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Polish Market :: 5 (211) /2014

PU B LISHED SIncE 199 6 No.5 (211) /2014 :: www.polishmarket.com.pl


Contents

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From The President’s Press Office From The Government Information Centre

Our Guest

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Janusz Piechociński, Deputy Prime Minister, Minister of the Economy; Three anniversaries of special importance to Poles

28 30

Tomasz Siemoniak, Minister of National Defence; 15 years in NATO

Jerzy Buzek, former Prime Minister; 10 Prof. 10 years in the European Union

12

Janusz Steinhoff, former deputy Prime Minister and Minister of the economy; Entry to EU and NATO - a result of agreement above political divisions

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Roman Łój, President of Katowicki Holding Węglowy (KHW); Conventional energy sources provide heat and electricity regardless of the time of day, year, or wind strength Herbert Wirth, President of KGHM Polska Miedź SA; We are following in the footsteps of Domeyko

Paweł Olechnowicz, President of the Board of Grupa Lotos SA; Polish energy security is under no threat

Energy

Defence Sector

38 41

14

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Janusz Onyszkiewicz, former Minister of defence; The past 25 years - a milestone in Poland’s development

Prof. Mariusz Figurski, Vice-Rector for Development at the Military University of Technology (WAT) in Warsaw; Scientific fight for the future

Industry

32 9

Bogdan Sadecki; Polish Space Agency POLSA means new opportunities

Patryk Mirecki; The EU energy sector in Putin’s shadow Henryk Majchrzak, PhD, President of PSE SA; Secure electricity supply Report from the 19th EuroPower Energy Conference

Innovation

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Krzysztof Jankowski, authorized representative of the Polish Arms Group; Polish Arms Group Consolidated and competitive defence industry PIT-Radwar S.A. - technologies for defence Jerzy Bojanowicz; Consolidation of the Polish arms industry

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Michał Czeredys, President of Arcus SA; We help companies save time and money

Jacek Kopyra, Vice-President of the Central Industrial District (COP) Cluster; America discovered!

A decade ahead Tomasz Nita, CEO of the weapons company Fabryka Broni Łucznik - Radom Sp. z o.o.; The army must continually develop

Zbigniew Mularzuk, President of the Management Board of Nano Carbon; Awaiting the market debuts of graphene-based products

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46 48

Jerzy Bojanowicz; Digital single market Prof. Krzysztof Jan Kurzydłowski, Director of the National Centre for Research and Development (NCBR); We have come a long and bumpy way


Contents

Infrastructure

Finance

Prof. Leszek Rafalski, General Director of IBDiM;

supports the development of modern road 50 IBDiM infrastructure

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Jan Bobrowicz, PhD, Director of ITB; Our Institute is a link between an idea and actual products

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Alfred Watzl and Wojciech Trojanowski Strabag Sp. z o.o; The modern face of Poland

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Bogdan Sadecki; A new approach to Polish infrastructure

Real Estate

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Konrad Heidinger, Consultant in Consultancy and Research Department, CBRE and Karina Kreja, Associate Director in Building Consultancy Department, CBRE; Office space - today and tomorrow

Brokers Ranking

63

Rita Schultz; Insurance brokers in Poland

Law & Taxes

Prof. Małgorzata Zaleska, a member of the Management Board of the National Bank of Poland (NBP); The classic banking products

Managing risk in Warsaw a chance to meet professionals Banking & Insurance Forum

Ecology

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Maciej Nowicki, former Minister of Environment; Environmental protection - a showcase for polish transformation

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Maciej Bartoń; Organic food exports to China

Culture

78 Maciej Proliński; Chasing destiny 79 Maciej Proliński; Treasures from distant places 80 Maciej Proliński; Cultural Monitor Events

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Anna Stasiak-Apelska, Director of the Warsaw branch of the Gajewski, Trawczyńska and Partners law firm; Amendment to provisions on consumer rights

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Marcin Paczewski, Legal Advisor, Head of Competition and Antitrust at Chałas & Partners Law Firm; Changes in Polish competition law in the last 25 years where we are now and where we are heading

Publisher: Oficyna Wydawnicza RYNEK POLSKI Sp. z o.o. (RYNEK POLSKI Publishers Co. Ltd.) President: Krystyna Woźniak-Trzosek Vice - Presidents: Błażej Grabowski, Grażyna Jaskuła Adress: ul. Elektoralna 13, 00-137 Warszawa, Poland Phone (+48 22) 620 31 42, 652 95 77 Fax (+48 22) 620 31 37 E-mail: info@polishmarket.com.pl Editor-in-Chief: Krystyna Woźniak-Trzosek

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Deputy Editor-in-Chief: Ewelina Janczylik-Foryś redakcja@polishmarket.com.pl Marcin Haber m.haber@polishmarket.com.pl Managing Editor: Rita Schultz rita.schultz@polishmarket.com.pl

82 84 85 86

21st Economic Forum in Toruń Personalities and Successes of the Year 2014 Aleksandra Defitowska, Director of Advertising Products Department at Wittchen; The Wittchen brand Europe needs bold leaders

Writers/Editors: Maciej Proliński, Jan Sosna, Sylwia WesołowskaBetkier, Grażyna Śleszyńska, Janusz Korzeń, Jerzy Bojanowicz, Janusz Turakiewicz, Contributors: Przemysław Rudowski, Agnieszka Turakiewicz Photographer: Agnieszka Andrzejczak -Charuba Sales: Phone (+48 22) 620 38 34, 654 95 77 Natalia Suhoveeva natalia.s@polishmarket.com.pl Marianna Dąbkowska marianna.dabkowska@polishmarket.com.pl Public Relations: Joanna Fijałkowska j_fijalkowska@polishmarket.com.pl

Design and DTP: Lili Projekt project manufacture www.liliprojekt.pl Printing: Zakłady Graficzne TAURUS – Roszkowscy Sp. z o. o., www.drukarniataurus.pl Circulation: 8,000 Oficyna Wydawnicza RYNEK POLSKI Sp. z o.o. Nr KRS 0000080385, Sąd Rejonowy dla m.st. Warszawy XII Wydział Gospodarczy Kapitał zakładowy 80.000,- zł. REGON 011915685, NIP 526-11-62-572 Published articles represent the authors’ personal views only. The Editor and Publisher disclaim any responsibility or liability for their contents. Unsolicited material will not be returned. The editors reserve the right to edit the material for length and content. The editors accept no responsibility what-soever for the content of advertising material. Reproduction of any material from this magazine requires prior written permission from the Publisher.


Editorial

The Polish economy is changing in an way open towards the future

T

he consequences of the democratic transition which started in Poland with the June 1989 parliamentary elections cannot be assessed from the perspective of everyday life. The significance of certain facts can only be accounted for from the perspective of the history of a nation, the proper measure being hundreds of years and even more. Historians of the economy are unanimous in their observation that geographical discoveries and the early Renaissance movement around the year 1500 gave Europe impetus for development and ensured it gained world domination for many centuries. The Eastern part of the continent, until then busily absorbing itself the achievements of the Roman civilization, fell behind. Poland, although it had a territory of 1 million square kilometers and 11 million inhabitants and therefore was among the leading European powers, did not keep up with Western European countries in terms of - as we would say today - competitive advantages. Its GDP per capita was about two thirds of the value attributable to Europeans living west and south of the Elbe. A mere 0.1% of the population resided in cities compared to 15-25% of the population of Italy or the Netherlands. And it was in urban areas that entrepreneurship, innovation and social dynamism were strongest. Over the next 500 years, the gap between Eastern and Western Europe grew steadily - in 1989, Poland’s GDP per capita was only one third of Western European GDPs. No one was able to identify a strategy to change it if the constitutional status quo was to be maintained. 25 years after the Polish transition began Poland’s macroeconomic indicators arouse disbelief. Assuming that GDP per capita in 1989 accounts for 100%, then it turns out that now, 25 years later, it reached the level of 357%. The Central and Eastern European countries, which we encouraged to undergo transformation, attained the level of 285%. At that time, GDP growth in Western Europe amounted to 220%. That enumeration is perhaps boring, but it contains one sensational message - over 25 years’ time, we have reached again two thirds of GDP per capita in Western Europe! In 25 years, we have made up for time lost in the previous 500 years. What is more - if you stick to long-term forecasts of the World Bank, the European Commission, OECD, Goldman Sachs and... the government’s Multi-Year Financial Plan - then, in 2017, Poland’s GDP per capita will reach 74% of the EU average, and by 2030 - 80% of the EU-15 average the highest relative income in modern history of Poland. After the downpour of good news, it is time to cool down a bit when it comes to income increase. The question remains open whether and when we will manage to noticeably bridge the gap  that grew over the past 500 years in terms of finance, experience and skills. Let us have a look at the financial capital, e.g. the volume of assets in the Polish banking system. In 2011, Eurostat estimated the figure at EUR 297 billion and it was the highest amount among the new EU member states. The list of the EU-15 was topped by the “bankrupt”,

and smaller than Poland, Greece (EUR 425 billion) and the final positions were taken by Germany with EUR 8 billion and the United Kingdom with EUR 11 billion. That is something that quite clearly points to Poland’s importance in the financial potential of Europe. So is Poland actually having a great historic opportunity? The Polish economy is changing in a way open towards the future. For 25 years, it was based on such industries as mining, shipbuilding and textile. Today, Europe’s fastest GDP growth is driven by automotive, electronics and IT, agriculture, air supercluster or dynamically fledgling aerospace industry. Polish new specialties are created according to new global technical, technological and quality standards, which is immediately verified by the markets, also those more demanding -foreign ones. Only in the last 10 years the value of Polish exports tripled - from EUR 45 billion to EUR 153 billion. There has also been a total, but reasonable reorientation of Poland’s international cooperation from centrally governed Eastern European economies to the highly competitive economies of the European Union and emerging markets. Thanks to remodelling of the economic structure, Poland was able to enter the path of sustainable development and environmental protection. We have cut by more than one third of greenhouse gas emissions (including CO2), overtaking most countries that claim to be leaders of a low-carbon economy. “Poland’s New Golden Age: Shifting from Europe’s Periphery to Its Center,” a report by the World Bank, finds that “rising incomes, open borders, access to the Internet, and the accession to the European Union have allowed Poland to participate in the global economic, social, cultural and technological progress to an extent never experienced before. (...) Likewise, in the most comprehensive OECD’s Better Life Index, which combines most measures – housing, income, jobs, community, education, environment, civic engagement, health, life satisfaction, safety and work-life balance – believed to affect well-being and happiness, Poland comes 24th among 34 high-income OECD countries, above its 29th place based on the income per capita alone.” ::

“Thanks to remodeling of the economic structure Poland was able to enter the path of sustainable development and environmental protection.”

Krystyna Woźniak-Trzosek Editor-in-Chief President Rynek Polski Publishers Co. Ltd.

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President

President meets with Pope Francis at a private audience

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ope Francis received President Bronisław Komorowski and his wife Anna at a private audience in the Vatican. The Pope offered the presidential couple a picture depicting St. Peter’s Square and commemorative rosaries. Mr and Mrs Komorowski were accompanied by former Presidents Lech Wałęsa and Aleksander Kwaśniewski with their wives. The audience was also attended by the Sejm and the Senate Speakers: Ewa Kopacz and Bogdan Borusewicz, and by Karolina Kaczorowska, the widow of the last President of Poland in exile Ryszard Kaczorowski. The conversation of President Komorowski with the Pope in the papal library lasted 25 minutes, and was followed by a 10-minute public part with the rest of the Polish delegation and journalists. The media note that a 25-minute conversation is quite a lot on a day with a very tight audience schedule. The Pope responded with amusement to a porcelain tea set for yerba mate offered to him by the presidential couple. He asked with a smile whether there is a tradition in Poland of drinking this brew. ::

Komorowski talks to Hollande on the reform of local government in Ukraine

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olish President Bronislaw Komorowski spoke by telephone on April 22 with French President François Hollande. The discussion focused on the situation in Ukraine and the country’s planned reform of local government. Both counterparts agreed that the reform will drive decentralization and strengthen local self-government, while preserving the unitary character of the state. The Presidents also discussed bilateral issues, including joint ventures in the field of defence cooperation. That was their second conversation in April. The first took place on April 9, and was also primarily devoted to the situation in Ukraine. ::

Meeting with the President of Moldova

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resident Komorowski, who on April 14 met with President of Moldova Nicolae Timoftim, said that the talks focused on the prospects for signing an association agreement between Moldova and the EU, as well as emerging threats and the situation in Ukraine and around it. “I would like to express my great concern about blatant manipulation and steering separatist processes in order to attain certain political aims within another state,” said Bronisław Komorowski. The President noted that separatists in Ukraine undoubtedly have their powerful principals and protectors. “But they pose a threat, both in political and economic terms, not only to the integrity of Ukraine, but also to the processes that Europe needs: I mean the process of building trust between the European Union - the Western world - and Russia,” he argued. The President stressed that separatisms emerging in Ukraine should be decisively opposed. “That is why we give our backing to all efforts aiming to halt the dismantling of the Ukrainian state by those who inspire separatist movements. We fully support all measures taken to ensure that difficult problems of ethnic and religious minorities are solved using other means in all European countries,” he said. ::

Komorowski talks to Napolitano about halting the Russian-Ukrainian conflict

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resident Bronisław Komorowski met on April 28 with President of Italy Giorgio Napolitano in his Roman residence at the Quirinale. The talks at a working breakfast were the last point of the three-day visit of the Polish President to Italy. “Italy also recognizes the need to halt the escalation of the conflict between Russia and Ukraine,” stressed Bronisław Komorowski after a conversation in Rome with Giorgio Napolitano. Komorowski considered “dramatic” the kidnapping of OSCE observers. The Polish President reported that he spoke with acting President of Ukraine Oleksandr Turchynov. “We have exchanged views on the course of events in the last hours and days. That was also the subject of my conversation with President Napolitano,” Bronisław Komorowski told reporters before departure from Rome. The President stressed that Italy also feels is necessary for the Western world to prevent the escalation of the conflict and to respond in a accordingly strong and united manner to “the unprecedented developments inspired by Russia and Russian separatists seeking to destabilize the situation in Ukraine and Eastern Europe.” ::

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Prime Minister Prime minister meets his Latvian counterpart in Warsaw

T

he Polish and Latvian Prime Ministers addressed, on April 9 in Warsaw, the energy security issues and the situation in Ukraine. Donald Tusk stressed that Latvia is interested in supporting the Energy Union project, and both countries speak with one voice on energy security. Energy projects, including international connectors, are one of the most important topics addressed by the countries of the Energy Union in the CEE region. The Polish Prime Minister stressed that Russia will bear the responsibility for the escalation of tensions in Ukraine, and the upcoming weeks will be a test of its credibility. Donald Tusk remarked that the content of the new Constitution of Ukraine cannot be the subject of international debate, as it should be agreed by Ukrainians themselves. Laimdota Straujuma took over as Latvian Prime Minister in January 2014, after the resignation of Valdis Dombrovskis following the disastrous supermarket roof collapse in Riga. In the previous government, she served as Minister of Agriculture. ::

The Polish and Italian prime ministers meet in Rome

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he P r i me Ministers of Poland and Italy spoke on the situation in Ukraine and EU energy security. Donald Tusk and Matteo Renzi made a​​ joint assessment of the EU energy security and agreed to continue discussing it at the next meeting. Prime Minister Tusk was in Rome on the occasion of the canonization of Pope John XXIII and Pope John Paul II, which took place on April 27. The Matteo Renzi government was sworn in in February 2014. In July 2014, Italy is scheduled to take over the Presidency of the Council of the European Union. ::

Tusk-Merkel meeting in Berlin: support for the Energy Union

One of the elements guaranteeing security in Europe is energy independence,” said Prime Minister Donald Tusk in Berlin. Chancellor Angela Merkel stated that Germany in principle supported the creation of such a union, but details need to be determined. Prime Minister Tusk said that “different countries may have different interests and points of view, but our task is to agree on what is to be a common cause in energy policy.” The Prime Minister stressed that Europe cannot be helpless in the face of violence and aggressive policy that we are witnessing east of our borders. “It has been a European specialty to build a kind of soft power. This is the actual fidelity to certain values​​, including solidarity with people whose freedom is threatened. If we are not ready today to fight for these values outside ​​ the European Union - because no one wants an armed conflict - then we have to be all the more willing to be faithful to soft power,” he said. “This should be borne in mind when talking about Ukraine,” he argued. 

::

Donald Tusk in Paris. Hollande: We can already talk of a Polish-French proposal

D

onald Tusk spoke with the French President about a new project as part of the European Union. “We want Europe to be more independent, more united and more consistent in its energy policy,” said President of France François Hollande. He stressed that the Energy Union would allow the European Union to achieve new levels of solidarity and energy independence. The Prime Minister noted that it is very important for Poland to submit, together with France, a proposal for the Energy Union in Europe. “We are both convinced that this project can serve well the European Union not only in critical moments associated with the Ukrainian crisis, but also in the long, strategic perspective,” said Donald Tusk. The Prime Minister noted that the Energy Union aims to waive the European Union’s - as a whole - dependence on one source of supply, which will actually mean a real diversification, lower energy prices, and a practical implementation of the idea of ​​the European community”. :: 5 /2014  ::  polish market  ::  7


Our Guest

Three anniversaries of special importance to Poles

Janusz Piechociński, Deputy Prime Minister, Minister of the Economy

T

his year has brought three anniversaries, which, to us Poles, are especially important: the 25th anniversary of the political transformation, the 15th anniversary of the accession to NATO and the 10th anniversary of the accession to the European Union. Throughout this period, we have witnessed profound political, economic and social changes. Thinking about this fills me with pride and satisfaction to have participated in this process. 25 years ago our situation was particularly difficult. Let me mention here that Poland’s GDP back in 1989 was estimated at EUR 97 billion. By 2013, this value increased to EUR 390 billion, a growth of around 400%. Hence we more than justified in reflecting on the phenomenon of what we might call a civilisational leap and success achieved within just one generation. Our joint efforts have not been in vain. Today, each of us can experience the positive results of joining the EU, in both economic and social terms. Most importantly, Poland’s growth has been over twice as fast as that of other EU Member States. Polish businesses from fields such as manufacturing and retail trade have succeeded in strengthening their market presence. Poland’s trade with foreign partners has been growing rapidly, our exports being nearly three times higher now than in 2003 and exceeding EUR 114 billion by the end of 2013. Imports have recorded an over-twofold increase – to EUR 90 billion. Competing on the single EU market has spurred our businesses to introduce modernisation and growth-promoting measures, and also to further reduce their operating costs.

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Poland’s accession to the EU has brought about promising changes in competition strategies pursued by Polish exporters. Our products and services receive wide acclaim abroad. Investments are yet another successful area. The trust and interest placed in our country by foreign businesses have been reflected in a substantial influx of capital. Foreign direct investments in Poland over the

“The trust and interest placed in our country by foreign businesses have been reflected in a substantial influx of capital.” last decade have exceeded PLN 100 billion. Our country has also received financial support from EU programmes and through active participation in the Common Agricultural Policy. To date, Poland has received EUR 82.2 billion, or around PLN 342 billion, from the Cohesion Fund, allowing e.g. the creation of over 150 thousand new companies. As regards support for entrepreneurship, innovations, and research and development, EUR 11.2 billion has been used as a direct form of support for 42.5 thousand companies and has allowed

over 1.7 thousand laboratories to be set up or modernised. With all these developments in mind, it is worth asking ourselves about the future. Both Poland and the whole European Union are still facing serious challenges. The crisis in the euro zone, the slower economic growth, and the increasing unemployment rates, have made measures aimed at stimulating job creation and economies a priority for the EU. Entrepreneurship promotion constitutes one of the key tasks for the Ministry of the Economy. We launch many legislative initiatives to make business run easier, bolster the business environment, and improve the economic standing of Polish companies. As an example, I can quote the deregulatory Acts formulated, among other reasons, to curb bureaucracy and to cut down on unnecessary procedures. Another solution proposed for small and medium-sized companies is the Enterprise Development Programme currently being developed by the Ministry. The Programme includes an all-round support system with special focus on innovation, as only innovative technologies will guarantee us a competitive position on the market. While rejoicing at the advancement Poland has made over the last 25 years, we need to be aware of the challenges that await us. The world seems to turn faster every day and the processes in which we participate require commitment and mutual cooperation. I am certain that with our hard, sustained work, the favourable prospects for the Polish economy will continue, and Poland will be a renowned brand worldwide. ::


Our Guest

15 years in NATO Tomasz Siemoniak, Minister of National Defence, talks to Marcin Haber about Poland’s membership in NATO. The year 2014 marks the 15th anniversary of Poland’s accession to NATO. It falls in a difficult moment in terms of defence both for Poland and for the Alliance as such. How important was joining NATO? It is worth noting that this year we are celebrating a double anniversary: the 15th anniversary of Poland’s accession to NATO and the 65th anniversary of NATO itself. Arguably, these anniversaries coincide with a complicated and serious international situation in Ukraine. From this point of view, we can be all the more satisfied with the fact that Poland is a member of NATO and, moreover, is an important and valuable partner. The past 15 years have shown NATO’s enlargement benefited not only Poland, as the Alliance has grown in value by opening to Poland, Czech Republic and Hungary. To a large extent, the newly-admitted countries have given it new valuable impetus. We must also remember that Poland’s path to NATO, which began in the early 1990s, was the result of the consent of all major political forces. Over the subsequent 15 years, no one questioned the validity of that decision. Today, after years of joint foreign missions, military exercises and cooperation in the different committees, we can confidently say that Poland constitutes one of NATO’s building blocks. The fast decision by the United States regarding the presence in Poland of an increased component within the Aviation Detachment shows that we can count on other member states. And so should be considered the decision of the UK, Denmark , France and the U.S. to increase their involvement in the Baltic Air Policing mission at a time when it is Poland’s turn to take over its leadership. The fact is therefore evidenced that the North Atlantic Alliance has gained from enlargement that took place in March 1999. Today, after 65 pm

years of operation, NATO is still the strongest and the most reliable guarantor of international security, and Poland being part of it has not only responsibilities and burdens, but also benefits. One of the latter is security, the guarantor of which remains - next to Polish Armed Forces - NATO. Prime Minister Donald Tusk has recently made it clear that one of the government’s priorities is to modernize the army. How is it coming along, and is Poland ready for a potential military action? The modernization of the armed forces requires several elements and is a long process. It seems that we are today in a fairly comfortable position. Since 2001, a statutorily stipulated percentage of the state budget is allocated for defence. The 1.95% of GDP allows to implement the programme of modernization of the army. It is done in a planned manner, which was made possible by the adoption of the Plan of Technical Modernization of the Armed Forces for 2013-2022. It has been specifically designed so that the army not only maintains high abilities in areas in which it already has them, but also to make up for some backwardness in some other underinvested areas. These activities are to be implemented within 10 years, and now we are only at the beginning of the road. Unlike skeptics, I am convinced that the plan will be realized because - although very ambitious - it is realistic. Therefore, I believe that it is too early today to challenge its assumptions and schedule. I am confident that in a decade - after the completion of the programme - Polish army will have the capabilities that today only some armies have. pm

Do you think that the higher activity of NATO along the eastern borders of the European Union will help ease tensions triggered by Russia’s annexation of Crimea? NATO’s operations and additional troops in Poland are not intended to relieve tensions between Moscow and Kiev, but to secure of NATO member states. It seems, however, that diplomatic means are a much more appropriate tool. We do not accept the annexation of Crimea, which was made by Russia in violation of international law. The presence of NATO troops in Poland and other countries located on NATO’s eastern flank is aimed to show that NATO does not approve either of the annexation of Crimea, or of any further such actions. Arguably, NATO’s military presence enhances the feeling of security of smaller members of the Alliance bordering with Russia. On the other hand, it is a clear signal that Russia must reckon with resistance from the international community. pm

Are Polish defence industry products good export goods? I am sure they are. Certain devices produced by the Polish defence industry have customers in different parts of the world. One such product is the wheeled armoured personnel carrier Rosomak, for the sale of which we have recently been licensed. Besides, we have done a lot to make the Polish defence industry competitive on a challenging market. The issue was discussed at a meeting of the EU Council in December 2013. We have also established the Polish Armaments Group and we are taking other measures to consolidate armaments. Undoubtedly, we have a rich scientific and technical potential, which stands a chance to conquer world markets. Our task is to support it by creating the best possible conditions. And that is what we actually do. :: pm

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Our Guest

10 years

in the

European Union

Prof. Jerzy Buzek, former Prime Minister (1997-2001) and former President of the European Parliament (2009-2012), talks about the upcoming anniversaries.

T

he anniversaries that fall in 2014 - 25 years since the June 1989 elections in Poland, 15 years of our presence in NATO and 10 years in the European Union - compel reflection. We may have different views or political affiliations, but one thing is doubtless: we live today in a more secure, and therefore better, country than it was before 1989.

The long-term action beyond partisan affinities I think not only about military, but also economic, energy and social security. Security a multifaceted notion indeed. And it is a sum of these facets that determines the position of a community - national, European and Euro-Atlantic. It furthermore determines the quality of life of each of us - millions of Poles. We often learn in Poland from our own mistakes. Sometimes we lacked consistence,

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willingness or courage to defend difficult and important reforms, and sometimes the partisan logic resulted in the cancellation of decisions already made. That was the case with the healthcare system dismantled in 2002, which is still heavily consequential. The same is true of gas agreements with Norway and Denmark, which were rescinded by my successors, leading to the construction of the Nord Stream pipeline linking Russia and Germany, bypassing Poland. It should be noted, however, that the strategic geopolitical choices have been made irrespectively of partisan divisions. Even if it was not so obvious in the early 1990’s, finally each subsequent administration was unanimous as to Poland’s membership in NATO and the European Union. There was also consensus in response to Ukraine’s Orange Revolution as it was understood that Poland’s security largely depends on the situation in our neighborhood.

