15th Economic Forum (2005)
Krynica Zdrój, Poland, 7-10 September 2005

European Challenges: The Model and Boundaries of Europe

Each year the Economic Forum in Krynica Zdrój, Poland, brings together decisionmakers, experts and political, economic and cultural leaders. They gather to discuss challenges that the world - and particularly Europe – is facing. By sharing experiences and exchanging opinions, they facilitate making decisions and undertaking projects crucial for both international and interregional cooperation.

More then 1500 guest from 40 countries participated in the four-day 15th Economic Forum. Close to 100 panel discussions were held. Presidents of Lithuania and Poland, as well as Prime Ministers of Slovakia and Poland, were among guests of the Forum. Due to the recent political crisis in Ukraine, President Viktor Yushchenko and Prime Minister Yulia Tymoshenko cancelled their participation.

Below please find selected statements given during the sessions of the XV Economic Forum.

 

Prime Minister of Poland Marek Belka: There are one billion new workers from China and India who have entered the world market. And all relations have changed. Raw materials have became expensive and labour cheap.

 

 

 

Even though none of this year's panel discussions was directly devoted to Turkey's EU accession process, the topic was widely discussed. Some of the sessions referred to the accession negotiations. Turkish representatives underlined that they hope that the European Union will keep its previous commitments. According to Yasar Yakis (Chairman of the EU Harmonization Commission and former Turkish Minister of Foreign Affairs) giving to Turkey new conditions means changing the rules of the game after the game has already started.

 

 

Hanna Gronkiewicz-Waltz, former governor of the Polish Central Bank: Europe does not believe in democracy. If it had, it would have never accepted what happened with Yukos and what is currently happening in Belarus. Europe is betraying its traditions and is full of hypocrisy.

 

 

 

 

Yuri Afanasiev, Director of Russian State University for the Humanities: The most worrying issue is the lack of structural reforms in Russia, especially in the social field. The Russian authorities are reluctant about reforms which might turn against them.

 

 

Leopold Unger, Le Soir correspondent: There is no leader in Europe, who could promise anything just by giving his word of honor, because no one will listen to him. There is no great idea such as was the introduction of Euro.

 

 

 

 

Andrey Melville, Moscow State Institute of International Relations (MGIMO): In the opinion of Russian intellectuals, the European Union has no common idea on the relations with Russia, and Russia has none on relations with Europe.  

 

 

 

Poland is now the East of the West. This situation is very well known to Germany, which held this function after the Second World War – said Joachim Bitterlich, Executive Vice President of International Affairs in Veolia Environment, former Foreign and Security Policy Advisor to Federal Chancellor Helmut Kohl. His remark stating that Poland has entered the European Union not due to the willingness of the "old" EU-15" but due to its own desire, could be treated as an incentive for the countries which are currently applying for membership.

 

 

 

Based on the Western solutions, reform of the Russian administration had limited success due to the fact that it was adjusted to the people, who were to hold certain functions in administrative bodies – said Konstantin Simonov, Director of the Center for Current Politics in Russia.

 

 

Oleksandr Todiychuk, President of the Board of Ukransnafta in an interview with Rzeczpospolita discussed the Odessa-Brody-Plock project: Western companies have implemented a "waiting" approach towards Ukraine and this not only concerns the Odessa-Brody-Plock project. This gives support to those advocating ever-closer Ukraine-Russia relations. In terms of our partners, we still count on the participation of American companies. Two years ago we signed an initial agreement with Chevron. We have also reached an agreement with KazMunaiGaze, the Kazakh national oil company, as a potential oil supplier. A few days ago we decided that we will work together on the reconstruction of the Piwdenny reloading terminal, situated close to Odessa. In terms of potential buyers, Lotos Group and PKN Orlen have stated in memoranda that they are interested in the purchase of Caspian oil.

 

 

In all of the countries that are at the stage of preparation for the EU membership, the investment risks are decreasing – believes Willem Buiter, Professor at the London Scholl of Economics and former chief economist with the EBRD. However, some countries are still far behind the European elite. Ukraine faces 20 to 30 years before it will have a chance to join the European Union. Russia's current stage of economic transformation is 10 years behind the Polish one.

 

 

Alexandr Karpushin, Director of European Office of Rosneft, stated during one of the sessions, that Russia with its large deposits of raw material has always, also during the Cold War era, fulfilled its contractual obligations. He also admitted that China has become an important buyer from Russian firms; however he insisted that "it is Europe that is a reliable market and partner for investment projects".

 

 

 

The path of development of consumer credit in Western Europe is similar to that in Eastern Europe – said Andrea Moneta, Deputy General Manager of Unicredito Italiano and Vice-president of the Supervisory Board of Pekao S.A. Bank. In his opinion, in the following years the consumer credit market in Central Europe will be driven by mortgage lending. The differences between the old and new EU member states in this field are still enormous. Last year in the Euro zone the value of mortgage lending amounted to 34% of national income, while in Central Europe it was only 4%.

 

 

Ivan Stefanec, President of the Business Alliance of Slovakia: I don't believe, that special financial incentives for foreign investors are the main factor influencing the decision of investment placement. In the majority of opinion, the key factors are: political stability, a qualified labour force, and a good infrastructure.

 

 

Right from the beginning we have tried to be present in the countries of origin of foreign investors. Well prepared advertising brochures and a large agency with an elegant office that passes the time waiting for investors or sending them out promotional materials, are not enough – stated Jan Amos Havelka, who headed the Czech Invest (an agency responsible for the promotion of foreign investment in the Czech Republic) and currently is the director in White&Case – More then 90% of people throw them away. Right from the beginning we have tried to build a network of offices abroad. We have hired people whom we have trained first. From today's perspective I can say that we had a very good strategy in searching for potential investors.

 

 

 

 

Ibrahim El Marashi, Turkey: Americans should not invest in the military presence in the Middle East, but in young people in the region. By creating possibilities for them to study in the West, they will create true allies of the democracy.