German press: Poland is at risk of losing billions of euros from the EU. “A blow to the economy”

The German magazine “Der Spiegel” reports that Poland will lose billions of euros in EU funds if the PiS government does not make concessions in the dispute over the rule of law. If this does not happen as soon as possible, Poland will not receive any structural assistance from the EU from January 1, 2024 – writes Markus Becker, a Brussels correspondent. He explains that in October 2022, the European Commission blocked all structural funds for Warsaw from the 2021-2027 budget because Poland did not meet certain conditions, including compliance with the EU Charter of Fundamental Rights.

Although Poland continues to receive funds from the 2014-2020 budget, 93 percent of these payments have already been exhausted and will be finally suspended on December 31, reports “Der Spiegel”.

“A blow to the economy”

Payment freeze applies not only to funds from the Cohesion Fund, which aims to equalize the differences between poorer and richer regions in the EU. Poland would be entitled to approximately EUR 11.3 billion from this fund for 2021-2027. The case also concerns the European Regional Development Fund – EFRE (EUR 47.4 billion) and the European Social Fund (EUR 12.9 billion). In total, it is approximately EUR 75.5 billion. From next year, nothing will be paid to Poland from these funds – except for smaller amounts for pre-financing and technical assistance – we read.

Moreover, “non-compliance with the EU Charter of Fundamental Rights will also lead to the blocking of payments from other EU funds, including those for fisheries, asylum, migration, border management and internal security, from January 1,” reports the German magazine. He adds that “it would be a serious blow to the country’s weakening economy”, because although it is doubtful whether Poland is facing an economic crisis, the PiS government has just announced a “new wave of election gifts” and – as an expert from the Science and Politics Foundation says – “it is now spending a lot for military armaments.

Almost unnoticed during the election campaign

The fact that such a scenario involving cutting off payments will not take place seems unlikely, because the PiS government will not make any concessions in the dispute over the rule of law before the parliamentary elections on October 15. In turn, PiS’s repeated victory (as indicated by polls) will probably not change much in the European course of this party – we read. What is “surprising” to outsiders is that the impending end of EU structural funds plays almost no role in the election campaign.

“Der Spiegel” reminds that the European policy of the PiS government is already costing Polish taxpayers dearly. It’s about, among others about penalties imposed on Poland by the Court of Justice of the EU after PiS ignored the EU Court’s judgment regarding judicial reform. From the beginning of 2022, the European Commission will deduct amounts from Polish subsidies. The total amount is EUR 556.5 million plus interest of 3.5 percent per annum.

The Commission is also suspending payments from the Reconstruction Fund, from which Poland is entitled to EUR 36 billion. The reason is the same: a conflict over the rule of law. “Nothing is likely to change for now. According to EU officials, there are currently no signs of a change in course in Warsaw,” concludes “Der Spiegel.”

“FAZ”: a surprising decision

In turn, the daily “Frankfurter Allgemeine Zeitung” (“FAZ”) writes about the decline in interest rates in Poland before the elections. The central bank in Warsaw wanted to cut interest rates when inflation fell below 10 percent. Now it has reduced them by 75 basis points anyway, which is surprising and raises doubts – we read.

After Wednesday’s (September 6, 2023) decision, the Polish zloty suddenly lost value on the currency market. One euro cost PLN 4.55 instead of PLN 4.50, and the downward trend could also be observed the next day. The weakening of the zloty also dragged down other currencies – the Czech koruna and the Hungarian forint. The Monetary Policy Council (MPC) has become less predictable and credible and has overlooked many risky issues – writes “FAZ”, citing experts.

They see the reasons for the MPC’s decision in the upcoming parliamentary elections. Some members of the government, including Prime Minister Mateusz Morawiecki, called for interest rate cuts and reduced borrowing costs for the private sector – notes “FAZ”.

Prepared by: Katarzyna Domagała-Pereira