Polish responsibility for the Euro-Atlantic Community These very lessons - consent for the sake of the common good and our role in building the Polish community and changing the European one - should be the starting point for a debate about the challenges facing today’s Poland. It is not only the question of how to build a secure and strong Poland, but how to shape the European Union and the North Atlantic Alliance. Such is, after all, the essence of our presence in the EU and NATO! The recent developments beyond our eastern border have highlighted that security in Europe is conditional on interdependencies both in a positive and negative sense. On the one hand, integration, common market, decisions made jointly at a European level give the EU the power to be a major global player in resisting blackmails or aggression. Solidarity,


Our Guest

properly understood and practiced, is the backbone of security. On the other hand, excessive economic or energy dependence of some EU countries on Russia often cripples the EU’s ability to act effectively - to the best of our abilities and aspirations.

Energy policy - a new impetus for integration A key area that is likely to permanently change this situation in a relatively short period of time is energy policy. It is about providing the security of supply and affordable prices, while maintaining environmental standards. In the economic sphere, it would enhance competitiveness, increase prosperity, and lead to the reindustrialization of Europe. In the political sphere, a common energy policy would waive EU dependence on the political use of energy and would boost Europe’s security. In the sphere of values , the notion of solidarity would be filled with substance. The energy policy - like the concept of a common market itself, free movement of goods and people, and a common currency is the real sphere in which we can pursue the integration project. It is important today as we hear, in the run-up to the European elections, that integration did not work in many areas. Finally, the energy policy, by its external dimension, allows to integrate countries outside the European Union - Ukraine, or more broadly, the Eastern Partnership members. But the same is true about North Africa and the Middle East.

European Energy Community This is why I promote at the European level the creation of the European Energy Community. I first proposed it in 2010, together with former European Commission President Jacques Delors. It is based on three pillars: the single EU energy market, using available indigenous energy sources, coordinated joint purchases of energy from outside the EU joint research on new energy technologies. An inseparable part of the Community is a gradual integration of the EU’s neighbours, especially the countries that lie on the supply routes or are energy suppliers. As the President of the European Parliament, I had a unique opportunity to convince Herman Van Rompuy to include these demands in the conclusions from the European Council meeting in February 2011. Thus,

they became - at the political level - binding for EU member states.

Europe’s security is to be developed within the European Union The European Energy Community is the key not only to strengthening the energy security of the European Union. The concept requires building consensus across party lines, among all the member states and between many MEPs regardless of their party affiliation or nationality. In preparing the European Parliament’s report on the common EU energy market, in the final vote I was able to win votes of more than 90% of MEPs. That gave a huge democratic mandate for the European Commission to implemented it. Efforts to build the European Energy Community have already yielded concrete results. Our demands have been included in all energy-related legal and organizational decisions: in the Regulation on the security of gas supply - regulating in detail how a member state should react if it runs out of gas; in the Directive on energy infrastructure connecting EU member states and in the budget for these investments; in the Energy Strategy until 2020. That is how the security of Europe - including Poland - is being built today. Therefore, we strived to allocate EUR 6 billion from the instrument “Connecting Europe Facility” to finance 12 cross-border

interconnections linking the Polish transmission system with the systems of other EU countries. It would increase our flexibility in crisis situations. For the same reason, we defend coal, which - used in an environmentally friendly manner - will, in the coming decades, continue to be a major factor of energy security, and not only Poland’s one. Therefore, we tried to secure EU funds for Polish coal gasification projects and the creation of a European Centre for Clean Coal Technologies in Katowice and Zabrze.

Security must be continually strived for Security is not given once and for all. We must constantly strive for it acting in almost all areas. In the years after 1989, we tried to ensure it by joining the Euro-Atlantic structures, by building our compatibility with them. Today, when we make part of the EU and NATO, this logic is not enough. We have an opportunity, even an obligation, to actively shape standards and solutions that will match today’s and tomorrow’s real security needs - ours in Poland and ours across the whole Community. We have to ensure that our community is a strong, jointly defended fortress able to resist those who are trying to threaten its security, and that its door remains open for those countries of the continent, such as Ukraine, which will choose to join it by way of a sovereign decision. ::

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Our Guest

Entry to EU and NATO – a result of agreement above political divisions Janusz Steinhoff, former deputy prime minister and minister of the economy in the Jerzy Buzek government, talks to Marcin Haber.

sovereignty and the reforms that the country needs will play a significant role. How do you assess the activity of Minister of Foreign Affairs Radosław Sikorski relating to Ukraine? My assessment is definitely positive. We are an active member of NATO and take part in NATO missions. Minister Sikorski continues the activity of his predecessors. He is one of the key foreign ministers of NATO member states. As a North Atlantic Alliance, we have to respond to the aggression of the Russian Federation, the annexation of Crimea and Russia’s support for separatist movements in Ukraine. Everything that now concerns this country is a big problem – not only for Europe. I think the Russian Federation and its government are making a historic mistake. Instead of focusing on economic reform, which would enable Russian citizens to look into the future with greater optimism, Russia is continuing, or returning to, superpower politics, paying no heed to the fact that it is going out of date. pm

This year we are celebrating three very important anniversaries. One of them is the 15th anniversary of Poland’s entry to NATO. How important was this step for Poland? Do you think Poland’s voice matters in the Alliance? Poland’s membership of NATO and the European Union was our political priority after 1989. We have managed to achieve this goal, which is our great success. We had no doubt that our road from the Warsaw Pact should lead us to NATO. We are now a member of the North Atlantic Alliance. Of course, Poland’s position will depend on our activity in the Alliance and the potential of our armed forces. Our voice in issues concerning Ukraine for instance is increasingly important. I hope we will be effective in this respect. I hope our voice in support of Ukraine’s pm

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You observed the process of Poland’s entry to NATO as an insider. Could you see any particular tension within the ranks of the government at the time? No, because it was our unquestioned political priority adopted after 1989. I think that Poland’s entry to the North Atlantic Alliance was an effect of a sophisticated policy pursued by successive Polish governments. A special role, in my opinion, was played here by Jerzy pm

Buzek and his activity – as it was under his government that we finalized the process of seeking NATO membership – and by our foreign policy. The person responsible for this policy was the late Bronisław Geremek, one of the most outstanding Polish politicians after 1989. The role of Jerzy Koźmiński, our ambassador to the United States at that time, was also very significant. He perfectly pursued the tactics and strategy adopted in the process of seeking the membership. Also important was the role of the Polish lobby in the United States, support from Prof. Zbigniew Brzeziński and many people active within the Polish-American community. Of course, our armed forces had to adopt all NATO standards. As a member of NATO, we take part in various foreign missions. The government of Jerzy Buzek adopted regulations setting our regular spending on defence as a percentage of GDP at around 1.89%. We want to have a well-equipped and well-organized armed forces. They are now smaller. In the past, we had 400,000 soldiers and now slightly over 100,000. A reduction in troop numbers has to be coupled with the armed forces being highly trained and equipped with modern weaponry. Another important anniversary this year is our 10-year presence in the European Union. Do you think our entry to NATO helped us come closer to the European Union? Let us remember that the entry to the European Union was preceded by many reforms. We were consistently harmonizing pm


Our Guest

Polish law with that of the Union. Our negotiations with the European Commission were not at all easy. But we showed strong determination in this respect. The government of Jerzy Buzek was active and consistent in these negotiations, which were continued and finalized by the government of Leszek Miller. It was under this government that Poland officially joined the European Union. So one can say that the entry to both the EU and NATO was a result of agreement above political divisions. After 10 years of Poland’s presence in the European Union time has come to sum it up. The pluses definitely outweigh the minuses. The membership of the EU certainly forced us to carry out unpopular reforms. But they were necessary from the point of view of our country’s future. However, what worries me at present is that actions taken by European Union countries are not sufficiently coordinated. I mean in particular a single energy policy. I am glad that the voice of the Polish prime minister is increasingly taken into consideration now. Poland has pointed on many occasions to the risk associated with the dominant position of exporters of energy carriers. We believe that the energy policy of EU countries should be better coordinated. We also believe that within The Third Energy Package it is necessary to build competitive European electricity and gas markets much faster. The condition is the construction of cross-border connections. Some regulatory elements of the market are already there, like for example a ban on re-exporting gas and separating gas transmission from its sales. These are sensible measures. Now, time has come for a more effective coordination of this policy, for seeing energy security in the context of the European Union as a whole rather than treating it as a national problem. This will produce synergy and we will be able to achieve a higher level of security while paying lower costs. A challenge for Poland is the climate and energy package. We are pointing out here that Europe should adjust the pace of implementing this package to support from other countries and continents because air quality protection is a global rather than local problem and can only be solved at global level. The ambitious programme to reduce carbon dioxide emissions will affect Poland the most because we produce electricity based on solid fuels, that is hard and brown coal. Our emissions level is 50% higher than the EU average. Consequently, it is necessary to look for more reasonable solutions to ensure

that the climate and energy package is effective in the first place and that its implementation does not result in part of European industry being relocated to other countries and the European economy becoming less competitive. Competition in the global economy should be based on common work and environment standards. If they differ too much we have to do with the violation of basic conditions for competition. Adjusting to European Union standards was a big challenge for Polish agriculture. But we have managed to do that excellently. Agriculture is a sector which has benefitted from our membership of the EU. Agricultural and food products account for almost 12.3% of our exports. Polish farmers are faring very well on the difficult and competitive EU market. How important for Poland were the first free elections after the communist period? Will they go down only in Poland’s history or is this date important for the history of the whole world? For me personally, and I think for many Polish women and men as well, it is a very important anniversary. I had an opportunity and honour to take part in these first elections. They were not fully democratic yet because the opposition, the Solidarity camp, had only 35% of seats for the taking in the lower chamber of the parliament. But the Senate election was fully free. The outcome was that we won the 35% in the first round and got 99% of the seats in the Senate. I remember our first meeting after the elections at the University of Warsaw. We deliberated over what name to give to our parliamentary group. We came up with the idea to call it the Opposition Parliamentary Club. But then, Prof. Geremek, as if anticipating the future, proposed that the name should allude to civic spirit and so we became the Citizen’s Parliamentary Club. And luckily so because in the near future our parliamentary group designated Tadeusz Mazowiecki as prime minister. Just after the elections we did not even dream of this but history accelerated quickly. That government was a government of compromise. The prime minister and some ministers came from the Solidarity camp and the two parties allied with the Polish communist party (PZPR). The Ministries of Internal Affairs and Defence were given to the PZPR, which was a condition for this government to be formed. Then, the composition of the government evolved and the two ministries underwent a metamorphosis under a different pm

leadership. One should be aware that it was a government of great change and that we managed to carry out a sweeping reform of the country, and regain independence and sovereignty in a peaceful manner. Much credit for this goes to the leaders of the Solidarity camp. Our parents’ dreams of an independent Poland came true. The dreams of my generation were similar. But, as a realist and member of the opposition, I did not expect to live long enough to see this happening. I think that Polish people are proud of living in a sovereign, democratic and rapidly developing country. We complain sometimes that our country is not well organized, but I think that now is one of the best periods in our history because we have managed to achieve all of our priority political goals and build a democratic system based on a properly functioning free-market economy. This is due not only to the responsibility of our political elites, but first of all the hard work and talents of our citizens. Let us remember that in 1989 we were one of the poorest countries in Central and Eastern Europe. We were the only European country where food rationing continued for so long after the Second World War. Let me remind you that for 14 years since 1976 one needed ration coupons to buy sugar in Poland. Then, other foodstuffs, coal, natural gas and petrol were also rationed. And now, we are quite a different country. Our GDP dropped by 11.6% in 1990 and by 7% in 1991, but in 1992 Poland saw its economy grow by 2.6%. And this growth has continued - at different rates - until the present day. We are the only country in Central and Eastern Europe to have escaped the financial crisis. This proves that our successive governments have pursued a reasonable and responsible macroeconomic policy. The result is that Poland’s cumulative GDP growth since 1989 has reached over 200%. This result puts Poland in first place among the Central and Eastern European countries in transition. Likewise, the increase in the value of exports from USD14.3 billion in 1990 to USD203 billion in 2013 is a great success of our businesses, a sign of the rising competitiveness of the Polish economy. Assessing the process of transition, initiated by the elections of June 4, 1989 and the government of Tadeusz Mazowiecki, one can say that the past 25 years were one of the best periods in Poland’s history. ::

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Defence Sector

The past 25 years – a milestone in Poland’s development Janusz Onyszkiewicz, minister of defence in the Jerzy Buzek government, the man responsible for bringing Poland into NATO, talks to Marcin Haber.

This year we are celebrating three anniversaries of great importance for Poland: the 15th anniversary of its becoming a NATO ally, 10th anniversary of its entry to the European Union and the 25th anniversary of the first free elections. How important for our security was the entry to the North Atlantic Alliance? It was an exceptionally important step because after the fall of Communism in Europe in 1989 Poland found itself in a grey zone, a sort of “strategic vacuum.” On one side there was NATO, with the Soviet Union and then Russia on the other. It was an extremely awkward situation because it still allowed Russia to hope it would be possible to restore the kind of Polish-Russian relations that had existed in the Communist times. In other words - that Russia would manage to draw Poland again into its sphere of influence. In order to make Russia abandon these hopes and illusions, which were so dangerous for us, it was necessary to show that Poland had already pm

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become part of the Euro-Atlantic systems, especially NATO. The membership of NATO was more important for us at that time. Additionally, it was easier to achieve because it was clear that it would take us a long time to enter the European Union. And being a member of NATO smoothed our road to the EU. Now, after 15 years, what is your opinion of this decision taken by Poland? I think it was a matter of the utmost importance. By taking the decision to enlarge first by Poland, the Czech Republic and Hungary, and then by further countries - NATO filled a vacuum in Europe. It played and still plays a very significant stabilizing role. The Alliance has helped to ease controversies – some of them quite heated - between Hungary and Romania, and between Hungary and Slovakia, not to mention the existing and longlasting controversies between Greece and Turkey. Let me remind you that when rumours spread several years ago that Russia keeps pm


Defence Sector

its tactical nuclear weapons in the Kaliningrad District there was no panic in Poland. We knew we were a member of NATO and that Russia had to take it into consideration. Indeed. The same has been the case recently during the conflict in Ukraine. One could not see any special tension in Poland. The Americans responded quickly, deploying their aircraft carrier and F-16 jets in the region. This demonstrated that the Alliance operates dynamically. NATO is indeed a very reliable organization. One reason is that it has a clear leader – the United States. This is why it is much easier for the Alliance to reach agreement or work out a political course than for the European Union, which has no leader. Thanks to the United States as its member, the Alliance is an organization of truly colossal power. One can still hope that the Alliance is powerful enough to discourage anyone from even testing its strength. pm

In your view, what is Poland’s position in NATO? Poland’s voice in NATO really matters, mainly because we have shown clearly, though sometimes it was costly and difficult, that Poland is an ally through thick and thin. We have demonstrated this, for example, by our presence in Afghanistan where we were a very important partner. Thanks to our involvement in Afghanistan, our armed forces already function excellently within NATO and our commanders have acquired the ability to lead military operations larger than those in which Poland had taken part previously as a member of UN peace-keeping missions. These two kinds of operations had a different scale and character. pm

You have mentioned the armed forces. What is the situation now? Until recently, the government did not regard the development of our defence capabilities as a priority. Now, the situation has changed. Prime Minister Tusk has turned up at the opening of a new Łucznik arms plant in Radom. We have been modernizing our armed forces. Is this a result of the present situation in Eastern Europe? Or perhaps this is what it should be like, irrespective of the geopolitical situation? As a rule, all armed forces should undergo continuous modernization because military technology is developing very quickly. It is impossible for any country’s armed forces to have exclusively state-of-the-art equipment. Even the US armed forces have units equipped with the most advanced military hardware pm

and ones equipped with much older generations of hardware. The modernization process has to go on incessantly for the armed forces not to “die out.” The difference in Poland is that for over 10 years now we have had a stabile system for financing this modernization process. We do not need to worry that if we launch a programme it may turn out in the next year that there is no money to finance it. The amount of money set aside for the modernization is so big that Poland has started to be presented as an example to follow by other NATO countries. Apart from the countries, like France and Britain, which have nuclear weapons and consequently need to have big defence budgets, Poland’s military spending - around 2% of GDP - is at the level that NATO would like to see. There is talk that Poland may have problems with Russia when it comes to using Soviet-made equipment for which our licences have expired. Let us explain this. Poland does not produce any equipment under Soviet licences - that is any equipment whose production would require permission from Russia. It is true, however, that part of our equipment needs servicing coupled with certification that the inspection or repair has been performed in a proper way. Because of the origin of this hardware, this kind of servicing is sometimes performed in Russia, but it does not have to be done there. I think this is a result of excessive caution on the part of our military. They simply fear that if the equipment is not serviced in Russia and something wrong happens the prosecutor will ask them why they have a certificate issued by a Polish or Ukrainian institute rather than the “right” certificate from the Russian manufacturer. It is because of this excessive care for details that we have been dependent on Russia so far. But I think time has come to put an end to this. pm

Can the recent cooling of Polish-Russian relations have an impact on our energy security? The Ukrainian issue will obviously have an influence on Polish-Russian relations. It is not because we would like them to deteriorate. It is because Russia has put itself in opposition to the whole international community, becoming a rogue state – a country which does not respect any international decisions, not even treaties it has signed itself, a country which behaves like a bandit, acquiring by force another country’s territory and another country’s property, as could be seen in Crimea. Of course, our relations will now be different and our hopes that it would pm

be possible to establish with Russia relations based on confidence and cooperation have been dashed. Russia has shown that it still wants to conduct politics from a position of strength, although Russia does not have the power it thinks it has. I think Russia poses no military threat to us. When it comes to energy security, our weaker – though not weak point is the problem of gas because we have to import it. The imported gas is not intended for households because what we extract in Poland is enough to meet their needs. We need the imported gas for our industry. Of course, our industry may find itself in trouble. But the problem will become much smaller once the LNG terminal is opened, which will take place this year, and once the interconnectors linking our gas pipelines with the German and Czech ones are constructed. One should remember that the Russian economy depends on gas exports to Europe. The Russians cannot redirect these exports somewhere else because there are no pipelines linking it with China or Japan. If they stop selling their gas the whole Russian economy will collapse as will the illusion of the good tsar Putin who is not only enlarging Russia but also giving its people a sense of financial security. To conclude, will the developments marked by the anniversaries I mentioned at the beginning go down as very significant dates in Poland’s history? I think that our entry to the European Union was a great turning point. At the time of accession it was even compared to the acceptance of Christianity by Poland in the 10th century. But I would like to return to the June 1989 elections. What happened then was absolutely incredible. In the 1970s and even 1980s, it was believed in the West that a totalitarian system, like Communism, which had an ambition to control everything, cannot collapse under peaceful conditions. The only experience of a similar system collapsing was the experience of the fall of Nazism. And this came about as a result of the trauma of the Second World War. Consequently, some analysts believed this was simply impossible and there was an atmosphere of desperation. What happened at that time in Poland, which triggered the avalanche which wiped out the Communist system, was really a miracle, something unpredictable and unbelievable. I think this moment was important not only in the history of Poland but also in the history of Europe and even of the world because it is thanks to this that Communism collapsed. :: pm

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Defence Sector

Polish Arms Group

Consolidated and competitive defence industry Krzysztof Jankowski, authorized representative of the Polish Arms Group, talks to Marcin Haber.

What is the Polish Arms Group (PGZ, or PeGaZ in short) and what are its goals? The idea to set up the PGZ group had two main goals. Firstly, the group is designed to complete the process, started more than 10 years ago, of consolidating Polish companies operating in the defence sector. The second goal is to adjust the Polish defence industry to the increasingly difficult challenges present on all Polish and foreign markets for military hardware and weapons. Completing the consolidation of Polish arms companies is necessary for Poland to keep up with the current trends in the European defence industry and a sine qua non for creating the image of the Polish arms industry as a reliable partner for the Polish armed forces and foreign partners. The consolidation of the Polish defence industry is a must. In this respect, Poland lags behind other European Union countries, which conducted their consolidation processes several years ago, generally even before the establishment of the European Defence Agency (EDA). The PGZ group was entered into the National Court Register (KRS), the central database of companies, on December 5, 2013. It is to consolidate in a single group all defence companies in which the state has stakes, military repair and manufacturing works (WPRP), selected companies held by the Industrial Development Agency (ARP) and members of the Polish Defence Group (PHO). Ultimately, the PGZ group is to be composed of around 30 companies. The group has a chance of becoming an important player on the European market. It will have a share capital of around PLN 5-6 billion. The amount is much smaller than what the European rivals have, but will make it possible for the group to work with them on equal terms. The PGZ group will not only be competing for contracts for the delivery of hardware and weapons for the Polish armed forces, but will also be striving to create a strong alliance within the triangle of armed forces, pm

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scientific research community and industry. For various reasons, their cooperation so far has not always been successful. There is a need to build within this triangle strong mechanisms immune to changes connected with the expiry of various terms in office, mechanisms which will be determining the strength of the Polish defence industry as a whole and will enable it to take an active part in the European market for military hardware and weapons. Which means the main objective is to make Polish companies more competitive? Exactly. We are aware that what Polish defence companies offer on the market is not competitive enough. We deem it necessary to stimulate their business activity, especially in the area of research and development, intensify their participation in international R&D programmes carried out under the auspices of NATO and the European Union, and implement advanced forms of international cooperation in the production of modern military equipment. In the medium term, we expect that the PGZ group will gain a competitive position on the European market. Our strategic goal is to achieve this position in seven to 10 years. For this purpose we are going to set up a technology development centre, the unit which will be coordinating research and development work in the PGZ group and will be responsible for commercializing the research findings. We want the results of the research and development work conducted at the PGZ group to find the broadest possible commercial applications rather than being shelved. The group would like to open much more broadly to the civilian market so that innovative dual-use technologies, which have proven their worth in the armed forces, can find civilian applications. At present, most of the output of Polish defence companies is intended for the Polish armed forces. Some of the companies sell more than 90% of their output to these armed pm

forces. The Polish defence market is a market of a single customer, the Defence Ministry, which would like to receive equipment meeting the requirements of the modern battlefield. Meanwhile, the existing potential of our defence industry is not able to fully meet the needs of the armed forces. Defence exports are also at a very low level. The truth is that if the Polish armed forces do not buy a specific piece of equipment there is very little chance of it being sold to a foreign customer. A very strong support on foreign markets is needed for the Polish defence industry from the Ministries of Defence, Foreign Affairs and Economy. But in the first place one needs to have products, which can be sold. They have to meet contemporary requirements. In pursuing its strategic goals, the PGZ Group is going to create conditions needed for raising the ability of Polish defence companies to compete on international markets. But in order to be able to create such conditions, one has to start with diagnosing the state of the Polish arms industry and urgently prepare maps of competencies, resources and predispositions, technologies and intellectual assets. In your view, is this the direction in which the armed forces will be developing? I think it is one of the development directions. It is not merely a potential direction – this is already happening. When it comes to aircraft, we will have to do with unmanned systems to a larger extent. The pilot will still be controlling them, but from the ground and by means of a computer. It is not that wars will be fought exclusively with the use of unmanned systems. Pilots, in the traditional sense, will still be needed for a long time and will be performing their tasks. But a drone will be used wherever it will be able to replace the pilot. Man is always the most expensive and at the same time the weakest link in a system, in particular in terms of endurance. :: pm


Defence Sector

PIT-Radwar S.A. – technologies for defence PIT-Radwar S.A. (previously known as Bumar Elektronika S.A.) is one of the most important and largest companies operating in the Polish defence sector, and one of the leading suppliers of professional electronics for the Armed Forces of the Republic of Poland. The Company specialises in military technologies, including radio-based electronic reconnaissance systems, command-support systems, battlefield and combat-asset-management systems, and sensor systems. Its final products are tailor-made for its customer, that is the Ministry of National Defence. The company maintains low-volume production, which often includes only individual items. This year, the Company celebrates the 80th anniversary of Przemysłowy Instytut Telekomunikacji (PIT) (The Industrial Telecommunications Institute) and the 60th anniversary of CNPEP Radwar, which for 2 years now have been operating under the same organisation. PIT-Radwar S.A. offers an extensive range of military radiolocation systems. Mobile and stationary 3D, medium- and long-range surveillance radars have been in the service of the Air Force for years, being used for domestic and Allied purposes as part of NATO.

Air defence short-range radars support Polish Land Forces, while cutting-edge weapon-locating systems work for Land Forces artillery regiments, including in Afghanistan, where they protect military bases.

The Liwiec Weapon-Locating Radar The mobile Liwiec weapon-locating radar makes it possible to locate enemy firing bases and to direct own artillery fire. It is designed to cooperate with integrated artillery command and control systems as well as directly with batteries and individual guns.

Poprad anti-aircraft missile system The POPRAD self-propelled anti-aircraft missile system is intended for fighting low- and mediumaltitude air targets with heat-seeking missiles. The Poprad system is characterised by its high efficiency.

Medium-range radars manufactured by PIT-Radwar S.A. are part of the Coastal Missile Command of the Polish Navy, and stealthoperation coastal radars protect the seashore

The TRS-15 S-Band 3D Mobile Medium-Range Surveillance Radar

The On-Board RF-Emitters Reconnaissance Station PRP-25

An S-band 3D mobile medium-range surveillance radar with an instrumented range of 240 km, designed to detect and automatically trace 120 air targets up to an altitude of 30 km. This radar is characterised by high efficiency in low-flyingaircraft detection, high mobility and very short deployment time.

The PRP-25M is dedicated to Air Force EW detachments for the automated detection, recognition, direction finding, monitoring and tracking of the emission sources which can be present on board any type of air vehicles, as well as on ground-based and sea platforms.

