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General Information about Poland
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General Information about Poland
The Republic of Poland (until December 1989 the Polish People's Republic) is situated in Eastern Europe, bounded to the north by the Baltic Sea and an enclave of Russia, to the north-east by Lithuania, to the east by Belarus, to the south-east by Ukraine, to the west by Germany and to the south by Slovakia and Czech.
Poland is one of the larger countries in Europe. The climate is temperate in the west but continental in the east. Poland has short summers and cold snowy winters. Most of the inhabitants profess Christianity: about 95% are adherents of the Roman Catholic Church. The official language is Polish, spoken by almost all of the population. The national flag has two equal horizontal stripes, of white and red. The capital is Warsaw.
Beginning through the Age of Greatness
Polish history began in the early 9th century when the Polians (dwellers in the field) obtained hegemony over the others Slavic tribes that occupied the country. Their principal dynasty (PIAST) accepted Christianity in 966. Poznan was the earliest Polish capital and Gniezno the first Episcopal see. The main line of the Piast dynasty ended in 1370 with Casimir III, and the crown passed to Casimir's nephew, Louis I of Hungary and to Louis's daughter Jadwiga. Jadwiga married Ladislaus (Wladyslaw) Jagiello, duke of Lithuania, who became king of Poland as Ladislaw II (Wladislaw). The time 1386-1572 under Jagiello's power was considered the "golden age" of Poland. King Ladislaw III (Wladislaw) (killed) by the Turks in the battle of Warna (1444), gave Poland the prestige of championing the Christian cause against the Moslem tide. In 1569 Poland absorbed Lithuania by the Union of Lublin. After 1572 no dynasty maintained itself for long, and the theory that the entire nobility could take part in the royal elections, applied in practice, frequently led to contested elections and civil wars.
There was considerable religious toleration in 16th century Poland, and the progress of Protestantism was arrested without coercion by the Jesuits. Much of the reigns of Stephan Batory (1575-86), and of Sigismund III (Zygmunt) (1587-1632) were taken up with schemes to conquer Russia. The great figure of this time was the chancellor Jan Zamojski.
Sigismund III (Zygmunt), a prince of the Swedish ruling house of Vasa also became the king of Sweden. He was succeeded by his sons Ladislaus IV (Wladislaw) (1632- 48) and John II (1648-68).
In 1655 Charles X of Sweden overran the country, while tsar Alexis of Russia attacked from his side. Only the miracle of Czestochwa saved Poland from annihilation.
The Peace of Oliva (1660) cost Poland considerable territory, and by the Treaty of Andrusov (1667) the E Ukraine passed to Russia.
With John II the Vasa dynasty ended. John III (Jan Sobieski), the savior of Vienna temporarily restored Polish greatness, but with his death Poland virtually ceased to be an independent country.
Division and Regeneration
The three successive partitions (1772, 1793, 1795) resulted in the disappearance of Poland from European map. Russification and Germanization processes started. Only in Galicja could the Poles enjoy a considerable degree of autonomy.
The Restoration
The First World War (1914-18) gave Poland an opportunity to recover its independence. Poland was declared an independent republic of 11 November 1918. In 1926 democratic government was suspended by a military coup d'®tat that made Jozef Pilsudzki virtual dictator. After his death Rydz-Smigly took over control.
Through the Holocaust
On September 1, 1939, Germany invaded Poland and thus precipitated the Second World War. On September 17 Soviet troops invaded Poland from the east. The German occupation started. German authorities proceeded methodically to exterminate a large part of the population by massacres and starvation and in the extermination camps such as Oswiecim. The worst fate was reserved for the Jews. The Germans, hunting them down like animals, exterminated all but some 100,000 Jews.
Polish prisoners of war in the USSR were allowed to form a corps under gen. Wladyslaw Anders and fought with distinction with the Allies, particularly in Italy; other Polish units were organized in Great Britain and Canada.
A mass grave of some 10,000 Polish officers were executed by the Russians in the Katyn forest.
Germany declared war on the USSR in 1941.
Early in 1945 the last German troops were expelled from Poland by the Soviet army. After the war under the Potsdam Agreement, the former German territories laying east of the rivers Oder and Neisse came under Polish sovereignty. Poland's frontier with the USSR was also shifted westward. Poland become a "people's democracy" on the Soviet model.
