BPCC CEO Breakfast with Radosław Sikorski, Poland's foreign minister

Poland’s foreign minister, Radosław Sikorski, addressed BPCC members at a breakfast held in the British Embassy in Warsaw on the eve of the Polish EU presidency.

Mr Sikorski, who studied at Oxford, began by praising the buoyant state of the Polish-UK economic relations; the value of Polish exports to the UK has been growing at an annual average of 17% year-on-year for the past decade. He also mentioned shale gas, inviting UK firms to “take advantage of a major opportunity for Poland and for Europe”.

“We are in an unusual position – for the first time in history, Poland has become a source of solutions not of problems,” he said referring also to the country’s manageable indebtedness levels and good practice in terms of a constitutional debt limit.

Focusing on the main themes of the Poland’s EU presidency, Mr Sikorski said “to use Bill Clinton’s quote, ‘it’s the economy, stupid’. Restarting growth in Europe is key to everything else. Better relations with our neighbours are conditional on the return to a dynamic economy. We want to push the British solution – completing the single market services and cross-border internet trade. 60% of all potential cross-border online transactions don’t get completed. If they were, the EU’s global GDP would rise by 4%. Our ministers will work to make this happen.”

Mr Sikorski pointed out that “after the Lisbon Treaty, the EU presidency is not what it was. There is no large chair for me at the Foreign Affairs Council. I deputise for Baroness Ashton.”

A further crucial theme is security – “food security, food safety, internet and border security. The fact that some southern member states that have not guarded their external borders effectively is not an excuse for dismantling Schengen. This is a key achievement of the EU – the act of dismantling borders three years ago between us and Germany after a thousand years of war. We will defend Schengen.” Mr Sikorski reminded listeners that the EU’s border agency, Frontex, is headquartered in Warsaw. “When Poland was a Soviet bloc member, surrounded by ‘friendly’ socialist countries, it had some of the toughest borders in the world. Today, with Ukraine, Belarus and Russia – we have very tough border controls.”

Mr Sikorski continued: “Europe will become a superpower if we sort out the problems in our neighbourhood. We are a trading partner and a civilisation.” He distinguished European neighbours from neighbours of Europe – and touched on the Arab awakening and the political and ideological instruments that the EU can use to influence developments in the Middle East.

“Never again should we be surprised by events like the Arab Spring. We can help create the good guys, become instrumental in their societies,

replicating what happened in Poland 25 years ago. It is cheap and effective. Super promotion for the price of a few F-16s – recent experience of successful transformation make Poland a role model. They are more likely to listen to us than to post-colonial powers.”

Turning to the deliverables of Poland’s presidency, Mr Sikorski pointed to four – creating a European Endowment for Democracy, supporting Arab democratic movements; preparing an action plan for the Eastern Partnership summit in September; signing an accession treaty with Croatia and integrating the Western Balkans with the EU along with completing the deep and comprehensive free trade agreement with Ukraine, which is an integral part of the Association Agreement. He spoke of the difficulties faced in achieving these deliverables.

The next subject to which he turned was Russia. “It is a difficult partner. For 80% of the past 300 years, Russian troops have been on our soil against our will. We began the reset with Russian before the USA. We have brittle but pragmatic relations with Russia; there is progress on difficult issues. We’ve helped the Russians de-Stalinise themselves. Poland’s voice on eastern matters in the EU as a whole is strong – we are regarded as the experts. I am concerned about Russophobia in Brussels, by signing the local border traffic agreement we’d like to Europeanise the Kaliningrad Oblast. One million Russian people are the avant-garde into the EU – without the humiliation of visas. Allowing them access to Olsztyn, Gdynia and Gdańsk would open up the westernmost part of Russia to EU influences,” he said.

“Russia continues to have a sense of competition with the West rather than a candidate member of the West. Yet with whom would Russia integrate more easily? A Russia moving towards the West, WTO, OECD – or with China? There is progress. Border dispute with Norway has been settled, Russia’s not threatening the Baltics so much, and is not threatening us with nuclear holocaust once a month. Premier Putin’s anniversary visits to Gdańsk and to Katyń have shown that he is denying the Stalinist coda to WWII. The Smoleńsk tragedy has not been helpful at all. For the first few weeks yes, relations seemed to have improved, but then Russians became desperate to suppress their faults. We can expect more turbulence ahead as we publish our report.”

Turning to the issue of Poland’s political stability, he looked forward to the prospect of the current government becoming the first since 1989 to be re-elected this autumn. “Previous governments changed at an Italian pace,” he commented.

Poland’s economic progress should be seen in relative terms, he said. “Poland has been playing catch-up for the past 20 years; for the past four years it has been catching up the fastest. Not because it’s been growing faster than previously, but relative to western Europe. Germany’s trade with Poland is greater than with Russia. Poland’s economy is one third the size of Russia’s or France’s; a quarter that of Germany’s, a half that of Spain’s. Not long ago, Poland’s economy was one seventh the size of Germany’s,” said Mr Sikorski.

Poland is contributing to bail-outs, he said – €200m to Iceland, €200m to Latvia, and offered €250m to Greece. “This is a gesture of solidarity,” he said. Poland has proved itself to be part of Northern Europe – a country with sound finances – and they will be sounder still if we win the elections – there will be necessary pension reforms, bolder measures. We wish the Eurozone well because we want to join it,” he said, adding “we want to be virtuous but not just yet.”

A crucial issue in UK-Polish bilateral relations is the discussion that is taking place regarding the EU’s budget perspective for 2014-2020. Mr Sikorski pointed out that Poland is the fourth largest contributor to the British EU rebate. “The dividing line is not between net contributors and recipients, but between those countries that want to pre-judge, stitch up the outcome with no discussion and those who want an open debate about the next budget round. Questions – how big will the budget be? Where will the money go? Where will the costs fall? We must have an informed debate,” he said.

Answering a question about Ukraine, Mr Sikorski replied that the past government only verbally pro-Western, and the new administration was actually accelerating discussions with EU. “Talks about issuing licences for Ukrainian truckers, deregulation, import duties on cars are going well. We hope to conclude hard negotiations by September. There are doubts about administration – it needs to prove commitment to democracy and improve the business environment – removing sharp practices – an agreement with the EU will give additional instruments,” he said.

Replying to outgoing US defence secretary Robert Gates’ criticism about European NATO members not pulling their weight, Mr Sikorski responded saying that Poland spends 1.95% of its GDP – a total of $11bn – on defence, which is the 18th largest military budget in the world. “Poland has the fifth largest European contingent in Afghanistan, troops on the ground in Bosnia and Kosovo. Major purchases will make Poland’s armed forces more capable in five to ten years time,” he said

“If I were to follow the European legislation to letter, on defence planning and logistical capabilities, I would have to force member states to act now. Europe should have an operational HQ. Indeed, the Lisbon Treaty obliges us to start a permanent structured defence area, similar to the concept of Schengen or the eurozone.”

Mr Sikorski returned to the subject of shale gas. “The three to five billion cubic metres estimated by geologists to be present here would make Poland an exporter. France and Libya both have huge deposits. Indeed, shale is almost everywhere, the major limitation is the population on the surface. We hope to benefit from American and Canadian experience. We are five to seven years from industrial, commercial production. If we do nothing it will not happen. There needs to be a different regulatory environment. Companies need to drill thousands of holes in quick succession to make the process commercially viable. These logistical factors mean that a change in procedures is necessary. This is strategic project for our energy independence. CO2 regulations force changes to our advantage. God gave us coal, but gas is part of the solution,” he concluded.