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against all intruders. For several years now, the Polish Air Force has been utilising passive systems that are used to detect and identify RF emissions from onboard equipment. In addition to active and passive radiolocation systems, the Company has on offer command-support systems that can be linked with them. Such systems are used by the Air and Land Forces. The Company also offers a selection of short-, medium- and longrange IFF systems. Anti-aircraft artillery and rocket units, and also air defence units, are an important part of this package.

Aside from the traditional scope of activity, that is radiolocation and automation and command-support systems, PIT-Radwar S.A. also offers other equipment solutions, such as chemical and radioactive-contaminationdetection systems and also civilian and paramilitary equipment. PIT-Radwar S.A. boasts considerable developmental capabilities in the field of design in the most crucial areas of microwave technology and software for command-support systems. The existing solutions and available design potential make it possible to offer advanced defence systems, by the Company itself or in consortia with domestic and foreign partners. The aforementioned Coastal Missile Command, established by PIT-Radwar S.A. in collaboration with the Norwegian


Defence Sector The Hydra 35-mm Remote-Controlled Anti-Aircraft Gun System

The Umbrella anti-aircraft artillery system

The Hydra Remote-Controlled Anti-Aircraft System with 35-mm guns is designed for fighting air targets (aircraft, fixed- and rotary-wing, manned and unmanned, cruise missiles) flying at very low, low-to-medium altitudes. The Hydra system is also capable of destroying lightly-armoured land and naval-surface targets.

The Umbrella air defence system is intended to fight against low-altitude flying airborne targets as well as against lightweight armoured ground and navalsurface targets, day and night. The Umbrella uses gun or gun/missile anti-aircraft sets. It can be linked with guns of various calibres, and can cooperate with superior command posts, as well as with remote radars. Manual Target detection is facilitated by a sensor-head or an observation monocular.

When coupled with a command and control unit (like Umbrella), the Hydra constitutes an air-defencebattery firing unit.

Furthermore, the unit is characterised by short deployment time and high mobility. Using the Umbrella system makes it possible to increase firing efficiency, at the same time decreasing the amount of ammunition and guns needed in the firing base.

Kongsberg Defence & Aerospace, and commissioned to be armed in June 2013, is an example of such a project. Working as part of the Air Defence Consortium is one of the most important tasks carried out by the Company. This consortium, established in spring 2013, encompasses a dozen or so companies from the Polish armaments sector, and is the answer by the Polish defence industry to the needs

The Soła relocatable radar The Soła is a cutting-edge multifunction threedimensional (3D) radar, which has been designed to detect and indicate airborne targets as well as mortar rounds in short (SHORAD) and very shortrange (VSHORAD) anti-aircraft systems. This radar is capable of detecting hovering helicopters, which can be applied to providing protection for the military bases or troops on the move. With its small dimensions and weight, the radar has exceptional capability of quick relocation with any kind of transport means, including aircraft. The design of the vehicle platform allows high manoeuvrability and fast deployment time after arrival at the site. The Soła provides missile batteries with warfare independence, which constitutes a breakthrough in the equipment of VSHORAD subunits. Equipping an anti-aircraft battery with the Soła radar radically increases its firing efficiency, and also its effectiveness in combatting low-flying targets in the area or responsibility (AOR) of the battery or airdefence command.

expressed in the national air-defence modernisation programme. PIT-Radwar S.A. is responsible in the consortium for radiolocation, command and firing-control systems, and also for the integration of the entire system. ::

Ryszard Kardasz, President of PCO S.A. and PIT-Radwar S.A., explains why this year will be important for both these companies, and what will be their roles in the establishment of the planned new Corporate Group. An important year 2014 for PCO S.A. and PIT-Radwar S.A. “For both companies that I am leading, this year will be crucial, due to the planned establishment of the new Corporate Group. This newly-formed Group will encompass PCO S.A. and PIT-Radwar S.A.,” said President Kardasz. The establishment of the new Group will facilitate synergy in the implementation of key projects, based on the long-standing experience of the companies in the capacity development of the Polish defence industry. “Furthermore, amalgamating the companies’ skills in the fields of optoelectronics and electronics is in line with the current trends on the global armaments market,” he added. Challenges to be faced by the new Corporate Group “One of the most important tasks in the coming year will be the active involvement of the companies in the implementation of Defence Ministry’s programmes – PCO as the leader of the Future Soldier programme, responsible for the integration of the system’s individual elements, and PIT-Radwar S.A. as the leader of the Shield of Poland air-defence programme,” said Mr Kardasz. In addition to maintaining the lead on the domestic market, both companies will strive to expand their customer base through focusing their export activities on selected foreign markets. We are also planning to diversify

the companies’ packages with civilian products. To sum up, this year’s priorities for both companies include the provision of innovative, next-generation defence solutions. A technologically-coherent product package will enable companies to keep product prices at competitive levels.” Changes in the structure of the Polish defence industry and the operation of the companies “The establishment of the Polish Arms Group, and the plans for restructuring the Polish defence industry connected with this endeavour, constitute a great opportunity for the development of the Electronic Group companies. The new structure can contribute to an increase in the competitiveness of the Polish defence industry at the European and global levels. Owing to strategic coordination, most projects will be implemented in specific subgroups, including an electronic one. This solution will make it possible to utilise companies’ resources in a more efficient way, and translate them into the development of state-of-the-art technologies, and also into the creation of innovative products,” summarised President Kardasz. ::

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Defence Sector

Consolidation of the Polish arms industry In September 2013, Prime Minister Donald Tusk, Minister of the Treasury Wojciech Karpiński and Minister of Defence Tomasz Siemoniak announced a jointly developed concept of the defence sector consolidation. The Polish Arms Group, which is being created, will bring together all key companies operating in the defence industry, including Huta Stalowa Wola, Polish Defence Holding and eleven military maintenance and production companies.

T

he consolidation comes as a fulfillment of some earlier announcements of the government and the next step in the further restructuring of the Polish defence sector that was initiated over 10 years ago. It is crucial for the modernization of the Polish army and will ensure a more efficient image building of the Polish defence industry on the domestic and foreign markets. The concept of the consolidation was presented in Siemianowice on the premises of the Military Mechanical Works, where various types of Wheeled Armoured Vehicle Rosomak are manufactured. “Siemianowice proves that polonization makes sense. The Military Mechanical Works produce Rosomak armoured vehicles being a de facto Polish product. We hope that the reputation of the Rosomak will become a reputation of products throughout the Polish Arms Group,” said Donald Tusk. Włodzimierz Karpiński, for his part, stressed that this place perfectly combines the interests of the Polish army and those of the Polish economy, and added that the Polish Arms Group generates a total revenue of PLN 6 billion and employs more than 13 thousand people. “In many cases, it also means successful knowledge transfer and commercialization of ideas by implementing them into the economy, he added,” he added. In 2002 - as a result of the adoption by the government of the “Strategy for the structural transformation of the defence industry in 2002-2005” - the Bumar corporate group was established. Its integrator was the Bumar company, which was entrusted with exercising supervision over 40 defence companies. In May 2013, the Group the name of Polish

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Defence Holding (PHO), the largest Polish defence industry organization. The PHO, whose majority shareholder is the State Treasury, is the largest manufacturer and supplier of arms in Poland and ranks among the largest ones in the region of Central and Eastern Europe. It brings together, more than 40 companies, employing nearly 10 thousand people. These include Obrum, Łabędy, ZM Tarnów, PCO, Dezamet, Mesko, Nitro-chem, Gamrat, Cedzin, FB Radom, Cenrex and Maskpol. Originally, it was planned that the Polish arms industry would be consolidated on the basis of the PHO. However, no consensus was reached on this issue and there was competition from other Polish companies for contracts from the Ministry of Defence. Will the PHO disappear once the Radom-based Polish Arms Group (PGZ) starts operations? The PGZ, headed by Wojciech Dąbrowski, who is also president of the Industrial Development Agency (ARP), was entered into the National Court Register on December 5, 2013. In the first quarter of 2014, the Polish Arms Group filed applications for consolidation permission with the Office of Competition and Consumer Protection (UOKiK). In April, UOKiK granted two consents for consolidation associated with the implementation of the development strategy of the Polish defence system. According to UOKiK, neither of these two consolidations leads to a restriction of competition, as most of the companies acquired by the Group do not compete directly with each other, and there is only one buyer on the market (the Ministry of Defence) that is obliged by Polish and EU law to

select suppliers by way of a tender, which is open for foreign entrepreneurs too. “The consolidation of the defence sector will allow to increase cooperation and coordination of defence companies, to make a more effective use of the potential of our defence industry,” said Włodzimierz Karpiński satisfied with the decision of UOKiK. “Today, we are at the beginning of the road when it comes to the consolidation of this segment of the economy. We are building a Group whose capitalization, depending on valuations, can reach PLN 5-6 billion and which will maintain and create new jobs - directly 14 thousand and indirectly even 50 thousand. This is the last moment for such a Group to be formed, taking into account the huge, also from the European perspective, investment in the modernization of the Polish army. With the consolidation of the capital, we will be able to increase cooperation and coordination of defence companies. PLN 130 billion, which the Ministry of Defence will disburse on modernization of the Polish army in the coming 10 years, should be spent, as far as possible, on armaments manufactured in Polish plants. It is one of the most challenging tasks ahead for the Polish Arms Group. In the long term, it might be floated on the stock exchange. But first, it has to show and maintain a good financial standing. The Ministry of the Treasury plans to complete the consolidation within the Polish Arms Group in the third quarter of 2014.  According to Ryszard Kardasz, President of PCO SA and Bumar Elektronika SA, creating the new corporate group will help achieve synergy in the implementation of key projects based on the years of experience the


WSK "PZL- KALISZ" S.A. WSK "PZL- KALISZ" S.A. has been a plant of the Polish Aviation Industry since 1952 and has been producing radial piston engines ASz-62IR of 1000 HP for aircrafts AN-2 and M-18 “Dromader”, Y5B and “Otter”.

An ASz-62IR piston engine holds a number of international certificates (including certificates issued by aviation authorities of USA, Canada, Brazil, Russia and PRC). The company also performs overhauls and repairs of these engines. At this time we have completed upgrading process of this engine by implementation of the electronic controlled fuel injection system and by enabling car fuel E95 application along with automotive fuel drive. Simultaneously we are conducting development works on a new type piston engine production of 280 HP. As a result of our company’s restructuring process we have expanded our commercial offer with gears and gear transmissions that we now manufacture for world aviation industry leaders. Within our production scope of interest are also parts for high pressure engines, oil pumps and crankcases. These components require top precision machining accuracy classes, which we accomplish when meeting the requirements of our Customers’ special orders. Our continuous goal and ambition is to meet our Customer’s engineering challenges and expectations as part of our technical qualifications and production capacities. We can offer a world class sophisticated machining capabilities, highly skilled, qualified and experienced engineering personnel and operators. We keep on looking for new markets and business partners, especially in manufacturing of high precision and processing complexity aviation parts. We are prepared to initiate a business relationship with any partner representing a similar production portfolio.

WSK "PZL- KALISZ" S.A. holds the following certificates: AS 9100, AQAP-2110, PART 21G-M and PART 145.


Defence Sector

companies have in developing the potential of the Polish defence industry. In addition, the combination of expertise in the field of optoelectronics and electronics is in line with current trends on the global arms market. “One of the most important tasks for next year will be active participation of companies in the implementation of the programmes of the Ministry of Defence: PCO as a leader of the Future Soldier programme responsible for the integration of various components of the system, and Bumar Elektronika as a leader in the Shield of Poland missile defence programme. The establishment of the Polish Arms Group and the related plans for restructuring the Polish defence industry are a great opportunity for development for Electronics Division companies. The new structure can contribute to increasing competitiveness of the Polish defence industry in Europe and in the world. Thanks to the strategic coordination, the majority of projects will be implemented in the various subgroups, including the Electronics Division. This solution will allow a more efficient use of resources and will prompt the development of new technologies and the creation of innovative products,” says Ryszard Kardasz. According to “The basic information on the national defence budget for 2014,” published by the Ministry of Defence in April, defence expenditure in 2014 reflect the positive upward trend. As provided for by law, it will amount to 1.95% of GDP in 2013, i.e. PLN 32.04 billion, of which PLN 28.26 billion will go for national defence. The main objectives of the Ministry of Defence are to improve the command and control structures of the Armed Forces, to terminate Poland’s mission with the International Security Assistance Force in Afghanistan (ISAF) and upgrade military equipment, and its priority is to increase the operational copabilities of the Polish Armed Forces. The largest funds - 26.36% of the budget - were allocated to central support, 17.53% for securing armed forces, 13.73 % - to Land Forces (47,317 soldiers), 4.57% - to the Air Force (16,425 soldiers), 2.44% - to command and control of the Polish Armed Forces, 2.01% - to the Navy (7,600 soldiers). Unfortunately, only 0.38% of the budget was allocated to R&D. Defence spending per capita in Poland amounts to USD 271, while NATO’s average is USD 950, with European NATO countries - USD 453, and the United States USD 1,896. Poland fares slightly better in terms of defence spending per soldier: USD 104,000 compared to USD 244,000 in NATO, USD

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127,000 in European NATO countries and USD 402,000 in the U.S. Although godfathers of the Polish Arms Group stress once and again that the Polish defence industry should be based on innovations being the product of Polish technical thought, they are aware that purchases abroad will be necessary too. And because large amounts are at play, it was decided to take better care of Polish interests. In January, the government approved an amendment - proposed by the Ministry of the Economy to the Law on certain compensation agreements entered into in connection with supply contracts for the needs of national defence and security. The most important proposal is changing the nature of offset contracts from purely economic (compensation) to the defensive one. The new offset agreements are designed to protect essential security interests of the state. In addition, the responsibility for concluding offset contracts falls now within the competence of the Minister of National Defence (and not the Minister of the Economy as was the case previously). The Ministry of the Economy also suggested that all offset contracts should be directed at defence companies, which will contribute to the development of Polish defence capabilities and will allow further expansion of the European technological and industrial defence base. The document also envisages the creation of the Offset Committee, which is an advisory body to the Minister of National Defence. It will be performing analytical tasks related to defence and security. The amendment to the offset law was necessary because it needs to be consistent with European regulations. After changes, it will be in line with the Treaty on the Functioning of the European Union, especially with the provision authorizing each EU member state to undertake measures it deems necessary to protect its security.  Unfortunately, Polish companies will not benefit from the purchase of licences for the production of drones. Israeli companies Elbit Systems Ltd. and Israel Aerospace Industries Ltd. were supposed to join the tender worth PLN 1 billion, but in February, the Israeli Ministry of Defence suspended their licences for arms exports to Poland.  On April 25, the first metal sheet was ceremonially cut at the Remontowa Shipbuilding SA in Gdańsk to build a mine destroyer, Kormoran II, marking the official launch of the production of the unit with a maximum displacement of 850 tonnes. The contract for the construction of the destroyer’s prototype,

whose entire hull is made ​​of non-magnetic steel - the date of transfer for the Polish Navy being November 2016 - and of two serial units (to be transferred in 2019 and 2022) was signed in September 2013 between the Inspectorate of Armaments, the consortium formed by Remontowa Shipbuilding - the leader, the Research and Development Centre for Marine Technology and Naval Shipyard SA. It is worth noting that the project of a multi-purpose corvette “Gawron”, whose construction began in 2001, came to nothing. It was being developed by the Naval Shipyard in Gdynia. 7 ships of this type were supposed to be built, the first one, costing PLN 500 million, to be commissioned in 2009. In 2009, the Defence Ministry announced that the corvette would be completed in 2014 or 2015, and its final cost will be nearly PLN 1.5 billion. But in 2011, the shipyard went bankrupt and the project, which absorbed PLN 400 million, was abandoned. In January 2014, the Military Prosecutor’s Office in Poznań decided to discontinue the investigation on the construction of corvettes due to the statute of limitations and “no constituent elements of an offense.” Speaking of the Polish defence industry, one cannot overlook the aircraft sector. This is a domain of PZL Mielec and PZL Swidnik purchased in March 2007 by United Technologies Holdings (a company of United Technologies Corporation) and since 2010 making part of AgustaWestland Group. Mielec manufactures Black Hawk helicopters, and Świdnik - Sokół helicopters . Although the Polish Arms Group is only under consolidation, its companies pursue their own interests and hire common stands at fairs: Defexpo (Delhi, 6-9 February) And IWA & Outdoor Classics (Nuremberg, 7-10 March). The first one was attended by the Polish Chamber of National Defence Manufacturers, Weapons Factory “Łucznik” Radom, Mechanical Plant “Tarnów”, Bumar Amunicja, Bumar Łabędy and Chemical Plant “Nitrochem”. PCO presented miniature aviator’s night-vision goggles PNL-3M Orlik and daynight aiming sights CKW Bazalt and CWKW. In Nuremberg, at a joint stand with the Weapons Factory “Łucznik” Radom and Mechanical Plant “Tarnów”, it showcased a novelty - a set of day sights CKD-1 Szafir, a miniature universal monocular MU-3M Koliber (this year’s winner of the Defender award), a night-vision sight PCS-5M GABRO, a daynight sight CEC Bazalt and a thermal sight SCT Rubin. ::


Defence Sector

A decade ahead This is one of the slogans that guides operations of the Mechanical Technology Research and Development Centre in Gliwice. The company works towards the modernization of military equipment and the development of new technological solutions in the defence industry. “As a research and development centre, we have been a few years ahead of the current technology,” says Aleksander Nawrat, Development Director of Obrum Sp. z o.o.

O

brum Sp. z o.o. has been present on the Polish market for nearly 50 years. “We are not a manufacturing company,” says Andrzej Szortyka, President of Obrum. “We conduct research, provide services, documentation and products, which are later put into mass production by other companies.” This may also be the case with the new light tank that Obrum is currently working on.

From idea to prototype The concept of the vehicle was premiered at last year’s International Defence Industry Exhibition in Kielce. The tank, is to be a light

(up to 40 tonnes) armoured vehicle on a universal modular crawler platform. “The army set high requirements with regard to the armour designed to protect as much as possible people inside,” explains Aleksander Nawrat. “To this end, we suggested several solutions, including high ballistic resistance combined with an active defence system of the vehicle. An unmanned tower, a system monitoring the crew’s vital signs and technical parameters of the vehicle will also significantly increase safety. The project is scheduled to be completed by 2018. In total, Obrum Sp. z o.o. has developed 60 products, including: modernization of the existing equipment, implementation of the purchased devices and its own constructions. It currently holds 67 patented solutions, and further three are underway.

Simulators and virtual reality Owing to modern simulation technologies, it is possible to reduce the cost of training soldiers, making use of SK-1 Pluton or iRys systems. The first product is a training system for crews of the wheeled armoured vehicle Rosomak (four integrated simulators corresponding to a platoon). In addition to training, it is designed primarily for exercise in respect of military tactics. This is possible through a combination of advanced technology, and perfect adjustment of Rosomaks’ cabins to a virtual reality. The use of the HLA (High Level Architecture) and DIS (Distributed Interactive Simulation) communication interfaces creates the possibility of conducting, at the same time and in the same virtual space, exercise for much larger groups that

may be located in different units across Poland, as well as in other countries. In contrast, iRys is a system that makes it easier, among others, to force buildings or to rescue hostages by soldiers equipped with special goggles, weapon replicas and sensors that record the most important vital functions. In addition, iRys has an electrical system that simulates the effect of a gunshot. Overall, it enables tactical training of soldiers and carrying out any combat mission scenario for a team and 20 independent individuals. “Military simulations represent a major business in the defence industry, as it allows to achieve the same training objectives without compromising the lives of people and incurring costs. It is a common trend in the world and we want to catch up with other NATO armies and R&D centres in other Western countries,” says Andrzej Szortyka.

Dual use Many products made by Obrum, although they are developed for military purposes, can be successfully used on the commercial market, such as MS-20 Daglezja, a truck-mounted mobile bridge. A span fitted in a specially adapted track allows to overcome obstacles with a width of 20 metres, and it takes only 10 minutes to spread it. It is a perfect solution for regional crisis management centres in the event of floods or landslides that destroyed the existing bridges. The MS-20 belongs to the Daglezja family of bridges, which also includes MS-40 (truckmounted mobile bridge overcoming 40-metre obstacles) and MG-20 (a crawler mobile bridge overcoming 20-metre obstacles). ::

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Defence Sector

The army must continually

develop

Tomasz Nita, CEO of the weapons company Fabryka Broni Łucznik - Radom Sp. z o.o., talks to “Polish Market”.

So far, your flagship product has been the Beryl machine gun. It is highly appreciated by soldiers. What is its biggest advantage? The most important is reliability. The weapon may be lightweight, ergonomic, well-designed, but all this has no significance if it fails in difficult conditions, such as dust or mud, typical of what is called the theatre of war. Soldiers must be sure that their gun will shoot. They cannot focus on whether the weapon will work or not work, they must be focused on completing the task. Our weapons have been a bit modified as a result of foreign missions. The first Beryl guns we produced had a slightly different look. Beryl has been upgraded in terms of ergonomics and optoelectronic innovations. Now everything that is available on the market can be installed on Beryl. We have also worked on some of the nuances. Some switches are duplicated, some enlarged because soldiers had problems using them in gloves. We would not have been able to learn such things from the test ground. It turned out that in the desert this weapon was actually reliable, but had some ergonomic shortcomings. We listened to what soldiers suggested, we watched TV coverages, images in the media to see what soldiers do with our product, what modifications they use and pm

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- observing it - we tried to apply them and refine Beryl. Today Beryl is a rifle that successfully works in heavy-combat conditions. Beryl is a success story, but with the launch of a new plant, you want to market a new product. Why? The army must continually develop. We had new ideas to further upgrade Beryl, but the army told us, and I think rightly so, to focus on the development of a completely new weapon. We also wanted to use a completely new philosophy in the development of weapons. There are already the first effects of it in the form of the Modular Firearm System (MSBS), which is the whole family of our new products. MSBS is supposed to replace Beryl in the long term. Some units in the army still use Kalashnikov rifles. Beryl is not the only gun in the Polish Army. Soldiers on missions use of course only Beryl, but some units in the country still have AK-47 (Kalashnikov). Starting from the next year, we want to gradually equip the army with MSBS in the basic version. MSBS’s innovation is that we rely on a single chamber to install classic and bullpup layout. That is a novelty on a world scale. Given that the army is composed of career soldiers, who are well trained, they can be entrusted pm

with a complicated device. We want soldiers to be able to configure the weapon according to their needs, depending on the area where they operate. In an open area, the weapon is preferred in classic layout allowing shooting at longer distances. The bullpup configuration takes the upper hand in urban areas. With both systems installed in one common chamber, soldiers are able to choose the most appropriate equipment taking into account specific tasks. Soldiers will be given a set of elements based on which they will be able to configure one single weapon. The MSBS family will, in a few years, consist of 10 types of 5.56 mm guns. When designing this weapon, we departed from the principles characteristic of the Kalashnikov system: it contains a number of patents and innovative solutions developed by our designers in collaboration with experts from the Military University of Technology. So you bet on modularity and at what soldiers really need? It would be ideal if even the commander does not have to tell soldiers what weapon to use in a given action. The commander would tell soldiers what their job is and they would be able to gear the weapon to their needs using available elements. We also know that pm


Defence Sector everyone has their own preferences. Owing to modular solutions, soldiers will be able to configure weapons in such a way as to feel most comfortable with them and to have the greatest confidence. Professionals should be allowed to do so. Łucznik has been incorporated into the Polish Arms Group. In your opinion, is it beneficial for the company? The entire defence industry in the world undergoes consolidation. No other solution makes sense. As one group, we will have an opportunity to present a more comprehensive product range not only for the Polish army. So far, there has been a Polish-Polish competition. It cannot be that two Polish companies, having the same owner, I mean the government, compete against each other. The development potential has been inhibited too. Two companies would develop the same technology without communicating and cooperating with each other. It is bad taking into account the money and time spent, and the human potential involved. I think that the market can accommodate everyone. Let me cite as an example our cooperation with the Tarnów factory. We only make certain calibers, whereas they are focused on sniper rifles and heavy machine belt-fed gun. There is a place for everyone. Coordination is simply needed. Making part of a strong group, we also have better funding opportunities, and cheaper supplies pm

of materials and energy. A strong group is furthermore a more serious partner in cooperation with foreign companies, especially that international transactions look different today often involving technology transfers, and not only equipment purchase. Purchases are also combined of several products in one transaction. Such offers are now sought. Governments want a more comprehensive service and buy military equipment in packages. A large, state-owned group is a good partner for the

Polish army. The domestic defence industry is in fact a natural hinterland for the army and the main partner accompanying its development and modernization. Łucznik, which has implemented for many years a policy oriented at both product and technology development and manufacturing organization, has in a natural way found its place in the structure of the Polish Arms Group. I believe that, with a newly built modern plant, it will become one of its leaders. :: ADVERTISEMENT

UL.ELEKTORALNA 13 000137 WARSZAWA TEL.(22) 620038834, (22) 620031142 EEMAIL: INFO@POLISHMARKET.COM.PL WWW.POLISHMARKET.COM.PL

5  /2014  ::  polish market  ::  25

POLISH MARKET YOUR BUSSINESS COMPASS.


Defence Sector

Awaiting the market debuts of graphene-based products Zbigniew Mularzuk, President of the Management Board of Nano Carbon, talks to “Polish Market”.

