Polish Premier Finally Opts for Privatization

POLISH Prime Minister Waldemar Pawlak last week reluctantly signed long-awaited legislation unleashing his country's much-touted privatization scheme.

Despite being the first to develop a comprehensive plan, in 1988, Poland is coming late to the privatization game. The Polish scheme has been adopted with varying degrees of success in countries such as the former Czechoslovakia and Soviet Union.

``It's kind of our identity card,'' says Andrzej Halicki, the program's spokesman. ``I think mass privatization is a very big and very important part of changing our economy.''

``All the countries - the Czech Republic, Slovakia, Russia, Bulgaria, and even South Africa - have mass privatization or they are going into the implementation of the program,'' he says. ``And we in Poland were the authors of the program.''

Critics worry that Mr. Pawlak's five-month delay may have cost the country prestige abroad and millions of dollars in foreign investment.

Pawlak claimed that some of the state enterprises in the planned third wave of privatization targeted key sectors that he was reluctant to turn over to the free market. He finally signed the list but removed 16 entities, including meat, aluminum, grain, metal, and others that he wanted to protect.

Sixty percent of Polish industry is still in state hands. Ultimately, in stages, the plan calls for privatizing a total of 1,000 enterprises. In the first stage, 444 enterprises are to be distributed among 12 to 15 National Investment Funds managed by consortia of both foreign and Polish financial and consulting firms.

These fund managers will be responsible for injecting fresh capital, technology, and marketing and management skills into the spun-off enterprises. Fund shares will be sold to the public for a nominal price and later will be traded on the Warsaw Stock Exchange.

The state will retain one-fourth of the enterprises' stock; 15 percent will go to employees. Foreign companies and their Polish partners will own three-fifths of the stock in the privatized companies.

But Pawlak questions the large role of foreign firms. ``[They] don't contribute their own capital but ... gain the right of management and with it compensation,'' the prime minister said in a televised address. ``Whether they lead an enterprise to boom or bust will depend only on their own good will.''

Privatization ministry officials, such as analyst Jerzy Thieme, are quick to refute Pawlak's suspicions. ``They are service firms, which means they don't have any capital at risk, but they have their reputation at risk,'' Mr. Thieme says. ``And reputation at risk is sometimes even more than capital.''

Convincing Pawlak of the benefits of rapid privatization has proven difficult. His Polish Peasant Party (PSL) opposed the mass privatization program in the spring of 1993, when the government of then-Prime Minister Hanna Suchocka pushed it through parliament.

When the PSL placed second in the parliamentary election a year ago and formed a coalition with the former Communists, it inherited the plan. Former Communists such as Privatization Minister Wieslaw Kaczmarek have supported the plan, while the PSL has criticized it, earning charges that it is slowing the country's economic development.

The government has promoted a ``commercialization'' program, whereby some 5,000 enterprises are to be transformed into joint-stock companies in preparation for privatization. But critics term the commercialization program an attempt by the state to hold onto industry. They accuse Pawlak's party of putting its labor constituents' welfare ahead of the nation's by heightening measures to protect the Polish market and provide farmers with cheap credit.

``He doesn't believe in indirect control through the market and through instruments which market democracies use, like the price of credit and the law,'' says Andrzej Wroblewski, editor of the business weekly Gazeta Bankowa.

For their part, PSL leaders have called attempts to rapidly privatize medium and large-sized industries ``ideological,'' asserting that well-functioning enterprises can remain in state hands.

Privatization proponents say Pawlak's delays will cost Poland foreign investment since it is no longer the only country in the region posting economic gains.