can be drawn from this Polish experience for others, both in Central and Western Europe?
For sure something can be drawn when it comes to our actions which we have taken and we are still taking to limit the expenses. It is very easy to show that in the last 10 years we were witnesses of exceptional reforms which led to the reduction of losses connected with functioning of the budgetary sector. We have implemented health insurance reform, which completely changed the situation when it comes to our spending on healthcare. We have also implemented public administration reform, which is maybe not as we would expect but it also increases the effectiveness of public spending.
Recently we have also implemented social security sector reform. The law on the extension of retirement age and equalisation of retirement age of men and women was passed without much resistance. So in a word, we have made such reforms for a unique scale in comparison to other European countries. This certainly can be a great lesson for our European partners – how to create and implement reforms.
Coming back to Krynica. Some people call the Krynica Economic Forum the 'Davos of the East'. What is unique about it?
Only people who don’t know how big is the difference can compare any of the events taking place in Central Europe to Davos.
The most important thing is that we do not have global aspirations. We would like to be active in Central and Eastern Europe. We would also like this activity to be directed to share the experiences connected with transforming the economy from centrally planned to free market. We would like to create a possibility which would enable our partners from this part of Europe to learn something from Krynica. So we would like to be helpful for those who are building free market economy and democratic governance. And this is a fundamental difference between Krynica and Davos.
And as we do not have global aspirations, also our budget is very limited in comparison to the Davos Economic Forum. And that is also why we have to be careful in this kind of comparison.