A People's Republic was established in February 1947 with the Polish Worker's Party - PWP (Polska Partia Robotnicza - PPR) led by Wladislaw Gomulka. In December 1948 the communist PWP merged with the Polish Socialist Party to form the Polish Unated Workers' Party - PUWP (Polska Zjednoczona Partia Robotnicza - PZPR). A new constitution was adopted in July 1952. The government's strict control eased slightly with the death in 1953 of Marshal Stalin, the Soviet leader.
In December 1970 an outbreak of strikes and rioting, caused by a sharp rise in food prices, led to the resignation of Gomulka as party leader, and the Marshal Marian Spychalski, who had been Head of State since April 1968. Jozef Cyrankiewicz, the chairman of the Council of Ministers (Prime Minister) since 1954, resigned from the post to become the new Head of State. His former post was taken by Piotr Jaroszewicz.
In February 1980 Jaroszewicz was replaced as Chairmen of the Council of Ministers by Edward Babiuch. Gomulka was succeeded as First Secretary of PUWP by Edward Gierek.
The introduction of higher meat prices led to strikes in factories near Warsaw. A wave of labor unrest began to spread through the country, and many industries and services were disrupted. Workers' demands for higher wages, however, developed into unprecedented protests against the economic and political management of the country.
Self-governing unions were formed under the guidance of Solidarity (Solidarnosc), the organization involved in the Gdansk strike, led by Lech Walesa.
In September 1980 Gierek was taken ill and was removed from the PUWP leadership. Stanislaw Kania was promoted to the post of First Secretary of the Central Committee.
In January 1981 the Central Council of Trade Unions was formally dissolved. In 1981 the country was paralyzed by a numbers of national strikes. The former recognition of Rural Solidarity in May ended the protracted dispute between the Government and Poland's and private farmers. The worsening shortages of food and other commodities led to further strikes.
In October 1981 Kania was replaced by Gen. Wojciech Jaruzelski as First Secretary of the PUWP.
Marital law was imposed on 13 December 1981, and a military Council of National Salvation, led by Gen. Jaruzelski, was set up. All trade union activity was suspended, and Lech Walesa and other Solidarity leaders were detained. Violent clashes between workers and the security forces followed, resulting in several deaths and thousands of arrests. Sporadic disturbances continued through 1982.
Underground Solidarity started organize a massive Strikes in Gdansk, at the Nowa Huta steelworks. Solidarity rapidly spread to other sectors leading to the most serious industrial unrest since 1981.
In September 1988 the Government of Prof. Zbigniew Mesner resigned. Dr. Mieczyslaw Rakowski was appointed Chairman of the new Council of Ministers.
In early 1989 the Government offered to negotiate on the contentious question of the restoration of legal status to Solidarity and, in February the 'round-table talks' on the future of Poland finally began.
In December 1989 the country became the Republic of Poland, when the National Assembly approved the change of name. The local election of May 1990 were the first full free election for more than 50 years.
On 9 December 1990 Lech Walesa resigned from the chairmanship of Solidarity and in late December was sworn in as the country's President for a five- year term. Elections to the Sejm and to the Senate took place on 27 October 1991, with only 43.2% of the electorate participating.
In January 1992 the Government faced a serious challenge when extensive strike actions, to protest against the implementation of higher energy prices, was organized by Solidarity.
In December 1992 an interim Constitution, known as the 'Small Constitution', entered into force.
In May 1993 President Lech Walesa dissolved the Sejm and called new general elections. The leader of the PSL Waldemar Pawlak became the Prime Minister of Poland.
Political and Economical Developments
Poland had a 1991 per capita income of about $1,790 and a population of almost 38.3 million, which has grown during the last decade at about 0.7 percent per year. The country's labor force of almost 19 million is well educated and highly skilled. In 1991 industry accounted for about 50 percent of nominal GDP, and employed slightly over one-third of the labor force. Agriculture accounted for less than 7 percent of GDP, and employed about 26 percent of the labor force.
Political Developments
In 1989 Poland took the lead among Eastern European countries in transition toward democratic market economics. However, the arrangements that led to the political changes also created an unstable situation, which has been dramatized by recent political developments. The Mazowiecki and Bielecki governments managed to engineer the courageous reforms of 1990 and maintain reasonably good overall macroeconomic conditions. Starting from mid-1991, however, the Bielecki government became increasingly unable to introduce and pass through parliament important economic and political reforms. Agreement on, and execution of, policies became even more difficult as a result of the political instability that followed the October 1991 parliamentary elections, which left Poland with a parliament splintered among 29 parties, with no clear coalition or majority in sight.