What is graphene and why is it considered so innovative? In physical and chemical terms, graphene is a two-dimensional, single-atomthick layer composed of carbon atoms in a hexagonal, or “honeycomb”, pattern. It is often presented as a homogenous network. However, no such perfect structure exists; it can be manufactured in the form of small, adjoining and overlapping flakes. The attractiveness of graphene, and the fact that it is “in fashion”, comes from its unique properties – extremely high mechanical strength, ductility, thermal conductivity, transparency over the entire electromagnetic spectrum, impenetrability by nearly all substances, biological features, sensory capacity, and high electrical conductivity (mainly very high electron mobility). All these properties are combined in one substance – this combination is behind the revolutionary potential of graphene in the field of materials engineering. Note that graphene can be obtained or produced in two basic ways – by growing it on a crystalline material or by cracking graphite into extremely thin flakes. Polish scientists specialise in the former. The Warsaw Institute of Electronic Materials Technology developed a method of growing graphene on silicon carbide, which allows top quality structures to be manufactured. Graphene produced this way is intended for use in a new generation of electronic devices which can function in places where traditional silicon-based electronics can’t be employed, due to high temperature, power or voltage. We should also mention that graphene is the first stable, durable and useable twodimensional crystalline form and its unique properties are inspiring research on similarly structured materials with the aim and hope of finding other unique characteristics. pm

26  ::  polish market  :: 5 /2014

What are the potential applications of graphene and which of them is the most profitable? Graphene is described as “the rising star” of materials engineering and nanotechnology. It is, therefore, no surprise that global companies are increasingly enthusiastic about the technologies developed with this new material. It is Nano Carbon’s main objective to selectively invest in products with a high market potential. It should be stressed that the state of work on the commercial applications of graphene is nowhere near as advanced as the mythology that the media would have us believe, with claims that this wonderful material is one step away from mass application in all areas of life, or that it is already in use. The hopes for a graphene breakthrough in various areas of technology are definitely justified, but they should be considered with real capabilities in mind – and these show that graphene might remain in the lab for quite a long time. For the time being, we are awaiting the release of graphene-based products. Conductive graphene ink will be coming to the market, which will make it possible to print flexible electronic circuits on any surface. Construction materials are the subject of experiments and there are high hopes for the biological properties of graphene. The potential areas in which graphene might be applied can be determined and then compared, for example on the basis of scientific publications and patent activity. Some notable fields include the automotive industry, chemical sensors, composite materials, batteries, fuel cells, ultrafast lasers, solar panels, touchscreens, and supercapacitors. Obviously, not all the research results are published and patented. Some corporations maintain strict confidentiality, working on the assumption that disclosing the nature and scope of their R&D activities reduces or pm

even rules out the possibility of achieving a competitive advantage. Which applications are the most profitable? I think that at this stage these are construction materials, sensors of various substances and electrical energy storage solutions – in the form of graphene-modified Li-ion cells and supercapacitors. Such storage solutions open up new opportunities for making use of renewable energy sources and can be an impulse for electric cars optimisation and market expansion. Can graphene become a Polish export product? It already is one. Note also that the Polish scientist Włodzimierz Strupiński, PhD, is a manager in the Graphene Flagship European research initiative. I’m mentioning this because we must not forget that this “commodity” also involves intellectual capital and value created by being part of the leading global R&D projects. Coming back to the Polish proposal – within the next couple of days Nano Carbon will be marketing 300x300 mm graphenecovered copper foil sheets. The graphene structure will be uniform and single-atom over the entire surface of the sheet. No other company can boast such a product. pm

Is Nano Carbon’s inclusion in the Polish Arms Group a sign that the Polish Army wants to explore the most innovative development paths? That’s how I see this decision on the part of its owner. It is certainly a huge opportunity and a challenge for the company. This will elevate the quality requirements to the stringent standards used in the defence industry, where the performance and reliability of equipment directly determine the safety of soldiers on the battlefield. Especially in recent weeks we have been obliged to re-evaluate this field, as innovation in the Army is becoming a question of national interest. :: pm


HIGHEST QUALITY - PERFECTLY MANUFACTURED is guaranteed by:

Zaklady Mechaniczne „BUMAR-£ABÊDY” SA which produces and performs repairs and modernizations of: - armoured equipment, including the tanks of T-72 family and armoured recovery vehicles (ARV) - turrets for infantry fighting vehicles (IFV) Rosomak, tested during military peace keeping missions - chassis of heavy self-propelled howitzers - specialist military equipment.

SECURITY - RELIABILITY - EFFICACY Zak³ady Mechaniczne „BUMAR-£ABÊDY” SA, e-mail: bumar@bumar.gliwice.pl, www. bumar.gliwice.pl


Defence Sector

Polish Space Agency – POLSA means new opportunities

A counrty’s presence in space encourages the rapid development of technologies, for example satellite ones, which can have numerous applications in communication, navigation, security and defence, environmental monitoring, responding to natural disasters, etc. It will benefit Poland’s economy, companies and research institutes as well as Polish innovators.

T

here are already dozens of government space agencies around the world. In the CEE region, these are established in Ukraine, Czech Republic, Hungary, Romania, and among the developing countries – in Bangladesh, Egypt, Nigeria. In July 2012, the European Space Agency (ESA) unanimously approved Poland’s accession. The final step to full membership was the ratification of the agreement by the Polish parliament and the President of Poland, which took place in November 2012. The European Space Agency will support the commercialization of research findings and the introduction of new technologies. By joining ESA, Poland was given new business and scientific opportunities; Poland’s membership in ESA is a catalyst for the development of new technologies. ESA’s industrial policy relies on delegating tasks, as far as possible, to the European contractors and allocating contracts in such a way that a given country receives contracts of a value close to its contribution to ESA’s budget. ESA’s membership gives Poland greater opportunities for cooperation within the framework of partnerships (consortia) and bilateral agreements. Demand is rising in Poland for products and services using satellite

28  ::  polish market  :: 5 /2014

technologies, which is also a magnet for foreign investment.

Going to the conquest of space

Parliamentary clubs, united as hardly ever, have submitted a Bill on POLSA, a Polish equivalent of the famous NASA. The Agency will report directly to the Prime Minister, with an initial budget of around PLN 5-10 million per year. The main task of POLSA will not be space exploration, but defence and supporting Polish industry in winning new contracts. The mission of the Polish Space Agency (POLSA) is to coordinate activities that are now scattered among different institutions and ministries, identify interesting and important applications, create its own laboratories, facilitate knowledge sharing, etc. The employers’ association of the space sector in Poland consists of 28 members, 24 of which are companies, mostly small and medium-sized, operating in sectors such as IT, defence, security and services based on satellite applications. The creation of the Agency will allow to coordinate research and economic activities, as well as international cooperation with regard to research and exploitation of space. It is intended to coordinate all Polish space initiatives in the sphere of administration, science and industry.

“It is not about the space, scientific research, a flight to Mars, but about defence programmes, which make up 70% of the Agency’s activity. It is about the country’s defence, about people’s physical security and life comfort, because you can do it all from the orbit,” said Włodzimierz Lewandowski, Ph.D., Chief Physicist at the International Bureau of Weights and Measures (Newseria Business) . The annual budget of the Agency will be relatively small compared to the contribution (approx. PLN 130 million) that Poland has committed itself to pay to the ESA. This money is then repaid in contracts. At the beginning, POLSA will cost PLN 5-10 million and employ 20-30 people. In 10 years, the staff number is likely to increase to 200-300 people and these will actually be engineers only. It will benefit Poland’s economy, companies and research institutes as well as Polish innovators who create inventions used in the aerospace industry. Owing to the cooperation with ESA, Polish entrepreneurs and scientists will receive both financial support and access to infrastructure. Such a cooperation is likely to significantly improve the life quality of Poles, who every day, unconsciously, use devices and applications produced by the space sector. We use them when, for example, doing shopping, housework, driving a car or surfing the Internet. ::


www.wbgroup.pl

ul. Poznańska 129/133, 05-850 Ożarów Mazowiecki, tel.: +48 22 731 25 00, fax: +48 22 731 25 01, e-mail: info@wbgroup.pl


Defence Sector

Scientific fight for the future Prof. Mariusz Figurski, Vice-Rector for Development at the Military University of Technology (WAT) in Warsaw, talks to “Polish Market”.

This year, you are preparing the publication of “180 Top Technologies of the military Univeristy of Technology. What is your advantage over other universities and research centres? Our advantage is that most of our research leads not to reports but concrete products. The most problematic is putting them on the market outside the armaments sector. The latter is stable - determined by the state capital - and we know our way round. The thing is that a number of solutions we create can be used in other sectors of the economy like for example in ​​cyber security, which is lately fashionable. pm

Is such an opening not going to benefit most of your competitors in the R&D sector? It would be good if it benefits them too. Competition is a stimulating factor, and we are confident about our potential and our advantages. The most important of the latter is experience that we have been gaining for years, that is at least since 1989, when the economic transition began i Poland. The year also marks changes in military technologies in the Polish army. If we take into account the Communist period, WAT’s history dates back to its inception in 1951. And WAT fits well in a nearly 250-year-old tradition of the military education in Poland. pm

pm

In Poland, there have always been a lot of projects that reached a certain stage of implementation, with some prototypes, and then were discontinued, so the problem is deeper. Do you believe that the Military University of Technology is able to successfully enter with its dual-use technologies a competitive civilian market and get confronted there with producers from outside the defence sector, including large international corporations?

30  ::  polish market  :: 5 /2014

In the field we are working in the answer is yes! In the rankings of Polish universities of technology, all departments of WAT are among top 10 schools. Does it mean that you have no weak points? Rankings are compiled with respect to different aspects of academic activities. I would be most interested in the ranking illustrating the structure of university budgets - how much the universities get from the state, and how much they can acquire themselves by obtaining grants, commercial contracts, implementations, licensing agreements, etc. I dare to say that in such a ranking WAT would be in the first place, because approx. 50% of our budget comes from research, implementations and innovation. This does not mean that everything is perfect. For the past six months, we have analyzed these processes at WAT - we already know what went wrong and what can be improved relatively quickly. Still, much remains to be done. pm

The reform of the entire Polish R&D sector is heading in this direction, isn’t it? The National Centre for Research and Development has already done a great job, rebuilding the national system of allocation of public grants for research and development projects. This process should be continued, with a focus on creating rules to pursue projects that give prospects for commercialization. We see this also in our own backyard: we have worked out demonstrators of new technology of the 8th grade, which is twice more than in typical R&D projects. However, information is missing which companies would be interested in implementing all the product or one of its elements. To deal with it, we thoroughly analyzed several technologies, which have been created in recent years at WAT, and we know what we have to improve pm

-it is the area of commercialization, ​​ which is, in my view, the third pillar of the university, after science and education. Commercialization combines human potential and the results of scientific research. The “third pillar” requires a good understanding of market mechanisms related to the whole process of commercialization, of how the product is commercially valued, of how to determine the costs of implementation, marketing, intellectual property rights protection, etc. If we make a mistake at any stage of this process, we will nor succeed. For example, in our case, it appears that the sale of licences is often more profitable than patent protection, but it requires extremely well-designed contracts and, therefore, an appropriate legal framework. I would exaggerate saying that we have already overcome all these problems, but we do have a road map. pm

It looks great. But everything takes time...


Defence Sector

Yes. We believe that we can deal with it in the course of the new EU financial perspective. Analyzing research processes taking place at WAT, we diagnosed phenomena that we have to change and we will do it quickly. We are constantly pursuing the university’s mission to be a “staff breeding ground.” We have opened programmes for civil students, we created civilian-military groups, which turned out to be a great idea. The proof of the quality of our education is the participation of our students in the world finals of the most prestigious technological contest Microsoft Imagine Cup. Let us talk a bit about the research areas in which scientists from WAT are successful today. The most important research areas at the Military University of Technology, which carry a large technological and economic potential, include: laser technology, optoelectronics, navigation and satellite observation, satellite communication, new sources of renewable energy and directed energy weapons. These areas are an inexhaustible source of dual-use technology. Let us have a look at space and satellite technologies. The first impression is associated with satellites, shuttles and space stations, while most of the solutions have their first applications on Earth. These technologies are important in the area of national security, but we also point to their utilitarian use. For example, together with our industrial partners, we have applied to the European Space Agency. On April 17 an agreement was signed, in the National Centre for Research and Development, to develop a feasibility study of the strategic programme “Satellite-based Optoelectronic Earth Observation System” (WAT is the leader of the project). The Military University of Technology also participates in projects implemented by the National Center for Space and Satellite Engineering, especially in the construction of the telescope 90+, as well as in defence-related programmes (“Shield of Poland”) and energy security ones. On the initiative of WAT a roadmap is being developed of the Polish space exploration research infrastructure. As regards the above-mentioned protection of cyberspace, it is a domain of the team of Prof. Andrzej Najgebauer, who deals with cyber security systems and battlefield simulation systems. We have signed agreements with a number of companies specialized in this area. We want to use the results of our research to develop a cyberspace protection system for universities in Poland. Not without significance is our enormous potential and pm

experience in cryptology. We are rebuilding, based on WAT’s human resources, the Polish team of cryptographers. It is worth noting that WAT houses the National Centre for Cryptology. We want all these areas of ex-

“For the past six months, we have analyzed these processes at WAT - we already know what went wrong and what can be improved relatively quickly. Still, much remains to be done.” ploration to fall under the Operational Programme “Digital Poland” and to be carried out mainly by Polish IT companies. Last year, WAT’s Technology Transfer Centre was set up, which manages our intellectual property, assists inventors, sets the directions in which to commercialize research findings. It presents our commercialization model and various companies formed by WAT and its partners, such as the Polonia Aero,

a large laboratory for testing aircraft engine turbine prototypes. It is to be built in Zielonka, outside Warsaw. The Military University of Technology is the only Polish university that has set up its own cluster. On the initiative of Prof. Mariusz Łapiński, the Director of WAT’s Center of Biomedical Engineering, a biotechnology cluster has been formed, bringing together 15 organizations representing businesses and research organizations. Its aim is to develop innovative products and services in the field of biotechnology, waste management, water management and the widely understood environmental protection, and to market them domestically and internationally. In the near future, we will initiate the second cluster the space and satellite engineering one. The size of WAT, measured by the number of students, seems to be optimal from the point of view of the quality of education and research. Therefore, our goal for the coming years is to improve cooperation with business partners. WAT unites the scientific community to use mutual experience without wasting money for research in the areas studied by other centres. Another important aspect is shortening of the time from the inception of the project to its market implementation. Business partners, participating financially in a research project, realistically expect a rapid return on the product sold. Such an approach requires a mental switch. Cooperation is needed that will ensure the dynamic development of the university and the business environment. ::

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Industry

Conventional energy sources provide heat and electricity regardless of the time of day, year, or wind strength Roman Łój, President of Katowicki Holding Węglowy (KHW), talks to “Polish Market”.

pm

You have recently carried out a very innovative coal gasification process in “Wieczorek” mine in Katowice. What does it consist in and what is it intended for?

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The experiment is not finished yet, and a pilot attempt is carried out by a group consisting of several research and mining institutions, including the AGH University of Science and Technology, the University of Silesia and the Central Mining Institute - as a unit coordinating specific tasks. The idea is to develop coal gasification technology for highly efficient production of fuels and electricity, which is one of the research tasks under the Strategic Programme for Research and Development. It is financed by the Polish National Centre for Research and Development. We are involved in the part concerning underground coal gasification. Generally speaking, the idea is to burn coal underground instead of burning it after extraction, and to obtain gas that can be used for boilers, engines and in chemical industry. Beds do not need to be mined and coal transported on the surface. This may be applied in the case of debris deposits or hardly accessible deposits, for example in the case of large coal deposits located at

depths greater than 1,500 meters, well below the current limit of the profitability of traditional methods. For the purposes of the experiment, we have made available one deposit in “Wieczorek” mine, we have secured it and provided it with an installation funneling oxygen and carrying away syngas, which is tested and burned on the surface. It is a pilot installation, which aims to determine benefits, costs and problems it may bring. It is necessary to determine how much gas can be retrieved from a given amount of coal, how big one single georeactor can be, what grid density is needed to gasify the entire bed, and how much the underground and on-the-surface installations - the one receiving gas and the one using it - will cost. There is a series of questions that need to be answered.We have already selected a bed which can be used in this way on an industrial scale. But first we have to finish the experiment, sum it up, and carefully weigh any possible costs and profits.


Industry

In times when profit is defined also in terms of innovative technologies, does KHW work with research units to develop such solutions? We are too small as a company to independently conduct research. But we get involved in such programmes wherever possible. In a sense, we have no choice. We have to compete with mines in Siberia or Mongolia, where mining costs are several to twenty dollars per ton. In Poland, the deep mining method corresponds roughly to ARA prices. Our advantage is high-quality coal and low costs of transport, but competition will continue to rise in power. Therefore, anything which gives a concrete hope for reducing production costs and achieving additional profits is worth some interest and commitment. pm

Do you think that, in the current tense geopolitical situation and the possible disruption in gas supplies from Russia, coal will come back into favour? I constantly hope that it will be so, and doctrinaire thinking will finally be replaced by the logic and economic balance. Coal is and will be the cheapest source of energy. Nothing indicates that for technological reasons it could be effectively replaced by other sources in the near future. That is true not only about Poland. Germany, which departed from coal, is coming back to it building new, interestingly, brown coal power units, which have a lower heating value, and emit more pollutants than black coal. Japan, after the Fukushima nuclear disaster caused by a tsunami, bets on coal-based energy. And the country does not have a single active coal mine. It does not substitute pm

nuclear with gas, wind turbines, solar panels or sea waves. Should we suspect they cannot count? What to choose then: energy from conventional sources or from renewables? There should be some kind of energy mix. It is true that, according to latest estimates, coal in Poland should be enough for at least a few dozen years of normal use, but some time it will finally get depleted. Probably not as fast as foreseen by experts like those who 40 years ago predicted a twenty-year career of crude oil, still there will be some end one day or another. Therefore, we have to be reasonable. However, in Polish conditions, energy companies cover the full cost of energy production from fossil fuels and pay additional burdens. In contrast, renewables are subsidized and have guaranteed prices. In imports, energy is sold for almost nothing, because our neighbours generate surpluses in wind turbines peak working time. That discourages investment in the development, modernization, replacement of power units so they are more efficient. And, whether one likes it or not, conventional energy sources provide heat and electricity regardless of the time of day, year, or wind strength... So we have powerful Asian economies China, India that are strongly focused on coal, U.S. that moves away from coal not for doctrinal reasons, but due to having a cheaper raw material, i.e. shale gas, Germany that despite the Nord Stream gas pipeline and a significant economic affinity with Russia - no matter the political situation - returns to coal, and Poland where we actually still do not know what is ahead of us. Practically, since 1991, no comprehensive fuel and energy balance has been compiled. So no one tried to determine how much coal and from what sources - domestic, imports - will be needed for our energy sector. On the other hand, we have a strong renewable energy lobby, some representatives of which behave as if they believed that destroying the national coal-based energy sector will lead to a situation of no choice: only expensive renewable energy generation and imports will remain. pm

Do you think that in that situation the European Union should withdraw from the stringent CO2 limits? According to advocates of the climate package, coal combustion results in the carbon dioxide emissions, which is true, and to climate warming, which - said in terms of certainties - is abusive. There were once pm

a tropical sea and a glacier where our company is now. Man was not there yet, so they could not interfere with the climate. Relationship has not be proved clearly between human activities and the global climate change. Moreover, the full implementation of the EU climate package may reduce greenhouse gas emissions by up to 1% on a global scale, which gives an amount bordering a statistical error. The implementation of the climate policy costs EU countries hundreds of billions of euros every year. At the same time, it causes a significant deterioration of EU industrial competitiveness and the exodus of manufacturing plants to countries that are guided by logic, not dogma. Someone imagined that the European Union will be a clean piece of the world, without production, offering services, technological ideas and providing consultancy to the rest of the world. But it works neither in the new EU countries, which still have to go a long way of development, nor in the so-called old Europe. The basis of countries’ economic existence is production, manufacturing goods that can be sold. Although this cannot be seen from air-conditioned offices in major political centres, the vast majority of production is dirty. And it cannot be different. Bringing “dirt work” outside the EU is no solution: neither for economies nor for the Earth. How do you assess the energy security of Poland? Poland has currently the EU’s highest rate of energy security, i.e. the degree of coverage of energy produced with its own resources. Let us make use of it - in a time when everyone talks about the concept of energy security. Meanwhile, we put a great emphasis on cross-border transmission capacities, pipelines, underground oil and gas storage... We have at our fingertips enormous resources of coal and lignite able to provide energy security and the cheapest electricity for many years. Curbing mining or closing down mines is a one-way operation. We have to make a decision: either invest and exploit, or close. And indeed, if the situation does not radically change soon, we will need to very seriously consider closing certain mines and the Upper Silesian Coal Basin due to costs. We should, however, be aware of how much we will have to pay for imported coal for lack of domestic mines and in the absence of competition. And how much end customers will pay for it. Everything in economy is a function of supply and demand. :: pm

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Industry

We are following in the footsteps of Domeyko Herbert Wirth, President of KGHM Polska Miedź SA, talks to “Polish Market”.

The recent severe earthquake in Chile could pose a threat for KGHM’s latest brainchild – the Sierra Gorda mine. How was it protected? This region of Chile is very sensitive to possible seismic tremors, so we took it into account when making the decision to acquire the mine. We have taken appropriate measures to protect it against the possible consequences of the disaster, although it entailed an increased spending: outlays estimated at the stage of feasibility study were lower, but increased as a result of changes to the security measures. Today, however, the mine is safe enough to withstand tremors of up to 10.2 on the Richter scale. Fortunately, the epicenter of the latest earthquake was far away from our mine – it was most felt in a town about 300 km north of Sierra Gorda. pm

KGHM is now a global company, operating thousands of kilometres away from Poland. How was the idea born to go global? Your activity within one country proved insufficient, or such are the requirements of the times? Until recently, we were focused on a single bed in Poland, but exploitation of an underground mine is relatively expensive. So we were looking for opportunities to diversify costs, and actually to ensure the company’s security. We sought to venture into lower-cost assets, preferably an open-pit mine. That is how the idea was born to acquire Sierra Gorda, or expand to Latin America in general. pm

Herbert Wirth, president of KGHM with the Honorary Pearl award in the Economy category

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“I think we should go into projects that will naturally protect us against the rising energy costs. It is an assumption beyond our willingness to get involved in nuclear and renewable energy – I am myself a fan of photovoltaic cells and I believe they have a future.”


Industry

I also had a dream. If you can feel your company, and it has certain know-how, you would like it to be recognized somewhere in the world, and to make money while selling skills. Dreams sometimes come true. There was also a patriotic factor. KGHM was not the first Polish establishment in Chile. After 1863, Ignacy Domeyko worked there, so I can say that we are now following in his footsteps. He spent 46 years in La Serena, where he settled as a refugee from Tsarist Russia. He got married and had children there. We have had an opportunity to meet his grandchildren. KGHM was willing to take patronage over Domeyko’s legacy, but we have not managed to reach an agreement with his heirs. Does it mean that activities in Poland become less important for KGHM? Not at all. In addition to searching for new deposits of copper and other metals, we would like for example to implement an intelligent mine project, where it would no longer be necessary to send people to risky areas. Anyway, we are guided by the same idea in Chile. We contemplate unmanned devices that make use of neural networks. pm

KGHM’s history dates back to the Communist regime and the creation of a mining and metallurgical complex, employing over 60 thousand people with all accompanying welfare facilities (crèches, kindergartens, schools, clinics, etc.) as in a medium-sized town. We were not an independent company. We had no influence on copper prices as these were determined by foreign trade enterprises. In subsequent years, the company was to undergo an almost incessant restructuring. This was done without lay-offs because people made redundant moved to companies that provided services to KGHM’s core business. Today, we employ over 18 thousand people, over 40 thousand less than a quarter of a century ago. We are still the region’s major company. Through the years, we have been driving culture in the cities of Lubin or Polkowice, the whole infrastructure of the region being formed by KGHM. And nothing has changed in this respect. Over time, however, we have made a real leap forward. KGHM is a modern globally-oriented company, focused on generating income for its stakeholders, the largest of which remains the State Treasury. Environmental protection has become an essential requirement of the present time. How is it at KGHM? Of course, we are a company that cares about environmental protection. The expression of it is an award we have received from a prestigious Canadian foundation acting in the field of sustainable development. In 1989, our plants were on the list of 80 biggest polluters in Poland, especially in terms of sulphur dioxide emissions. Today, they practically do not emit SOx as we use it for the production of sulphuric acid, an excellent chemical industry product. There is no doubt, however, that 1989 saw a new opening for companies that have an idea for their business future. pm

Is it a distant future? A very close one, although we still employ people. In Chile, one of the problems we face is increasing labour costs. And so it is in Poland. The difference is that in Chile there is an employee market. It is an employee who chooses a job there, and not vice versa. That is evidenced by the fact that the unemployment rate in Chile is less than 5%. Labour costs incurred during the construction of the mine turned out higher than estimated when we envisaged investing in Chile. Nevertheless, innovation, not only in Poland, allows to mitigate cost-related risks. For example, we are involved in a renewable energy project. We want to build on the Atacama Desert a copper-based photovoltaic farm, which would use sunlight to generate electrical energy required for the production of copper. In Poland, quite differently, copper is smelted in foundries, while in Chile, we rely on chemistry. There is some kind of a dream at the core of our expansion. pm

pm

KGHM is one of Poland’s flagship successes of the last quarter century. While the company has been operating for more than 50 years, it saw a particularly intensive development over the last 25 years. Where did you stand in 1989? And at what point are you today?

