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MAY 26, 2003
Will Poland Turn Its Back On EU Membership? It's one of Europe's most important peacetime initiatives ever -- the expansion of the European Union to the East. Since the end of the Cold War, Poland has been seen as key to that effort. With 40 million people, it is by far the largest of the 10 countries set to join the EU in May, 2004. It was the first to embrace free-market reforms and is central to Brussels' plans to build a stable and prosperous region on the EU's eastern flank. Poland's enthusiastic acceptance of membership has long been deemed a certainty. Now, the Polish electorate is due to vote on the country's entry to the EU in a two-day referendum on June 7-8. Suddenly, it looks as though the grand experiment in expansion could unravel. Fears are growing (ING ) that a mix of voter apathy and outright hostility could invalidate the referendum -- making it impossible for Poland to join the EU on schedule. For a referendum to be legitimate, Polish law requires that at least 50% of registered voters cast ballots. While polls show that 65% or more Poles back EU membership, "there's a real question over the turnout," says Krzysztof Zagorski, head of Warsaw's CBOS Public Opinion Research Center. Voters may stay away from the polls for a host of reasons. Many believe the terms of the EU accession treaty discriminate against farmers. Poland's farmers are a mainstay of the economy and need hefty subsidies to compete on a level playing field with their EU counterparts. Opponents of expansion may boycott the ballot, figuring their best chance of defeating it is to keep participation below 50%. Other Poles may stay home -- or vote no -- to protest the government of Prime Minister Leszek Miller, which is campaigning heavily for EU membership. Poles blame Miller, who has a 10% approval rating, for Poland's surging 18% unemployment. Finally, some may avoid the referendum because they were outraged by French President Jacques Chirac's accusation that EU candidate countries backing the U.S. on Iraq, as Poland did, were guilty of "infantile behavior." The French are key architects of expansion: How better to defy them than to vote it down? Poland would likely have to wait until the next wave of enlargement in 2007 to reconsider joining. The referendum's failure would probably lead to the government's collapse. The only way Miller could keep EU accession on track would be to win the backing of a two-thirds majority in both houses of parliament -- unlikely, since he leads a minority government. "We will vote against it," vows Andrzej Lepper, leader of the Self Defense Party, which controls 53 seats in the 460-member lower house. Other parties could do the same, unless Miller buys them off with increased social spending, which he vows not to do. There's much at stake for business. If the Poles don't join the EU, foreign direct investors could switch to the Czech Republic, Hungary, and other countries whose accession looks assured. Partly because of uncertainty over accession, investment inflows to Poland plummeted to $6 billion last year, compared with a peak of $10.6 billion in 2000. Portfolio investors, who have poured billions of dollars into Polish securities, could also be frightened off. Says Mateusz Szczurek, chief economist at ING Bank in Warsaw: "Investors would consider nonratification a disaster." So Poland's political leadership is pulling out the stops to get out the vote. President Aleksander Kwasniewski is barnstorming the country in a 30-city tour. Even the Catholic Church is supporting EU expansion. Enough Poles may yet be persuaded to come out and vote yes. But for Polish and EU leaders, the next few weeks will prove nerve-racking.  By David Fairlamb and Rick Butler in Warsaw Edited by Rose Brady Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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