It took two governments and several months of virtual political paralysis before a centrist coalition could be formed under the leadership of Prime Minister Hanna Suchocka in July 1992. While the coalition did not enjoy a solid parliamentary majority, it did manage to survive important testsńsuch as the waves of strikes in August and December 1992 and also secured enabling legislation for several crucial pieces of the reform agenda, particularly the Banking and Enterprise Restructuring Law, the multi-track privatization program, including the Mass Privatization program, and the 1993 budget. Despite these achievements, a motion of no confidence carried the Sejm on May 27, 1993. As a result, parliament was dissolved by President Lech Walesa, and new elections set for the early fall. While the political scene over the next few months is likely to be dominated by pre-electoral politics and posturing, the recently approved electoral law sets a minimum threshold for representation in parliament and may contribute to the emergence of a more stable political environment.
Progress in Economic Reform
After two very difficult years, economic conditions in Poland improved during 1992. Despite the uncertainty in statistical information that still prevents a full assessment of the growth in private sector activity, the signs of recovery are unmistakable. Industrial production rose by 14.5 percent over the December 1991 level, driven by a healthy expansion of exports. Construction activity was also strong, driven by private sector activity. Early estimates point to an overall GDP growth of 1 percent, despite the effects of the serious drought that has affected all of Central Europe and led to crop losses of as high as 25 percent, and cutbacks in some public services. This is in sharp contrast with output losses of 12 and 7 percent in 1990 and 1991.
At the same time, important progress has been made in steering the economy away from the hyper inflation of the late 1980s. Average annual inflation declined from almost 600 percent in 1990 to 70 percent in 1991, to 43 percent in 1992, and 39 percent in the first quarter of 1993. Finally, after incurring important reserve losses in 1991, Poland's external performance has improved considerably: a trade surplus of about $600 million allowed Poland to strengthen its reserve position to about 5 months of imports. Early results for 1993 point to a continuing good performance in industrial production, with a somewhat weaker external performance, mostly on account of lower growth in exports to the European Community.
These indications of recovery are encouraging and augur well for more sustained growth in 1993 and beyond. But they mask a sharp differential in the performance of the private and state-owned enterprise sectors. While the private sector took advantage of the considerable opportunities created by the opening of the economy and invested in emerging growth sectors, the parastatal sector inherited a legacy of overmanned facilities, outdated capital, and unclear governance that hampered its ability to respond to the new economic environment.
Private sector activity has provided the main engine of transformation and growth in Poland's economy. First concentrated in trade and commerce, private sector activity has more recently extended to industry and construction, where it accounts for over half and a third of output, respectively. Overall, about half of Poland's GDP is now produced by the private sector. This constitutes a positive response to the changes in the incentive environment, and is an indication of the potential for growth that remains to be unleashed in the Polish economy.
By contrast, the parastatal sector has had great difficulties in adjusting to the new economic conditions. External shocks, notably the demise of the Soviet Union and Soviet bloc trading arrangements, and the abolition of the complex system of subsidies, particularly on energy, played an important role in depressing industrial production in 1990 and 1991. This contributed significantly to the fall in output during that period. The effects of the recession, however, were compounded by internal management problems in state-owned enterprises, whose unit labor costs, productivity, and profitability deteriorated substantially in these two years.
The picture in 1992 was somewhat more complex. Despite the abatement of the recession in the parastatal sector, its financial position remained very weak. Many enterprises are severely constrained by the burden of debt accumulated in the past two years as a result of the lack of restructuring and adjustment to new market conditions. Some enterprises that are probably not economically viable have been allowed to continue to operate for lack of a viable exit mechanism. There is evidence, however, of signs of adjustment, at least in enterprises that have been able to respond to new business opportunities. This partial improvement appears to have been the result of a significant hardening of the budget constraint facing the enterprises. The no-bailout signal has been very clear from the government.
Directly related to the parastatal crisis, the structural public finance crisis is perhaps the single most worrying feature of the economic situation in Poland. On the expenditure side, increasing outlays originate mainly from the growth of social programs- because of inadequate design and increasing claims due to the recession.