How did it happen that KGHM executed the largest foreign transaction ever made ​​ by a Polish investor – the acquisition of Canada’s Quadra company? What brought the idea about? First, we started thinking about buying a project, and not about taking over a company. By buying a mine, together with an external partner, we could exploit copper. The mine at issue was Sierra Gorda. Then Quadra announced a tender for the sale of its mine. We were shortlisted, along with the well-known Japanese company Sumitomo that eventually won the tender. Finally, we decided to take over the mine’s owner. In February 2012, we pm

Herbert Wirth and Krystyna Woźniak-Trzosek

acquired a majority stake in Quadra. From today’s point of view, I must, unfortunately, point to some lack of acceptance for this project from the Polish state. KGHM has recently participated in energy-related projects. What future do you see ahead for the company in this segment of the economy? The way we think about energy has changed. I think we should go into projects that will naturally protect us against the rising energy costs. It is an assumption beyond our willingness to get involved in nuclear and renewable energy – I am myself a fan of photovoltaic cells and I believe they have a future. In my view, we can create a Polish product based on metals extracted in Poland. We are – next to the Treasury – the main shareholder of the Tauron energy company. It is not going to change yet. We have invested in Głogów and the adjacent area in two boilers for combined heat and power generation of a capacity of approx. 90 MW. Currently, KGHM covers 25% of its energy demand from its own sources. With such an amount of energy it is possible to react in case of blackouts or random events, to quickly evacuate people from underground mines, early extinguish furnaces or ventilate pits at risk. This objective has been achieved. We are waiting for the investment to be officially started. :: pm

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Industry

Polish energy security is under no threat Many important jubilees are being celebrated this year. Poland regained independence in 1989, joined NATO 15 years ago, and became member of the European Union 10 years ago. These were landmark events which we would like to assess not only from the historical perspective, but especially from the forward-looking one. We interviewed Mr Paweł Olechnowicz, President of the Board of Grupa LOTOS S.A. Prime Minister Donald Tusk has promised simpler legal processes to investors interested in shale-gas extraction in Poland. Do you think this will accelerate growth in the shale-gas sector? On 11 March 2014 the Government adopted a draft amendment which will eliminate the administrative barriers inhibiting the searching for, identification and extraction of hydrocarbons (including mainly shale gas). The amendments to geological and mining law, and also to other legal Acts, will have a positive impact on the hydrocarbon-extraction industry in Poland. Among other things, new principles for licensing hydrocarbon-related activities will be introduced. A wide array of changes is intended to provide simpler legal processes and to eliminate bureaucratic barriers. This has been a major decision and a step in the right direction. pm

The European Union and the United States have been negotiating an agreement on the supply of liquefied gas from the USA to EU countries. Can this make Poland independent of Russian gas? I do not think a single decision can lead to such independence, but several different decisions optimising gas supplies certainly can do so. The U.S. authorities are under strong pressure exerted by a united Europe regarding the abolition of the current crude-oil and gas-export ban. This issue is complex for many reasons. Firstly, the USA does not have the right technical facilities to liquefy gas and reload it on ships, although the construction of adequate installations has already begun. Americans, for whom the economy is top-priority (to quote one of the U.S. Presidents – “It’s the economy, stupid!”), precisely calculate the benefits and losses which can flow from hydrocarbon exports. The energy-absorbing industries are moving to the USA, mostly from Europe, in order to use cheaper raw materials. This movement entails increased employment and higher pm

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GDP. Should there be huge supplies of liquefied gas from the USA, Europe would be much less dependent on Russia. However, this concerns political strategies which go beyond the scope of business considerations and the impact of businessmen. To conclude, I believe that an optimum “energy mix” leading to permanent European independence from Russian supplies, should comprise both American gas, and increased supplies of Norwegian and British gas, extended gas transfers from Northern Africa, and liquefied gas supplies from the Middle East. If these sources are activated or extended, we will be able to speak of steady non-sensitivity of the European economy to fluctuating supplies from the east. In my opinion, the whole issue is not about cutting ourselves off from Russian gas. It would be irrational, given that the Russian gas fields are located relatively closely to those areas to which gas is supplied. Forgoing these supplies for non-business reasons would not make sense. Instead we should aim at a situation in which decisions concerning gas supplies, supply conditions, technical parameters and prices could be made by enterprises or corporate groups while the gas itself would not be the object of political horse-trading. What is your opinion about the current status of Poland as regards energy security? It is under no threat. This results from, among other things, the awareness of the absolute need to maintain this security, on the part of both the Government and the business world. Without any false modesty, I wish to remind you that LOTOS S.A., as the first Polish large enterprise in the energy sector, emphasised the need for business entities to be mindful of the energy security of the country. This was what we had in mind when establishing Central Europe Energy Partners (CEEP) four years ago. This organisation unites companies, scientific centres and institutions, operating in the widely understood energy sector in Central Europe. Owing pm

to CEEP’s activity in Poland and in the European Union, we have reached a consensus of ideas and operational modes among the authorities and energy-sector enterprises, which is extremely beneficial to overall security. In the past energy was considered “bread and butter” for the economy, while nowadays it is viewed as “daily bread”. It must therefore be a safe harbour to the public that can hardly function in the 21st century without steady and regular supplies of electricity, gas and liquefied fuels. What, in your opinion, should the Polish fuel mix look like? Hard coal and lignite form the basis of our energy sector. These energy carriers are used to produce over 90% of the entire electricity output of Polish power plants. We should not yield to the heated and often violent critique of extreme ecological organisations which demand the immediate shut-down of coal-fired power plants, as their views are inappropriate and daydreamt. Coal-fired processes should be refined to reduce their environmental impact. Modern technologies can surely do so, which can be seen in Germany, where several coal-fired facilities are currently under construction or modernisation. As regards the Polish fuel mix, coal has to play the leading role at least for the next decades. We must avoid a situation in which we make our best endeavours to catch up with the EU-15, at the same time putting an excessive burden on society, resulting from stringent CO2 emission standards. I hope that the much more economically efficient western countries will understand that closing the GDP and living standards gap is in the best interests of us all. Europe must compete with the rest of the world. High energy costs do not foster such competition and huge income disproportions between individual countries do harm to it. These are complex issues but I am convinced of the willingness to consider our postulates and views. :: pm


Energy

The EU energy sector in Putin’s shadow

Patryk Mirecki

W

ill Russia’s expansionism against Ukraine indirectly result in easing of EU energy policy insofar as it aims to reduce CO2 emissions? That question can be answered quite soon: at European Council meeting in June. Energy industry experts, however, believe that even if a makeover occurs in the current position of the EU, it will be evolutionary and will become apparent in the long run. Perhaps only Putin’s radical move - closing the gas tap for Ukraine that is indebted to Russia - will prompt the European Union to change its energy policy. Paweł Mikusek, spokesman for the Polish Ministry of the Environment, said in his remarks for “Polish Market” that energy security and diversification of energy supplies are closely linked with the goals of climate policy. Currently, both issues are under discussion in the European Union. Conclusions from these analyses will probably be drawn at the European Council’s meeting in June. It will assess what has been done to date in

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accordance with the Council’s conclusions of last March. In the opinion of Mikusek, however, it is too early for the time being to anticipate possible changes in the climate and energy policy of the EU. Konrad Szymański (PiS), member of the European Parliament, is more radical. In his view, the best things have happened in the EU’s energy policy as a result of an aggressive Russian policy. In this sense, the “accidental father” of positive developments in EU energy policy is Vladimir Putin. So perhaps the principle must continue in order to toughen the EU’s present stance.

Three goals with the domination of energy balance EU energy policy is based on three goals: sustainable, competitive and secure energy. As written by Jerzy Dudek from the European Centre Natolin in his recent study, sustainability has begun over time to play a dominant

role at the expense of competitiveness of the European energy sector. However, according to Dudek, changing circumstances - the recession-driven eagerness to increase competitiveness of the industry and the aggressive foreign policy of Russia - may lead to the restoration of balance between the three goals. In fact, it is energy policy that was to become a leading topic of the last meeting of the European Council of 20-21 March 2014. If it did not happen, it is due to the Russian invasion of the Crimea. As a result, key decisions on energy and climate have been postponed.

Renewables instead of coal? If the EU has focused over the last decade on achieving the sustainable development goal, it is because of the times of prosperity, when governments and companies in the energy sector had a lot of money, explains Szymański. The idea was coined then that the EU’s giant leap towards renewable energy sources will


Energy

lead to economies of scale. The result would be a sharp drop in the cost of energy production and a rapid leap towards energy independence and CO2 emissions reduction. Coalbased energy generation, which was found guilty of “all evil”, i.e. greenhouse gas emissions, was doomed to gradually disappear and be replaced - the sooner the better - by renewables (or “clean” nuclear energy). This thesis still circulates somewhere around the EU. However, several years on, experiences vary. Szymański says that many people who trusted it have a headache today. For example, Spain almost from day to day invested heavily in the renewable energy sector. And then suddenly it had to withdraw due to the increasing sovereign debt. Many industries came to existence for which the development of renewable energy sources created potential benefits. They are interested in continuing the “green” policy, because they either deal with renewable energy or invest in it. And of course they would like these investments to remain profitable.

3 x 20 “An important role was also played by a quantification of the sustainable development goals - the catchy slogan “3 x 20” by 2020 - in the absence of similarly formulated ambitious goals in terms of competitiveness and security,” adds Dudek. Making the decision that by 2020 the EU will reduce its greenhouse gas emissions by 20%, will increase by 20% the share of renewable sources in the energy mix and will improve energy efficiency by 20% (for all these purposes the base year was 1990) was easier than formulating similar goals in relation to the degree of integration of the energy market (and thus influencing the competitiveness of energy prices) and in terms of energy security.

Polish veto Meanwhile, even that was not enough for the EU air pollution fighters and renewable energy enthusiasts. As reminded by Dudek, starting a debate in 2011 and setting plans for a low carbon economy by 2050, the European Commission remained in line with the existing logic of the energy policy. Finally, negotiations on establishing goals until 2050 did not lead to concrete decisions because of opposition from the Polish government. The European Commission proposed a reduction in greenhouse gas emissions by 40% compared with 1990, and the share of renewables at the level of at least 27%, but only for the whole

EU, without binding national targets. At the same time, it was pointed out that the issue of energy efficiency will be analyzed in detail during the review of the Directive on energy efficiency, which is to end in 2014.

Negative consequences for Poland What are the chances that Poland cuts CO2 emissions? In a recent interview for the portal wnp.pl, Janusz Steinhoff, a former deputy Prime Minister, stressed that Poland emits approx. 1 t CO2/MWh. He added that the reduction of emissions in Poland in the foreseeable future will not be the result of the diversification of fuels in the power sector. “It can be achieved through the modernization of the electricity generation sector and replacing outdated 30-40-year-old low efficient units with new ones. This is the most effective way of reducing CO2 emissions in Polish conditions.

Energy security is back in EU debate

Market” that the resolutions of the March European Council are indicative of some visible emphases. “When it comes to energy security, I feel it begins to feature higher on the agenda. However, it is not determined yet and requires further discussion.” According to Chmal, opinions vary from one EU country to another. For example, Germany, Scandinavia, France and Western Europe in general invested heavily in renewable or atomic energy. In addition, public opinion there favours further restrictions on CO2 emissions and advocates the development of renewables. The West feels quite safe. “For them, what we say about the need for independence from Russian gas supplies sounds like a fairy tale about an iron wolf,” says Chmal. “The European Commission itself must reevaluate its way of thinking,” he points out. Firstly, because CO2 emissions are actually not related to the production of electricity, but to the consumption of goods. If Europe buys in China or in other places, then it will be buying the carbon footprint and emissions of CO2. Poland’s role is to move the issue up on the agenda. And show some related hypocrisy: we buy products with emissions: T-shirts, jeans and i-pads, whatever. ::

Tomasz Chmal, an expert at the Sobieski Institute, recalls in an interview with “Polish

Henryk Kaliś, Chairman of the Forum of Electricity and Gas Consumers: The Forum has for years called for the political acceptance of elementary facts. First, energy security, understood as a guarantee of the supply of electricity, heat and gas, should be based to the maximum extent on domestic primary energy resources. Second, the justified desire to reduce the consumption of fossil fuels by promoting renewable energy must take into account the need to maintain the competitiveness of European industry and diversified financial capabilities of EU countries. Third, mere political slogans and ideologies are not able to replace the traditional European industry, in particular the energy-intensive sectors, with one single industry - renewable energy sources. We have to find a way to make them coexist. I hope that the political situation in Ukraine and the ensuing turbulence on the energy market will remind Brussels officials that life of EU citizens must be based on solid grounds, that the European economy needs copper, zinc, steel, cement, glass, paper, that energy is not only CO2, but also the need to continually meet the energy needs of millions of citizens of the Community. That cannot be ensured by renewable energy alone. Moreover, the fear of interruption of gas supplies has shown clearly that the European Union has not created a single energy market and has not availed itself of diversified energy supplies. It is evidenced by the varied price of Russian gas offered to particular EU countries, or Germany’s desire to get gas through the pipeline bypassing Poland. As a representative of Polish energy-intensive industries, I appeal to political elites for greater moderation and reason in declaring feasible emissions reduction goals after 2020. They actually define the boundaries of not only development, but also further functioning of energy-intensive sectors of European industry, and decide on the fate of millions of inhabitants of Polish industrial regions. It would be good to remember that not only before, but also after elections.

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Energy

Dariusz Lubera, President of Tauron Polska Energia SA

O

ver the past 25 years, the Polish power sector - just as the whole economy - has been undergoing significant transformations. There have been changes in energy trade rules, market and environmental requirements, and above all in the organization of energy companies. We have come a long way from socialist units, centrally-planned and offering officially fixed energy prices, through the radical organizational fragmentation of the market, to the emergence of large energy corporations that realistically compete for customers today, operating in line with market-based principles. One can also see with the naked eye technological progress that has allowed to improve the efficiency of electricity and heat generation, reduce the environmental footprint of power plants, or to put in place more efficient waste management systems.

Energy security has recently become a core issue both for the economy especially in terms of energy-intensive industries, and for individual people. For this reason, it is necessary to have a diversified and balanced fuel mix, which will provide an acceptable level of prices. It should be kept in mind that a well-balanced generation portfolio is extremely important not only at a national scale, but also from the point of view of individual energy companies. Therefore, in line with Tauron’s investment programme until 2020, the Group’s portfolio is set to include conventional fuels (coal, natural gas) and renewables (wind, water, biomass), whose share in the energy mix is expected to increase to 800 MW by the end of the decade. Such a generation fleet, made using best available technologies, will be aimed at providing our customers stable and continuous energy supplies for many years. ::

Ireneusz Łazor, President of Polish Power Exchange (TGE) SA

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ver the past 25 years, many significant decisions have been made regarding Poland’s energy sector and energy security. In the late 1990s, both in Poland and in Europe, electricity began to be considered as a commodity. In 1997, a new Law on energy was enacted, which paved the way for the liberalization of the electricity market and the privatization of the power sector. Then, the Polish Power Exchange was established as an essential element of liberalization of the electricity market in Poland. The Polish Power Exchange has been successful. Last year marked a record-high interest in energy trading - more than 176 TWh, which means that TGE’s turnover accounted for more than 108% of the domestic output and more than 111% of electricity consumption in Poland. Energy is available for Polish companies in one click. And they can buy it at a transparent price. It is worth noting that Poland’s accession to the European Union was a very strong impulse for the development of competition. As a result, it contributed to giving equal opportunities to Polish industry internationally. Undoubtedly, the most important issue in Poland, but also across the EU, is now energy security.

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The government’s proposals to form the Energy Union in Europe might be for Poland a test of maturity, verifying whether - apart from using ready-made solutions - we are able to create and implement a vision of a common market drawing upon the principles of safety, competition and transparency. The Polish Power Exchange operates today one of Europe’s largest energy markets, and in the vicinity of large energy systems in the European Union and Eastern Europe. Therefore, we come as a natural partner in the system of the European energy trade. From year to year, we are gaining ever stronger foothold on the European market. The increase in turnover in recent years has positioned us as one of the fastest growing markets in Europe. The domestic market has become also one of the most liquid markets in Central and Eastern Europe. TGE’s energy futures market is today Europe’s second largest (after the Scandinavian one). We are facing the challenges related to the emerging competitive gas market. I am convinced that our ambitions are feasible to build a blue fuel market of similar size as the electricity one. From the perspective of the past 25 years, it should be stressed that - with great effort and determination that have been invested in the construction of the Polish energy sector -we

managed to develop a free-market model of the Polish energy sector. But such a determination must continue, because we still have a lot of opportunities to seize in order to strengthen our position in the CEE region and in Europe as a whole. ::


Energy

Secure electricity supply Henryk Majchrzak, PhD, President of PSE SA, the operator of the national power grid, talks to “Polish Market” about Poland’s energy security. Since January 2014 PSE has been pursuing an updated strategy, which defines the key tasks of the company until 2020. Which of them are the most important when it comes to energy security? The updating of the PSE strategy until 2020 is an important step for our company because the strategic goals the document defines are the lodestar for our activity while the effective performance of the tasks defined as strategic projects is the most important challenge for our staff and workers. Investment projects are one of the most important areas of PSE activity. PSE is now conducting one of the biggest investment programmes in Poland. We are expanding the network of modern substations and electricity transmission interconnectors. Access to energy, alongside road building, is an important factor determining the development of every Polish region. Considering the scale and scope of these investment projects, one can say without exaggeration that our activity in this area is of great magnitude because the investment projects will give the next generations the security of electricity supply. The company has been preparing for this very ambitious investment process for several years. We have worked out and implemented a new effective investment model. The scale of the investment projects we are launching is the biggest in the company’s history. In 2014, we are going to spend on them PLN740 million. In the coming five years, from 2014 to 2018, PSE will set aside around PLN7-8 billion for investment in transmission networks, which will significantly enhance the security of electricity supplies. pm

The scale of the investment projects is truly impressive. I suspect there are many more interesting things going on in such a large company as PSE. Could you name the company’s most important achievements recently? The construction of an electricity interconnector between Poland and Lithuania is the biggest investment project we are now conducting. The project involves the construction of a 400kV line linking the two power grids, running from the city of Ełk in Poland to Alytus in pm

Lithuania, and the expansion of the transmission system in north-eastern Poland. The first stage of the project is made up of 11 tasks, which will be completed by 2015. This will enable the transmission of around 500 MW of electricity and strengthen the energy security of the regions of Mazuria and Podlasie in Poland. The implementation of investment tasks needed to ensure energy security for the UEFA Euro 2012 football tournament was a big challenge because of time pressure. The stability of the system’s operation was improved and energy security in the country was enhanced through the expansion of transmission lines and substations in the cities of Wrocław and Poznań and the surrounding areas. We have started to successfully introduce new mechanisms improving the secure balancing of the power system. The first agreement on negawatt power has been signed. Negawatt power means an amount of electricity conserved by the consumer, who - on request from the OSP – does not use it. As a rule, the demand reduction service to prevent a power system failure will be used only in exceptional situations. The measures we have taken are an element of a broader concept of implementing in Poland demand management mechanisms. Another measure we have taken to improve the balance of electricity supply and demand in Poland is the interventional non-spinning reserve. It is composed of generating units which were initially planned to be shut down by 2016 because of increasingly stringent pollution emissions standards. The units will be connected to the system only at a time of power shortage on request from the OSP. As a result of the tender process conducted in December 2013 and January 2014, the OSP has acquired the first part of the non-spinning reserve from power stations operated by the PGE and Tauron companies - around 830 MW in total. It is also worth mentioning the Operational Continuity Management System Certificate that PSE has received for its electricity transmission services. It is the first certificate of this kind granted to a Polish company operating in the power sector.

The official opening of the Ołtarzew substation. From left: Director of the Energy Department at the Ministry of the Economy Tomasz Dąbrowski, PSE President Henryk Majchrzak, Vice-President of PBE Elbud Katowice Halina Zakrzewska, deputy Prime Minister and Minister of the Economy Janusz Piechociński and deputy Governor of Mazowieckie province Dariusz Piątek. Pogroszew, April 24, 2014.

To conclude, I would like to ask you about some examples of your spectacular successes when it comes to energy security. Could you name one of them? Among the numerous tasks important from the point of view of energy security that we have carried out, it is worth mentioning the National Power System Simulator. Launched in September 2013, the simulator is one of the most modern training centres for OSP services and distribution system operators. Its launch was a big achievement, enhancing the security of the system and enabling constant staff training. At the end, I would like to say that we have recently opened a 400/220/110 kV Ołtarzew substation, of which I am very proud. It is now the most modern substation in the Polish transmission system. It was constructed as part of the Polish-Lithuanian interconnector project. The Ołtarzew substation and the transmission lines connected to it make up a new node which has enabled connecting the existing substations in Mazowieckie province, the Bełchatów and Pątnów power stations and the lower-voltage distribution network, increasing the reliability and security of power supply. :: pm

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Energy

Report from the 19th

EuroPower Energy Conference

T

he 19th EuroPower Energy Conference was held in Warsaw’s Westin Hotel on April 15-16, 2014. Present at the conference were people representing every part of the energy sector: presidents, management board members and directors of energy and fuel companies and groups which operate power stations, heat and power generating plants and networks, and provide services to businesses active in the energy sector. Deputy Treasury Minister Rafał Baniak officially opened the conference. Leszek Juchniewicz, PhD, moderated the first panel discussion entitled “The EU’s and Poland’s Energy Policy.” Among the panel-

lists were Maciej Bando of the Energy Regulatory Office (URE), Marek Woszczyk of PGE, Mariusz Zawisza of PGNiG, Jarosław Zagórowski of JSW, Cezary Szwed of PSE, Tomasz Dąbrowski of the Ministry of the Economy and Dariusz Mioduski of Radwan Investments. The second panel discussion, entitled “Building a Competitive Industry in Poland,” was moderated by Janusz Steinhoff, PhD, and attended by Zbigniew Bicki of EM&CA, Dariusz Baran of Atos Polska, Mieczysław Borowski of the Office of Technical Inspection

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(UDT), Czesław Bugaj of PKN Orlen, Jean-André Barbosa of Areva Polska and Prof. Anna Fornalczyk of Comper Fornalczyk i Wspólnicy. The speakers at the remaining discussions on the first day of the conference included Jerzy Witold Pietrewicz of the Ministry of the Economy, Piotr Szpakowski of PKN Orlen, Martin Durčák of Unipetrol a.s; Wojciech Cetnarski of the Polish Wind Energy Association, Jacek Szymczak of the Polish Heat Engineering Chamber, Włodzimierz Kędziora of Dalkia Polska, Michał Machlejd of Dalkia Warszawa and Waldemar Szulc of PGE GiEK. The first day of the conference ended with a Grand Gala of the Energy World Leaders. The gala was officially opened by Rafał Baniak, deputy Treasury minister, and Leszek Juchniewicz, the chairman of the competition chapter. Marcin Prokop hosted the gala while Jacek Stachursky entertained the participants with his concert. Winners of the Energy World Leaders competition: Energa Operator (Distributor of the Year 2013), Tauron Wytwarzanie (Producer of the Year 2013), Energia dla firm (Seller of the Year 2013), Oracle Polska (Supplier of Solutions for the Sector of the Year 2013), PGE Energia z Serca Foundation (Corporate Social Responsibility 2013) and Krzysztof Zamasz (Man of the Year 2013). The programme of the second day of the conference was divided into three simultaneous thematic blocks: Block 1: Betting on Renewable Energy Sources – legal conditions, support mechanisms, social and environmental aspects, and the funding of development. The participants included Maciej Stryjecki of the Foundation for Sustainable Energy (FNEZ), Janusz Pilitowski of the Ministry of the Economy, Waldemar Pawlak, former prime minister and now deputy to the Polish parliament, Marek

Kossowski of the Polish Economic Chamber of Renewable Energy (PIGEO), Prof. Krzysztof Żmijewski of the Social Council for the Development of a Low-Emissions Economy, Krzysztof Pietraszkiewicz of the Polish Bank Association (ZBP), Arkadiusz Sekściński of the Polish Wind Energy Association (PSEW) and Grzegorz Zieliński of the European Bank for Reconstruction and Development. Block 2: Transmission and Distribution Networks: Can They Be Smart Already? Among the speakers were Waldemar Skomudek, DSc. Eng., of the Opole University of Technology, Wojciech Lubczyński of PSE, Tomasz Kowalak of the Energy Regulatory Office (URE), Tomasz Świetlicki of the Ministry of the Economy, Piotr Rutkowski of Orange Polska, Piotr Pichlak of Energa Operator and Szymon Kowalski of Tauron Polska Energia. Block 3: Energetically into Equities: Opportunities and Barriers to Financing Businesses in the Energy Sector. Among the participants were Daniel Wójtowicz of Danter, Maciej Bando of the Energy Regulatory Office (URE), Paweł Graniewski and Wiesław Rozłucki of the Warsaw Stock Exchange (WSE), Stanisław Okrasa of the Energy Market Agency (ARE), Sławomir Krystek of the Chamber of Energy Industry and Environmental Protection, Mirosław Kachniewski of the Association of Stock Exchange Issuers (SEG), Jarosław Dominiak of the Association of Individual Investors (SII), Olga Fasiecka of Enea, Prof. Jerzy Gajdka of the University of Łódź and Jakub Frejlich of PGE. The EuroPower Energy Conference is an effective platform for dialogue on the development of the energy market. Its participants discuss the most important changes taking place on the market, analyse new trends and seek business models allowing them to pursue their goals. You are welcome to register now for the 20th EuroPower conference, which will be held on November 18-19, 2014. ::


Innovation

We help companies save time and money Michał Czeredys, President of Arcus SA, talks about the development of the company he manages.

