June 4 is an important day for Poland and Europe. Thirty years ago today the process of the peaceful fall of communism began in Poland when the first partially free parliamentary elections were held there and won by the Solidarity movement – once the world’s largest trade union. Its longstanding opposition to the oppressor sparked a series of revolutions – also inspired by the anti-communist rhetoric of Margaret Thatcher and Ronald Reagan, and support from Pope John Paul II – which ended Soviet rule in Central and Eastern Europe and paved the way for a peaceful transition to democracy in the region. It was the start of Poland’s structural and economic transformation – one which has seen it become Europe’s success story.
Beginnings are usually tough and so was the case with Poland’s path to prosperity after 1989 – the year when Poland and Europe fully regained freedom for the first time since before the Second World War. As the communist occupiers were gradually losing grip on power, the country was experiencing galloping hyperinflation, while its industry was obsolete and ineffective. Government-imposed shock therapy ensued. The economy which was based on central planning and state ownership was transformed into one with market allocation of resources and largely private ownership. The plan resulted in reduced inflation and budget deficit, but increased unemployment and worsened the financial situation of the poorest members of society. The situation eventually stabilised and in 1992 the Polish economy achieved growth – which has continued uninterrupted for 27 years.
In the 1990s, liberal economic reforms were ushered in, with privatisation of many state-owned companies and entrepreneurial freedom to start businesses helping to develop the private business sector – a big driving force behind Poland’s meteoric, 800 per cent GDP growth over the last 30 years. The privatisation encouraged foreign investments in the country, which made up for shortfalls in domestic capital. There was a robust reorganisation of the state and local administration, healthcare, pensions and financial systems, education, iron, steel and metalworking sectors, and decentralisation. A new constitution was adopted in 1997, creating greater transparency as regards the functioning of the state, the division of power between state bodies and the rights and obligations of its citizens.
After 1989, Poland’s foreign policy began focusing on the West, as well as the East. The country started implementing procedures to meet the NATO and EU accession requirements, joined the Council of Europe (and signed the Europe Association Agreement) in 1991, the NATO Partnership for Peace programme in 1994, the WTO in 1995 and the OECD in 1996. It was being rewarded for the democratic processes it had undergone, economic reforms, robust institutional building and opening itself up to the world. But it remained strong in its commitment to Central and Eastern Europe, recognising Ukraine’s independence as the first country, and creating, together with the Czech Republic, Hungary and Slovakia, the Visegrad Group cultural and political alliance.
In 1999, Poland became one of the first three countries of the former Eastern Bloc to join NATO. The country has played a particularly active role during missions and operations in Afghanistan, Iraq, Pakistan, the Western Balkans and the Mediterranean Sea, and been crucial in the Alliance’s deterrence and defence plans against Russian aggression, serving on NATO’s eastern flank as one of the Bucharest 9 countries. We are proud of meeting the spending target of 2% of GDP on defence as one of only seven countries – which include the UK and the US.
Then, in one of the most important moments in modern Polish history, on 1 May 2004, Poland joined the European Union. We looked forward to the security and prosperity the union would offer. The EU labour market opened to Polish workers, with the UK and Ireland becoming the first countries to be open as soon as we joined. Since then, Poland has allocated fruitfully the EU structural funds and farm subsidies, greatly developing its infrastructure and transforming rural areas, while our exports to other EU countries have provided a boost to the economy (since 2005, Polish exports to the UK have tripled and UK exports to Poland have doubled).
Poland’s success is perhaps best illustrated by the fact that it was the only EU member not to fall into recession in the wake of the global financial crisis, and that last year it became Central and Eastern Europe’s first country to be ranked a “developed market” by the FTSE Russell index, marked officially at the London Stock Exchange, joining the list of the world’s 25 most advanced economies, with prospects for further growth. The country has also sought to bring stabilisation to the CE region, being an initiator of the very successful EU-Eastern-Europe-linking Eastern Partnership project and a member of the development-focused Three Seas Initiative, as well as sharing pre-accession know-how with Western Balkan countries as part of the Berlin Process, this year holding its presidency after taking over from the UK. And Poles are very happy with Poland’s EU membership – 91 per cent support it.
At present, the situation in Poland is very good and a stark contrast to 30 years ago. Its GDP per capita has grown from 10,300 US dollars in 1990 to more than 28,000 US dollars in 2018. Last year, the average level of income exceeded two-thirds of the average level of the eurozone, with many people escaping the middle-income trap, and unemployment stands at just 5.6 per cent. Since 2015, an adjustment to economic policy has taken place, shifting the focus to innovation and a balanced development of the whole country. At the same time, Polish citizens can count on the family-friendly social policies as part of the “solidarism” system, including the “Morawiecki 5” plan (named after Prime Minister Mateusz Morawiecki), with a monthly stipend of 500 zlotys (around 117 euros) per child (helping to minimise extreme poverty among children), no income tax for people aged 26 and under, and improved local transport links among its benefits.
Poland has come a long way since 1989. Transitioning from a socialist to a capitalist system has not always been easy, and some people have not benefited as much as others. There are also still remnants of the communist past, many dysfunctional practices that we are fighting to this day, and many other challenges we face. But considering Poland’s miraculous economic rise, openness to the world and overall social welfare, the country can without doubt be seen as one of Europe’s biggest successes since 1989 – and may its good run continue for the next 30 years and beyond.
The views expressed in this opinion editorial are the author’s own and do not necessarily reflect Emerging Europe’s editorial policy.