Expectations of improved tax revenues have been repeatedly frustrated as the state enterprise tax base shrinks and the government is unable to mobilize sufficient resources from the expanding private sector. The result has been a steady increase in the general government deficit and its demands on bank and non-bank financing. The public sector, which registered a surplus in 1990, was forced to rely on domestic borrowing in 1991 to finance a deficit that amounted to over 6 percent of GDP. For 1992, the government adopted a deficit target of 5 percent of GDP, which was considered compatible with increased progress on the economy stabilization front. Despite the recovery in industrial output, however, revenues continued to lag behind expectations, and expenditures continued to inerease as a proportion of GDP. As a result, the defieit for the year climbed to some 6.5 percent of GDP despite correetive measures in late 1992. The larger defieit did not substantially affect inflation only beeause much strieter terms are now applied by the banking sector for credit to state enterprises. In the course of 1992 this contributed to freeing domestic resources for financing the deficit. Nevertheless, the size of the deficit remains a cause of concern, and continued recourse to domestic finaneing on the seale of 1992 may prove incompatible with macroeconomic stability.
Despite the apparent end of the recession, the social situation remains tense. After rapidly increasing to 12 percent of the labor foree through 1990 and 1991, unemployment stabilized somewhat in 1992, largely as a result of better output performance in industry. In mid-1993 it stood at 14.6 percent of the labor force, and could further increase as a result of the paring down of activity in a number of parastatals that are expected to undergo restructuring. This could lead to increases in the number of the poor as restructuring takes plaee, and to widening regional differences in the incidence of poverty due to the "company town" nature of past industrial development, thus making the maintenance of a viable social safety net a crucial priority for the government. The social tension has manifested itself in repeated strike threats that contributed to the political crisis. These tensions could be heightened by the uncertainty linked to the elections and the formation of new government.
Toward Sustainable Recovery
Prior to the latest crisis, the Suchocka government had made considerable progress in ensuring a stable macroeconomic framework and in pursuing structural reforms. Against baseline projections that pointed to a 1993 deficit in excess of 10 percent of GDP, the government steered through parliament a budget that incorporates revenue increases and measures to reduce expenditures expected to cut the fiscal imbalance to zloty 81 trillion, or 5 percent of projected GDP. After a long and sometimes contentious parliamentary discussion, the budget was approved, with only minor modifications, by Sejm in mid-February, and represents the basis for this year's macroeconomie policies.
The macroeconomic program for 1993 envisages overall output growth of some 3 to 4 percent, and inflation declining, on a December-to-December basis, to some 33 percent. The current account of the balance of payments would deteriorate, chiefly on account of the effects of the drought on agricultural exports and higher growth in imports. In turn, external reserves are expected to decline somewhat, also depending on how soon a debt reduction agreement with the London Club is consummated.
The policies envisaged to attain these objectives revolve around a strong public finance program. Given the expected small negative external financing of the budget, recourse to domestic credit would amount to zloty 90 trillion, (including placement of treasury bills for zloty 15 trillion), which would allow continued growth in credit to the non-government sector, particularly the private sector. Monetary policy would continue to aim at positive real interest rates. On the exchange rate front, the crawling peg system would be maintained, with the understanding that, depending on wage and budgetary developments, step devaluation's of the zloty might be necessary.
The government has also moved forward on legislative measures needed to implement its reform agenda. These included the Banking and Enterprises Restructuring Law, which enables re capitalization of the banks and restructuring of enterprises, and legislation to support the multi-track privatization program, including the Mass Privatization Program.
The government has assigned considerable importance to resolving external debt reduction negotiations with its commercial creditors. After the appointment of a negotiator, a number of meetings with the London Club steering committee have been held, and the parties are working on a possible solution, which would clear the way for the second phase of the Paris Club debt reduction agreement, scheduled for 1994.
While the policies pursued by the government are in the right direction and address many of the relevant priorities, the ambitious character of the reform agenda should not be underestimated. Political uncertainty will take some time to resolve, and the government emerging from the election will require time to reassess the reform strategy.
A key constraint to the success of the program is the institutional weakness of the Polish public sector. Patterned after the requirements of a command economy, it is now in the midst of a process of reform to make it compatible with the requirements of a market economy. This process has involved changes in the roles of different layers of government, as well as attempts to create a modern civil service and address problems of public employment. Yet, with a growing private sector increasingly able to attract the best and brightest civil servants, implementation and institutional capacity in the public sector are likely to remain an important issue for years to come.