In what fields does the Arcus Group operate? The Arcus Group offers cutting-edge technology solutions for various businesses. These are the solutions that help save entrepreneurs’ most valuable company resources: time and money. Arcus SA, which makes part of the Group, is one of the largest Polish providers of integrated document management and mass correspondence systems. Arcus SA, together with T-matic Systems SA, provide comprehensive solutions and services in respect of telematics and building of smart grids networks, as well as IT and telecommunication, including unified communications tools. Let me just say that Arcus Group is behind the biggest roll-out of smart meters for remote electricity usage reading in Poland. Energa Operator ordered 420,000 of these cuttingedge devices. Interestingly, tests confirmed an extremely high 99% efficacy of these meters. The third company making part of the Arcus Group is DocuSoft Sp. z o.o. manufacturing information flow systems. Its flagship product is the award-winning Vario.ONE that allows to keep company documents in electronic form, greatly reducing the use of paper documents. pm

In what sectors does the Arcus Group see the greatest opportunities for growth? In printing cost optimization or in the development of smart energy grids? We see opportunities for growth in both these areas. In accordance with EU directives, all EU electricity distributors are required to install, by the end of 2020, smart meters for remote reading with at least 80% of consumers. In Poland, we are a pioneering supplier of these devices, and experience we have gained is a considerable competitive advantage. For pm

sure, we will strive to acquire new contracts, but we must remember that the energy sector in Poland must get prepared for the implementation of such contracts in legal and technological terms. And is the demand going to increase for services related to printing cost optimization? Definitely yes, and that is confirmed by studies carried out among entrepreneurs. An independent research institute Londhouse, together with Kyocera Document Solutions, whose the Arcus Group is the exclusive distributor in Poland, have developed a report which clearly shows that 89% of European businesses is already implementing or is planning to implement an electronic document management system. It is fully understandable - the cost of printing and document management makes up more than 10% of all corporate costs and can easily be reduced thanks to the latest technologies. The process of cost optimization should always begin with the analysis of expenditure. This is all the more necessary that IT market analysts indicate that every year the number of paper information in any business is growing by 18-21%. Arcus offers its customers to carry out optimization that is preceded by such an audit. The full report of the audit shows the need for changes: from the unification of equipment and its arrangement in office space through the replacement of software to the use of electronic document circulation system reducing paper consumption and shortening the time staff spends handling paper documents. Our experts, who have gained extensive experience in recent years and are in permanent contact with customers, confirm that Arcus is the leader in this area in Poland. pm

What are the strategic objectives of the Arcus Group for the next two or three years ? We want to continue to boost our market share, improve economic efficiency throughout the Group and increase the share of services and equipment leasing in revenues. Currently, we are working on optimization by adjusting the Group’s structure and strategy so that our companies best meet the needs of customers. These efforts have led us to move the three companies to the new premises in Warsaw, which allowed us to significantly improve internal communication and reduce costs. Changes also occurred in the available storage space - the central warehouse was enlarged twofold at the expense of a local one. The effects of the restructuring are already reflected in the Group’s financial results. Recently, we have received a lot of awards both for our products and projects we have carried out. I am convinced that investors appreciate all we do and offer. Over the last 3 months, our stocks jumped by more than 15%. pm

Arcus has won this year’s the Dragon’s Claw award in the first edition of the competition run by “Polish Market”. Yes, we are very pleased that the Arcus Kyocera MDS system has received the award. The jury have recognized the fact that our services allow a significant paper management reduction, which in turn helps improve the competitiveness of Polish businesses. This is a very promising segment of activity. It is also worth mentioning that the Arcus Kyocera MDS system was awarded last year the “Teraz Polska” emblem, which proves that our services and solutions meet world-class standards, something that we can be proud of. :: pm

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Innovation

America discovered! Jacek Kopyra, Vice-President of the Central Industrial District (COP) Cluster, talks to “Polish Market”.

The Central Industrial District Cluster is an organization that meets characteristics of a commonplace trend... Have you really discovered the New World? This is indeed a provocative statement. But any sarcasm is somewhat true, literal, ironic and metaphoric. In fact, the purpose of such a statement is to draw our attention to something unnoticed, something important and something that can be overlooked amid our rush towards bureaucratic chaos and economic anaemia. Why am I talking about chaos? Because the excessive amount of procedures in Polish economic life in terms of administrative and legal regulations and regulations concerning financial support for enterprises inevitably results in chaos. The chaos is a product of increased disorder in overregulated sectors where businesses, in an attempt to adapt to the demanding and fast evolving market challenges, seek new ways of solving problems, especially financial ones. At some point, the support offered, if interfering too much with the structure of the activity of market organizations, becomes useless and the funding offered is not used. Room then arises for global corporations, for pm

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which Poland is often a source of cheap labour force, to drain our domestic potential. It is a very fragile balance, which – in the case of some economic turbulence, not necessarily a strong one - leads to the collapse of domestic industry and brings us down to the role of contractor who has no influence on the country’s economic potential or its development. It is time to look at the core of the problem at issue. For some time, voices have been heard that the majority of EU aid funds will be pumped into the Polish economy through economic organizations, which are able to ensure that the money is used in the possibly most efficient way. This kind of efficiency can be achieved through cooperation - well-managed, planned and properly implemented. This is the natural environment for clusters. However, clusters - which until recently operated in a less developed form of cooperatives, a form, by the way, introduced as a system by Stanisław Staszic - represent a very broad form of economic organizations. There are no appropriate legal regulations that would describe the cluster the way the company, foundation or association are defined. This is why clusters undertake many forms of activity. However, we are interested in those which set directions for the development of innovation, effective practical applications of inventions, new technologies and new products based on advanced technical ideas, and open new fields of manufacturing and set the bar higher for the progress of our civilization. The scale of these implementations is also important - we do not want them to be done “in a garage,” we want big results. Poland has always been a front-runner when it comes to technical thought, inventiveness and ingenuity. Before World War II Polish inventions had no equal as the examples of the construction of the city of Gdynia and the Central Industrial District (COP) show. In these projects Poland championed powerful economic concepts. I would like to refer those interested to the pre-war history of Poland, the policy of Ignacy Mościcki, who was himself an inventor, the biography of Eugeniusz Kwiatkowski and COP’s history, bits of

which run through our website. The names Czochralski, Jelonek, Mazur, Sendzimir and Prószyński may serve as a hint. Today we can also boast of great inventions, which, however, remain unnoticed and under-funded, and the Polish potential is tapped by foreign corporations and governments, which are able to think of something more than bread and salt, and enrich the heritage of their countries and people. Drawing upon the traditions of Polish economic thought and the ability to organize economic structures at the grassroots, we have decided to set up an industrial cluster, covering the area of the former COP and the industries that have always been developed there. The originator and initiator of our organization was Jan Banaszak, a son of Ludwik Banaszak, one of those who had created COP and a close associate of Prime Minister Kwiatkowski. As co-organizers, we took up this enormous challenge and today our activity is already producing concrete results. Our intention is to make the COP Cluster an organization as efficient as possible in economic terms, relying on the implementation of large economic projects with measurable results. The Cluster will soon become an “economic roller,” as we call it, which itself will be setting development directions for large business groups making up its 10 sections. It will be dynamically working with local governments, contributing to regional development through the application of innovations and technologies available within the COP Cluster - the knowledge bases of universities, industrial institutes, and private entrepreneurs-inventors. The assumptions are quite ambitious. What about putting them into practice? After two years of operation, we bring together about 120 entities. One should add to this 400 more entities making part of associations, chambers of commerce and other organizations active in the business environment, which are linked with the COP Cluster by cooperation agreements. It is the potential you can build upon. By combining pm


Innovation the COP Construction Industry Cluster and the Eastern Construction Cluster we have one key national construction cluster with a potential annual turnover of PLN10 billion. We can build anything! And this is just the beginning. The COP Cluster has contacts with many similar organizations abroad. This gives us an opportunity to create markets and acquire new directions for economic expansion for our members. Also, an incredible opportunity has emerged to use in Poland a concept for building a logistics area for cooperation with Latin American markets. The COP Cluster is now at the stage of signing a letter of intent concerning the organization of large contract fairs for companies from Europe and both Americas. Our intention is for such fairs to be held alternately in the United States (Miami) and in Poland (Kielce and Poznań) starting from 2015. It will be a gateway to those markets, larger and far more lucrative than the Eastern ones, destabilized due to the situation in Ukraine. But this is not even the tip of the iceberg of our activity. The COP Cluster intends to set up a unit, which will be dealing with research and the implementation of new technologies, exploiting the potential of businesses associated in the Cluster. It turns out that we have fantastic waste-free systems for collecting energy from municipal waste, fuel combustion catalysts raising the calorific value of the fuels by 15%, methods for obtaining energy from geoplutonic deposits, and patents for the extraction of oil and gas

from deposits not available so far. These sources are very rich in Poland and I do not mean shale formations. In addition to innovation-related activities, the Cluster deals with the preparation and coordination of investment projects, including public-private partnership. In what sense have you discovered America? It is actually a metaphor but one relating to reality. Discovering new lands requires expenditures. Columbus knocked on the doors of many courts, tried to convince many sponsors to give him ships. In return, the tiny Portugal got its treasures and new territories. The COP Cluster is effectively searching for markets and organizes cooperation leading towards economic development. Of course, the fundamental issue is to design an appropriate funding model for such a unit, because contributions from members alone are not enough. We pin great hopes on the Polish government, as our Cluster has already been given the patronage of the deputy Prime Minister and Minister of the Economy. The COP Cluster is doing more than is needed to repay this credit of confidence. The funniest thing is that - with all our organizational commitment - we work as volunteers with no financial support either from the national budget or from local government budgets. So far, the said patronage has had little effect. The result is that we are looking for funds in order to cover the cost of our members’ travel to Miami to attend the Hemispheric Congress Camacol in June, even though we are blazing trails, we have our “Portugal.” In fact, operational financing is the main problem of each cluster. We do not need support from large programmes, which actually constrain the creativity of clusters.

Their procedures are difficult to understand and final settlements are horrifying. We need financial assistance to kick-start our organization so as to be able - in three or five years’ time - to maintain ourselves, to have our own R&D facilities and, most importantly, support innovative projects aimed at regional development.

pm

Do you have more friends or enemies? I think that observers are prevailing for the time being, people who say: “Just do your job, and if you succeed, it will be our joint success. We are struggling every day with disbelief that you can really do something in Poland, that you do not have to pay bribes and that the common future of our children can be an exceptionally strong motivation. So we are doing our job, and we have good news to those who have forgotten that Poland can be a real model and have elite knowledge: together with the Poznań-based Hipolit Cegielski Society, we have undertaken to build a monument to Jan Paderewski - the first Polish Prime Minister, thanks to whom the Polish raison d’état and Poland as a country re-emerged after World War I. A twin monument will be built at the same time in the United States. It is probably a good time to say that not only brute force can win and fulfil one’s dreams of power. :: pm

www.klastercop.pl

The Cluster is coordinated by Korporacja Radex SA.

www.korporacjaradex.pl

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Innovation

Digital single market

In March, my mobile phone bill was by 30% higher than usual. Why? Because I made three calls to Israel and the four minutes of conversation cost me PLN33.12. Jerzy Bojanowicz

A

ll the people who travel abroad and call to their country to say what a wonderful holiday they have or to learn what goes on back home find their wallets hit hard. But the problem also concerns those who make a call in an area close to the border with another country. The area may be covered by a foreign rather than domestic operator, in which case the conversation is treated as an international call. Being absent-minded may cost you a lot as Kai Diekmann, the editor-in-chief of the German tabloid “Bild” learnt after returning from a holiday in Morocco in 2010. He received a monstrous bill of EUR42,000 from Deutsche Telecom.

Good-bye roaming charges If the mobile roaming charges are removed we will still be paying more when calling to Israel but the prices of all our connections within the European Union, including data transfer, will finally be the same. The European Parliament voted at a plenary session on April 3 to scrap roaming charges across the European Union by December 15, 2015 and to better protect consumers’ rights on the telecommunications market, ensure network neutrality, prevent two-speed Internet and make it easier to develop better telecom services. These are the most important elements of the draft

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Regulation, which is part of a wider vote in support to the Commission’s proposed regulation for a Connected Continent. This is what Neelie Kroes, a Dutch economist and politician, a vice-president of the European Commission and the commissioner for Digital Agenda, promised several years ago. Commenting on the April 3 vote, she said: “In 2010 I promised to end roaming charges by the end of 2015, and now we are one step away from achieving that result. This vote is great news. Digital tools and telecoms networks enable productivity and performance in every area of our lives. It is about arming every European business with the tools and networks they need to innovate and grow, and giving every European citizen the seamless connectivity they have come to demand – without unfair practices like blocked services or roaming charges. Nearly all of us depend on mobile and Internet connections as part of our daily lives. We should know what we are buying, we should not be ripped-off, and we should have the opportunity to change our mind. Companies should have the chance to serve all of us, and this regulation makes it easier for them to do that. It is win-win. This vote is the EU delivering for citizens. This is what the EU is all about – getting rid of barriers to make life easier and less expensive. Beyond the highly visible barrier of roaming we are now close to removing many other barriers

so Europeans can enjoy open, seamless communications wherever they are.” The European Commission proposed regulation for a Connected Continent - telecoms single market - in September 2013. The goal is to bring us much closer to a truly single market for telecommunications services in the European Union by removing roaming charges, providing an open Internet for all, with a ban on blocking and degrading content, and coordinating the process of granting permits for the use of the radio spectrum for wireless broadband services, ensuring users a greater transparency of agreements for Internet and broadband services and making it easier for consumers to change service providers. It should be added that in mid-2007 telecom operators came down a peg and prices of voice calls and data transfer slightly decreased, but not disappeared. And consumers still worry about accidentally running up huge bills. This is indicated by the findings of the “E-Communications Household Survey and Telecom Single Market Survey. Roaming Results.” The survey was conducted in the second half of January 2014 in 28 EU countries among people older than 15. The results show that 28% of those polled switch off their mobile phone when visiting another EU country while 25% switch off the data roaming capabilities of their phone. Asked “When visiting another EU country, how often do you make voice calls?,” 33% of those surveyed answered


Innovation “never” and 58% answered “less often than in my country.” The figures for Polish people were respectively 19% and 65%. Asked “How often do you receive voice calls?,” 29% said “never” and 51% said “less often.” The results were similar for questions about sending and receiving text messages, and using mobile Internet access, excluding Wi-Fi access. On average, only 8% of those polled make mobile phone calls as often as in their own country. Why? Because they have once paid an astronomical bill for mobile services in another EU country. The removal of roaming charges may actually benefit not only consumers but also operators as the clients will be using their services more often. The members of the European Parliament adopted an amendment to ban roaming charges for using a mobile phone to call, send text messages or access the Internet in another EU country. However, if roaming services are abused, capped charges could exceptionally be imposed, MEPs said. The European Parliament would like the retail prices to drop starting with July 1, 2014. “We will pay PLN0.97 (now PLN1.22) for an outgoing call, PLN0.26 (now PLN0.36) for an incoming call and PLN1.02 per megabyte of data instead of PLN2.3,” said Róża Thun, Polish MEP, member of the Committee on the Internal Market and Consumer Protection. “Of course, these are maximum prices. The actual prices offered should be much lower.” “With the EU’s open borders, actually the only thing reminding us we have entered another country is text messages with information about roaming charges,” said Rafał Trzaskowski, the minister of administration and digitization, responsible for negotiating the telecoms package in the EU Council. “Scrapping roaming charges and strengthening consumer rights are the proposals we want to support when negotiating with other countries.”

Unblocked Internet At the same time, the European Parliament supported an open and neutral Internet. EU

parliamentarians decided that Internet access providers should be barred from blocking or slowing down selected services for economic or other reasons, like for example making it more difficult for users to access YouTube or Skype. Internet access providers would still be able to offer specialized services of higher quality, such as video on demand and the storage of large amounts of business-critical data in a cloud so long as these services are not supplied to “the detriment of the availability or quality of Internet access services” offered to other companies or service suppliers. MEPs stressed that Internet access should be provided in accordance with the principle of “net neutrality”, which means that all internet traffic should be treated equally, without discrimination, restriction or interference, irrespectively of its sender, recipient, type, content, device, service or application. Internet access providers would have the right to restrict or block Internet access in exceptional cases. “I could not be more satisfied,” said Neelie Kroes after the vote. “The Regulation safeguards the open Internet for all, something that we call network neutrality.” “The main achievement of this Regulation is ensuring that the Internet will remain open. In other words, that users have access to information and may use any application they choose,” said Bogdan Marcinkiewicz, MEP, member of the Committee on Industry, Research and Energy. “Additionally, for the first time a regulation contains a definition of network neutrality. (…) The package maintains equilibrium between Internet access in accordance with non-discriminatory and transparent rules and the development of new innovative products, like specialized services. The proposed Regulation guarantees that the services will not harm the open Internet in any way. At the same time, the proposed solutions make it impossible to hide charges for specialized services.” “There will be no two-speed Internet. Internet providers will not be allowed to offer ‘special services’ - such as videoconferences and IPTV, that is premium Internet services, for which consumers pay extra, involving special access, faster transfer or higher download quotas – instead of

traditional Internet access,” said Róża Thun. “We have also taken care to ensure that these services are only offered if the network capacity is sufficient and if they are not to the detriment of the availability or quality of Internet access services for other users.” According to the Ministry of Administration and Digitization, the European Parliament has also proposed adopting the “fair use” rule to allow service providers to impose the voice call / data transfer caps below which roaming fees would not be charged. “It is worth noting that some telecoms package proposals important for the consumer have already been put in Poland into practice. We already have access to information about the extent to which we have used a service, like for example data transmission, and are able to set caps on our consumption in mobile networks. Mobile Internet providers already offer data transmission packages in which the users receive a warning after their bill has reached a specified limit,” Minister Rafał Trzaskowski said. “Problems associated with net neutrality, that is the principle that network traffic management should not discriminate against anyone, restrict or interfere with the traffic irrespective of its sender, recipient, type, content, device, application or service, still remain to be settled. The debate in the European Parliament has made us aware that the issue required more public consultations, which we, as the Ministry of Administration and Digitization, are going to hold.” Poland is an advocate of the Connected Continent telecoms package being adopted quickly. The European Parliament’s vote on the draft Regulation only ended its first reading. The final shape of the Regulation will be negotiated by the new Parliament with the EU Council and Commission in the second half of the year. The Regulation will come into force after an agreement is signed between the European Parliament and the EU Council, which represents the EU member states. The European Commission expects that the final agreement on the issue will be reached by the end of 2014. ::

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Innovation

We have come a long and bumpy way Prof. Krzysztof Jan Kurzydłowski, Director of the National Centre for Research and Development (NCBR), talks to “Polish Market”. How do you assess the development of Polish science since 1989? We have come a long and bumpy way. When we started, the reality was completely different from what it is today. Before 1989, Polish scientists could not work freely in an international academic environment and were subject to many restrictions, which does not mean, however, that they were not successful. Political changes in Poland caused many barriers to disappear, but a number of new challenges emerged. The science sector faced numerous problems: structural, financial, legal, etc. Universities and research institutes could - regardless of difficulties encountered - conduct research, but the research financing system based on grants awarded by the minister made ​​it difficult to reward the most promising and most needed R&D activities. Some necessary changes were introduced pm

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by the reform of the entire system in 2010. The new Law on financing scientific research has opened up new possibilities as regards effectiveness of public and private spending on research and implementation. Two specialized public executive agencies were established to handle organizing and financing competitions for research projects to be funded from the state budget and the EU: the National Science Centre (NCN) and the National Centre for Research and Development (NCBR). Proportions were inversed in research funding distribution: the role of the competitive mechanism was strengthened at the expense of statutory grants that had prevailed previously. Therefore, the potential of Polish scientists can be better used. Also, owing to the introduction by NCBR of funding mechanisms which reward cooperation between researchers and entrepreneurs, science is more open

to the needs of the economy. At the same time, spending for on scientific research has significantly increased, mainly due to EU funds. In retrospect, and given the number of projects funded by NCBR, I can say that we are at a turning point. We managed to create an effective system of science financing, to raise awareness and involvement of entrepreneurs in R&D, we have superb research teams, and - thanks to huge investments - we can boast a modern, world-class research infrastructure. Most of the barriers that hampered the development of Polish science over the last quarter-century have been removed. We have a huge potential, changes are underway, and hopefully we will succeed. pm

NCBR acts as an intermediary in the three operational programmes financed from EU funds. To what extent do they help in


Innovation

the development of Poland and how important was accession to the EU for Polish science? Poland’s accession to the EU was of great importance, since it opened a number of opportunities to make a leap forward. EU funds are spent not only on infrastructure projects, but also on research and development projects and advanced training programmes for professionals needed by the Polish economy. We received almost unimaginable resources for research and development, amounts that Polish science had never had before. More that PLN 20 billion were invested in research infrastructure: modern laboratories and equipment, science centres, educational facilities, libraries, etc. The most important contribution (more than PLN 12 billion) was that of the Operational Programme Innovative Economy. There are of course many more advantages. The EU membership opened boundaries, creating for Polish scientists an opportunity to participate in EU training and research programmes. Polish scientists are highly appreciated, as evidenced by their participation in research projects of the European Commission -Human Brain Project and Graphene Flagship. We know how to make use of the opportunities created by the membership in the Union. The new EU financial perspective 2014-2020 gives even more R&D investment opportunities. Under the Operational Programme Smart Growth Poland will spend on innovation more than PLN 8 billion, the bulk of which will go to science-business cooperation. I am convinced we will make good use of these funds. The National Centre for Research and Development is called a Polish innovation centre. Why is there such an opinion? If it is called so, it a good reason to be proud of. The real innovation is possible only when it is implemented. That is why we bet on supporting and facilitating cooperation between researchers and entrepreneurs. In my opinion, we have managed to create favourable conditions to do so. The key objective of NCBR is to support economic growth based on new technologies in order to drive technological and social development. NCBR awards grands to researchers cooperating with entrepreneurs, with the latter’s own high contribution. As a result, the number of scientific and industrial consortia has surged. In 2011, there were slightly over 20 contracts entered into with such consortia, compared to 700 currently. We are launching sectoral programmes in direct response to the needs of innovative sectors of the Polish economy. Thanks to our cooperation with the Polish pm

Aviation Technology Platform and the Polish Platform for Innovative Medicine two such programmes are already operational: INNOLOT - addressed to the aviation industry (budget: PLN 500 million) and INNOMED - to the medical industry (budget: PLN 300 million). We also have a joint ini-

“The real inno-

vation is possible only when it is implemented. That is why we bet on supporting and facilitating cooperation between researchers and entrepreneurs.

tiative with KGHM Polska Miedź SA, a Polish global corporation, as part of which we are jointly financing innovative research in non-ferrous metals (budget: PLN 100 million). At the same time, we are introducing innovative, unprecedented in Poland, mechanisms for public-private R&D funding. As part of our BRIdge programmes we have engaged venture capital funds, drawing upon the experience of the most innovative countries in the world such as Israel or the United States. We are the first government agency in the world to have launched a programme for the development of graphene-based products. Our offer is extremely wide, covering all levels of what is called technological readiness of the product. More recently, in response to the needs of the beneficiaries, we have introduced a number of simplifications in application and settlement procedures. The first so-called fast-track competition for entrepreneurs has already been carried out. Decisions on granting funds have been made in 60 days. If we want to effectively support innovation, we need to be innovative and flexible ourselves.

Does NCBR cooperate with the defence industry towards implementing innovative solutions? NCBR carries out tasks aimed at increasing technological independence and the potential of Polish research and business units by creating Polish know-how in the area of critical technologies. R&D programmes in the area of ​​security and defence are implemented in cooperation with relevant ministries and agencies. Together with the Ministry of National Defence and the Ministry of Internal Affairs, we announced and settled four competitions for the implementation of research and development in the field of security and defence. Currently, scientific and industrial consortia, involving over 170 companies, implement projects to the value of PLN 1,436 million with financial support from NCBR at PLN 1,345 million. pm

Does Polish science have any special export products? Does it have something to boast of? There is much talk today of graphene and how it is likely to revolutionize many fields of technology. Polish scientists have obtained widely appreciated results in terms of its use as a multifunctional material. I see a big potential in applied mathematics and computer science that can be used in virtualization of production: prototypes - before they go into mass production - are tested in a virtual world. Virtualization has a future. ​​ It can be used in all areas, and we can be successful especially in those where we have strong research teams, such as chemistry, biology, medicine and materials science. Recently, Polish ICT start-ups are increasingly successful on the global market, for example Estimote that offers beacons or creators of a dice DICE +. If only we continue to invest in R&D, we have a chance to dictate the pace of technological development, and Poland may become a significant producer and exporter of high-tech products. Such is the forecast of analysts from Oxford Economics, according to whom in 2014-20 Polish exports of high-tech products are to grow by an average of 8.6% per year and in 2021-2030 by 5.5% per year. This growth rate is higher than that predicted for almost all Western countries. As a result, Poland is set to more up to the 11th place in the ranking of the largest high-tech manufacturers, ahead of the United Kingdom and France. So we have a chance to become a major player on the market of advanced technologies. :: pm

5 /2014 ::  polish market  ::  49


Infrastructure

IBDiM supports the development of modern road infrastructure Prof. Leszek Rafalski, General Director of IBDiM

T

he Research Institute Road and Bridge (IBDiM) is a leading Polish scientific institution dealing with transport infrastructure. Conducting research, drafting expert’s opinions and implementing groundbreaking projects, it promotes investment, modernization and upgrades of roads and bridges, and helps manage the country’s road network. IBDiM has accredited laboratories and provides certification for products used in civil engineering. Its research and experience benefit both road administration bodies - central and local - and contractors. One of the government’s priorities is currently the improvement and development of road infrastructure. IBDiM supports the development of innovative infrastructure. In recent years, the Institute has developed several outstanding innovative solutions. An example is the Intelligent Comprehensive Vehicle Identification System (ISKIP), which enables automatic vehicle identification based on the recognition of characteristics such as colour, make, type and registration number.