Medium-Term Prospects
After the severe contraction of the first two years of the program, and the relatively stable results of 1992, GDP growth is expected to resume at some 3 to 4 percent in 1993, and accelerate gradually to reach 5 percent by the end of the decade. Initially, a modest swing in net exports, and an increase in fixed capital formation would provide the spur for higher growth. In subsequent years, private consumption growth would contribute importantly to overall demand, as the economy stabilizes.
Stabilization would result from a gradual reduction in the demand for domestic credit by the government, as the deficit-reduction measures and reform of spending programs put public finances on a sustainable path. By 1994, the general government deficit could be reduced to some 3 percent of GDP, from 6.5 percent in 1992, which would be financed by about two-thirds through domestic sources. This dramatic reduction of the deficit will not be feasible without substantial progress in reforming expenditure programs and in restoring the financial viability of the enterprise sector. In turn, reduced reliance on domestic financing should permit an increase in real credit to the non-government sector, which is expected to finance expanding private sector activity.
A feasible external financing plan will have to allow for increased imports due to faster GDP growth, and resumption of full interest payments on the Paris Club debt. These two factors are expected to lead to a somewhat wider current account deficit starting in 1993. After accounting for desirable accumulation of international reserves, and the reduced amount of amortization of existing debt, external financing needs are expected to decline throughout the decade. Direct foreign investment is expected to grow only modestly over the period, and most of the financing would originate from the May 1991 Paris Club agreement and from the envisioned debt and debt service reduction agreement with the London Club, which is excepted to be on terms equivalent to the Paris Club agreement. A reasonable build-up of new lending from bilateral and international institution sources is also assumed. Little or no new commercial bank lending is expected for the remainder of the decade, a conservative assumption that might be somewhat pessimistic if economic adjustment in Poland proceeds as envisaged.
Authentic Polish history began in the early 9th century when the Polians obtained hegemony over the others Slavic tribes that occupied the country. Their principal dynasty of PIAST accepted Christianity in 966.
Poland, partitioned since the 18th century, was declared an independent republic on 11 November 1918, when the First World War ended.
The country was ruled by a military regime from 1926 until 1939, when it was invaded by Nazi Germany and by the USSR. The invading powers partitioned Poland again. After Germany declared war on the USSR, in 1941, its forces occupied the whole of Poland until being driven out by soviet troops in 1945.
After the Second World War under the Potsdam Agreement, the former German territories laying east of the rivers Oder and Neisse came under Polish sovereignty. Poland's frontier with the USSR was also shifted westward. Poland become a "people's democracy" on the Soviet model.
Self-governing unions were formed under the guidance of Solidarity (Solidarnosc), the organization involved in the Gdansk strike, led by Lech Walesa.
Marital law was imposed on 13 December 1981, and a military Council of National Salvation, led by Gen. Jaruzelski, was set up. In December 1989 the country became the Republic of Poland, when the National Assembly approved the change of name. The local election of May 1990 were the first full free elections for more than 50 years.
A year after in December 1990 Lech Walesa was sworn in as the country's President. In December 1992 an interim Constitution, known as the 'Small Constitution', entered into force. In May 1993 President Lech Walesa dissolved the Sejm and called new general elections. The leader of the Polish Peasant Party - PPP (Polskie Stronnictwo Ludowe - PSL) Waldemar Pawlak became the Prime Minister of Poland. The following resources have additional information on history of Poland:
Poland is one of the larger countries in Europe (the land area 312, 638 sq. km making it the 9th largest country in Europe and the 66th in the world). The country is situated in very hart of Europe. It has a two-level administrative division: first is divided into 49 voivodships, which are then divided into 2,459 communes. The territory of Poland is compact and resembles a circle it lies in the basin of the Vistula (the longest Polish river - 1047 km) and Oder rivers, in the European Lowland and between the Baltic Sea and the arc of the Carpathian Mountains. Farthest to the south lies Oplonek Peak. Farthest to the north is the Rozewie Cape. The major historical cities like Warsaw, Cracow, Sandomierz, Kazimierz, Plock, Torun and Gdansk were built along the Vistula river. Modern architecture coexists with historical quarters that, like the Old towns in Warsaw and Gdansk, Cracow's center, and the market places of Kazimierz and Sandomierz, remember times from eight centuries ago.
With recent changes in this part of continent Poland's neighbors are: to the east and north-east - Russia, Lithuania, Belorussia and Ukraine; to the south - Czech and Slovakia, and Germany to the west.

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