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The project is based on a complex algorithm of neural networks, analytical software and a database of about 500,000 images of vehicles. It is a unique solution in Europe and in the world. Another advantage of the system is the ability to integrate it with other elements of Intelligent Transportation Systems such as vehicular speed measurement systems and weight-in-motion systems. Highly appreciated at international exhibitions, ISKIP is implemented domestically, as well as on the international market. Among other significant solutions of the Institute I would cite “The bridge in three months” (M3M), which allows to construct in a very short time small bridges, thanks to the use of pre-fabricated systems. A few units have already been built using the technology developed by the M3M consortium. It can be observed that one of the most difficult problems related to the design and use of new roads is finding a compromise between comfortable and fast driving and the need to ensure traffic safety. An important achievement of the Institute, which can significantly improve road safety, is the Active Intelligent Road and Bridge Restrain (ABDiM) project. A smart barrier is an innovative device that actively responds to a vehicle’s hitting it and adjusts the level of shock absorption to its mass. If a crush occurs, it directs the vehicle to the correct path and notifies emergency services. Notification systems are one of the EU priorities , and the barrier management system will be one of the sources of information for traffic management centres. The use of a smart barrier on bridges, in tunnels and on roads - in their risky parts - will allow to minimize social cost of road accidents estimated at several billion zlotys per year. But safe traffic means also effective road diagnostics. It is extremely important to make timely and right decisions as regards repairs

and upgrades of roads. It is essential to examine surface characteristics affecting traffic safety, such as roughness and evenness. The System for Pavement Infrastructure Diagnosis (SPID), a mobile laboratory inside a lorry, is very useful as it allows a precise measurement of road surface deflections. The lab is ultramodern, the second one in Europe. Its laser equipment allows non-invasive and, which is important, without disrupting traffic examination of the condition of the surface. I would also like to draw your attention to the operation of roads. It is an extremely important area, unfortunately, often neglected in terms of funding and education. I believe that it is necessary to incur expenditure on regular road maintenance to ensure long-term uninterrupted use of the roads. I would like to stress that IBDiM has for more than 20 years worked with European research institutes. We are able to participate in subsequent editions of the EU Framework Programmes as well as in international projects. Being actively involved in these projects, including as a coordinator, IBDiM is a research unit that can boast international recognition. That is reflected in entrusting IBDiM - as a partner of the Ministry of Infrastructure and Development - with a mission to organize in Warsaw in 2016 the conference Transport Research Arena. The aim of the Polish edition of TRA is to show that Poland has a lot to offer Europe in the field of research and innovation, in particular as regards synergy between academia and industry. ISKIP - Intelligent Comprehensive Vehicle Identification System AIBDiM - Active Intelligent Road and Bridge Restrain Systems SPID - System for Pavement Infrastructure Diagnosis ::


Infrastructure

Our Institute is a link between an idea and actual products “The Building Research Institute (ITB) is notified to the European Commission as a body performing the tasks defined by the Regulation (EU) no 305/2011 of the European Parliament and of the Council (CPR, Construction Products Regulation), which lays down harmonised conditions for the marketing of construction products. In 2013, the Institute was entered into the database of New Approach Notified and Designated Organizations (NANDO) as a technical assessment body,” ITB Director Jan Bobrowicz, PhD, tells Jerzy Bojanowicz.

The word institute is associated with innovation. Our Institute is a link between research an idea, which is often very immature at first – and actual products used in the building industry. Before a product is put on the market it has to undergo a series of tests so that it can be safely used in building practice. It has to receive technical approval. The ITB is authorized to grant technical approvals for most building products, including wiring and sanitary ones, or appropriate certificates if a specific standard is involved. An innovative product often meets the requirements of a standard. Our employees deal mainly with inventing testing devices and methods for testing new products. In order to avoid a conflict of interest, we have decided not to patent building products, although we have knowledge and ability to do it better than many organizations involved in this activity. pm

pm

In 2014, we are celebrating in Poland the 25th anniversary of the beginning of our political and economic transition and the 10th anniversary of our entry to the European Union, which - even before we

52  ::  polish market  :: 5  /2014

became an EU member - financially supported the changes going on in Poland, including those in the area of research. Has the ITB benefitted from this funding? We spent most of the money to buy research equipment, although we received the biggest subsidy of PLN8.4 million for building an integrated IT system and digitizing our library. But we used our own resources to build Europe’s biggest fire-testing laboratory with a system purifying exhaust fumes in the town of Pionki. It cost almost PLN70 million. The Institute’s staff have provided the know-how and designed the workstations for testing. Only the ITB has a furnace big enough to test a horizontal element, for example a ceiling beam, of up to 4 by 11.5 metres or a vertical partition wall of 7 by 10 metres. This is why half of our orders for tests come from Western Europe. One should remember that some of the many foreign companies operating in Poland now have all their tests done by the ITB. An excellent example is a large German manufacturer of construction chemicals. The company has built its development centre in Poland, but conducts all of its tests at the ITB. We have over 4,000 testing methods accredited by the Polish Centre for Accreditation (PCA). Around 3,000 of them are procedures related to European standards. This is why many foreign institutions want to work with us and the results of tests conducted at the ITB are accepted in Europe. Much of the money Poland received from the European Union was used to finance infrastructure building. Did the ITB feel this surge in road-building activity? Our experts made many assessments in cases of disputes between investors and contractors concerning building products used not only for the construction of roads but also power stations. Most of the difficult assessments concerning the construction of pm

large building structures are made at the ITB because we have qualified experts and all the equipment needed for testing. For example, at present we are doing tests on the subsoil and designing a waste deposit site for the Bełchatów power station. The purpose of these tests is to enable completing the construction of a new landfill on the site of an old one, which has already been closed down. Membership of the European Union means an opportunity to take part in the work of many different organizations. We take an active part in the work of the European Committee for Standardization (CEN), ISO and European Organization for Technical Assessment (EOTA), which prepares all documents associated with the assessment of innovative products. Sebastian Wall, PhD, head of the Section for Technical Harmonization in Construction, is an EOTA officer – a member of the EOTA Executive Board. We take part in the work of the Standing Committee on Construction (SCC). We try to have representatives on all committees to have an influence on the final shape of the standards that are developed. For example, we have submitted many opinions concerning changes proposed to the Construction Products Regulation (CPR). We also work intensively on sustainable building – we are members of the special committees set up by CEN for this purpose. Interesting publications and requirements defined in manuals are the products of several European research projects in which we have participated. pm

What are your plans for the future? We want to maintain the Institute’s position, especially in Europe, strengthen our activity designed to develop our research staff, expand activities associated with new market needs and generate a profit designated for development. :: pm


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Infrastructure

The modern face of Poland For 30 years, Strabag, one of the largest construction companies in Europe, has supported the development of the construction market in Poland. In its operations, it is guided by team work, which fits in perfectly with the principles of cooperation in Europe. For 10 years, Strabag has pursued road building projects and helped build modern cities thanks to EU funds. These investment projects drive entrepreneurship, reduce unemployment, increase living standards in cities and communities. And although sometimes, on a local scale, we do not feel the enormity of the changes that have occurred recently, in the long term our efforts have paid off. Alfred Watzl and Wojciech Trojanowski Strabag Sp. z o.o.

I

n Western Europe, the comfort of motorways and expressways is the standard we have strived to catch up with for many years. Poland, as a transit country, deserves to become an important logistics hub linking the West and the East, but also to build on that basis a strong and stable economy. For years, probably nothing have stimulated the labour market, SMEs and regional development as much as the decision to enter the EU. The injection of funds and the organization of the Euro 2012 football tournament have significantly impacted the quality of life in Poland. Strabag has been involved for many years in this process, being one of the main contractors of infrastructure projects in Poland. By its presence in Poland and the use of modern technologies and innovative construction methods it helps improve the quality of transport and stimulates the economy both on macro and micro scale. The successfully completed motorways A1 and A2, where one of the contractors was Strabag, not only make it possible to quickly move from the west and south of Europe to Poland, but have almost eliminated unemployment in many municipalities. In addition to the A1 and A2, Strabag has also implemented its technologies in the A4 and roads S1, S3, S5 and S8. The biggest beneficiaries of EU funding, however, are local governments. One of the

best examples is the city of Toruń, for which Strabag has built one of the most modern bridges over the Vistula River, with the use of technology not used in Poland before. On the occasion of its construction, in the extremely challenging weather conditions and with the highest respect for the environment, complex engineering processes can be observed. In the past 10 years, Polish cities gained a number of shopping centres and modern public buildings, namely thanks to EU funds, or - as in the case of shopping malls - due to the inflow of foreign capital to Poland. Strabag was involved in the construction of such facilities as Galeria Katowice, Atrium Felicity in Lublin and Galeria Zielone Arkady in Bydgoszcz and more than 30 other facilities. Poland’s accession to the European Union has also enabled the development of research centres in Poland. Companies such as TPA technological laboratories (Strabag’s Group), together with researchers from technical universities, develop pavings, which are more durable, comfortable and safe than ever before. Universities themselves gain new spaces to conduct education and research activities, such as “Fabryka Inżynierów” in Łódź commissioned in 2012. Talking about the consequences of Poland’s entry to the European Union, one cannot omit the EU environmental standards. They involve the need to incur considerable

costs, but in the long term it gives hope for a comfortable and healthy life, something that is fostered by investments in companies from the waste management sector. The most modern waste treatment plant in Poland, based on Strabag’s solutions, with a groundbreaking garbage selection and processing line, a closed air and water circulation system and a possibility to generate energy from biogas, will be opened in Tychy in the autumn. For a European corporation such as Strabag, Poland’s 10 years in the European Union is only a moment. Yet, if we managed, in such a short time, to take advantage of so many benefits, then what else can we achieve using opportunities it gives us? :: 5 /2014  ::  polish market  ::  55


Infrastructure

A new approach to Polish

infrastructure Experts believe that investment in transport infrastructure will continue to increase. There is still much to be done to complete the construction of a network of expressways. Thanks to cooperation of large companies with the researchh community, especially in business clusters, more and more new technologies can be put into practice. Bogdan Sadecki

I

nnovation is one of the most important factors for business development. The government’s policy should be aimed at stimulating innovation and creating new technologies. Inconsistent government policy, small financial outlays and extensive bureaucracy - these are the main reasons why Poland is not perceived as an innovative market. Domestic companies focus more on implementing already existing solutions. For small and medium-sized enterprises the very word “innovation” means introducing solutions or technologies that have already been invented elsewhere. It is therefore a conservative action reactive rather than proactive. Innovation can be implemented more easily by building strategic partnerships with other companies. The borders between the countries of the European Union are disappearing quickly, but there are still many infrastructural barriers, especially in rail transport and telecommunications. Poland is at the EU’s forefront in terms of funds allocated under the financial perspective 20142020 (EUR 82.5 billion under the Cohesion Policy, including EUR 27.5 billion under the Operational Programme Infrastructure and Environment), which will be an important source of funding infrastructure projects. In addition, the government has created a programme “Polish Investments”,

56  ::  polish market  :: 5  /2014

which aims to support long-term investments with funds from Bank Gospodarstwa Krajowego (BGK) and a specially established company Polish Invetments for Development. “The largest investments in terms of value are planned in the sectors of road and rail construction, energy and the environment. Investments in road construction in 2014-2020, only on the basis of annexes 5 and 6 to the National Road Construction Program, will cost approx. PLN 40 billion, which creates good prospects for companies dealing with road construction,” says Jarosław Dąbrowski, Director at Deloitte’s Financial Advisory Department. “The outlook for the construction industry in Poland looks promising,” he adds.

50 years without repairs

Roads can withstand half a century without repairs - it is a real prospect. Strabag’s R&D unit in Poland - TPA has developed an innovative construction technology of long-lasting pavement to be used in Polish roads. This very innovative concept will extend the life of asphalt pavement from 20 to 50 years, thereby significantly reducing financial expenditures on repairs and generating savings. The lower layer of asphalt will be more

flexible and, therefore, more resistant to fatigue and aging. The new formula can be used in the implementation of “design and build” contracts, which pave the way for the implementation of innovative solutions and technologies for experienced contractors (Source: Rynek Infrastruktury). Alfred Watzl, a board member of Strabag, says: “What is needed today is energy efficient, intelligent paving technologies, especially those making use of recycled materials. Research into their applications, which can only be afforded by large companies with specialized know-how, is still rare in Poland. Meanwhile, these technologies are extremely important both economically and ecologically. In a time of intensive development of the transport network in Europe it makes no sense to use halfmeasures and temporary solutions. Investing in technologies is a duty of the construction companies taking responsibility for the quality of our lives in the future.”

Modern replaces traditional

The long-lasting pavement project involves the construction of a flexible foundation layer highly


WE SPECIALISE IN: • paving work – pavements of natural stone, graniteand basalt setts, concrete slabs and setts; • traffic engineering – traffic system organisation design, road signs and markings; • green areas development – the development of greenery in parks and lawns; • playground construction – safety surfacing, playground equipment.

ZAKŁAD USŁUG BRUKARSKICH „ADROG” SP.J. ADAM DYBCIO, EUGENIA DYBCIO Registered office: 00-388 Warsaw, ul. Dobra 6 m. 14 Business office: 03-289 Warsaw, ul. Ostródzka 213 Tel. 0-22 510 70 60 Fax 0-22 510 70 70 biuro@adrog.com


Infrastructure resistant to fatigue from traffic. Asphalt with a high modulus of rigidity, recently used in the construction of highways, is added to the middle layer to prevent rutting. As a result, the durability of the whole structure increases several-fold. Igor Ruttmar, Ph.D. and President of TPA says: “We have the most modern laboratories, which, together with knowledge and experience of our engineers and technologists, allow the kind ofresearch never conducted in Poland so far. The long-lasting pavement is yet another innovative solution, after asphalt with an admixture of rubber or bridge-dedicated asphalt that we have implemented recently. We are trying to popularize new solutions and set trends in order to improve the quality and increase the stability of road infrastructure in Europe. The know-how comes from the United States, but has also been worked on by specialists from around the world. Guidelines and recommendations have been set for the construction of the longlasting pavement, and new mechanistic methods of designing such structures. Based on the experience of many other countries, TPA proposed the concept of long-lived pavement in Poland.

Swiss technology

of laying mastic asphalt

An innovative technology - based on the Swiss experience of laying mastic asphalt - that has been applied in the construction of the surface of the new Vistula bridge in Toruń - will extend its life up to 20 years. Mastic asphalt is most commonly used in Germany and France. Due to its water resistance, the material was used only in the lower layers of the pavement to protect the insulation layer of the bridge. A similar technology was used, among others, in the bridge linking Denmark and Sweden. “Mastic asphalt is the only technology that does not require rolling. It is laid by means of a paver moving along a profiled guideway. This innovative solution makes for a maximum even surface,” says Igor Ruttmar, President of TPA, a Strabag Group’s company. The

mixture, thanks to its composition, leaves no voids in the structure and guarantees a perfect waterproofness. At the same time, roughness is enhanced namely owing to the blending of grit onto the surface of the asphalt, something that significantly shortens the braking distance and increases traffic safety (source: Newseria). Research on adapting mixtures to Polish conditions were conducted in TPA’s laboratory in Pruszków for over two years. Based on the results, TPA ordered with the Gdańsk Refinery special asphalt adapted to laying such pavements.

Railways

President of Alstom Polska Lesław Kuzaj says that with proper planning and use of money Poland could catch up with Germany or event overtake it in terms of transport infrastructure (source: Rynek Infrastruktury). He fears, however, that lack of such planning is apparearent, which can cause problems in the future. Kuzaj notes that investments in transport infrastructure are to be implemented with a 30-year advance. PKP has definite plans for the modernization of rail infrastructure in 2014. Jakub Karnowski, President of the company, says that this year’s expenditure on modernization of railways will amount to approx. EUR 2 billion compared to EUR 1.3 billion in 2013. He stresses that although it is a lot of money and some kind of a 50 years’ delayed Marshall Plan, the amount is still much smaller than in Germany.

Plant for the production of 120-metre long rails

On February 24, 2014 Deputy Prime Minister Janusz Piechociński officially opened the plant for the production of long rails in ArcelorMittal’s steelworks in Dąbrowa Górnicza. “So far, large 30-metre rails have been produced in Dąbrowa Górnicza. Now there begins the production of 120-metre rails. The company’s strategic project, the value of which exceeds PLN 140 million, will contribute to the modernization of

Polish railway infrastructure, and will increase safety of railway transport, as the longer rail means fewer links. The production of long rails is for us a project of strategic importance, particularly in the context of plans for railway investments in a number of countries, including Poland. We are pleased that the opening of the plant takes place a few days before March 5, when we will celebrate the tenth anniversary of our presence in Poland. Over the past decade, we have invested more than PLN 5 billion in the modernization of our Polish plants,” said Manfred Van Vlierberghe, CEO of ArcelorMittal Poland.

Cooperation of Kapsch and Lotos

Companies dealing with infrastructure have come together in the cluster called Interdisciplinary Partnership for Innovative Development of Transport and Infrastructure to jointly carry out research and analyses and disseminate their results. The partners include the Silesian University of Technology, Koźminski University, Kapsch Telematic Services and Lotos Asphalt. Thanks to the cooperation it will be possible to acquire EU and national funds for research. There will be thematic groups within the cluster. The Silesian University of Technology will be the leader of the innovative technologies in the rail transport group. The Koźminski University will lead the group dealing with the management of transport systems, whereas Kapsch Telematic Services will use its know-how to work on modern mobility management through intelligent transport systems (source: Newseria). “The company, regardless of implementing innovations, wants to share its knowledge so that it becomes widespread. We are very pleased that we have been invited to form that cluster. This involves a broader idea of ​​the so-called smart cities. Through innovative infrastructural solutions, cities are supposed to become safe, friendly, and meet high standards of environmental protection,” says Marek Cywiński, CEO of Kapsch Telematic Services. ::

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Brokers Ranking

Since its establishment in 1872, the Mönchengladbach-based company Scheidt & Bachmann has developed into a global corporation which enjoys an excellent reputation. This worldwide success has stemmed from the company’s innovative and far-sighted operations and the inn awareness of its customers’ needs. Scheidt & Bachmann is one of world’s most important producers of systems for communications and mobility. We are proud that our products form the basis of transport systems across the globe and that they help millions of people every day to reach their destinations. Our package in railway-traffic management manageme includes comprehensive solutions for railway sections – a coherent equipment base, central management and diagnostics allowing problem-free work and management of the system. Automatic control systems in railway transport include devices providing safety at level crossings. The BUES 2000 computer-controlled system sets a new standard in safety devices for level crossings. Over 3,000 crossings served by BUES 2000 all over the world, including 200 in Poland, connrm the enormous experience and exibility of Scheidt & Bachmann. Scheidt & Bachmann’s fully-electronic interlocking system - ZSB 2000 - is designed to manage railway traffic in accordance with the binding regulations and has received acceptance certiicates in many countries to be used on both primary and secondary railway lines. Thanks to the modular se concept of the system and the fact that all its functions are computer-controlled, the ZSB 2000 interlocking system boasts excellent exibility and can easily be tailored to the customer’s speciic demands.

5 /2014  ::  polish market  ::  59


Real estate

Office space – today and tomorrow Konrad Heidinger, Consultant in Consultancy and Research Department, CBRE Karina Kreja, Associate Director in Building Consultancy Department, CBRE

Open Space office – the dominating model The open space layout of office environment dominates Polish corporate landscape. CBRE’s recent research clearly indicates that among the surveyed businesses, open space layout is the most popular one; it dominates in the offices of 61% of the respondents. From an enterprise’s point of view, such a solution is usually very profitable, as on the one hand it enables reducing the amount of required office space, while on the other allows for more effective flow of information and solutions between the employees owing to the elimination of physical barriers separating each organisational unit. Of course, the application of open space concept is not possible for everyone due to the enterprise operations and culture idiosyncrasies, however a number of companies which have their offices in modern office buildings have decided to benefit from the advantages of shared work environment. Their number is growing and while currently the closed space layout is the major one for 34% of the respondents, already half of them declare that they are planning to introduce open space layout. The shift from traditional model of an office, which in Warsaw started in the mid-nineties, has still not been completed, while already a new office concept is looming at the horizon. Open space office concept is already considered a traditional layout by many more progressive companies. Recently, a new alternative concept of Agile Office took off on the market, although for the time being it has been implemented by only 3% of the surveyed.

Agile Office – toward activity-based workstyle At the bottom of the new office concept lies an attempt to limit the costs related to occupied space. In short, the idea of Agile Office embraces sharedesk model and results from the analysis of the real workplace usage through post-occupancy studies known as Workplace Strategy. Together with the increasing employees’ mobility and activity-based working culture that includes numerous face-to-face and team meetings in place of individual work, as well as the growing number of business travels or the necessity of working in the client’s place of business, many enterprises are affected by a similar problem – during a typical

workday many individually assigned workstations remain unused, while simultaneously companies struggle with the lack of office space for new workers. As it comes out from our research, the occupancy level of workstations rarely reaches over 70% and we expect, that over time the demand for individual workstations will further decrease, while other types of spaces – facilitating remote, co-working and activity based work culture will be in increasing demand. On one hand, the growing popularity of mobile technologies makes access to enterprise resources possible from every place connected to the network. On the other hand, office work is more often organised in inter-department project teams. In such arrangement, team members often need a quick change of the work environment to be able to participate in the group meeting on the one hand, or to have a possibility of focused work on the other. For these new requirements, a new office layout, where employees do not have their individual workstation assigned is clearly more suitable. When employees come to work, they simply take one of available sits. It allows a business to reduce the number workstations for their employees, and implement a layout in which 8 workstations are shared by 10 people. The resulting 10 -20% surplus of rented space can used for additional facilities: • • • • • •

interior meeting rooms with projectors, table and environment that supports creative work, additional social areas, used during breaks or less formal meetings, soundproofed, small rooms for work which require concentrations, additional conference rooms, leisure / relaxation rooms, larger than average kitchen.

The introduction often meets strong resistance from both the employers and employees. Apart from the issue of losing ‘private’ space at the benefit of ‘community’ spaces, the concerns of employees are related to potential problems with Source: CBRE

60  ::  polish market  :: 5  /2014

finding a free place, the necessity of constant moving one’s documents and laptop. On the other hand, from the employer’s point of view, the innovative office layout is often related to concerns about employees’ productivity. The lack of fixed workstations and a significant share of mobile workers means that the team manager has lower physical control over what a given employee does and requires new work culture both from employees and their managers. First weeks in the new office are often related to a certain dose of uncertainty, but after the initial accommodation all involved start to appreciate new office benefits stemming from the new office layout. The possibility of a fast change of the work environment and new amenities boost creativity, productivity and improve cooperation between employees.

Workplace Consultancy – a smart approach to office requirements definition Workplace Consultancy approach allows for accurate definition of office space requirements. It is often mistaken for a tool that necessarily leads to Agile Office concept, but in truth its applications are considerable wider and applicable to any tenant’s requirement, whether cellular office or open space. Workplace Strategy analysis is taking under account the current office usage as well as future changing requirements. It is time and resources consuming and requires an engagement of an external advisor as well as a large degree of internal team’s support, but at the end it allows for considerable deeper and more precise understanding of current and anticipated tenant’s needs and helps to mitigate costly mistake steaming from both underuse of rented space or its insufficient amount. ::


One firm Many things to be proud of It is good to build more. It is also good to do it well. With this philosophy we have been for many years among the largest construction companies in Poland. Over more than twenty years of our operations we have built more than 400 modern facilities honoured with numerous awards. A confirmation of the top quality of our services is the unabated trust of our Clients - this allows us to build more and more.


Brokers Ranking

Insurance brokers in Poland This year, the annual ranking of insurance brokers has been published for the 18th time. The table is composed of companies which have responded to the survey and disclosed their financial results. The main criterion in compiling the ranking was operating revenue for 2013. AON Group tops the league table.

Rita Schultz

T

op places in the league table have been occupied for years by the same companies, indicating how stable the sector is. The leaders are AON Group, Gras Savoye Polska, Marsh & McLennan Companies and Mak Group. Revenues generated by the remaining companies are not as high but the companies have been included in the ranking to show the disparities among brokers in terms of revenue and because they have not been afraid to publicly disclose their results. The fact that the largest part of the market is still held by the same market players indicates that the clients are not interested in changing their broker, especially if they are satisfied with the services they receive. They prefer to entrust their personal and property insurance to the brokers who have already proven their worth. It is worth noting that brokers’ services officially appeared on the Polish market at the beginning of the 1990s. With time, Polish business, following the example of foreign companies, has noticed the need to use the services of insurance brokers. The insurance broker’s occupation is still undervalued and confused with that of the insurance agent. Meanwhile, brokers are not only committed to their activity but look broader at the market and are actively

Name of company 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Grupa AON Gras Savoye Polska Marsh & McLennan Companies (Marsh and Mercer) Grupa MAK Mentor S.A. GrECo JLT Polska Sp. z o.o. FST Grupa Brokerska PWS Konstanta S.A. Grupa Kapitałowa WDB Brokerzy Ubezpieczeniowi S.A. Maximus Broker Sp. z o.o. Grupa Brokerska Odys. Sp. z o.o. Biuro Brokerskie Verum Dom Brokerski Negocjator International Risk & Corporate Advisory (IRCA) Sp. z o.o. Kancelaria Brokerska Aspergo Sp. z o.o. Rożek Brokers Group Unibroker Sp. z o.o. Lab-Broker Sp. z o.o. Biuro Brokerskie Certum Gort Business Service Piotr Gortatowicz

Based in

Since

Revenue in 2013 in PLN

Warsaw Warsaw Warsaw

1992 1991 1992

154,153,626 144,830,000 95,709,977

Warsaw Toruń Warsaw Toruń Bielsko-Biała Wrocław

1995 1994 2001 2000 1995 2006

80,000,000 49,398,985 37,735,004 31,682,053 28,484,708 11,214,239

Toruń Bydgoszcz Kraków Elbląg Warsaw

2001 2000 2000 1998 2004

10,070,486 9,400,568 5,100,000 3,563,222 2,271,383

Kraków

2007

1,913,227

Sandomierz Warsaw Warsaw Toruń Warsaw

1998 1992 1990 2011 2002

1,047,089 1,025,703 551,000 259,000 85,000

Source: insurance brokers

5 /2014  ::  polish market  ::  63


Brokers Ranking

involved in improving the quality of insurance products offered. And they have an influence on the shape of newly developed products. Thanks to their commitment and knowledge of the needs of businesses, insurers are able to notice quite new areas in insurance coverage and create products tailored to the needs of clients. The insurance brokers operating in Poland have the same level of expertise as their foreign colleagues. A report published by the Polish Financial Supervision Authority (KNF) reads: “Analysing data for past years, one can note a steady growth in interest in conducting brokerage activity. In 2012, as in the previous year, an upward trend continued in terms of the number of permits issued for conducting brokerage activity. It follows from data obtained from brokers’ statements that brokers generate the highest revenues in two provinces: Mazowieckie and Kujawsko-Pomorskie. At the same time, it should be stressed that a small number of brokers generates more than half of the total revenue. The insurance brokerage market, with a continuous growth in the number of businesses acting on the market as insurance intermediaries, has recorded a steady increase in overall revenues from commissions paid by insurance companies.” ::

To receive a permit for brokerage activity and be entered into the register of brokers one needs to have professional liability insurance.

In 2012, the following insurance companies had the biggest number of professional liability insurance contracts signed with brokers, according to the KNF: 1. InterRisk Towarzystwo Ubezpieczeń S.A. Vienna Insurance Group 66.6% 2. Uniqa Towarzystwo Ubezpieczeń S.A. 10.7% 3. TUiR Warta S.A. 6.9% 4. PZU S.A. 5.5% 5. Gothaer Towarzystwo Ubezpieczeń S.A. 2.9%

In 2012, the insurance companies to which insurance brokers transferred the highest amount of premiums on behalf of their clients were PZU S.A. and PZU Życie S.A. Among the 10 insurance companies which received the biggest amount of premiums were only companies based in Poland.

Top 5 insurance companies according to the total amount of premiums transferred by brokers in 2012: 1. PZU S.A.

PLN 1,706,984,087

2. PZU Życie S.A.

PLN 1,087,486,139

3. TUiR Warta S.A.

PLN 796,017,751

4. STU Ergo Hestia S.A. PLN 666,891,095 5. Compensa Towarzystwo Ubezpieczeń S.A. Vienna Insurance Group

PLN 401,554,693

Source: KNF

Brokers strengthen clients’ insurance awareness Jan Grzegorz Prądzyński, president of the Polish Insurance Association (PIU) The position of insurance brokers on an insurance market is a sign of its maturity. Of course, their key task is to professionally offer intermediation services. But it is worth

“I am glad that the position of brokers in our country is growing every year.” stressing that brokers play an invaluable role in raising insurance awareness by communicating knowledge about insurance to clients and identifying potential risks, while strengthening insurance protection and tailoring it to customer needs. I am

64  ::  polish market  :: 5  /2014

glad that the position of brokers in our country is growing every year. According to data from the KNF (Polish Financial Supervision Authority), in 2012 the value of premiums transferred by brokers to insurance companies reached PLN7 billion and was by 18% higher than a year earlier. On the other hand, one may worry about the significant disparity between the life and property markets. The first one accounts only for slightly over than 20% of the premium contributed by brokers. Also, the client portfolio is far from being balanced: retail clients still use services offered by brokers much less often than businesses. However, I believe that as the market will continue to develop the differences will be visibly diminishing to the benefit of Polish brokers and their clients. ::


Brokers Ranking

Customer, insurer, regulator challenges for the market Łukasz Zoń, President of the Association of Polish Insurance and Reinsurance Brokers

What are your plans regarding the Association? The Polish Association of Insurance and Reinsurance Brokers is an organization of professionals. Therefore, our efforts are focused primarily on securing optimal conditions for practicing the profession. The areas of the Association’s functioning are traditionally divided into the internal one regarding members themselves and the external one that deals with the economic environment. Making plans for the coming years, I would like to suggest maintaining the Association’s current structure. In the internal area I think efforts are essential to shape the relationship between brokers and the market in line with the Code of Ethics amended last year. In addition, education is also important, and in this respect, apart from organizing a series of training sessions, we want to maintain cooperation with the Insurance Law Foundation which issues uninterruptedly since 1994 the scientific journal “Prawo Asekuracyjne”. As regards the external environment, the Association will give substantial consideration in the near future to changes in the legal framework. At the European level, work is underway on the new shape of the Insurance Mediation Directive, which is then to be implemented into Polish law. The Association is and will be actively involved in these processes, since the final form of the Directive pm

66  ::  polish market  :: 5  /2014

and subsequently Polish regulations will affect operational possibilities of brokers. The above actions will be underpinned by the Congress of Brokers that we organize every year. It is a meeting of over a thousand participants - brokers and insurers, providing a platform not only to exchange knowledge during panel discussions, but also to hold bilateral meetings with a substantial number of market players at the same time. What is the guiding theme of this year’s Congress? The above-mentioned work on the final shape of the Insurance Mediation Directive makes us consider the role and the market impact of the proposed solutions. Therefore, the theme of the Congress is “Customer, insurer, regulator - challenges for the market.” Generally speaking, we would like to think about how certain mechanisms operating on the insurance market, such as its cyclical nature, the method of insurance products’ distribution or the quality of products offered, affect the interests of stakeholders and how these can be influenced by the current European trends related to the regulation and control over the market. pm

How will the legal changes affect the way brokers operate? We must remember that insurance brokers are one of the many channels of insurance pm

distribution. At the same time, Polish legal framework based on the Law on insurance mediation clearly defines the broker as an individual acting in the name and on behalf of the client. The solutions adopted in the EU Directive are slightly different, allowing brokers to act on behalf of the client or the insurer. The aim of the ongoing work on the revision of the Directive is primarily to ensure

“I believe that the amendment made last May will help brokers perform their tasks even better.“ that by imposing certain disclosure requirements consumers are able to make more informed decisions. Two issues are particularly significant. First, it is important that the information be useful for customers and direct their attention to what is really essential to safeguard their interests. Second, obligations should be imposed on all market players in line with the “level playing field”


Brokers Ranking

principle (equal opportunities of doing business), postulated by the European insurance intermediaries. Depending on the solutions adopted in the Directive and then implemented into Polish law, the consequence for brokers may be either legal obligation to disclose information not burdensome because already widespread in brokers’ daily practice - or a severe battle for client. Has the Code of Ethics helped brokers in doing business? Definitely yes. Let me remind you that the Sobieszewska Charter containing the Broker’s Code of Ethics was adopted in May 1998. At that time, people shaping the emerging insurance market had no doubts about the need to establish principles that will guide brokers in their business. In retrospect, we observe that the principles of ethics, although they are called soft law and formally bind only members, have a significant impact on the practice. They are also increasingly used by judges assessing the broker’s conduct in particular pm

situations involving brokerage. I believe that the amendment made last May will help brokers perform their tasks even better. Does the insurance broker have the characteristics of a profession of public trust? A person performing the profession of public trust performs strictly defined legal actions in order to safeguard the interests of an entity in a manner regulated by law, guided by certain rules of conduct, including ethics, and keeping the secret as to actions taken. As far as security of interests of persons seeking insurance protection is concerned, the broker’s profession has all the characteristics of a public trust profession. The Association makes efforts to popularize this view, hoping that in the future we will see its formal confirmation. pm

world standards. The introduction of these products on the market would not have been possible without demand from clients. Therefore, it seems that there is quite a strong awareness of the opportunities offered by the market. It is worse when it comes to making the decision to purchase a particular insurance programme securing interests of an entrepreneur. Buying insurance is still considered as a “necessary evil” without analyzing benefits that a well- designed programme can bring by stabilizing the financial situation even in the absence of damage. As a broker, I too often hear “Now I cannot afford it, besides, I will manage somehow.” Unfortunately, in the event of a major crisis, it does not work and the company ceases to exist. ::

How would you assess insurance awareness of Polish business? Watching over the past twenty years the development of the Polish insurance market, I can generally say that we have products of pm

Adjustment of the Polish insurance mediation market to EU requirements Tomasz Zagórski, head of the Brokerage Unit at the Insurance and Pension Licencing Department Polish Financial Supervision Authority (KNF) Directive 2002/92/EC on insurance mediation (Insurance Mediation Directive – IMD) was adopted in September 2002 and became effective on January 15, 2003, the day it was published in the Official Journal of the European Union. The member states had two years to implement the directive. Poland regulated brokerage activity, adjusting the country’s legislation to EU requirements, by the law on insurance mediation of May 22, 2003, which came into force on January 1, 2004, and by secondary regulations. The legislation in force is a guarantee that the Polish insurance mediation market functions in compliance with the IMD requirements. In connection with ongoing work to revise the IMD Directive (IMD II), it should be noted that the work will not be neutral for the Polish insurance mediation market. However, the

progress achieved in this work so far does not allow determining exactly the consequences of the amendments that may be adopted. At the same time, one should remember that the present Parliament will not have enough time before its term expires to adopt the revised directive. As a result, given the instability of the existing EU legislation, as work has begun on revising the insurance mediation regulations, it is impossible to say clearly what the Polish insurance mediation market will be like in the future. The reason is that the final concept for the EU regulations will be directly translated into solutions to be used in Polish law. Under existing regulations, it is the Polish Financial Supervision Authority that grants permits to conduct insurance mediation activity, runs a register of insurance brokers

and notifies entities conducting insurance mediation activity. The Polish Financial Supervision Authority, which exercises direct supervision over Polish insurance brokers, ensures that they meet international standards. The supervision involves checking whether the brokers comply with the obligation to have mandatory insurance, raise their professional qualifications and meet regulatory requirements. In its activity, the Polish Financial Super vision Authority guards the performance of insurance mediation operations in compliance with existing legislation. It should be stressed that the legislation is fully harmonized with EU regulations. ::

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Law & Taxes

Amendment to provisions on consumer rights Anna Stasiak-Apelska, Director of the Warsaw branch of the Gajewski, Trawczyńska and Partners law firm

T

he Bill on consumer rights (hereinafter: “the Bill”) has been submitted to the parliament and is already after the first reading. The main aim of the Bill is implementation into Polish law of the European Parliament’s and the EU Council’s Directive on consumer rights, putting in order and integrating of the rules on liability for the quality of the thing sold, in particular the provisions transposing the Directive on consumer sale implemented into Polish law by the Law on the specific conditions of consumer sale. In contrast, the main objective of the European Parliament’s and the EU Council’s transposed Directive No. 2011/83/EU of 25 October 2011 on consumer rights amending the EU Council’s Directive 93/13/EEC and the European Parliament’s and the EU Council’s Directive 1999/44/EC and repealing the EU Council’s Directive 85/577/EWG and the European Parliament’s and the Council’s Directive 97/7/EC (hereinafter: “the Directive”) is to increase the confidence of both consumers and traders in the legal systems of other member states, which is supposed to result

68  ::  polish market  :: 5 /2014

in a more frequent conclusion of cross-border transactions. The new Law on consumer rights is intended to guarantee consumers a broader right to information in connection with entering into contracts. The right to information applies both to contracts concluded in a traditional way (e.g. in a shop) and to those made at a distance (e.g. via the Internet or telephone). The trader is bound to provide the consumer with sufficient information relevant to them in the context of the contract even before the conclusion of the contract. The consumer is entitled to information, as already mentioned, with respect to contracts negotiated away from business premises or at a distance and with respect to contracts concluded in a traditional way. In addition, the Bill introduces provisions which make it easier for the consumer to get to know, before the conclusion of the contract, what costs he or she will actually have to incur in connection with the contract. The trader is obliged to inform the consumer in a clear way about all costs arising from the contract. The Bill extends the rescission period of a contract entered into off-premises or at a distance - without giving reasons - to 14 days (currently 10 days). In addition, the Bill precisely regulates the method of calculating this period. If the trader has not informed the consumer about his or her right to rescind the contract, the right to withdrawal will expire only after one year from the expiry of the basic 14-day period (currently three months from the delivery of the thing). If the consumer exercises his or her right to withdrawal and has not been informed by the trader about the costs associated with returning the thing in the event of exercise of the right to withdrawal, the Bill releases the consumer from the obligation to incur such costs. Another change for the benefit of consumers is the introduction of the notion of “flaw” in a sense commonly understood by consumers. It will be up to the consumer to choose

the right which he or she wants to use in case of a purchased thing that is flawed. The Bill restores the opportunity to claim a discount or rescind the contract immediately after the flaw was discovered, without having to request repair or replacement of the thing. The purpose of such a change is to align the level of protection in areas where the consumer is currently impaired compared to traders that purchase things and individuals who are not consumers. In addition, the Bill restores the application of the provisions of the Civil Code to consumer warranty, which means in practice that if the trader that gives a warranty does not specify exactly its substance, the consumer will be able to rely on the rights related to warranty provided for in the Civil Code. In addition to any rigidities that the Bill imposes on the trader, including those that go beyond obligations imposed by the Directive (e.g. the change in the definition of the consumer, the obligation to provide information about the thing’s country of origin, the extension of the period in which it is alleged that the flaw existed at the time the thing was delivered) the question arises whether, due to the short time that is devoted to the adoption of the new law, the provisions proposed therein will not undermine the stability of the economy. In accordance with Art. 28 of the Directive, member states were required to adopt and publish legal, regulatory and administrative provisions necessary to comply with the Directive by 13 December 2013. The provisions of the Directive on consumer rights impose - within the scope of its regulation the introduction of uniform solutions in all member states. These provisions shall enter into force across the European Union on 13 June 2014 at the latest, regardless of whether the member states will manage to pass appropriate national legislation or not. ::


Law & Taxes

Changes in Polish competition law in the last 25 years – where we are now and

where we are heading

Polish competition law has been accompanying the country’s political and economic transformation process right from its very start in 1989. The year 1990 witnessed the first act on combating monopolistic practices and the establishment of the key authority and guardian of competition law – the Polish Competition Authority (PCA).

Marcin Paczewski, Legal Advisor, Head of Competition and Antitrust at Chałas & Partners Law Firm

F

ollowing years of centrally-planned economy, it was a turning point both in law and business mentality. In 1996 the scope of competence of the PCA was extended from combating anticompetitive conduct and merger control to also include safeguarding consumer interests. It was this moment which transformed the former Antimonopoly Office into the current Office of Competition and Consumer Protection. In 2000 the act titled Competition Law was adopted. On 1 May 2004 Poland joined the European Union, which meant that since then a whole new set of regulations and jurisprudence could and should be taken into consideration by the PCA and Polish courts. The Competition Law of 2000 was then followed by a new version of the act in 2007 (currently in force). 2014, 10 years after joining the European Union, looks likely to witness another significant development of competition law in Poland. The changes and modifications since 1990 have made competition law an indispensable part of conducting business activity in Poland. The regulations have evolved into a system aimed at protecting competition in all sorts of business activities: merger control, anticompetitive conduct (anticompetitive agreements and the abuse of dominant position) as well as protecting consumer collective interests. Merger control includes an obligation for businesses dealing with mergers & acquisitions

activity to submit their business acquisition plans for review by the PCA if certain financial thresholds are met, ie. if the combined turnover of undertakings participating in the consolidation (including their corporate groups) in the financial year pre­ceding the year of the notification exceeds either EUR1 billion worldwide or EUR50 million in Poland. Exceeding these thresholds in principle implies that the planned transaction may have an effect on the market and is therefore subject to control by the PCA. Depending on the scale of the transaction, it may also be reviewed by the European Commission. The current system of competition law is very strict on undertakings not taking it properly into account – the PCA may fine the infringing undertakings with a fine of 10% of their annual turnover and impose additional financial sanctions on the management of the undertaking for carrying out a concentration without prior merger clearance from the PCA. Currently, undertakings have to be very careful when conducting their businesses at all levels of operations – dealings both vertically (with suppliers/manufacturers) as well as horizontally (with competitors) are subject to strict rules set out in the competition law. Setting prices, sharing markets, agreements between undertakings when taking part in tender procedures, providing significantly different conditions of cooperation to similar contracting parties are all examples of behaviour prohibited and severely penalized (10% turnover

fine) practices under Polish (and European) competition law. Also undertakings with a market share exceeding or close to 40% on the relevant market are subject to specific regime set out by the competition law regulations. When dealing with contracting parties, they have to be very careful when setting out the rules of cooperation as practices of abusing dominant position are not only invalid by law but also carry the risk of significant (10% of turnover) financial sanctions. The current developments of competition law are heading in the direction of more severe (more penal than administrative in nature) responsibility for undertakings and their management, more opportunities for whistle blowing and more extensive powers for the PCA but also reflect some of the concerns so far voiced by Polish undertakings such as keeping confidential the conditions set out in conditional merger clearance decisions. To summarise, Polish competition law has not only undergone a significant transformation in the past 25 years but the process of its development is likely to intensify even more, thus providing for a comprehensive legal framework for a free-market and competitive economy. ::

T +48 22 438 45 45, chwp@chwp.pl www.chwp.pl

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Finance

The classic banking

products

Prof. Małgorzata Zaleska Małgorzata Zaleska, a member of the Management Board of the National Bank of Poland (NBP), professor at the Institute of Banking and Insurance, Warsaw School of Economics, and Vice-Chair of the Committee on Finance, Polish Academy of Sciences.

T

raditional banking is primarily about taking deposits and granting loans. Close to it is - more risky - investment banking. For years, the debate has been going on whether these two types of banking should be separated or could be carried out simultaneously by one entity. Now, in response to the crisis, a tendency is back to separate traditional banking from investment activities. Such a trend may be observed in some EU countries such as France or Germany. It also should be mentioned that the Polish Financial Supervision Authority drafted a proposal for organizational change in that area. That may be somewhat surprising, since there are no investment banks in Poland. Given the above, the Polish banking sector should be considered primarily in terms of traditional but also modern banking, taking into account new distribution channels for banking products. Of course, this does not mean that banks operating in Poland only take deposits and grant loans. Nevertheless, this is their dominant activity, on which I would like to focus here. Let’s start with Polish household deposits, which amounted to PLN 548 billion at the end of 2013. Deposits in zlotys were dominant and accounted for 91%, while deposits in euros constituted 5% of all household deposits. The challenge for the financing of the banking activity is that the deposits are largely short-term - up to one year. On their basis banks provide long-term loans -for several decades. It is obvious that banks change valuation dates, and in the case of the Polish banking sector it is a large-scale transformation. It should also be noted that there are basically no incentives to invest savings for a

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“The total amount of loans to households at the end of 2013 was PLN 556 billion, including PLN 336 billion, in mortgage loans which are predominantly foreign currency loans denominated in Swiss francs.” long period in the Polish banking sector or in the tax system. No wonder that Poles choose short-term investment. While discussing making savings by Poles it is worth mentioning seasonality. The analysis relating to the past five years indicates a significant increase in savings in December, and a decline in April. It is therefore not true that October is a month of savings in Poland. Talking about household loans, it should be noted that their value does not differ significantly from that of household deposits. The total amount of loans to households at the end of 2013 was PLN 556 billion, including PLN 336 billion in mortgage loans, which are predominantly foreign currency loans denominated in Swiss francs. These have been characterized by small increments in recent

years. On the other hand, a significant increase is also palpable in housing loans denominated in Polish zlotys (by 121% over the past five years). Moreover, housing loans have been fairly well repaid, because the share of loans in the total amount of unsettled loans is slightly more than 3%. A systematic deterioration is to be noted, however, in the quality of these very loans. Perhaps, once again in the history of banking, a rule will prove true that the housing loan portfolio breaks down at about the seventh year of its life cycle. But the poorest quality is that of the consumer loan portfolio, as nearly 15% of the loans is not repaid on a regular basis, though this has improved recently compared to 2011 when the rate was 18%. Seasonality can be observed in relation to consumer loans: Poles incur them primarily in May, which may indicate that their needs are increasing in the spring time. A clear decline in the demand for that kind of loans can be seen in January, which may be surprising considering that the earlier month is associated with Christmas spending. Less surprising is the growth in demand for housing loans in May due to a flourishing construction season. It is also worth mentioning that the cyclical nature of saving and borrowing is consistent, i.e. a decrease in deposits in April is followed by an increase in demand for loans in May. Given all the above, it is important that people knowingly use banking products. They can be helped by financial education. It should be remembered that an aware customer is a more difficult partner for banks than a customer who does not have sufficient banking knowledge. ::


Finance

Managing risk in Warsaw – a chance to meet professionals

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n June 23 and 24 the Warsaw School of Economics (SGH) will be hosting an international conference dedicated to risk management. The International Risk Management Conference 2014 brings together researchers and practitioners from around the world, providing a platform for presenting the latest research results in the field of risk management. Leading experts from various academic disciplines and professionals from banking and financial sectors will meet to discuss the safety of the financial system. Professor Małgorzata Iwanicz-Drozdowska from the Warsaw School of Economics and chair of the conference local committee said: “We managed to attract outstanding speakers from US and European universities for plenary sessions and professional workshops like: Franklin Allen, Edward Altman, Menachem Brenner, Santiago Carbo-Valverde, Sanjiv Das and Bing Liang. More than 70 papers have been classified for the presentation during parallel sessions. We expect about 150 participants from all around the world. In my opinion, IRMC 2014 will be an expectional event for researchers and practitioners involved in risk management”. Participants will have a unique chance to meet and listen to professors and experts in risk management from NYU - Stern School of Business, Wharton UPenn, University of Massachusetts Amherst, Santa Clara University, Bangor Business School and the Warsaw School of Economics (SGH). They will be talking about current conditions and outlook for global credit markets, countering systemic risk through banking regulation and other means, the state of regulations following the financial crisis and the safety of CEE financial systems. These will be just a few from a number of keynote and featured speeches

dedicated to risk managament. Additionally participants will be able to take part in a series of workshops conducted by specialists representing the National Bank of Poland, Bank Guarantee Fund (BFG), National Depository for Securities (KDPW), Polish Financial Supervision Authority (KNF), Credit Information Bureau (BIK) and StockWatch. The conference has had six previous successful editions. It will take place in Warsaw for the first time. The latest one took place in Copenhagen. This year’s seventh edition of this event is organized by New York University – Stern School of Business, University

IRMC2014

of Florence, The Risk, Banking and Finance Society – which are permanent organizers – and the Warsaw School of Economics, which will be hosting the event this year. ::

To register for the conference please visit www.irmc.eu. The normal registration fees apply until May 23, but late registration is also possible until June 24.

International Risk Management Conference

THE SAFETY OF THE FINANCIAL SYSTEM: FROM IDIOSYNCRATIC TO SYSTEMIC RISK

®

LEADING PARTNER

The project implemented with Narodowy Bank Polski under the economic education programme

PARTNERS

SUPPORTING PARTNERS

CONFERENCE MANAGEMENT BY

Warsaw, Poland June 23-24, 2014 Fot. Zbigniew Panów, pzstudio.pl_archiwum www.warsawtour.pl

The International Risk Management Conference 2014 will take place at the Warsaw School of Economics (SGH).

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Finance

Banking & Insurance Forum The 7th Banking Forum and the 3rd Insurance Forum were held in the Westin Hotel in Warsaw on April 2-3. The events were attended by people from the banking and insurance sector - presidents and members of the management boards of banks and insurance companies - public administration officials and companies providing services for the sector.

Mariusz Grendowicz, President of the Board, Polskie Inwestycje Rozwojowe SA

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ariusz Grendowicz, the chairman of the Banking Forum Programming Council and president of the Polskie Inwestycje Rozwojowe SA company, officially opened the conference. Ryszard Petru moderated the first panel discussion entitled “The Impact of Global Factors on the Development of the Polish Financial Sector.” The panellists were Józef Wancer of Bank Gospodarki Żywnościowej (BGŻ), Krzysztof Kalicki of Deutsche Bank Polska, Jacek Bartkiewicz of the National Bank of Poland (NBP), Wojciech Kwaśniak of the Polish Financial Supervision Authority (KNF), Sebastien de Brouwer of the European Banking Federation, Bożena Graczyk of KPMG, Anna Włodarczyk of Gothaer and Artur Olech of Generali Group Polska. Zbigniew Derdziuk of the Social Insurance Institution (ZUS), Leszek Niemycki of Deutsche Bank Polska, Krzysztof Żukowski of Skandia Życie and Mariusz Wójcik of AXA Polska took part in the second discussion – “The Role of Banks in Building Retirement Security” - moderated by Prof. Marian Wiśniewski. Among those who participated in other discussions on the first day of the Forum were Dariusz Kacprzyk of Bank Gospodarstwa Krajowego (BGK), Tomasz Bogus of Bank Pocztowy, Mariusz Klimczak of Bank Ochrony Środowiska (BOŚ), Jerzy Osiatyński

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of the Monetary Policy Council and Tomasz Tarkowski of the PZU insurance company. The first day of the conference ended with a Grand Gala of the Banking World Leaders, which was officially opened by Rafał Baniak, a deputy minister of the treasury and Józef Wancer, the chairman of the competition chapter. The meeting was hosted by Marcin Prokop while Mateusz Mijal appeared in the artistic part.

Winners of the Banking World Leaders competition:

mBank, (The Most Innovative Bank of 2013), IKO – PKO Bank Polski (Most Interesting Banking Innovation of 2013), Bank Zachodni WBK (Fastest Expanding Bank of 2013), Warsaw Banking Institute (Corporate Social Responsibility 2013), Bank Zachodni WBK (Best Large Bank of the Year 2013), Alior Bank (Best Small and Medium Bank of the Year 2013), Mateusz Morawiecki, president of Bank Zachodni WBK (Manager of the Year 2013), Cezary Stypułkowski, president of mBank (Man of the Year 2013).

The second day of the Forum was divided into three thematic blocks:

• Banking Forum – IT and New Technologies. The participants included Maciej Witucki of Orange Polska, Iwona Dudzińska of Bank Citi Handlowy, Justyna Kesler of ING Bank Śląski,

Adam Grzebieluch of BOŚ and Jarosław Mastalerz of mBank. • Banking Forum – Payments and Innovations in the Banking Sector. Among the participants were Jakub Kiwior of Visa Europe, Aleksander Naganowski of MasterCard Europe, Piotr Czarnecki of Raiffeisen Polbank and Rafał Juszczak of Getin Holding. • Insurance Forum. The participants included Krzysztof Pietraszkiewicz of the Polish Bank Association (ZBP), Roger Hodgkiss of Link4, Michał Kwieciński of Liberty Direct, Rafał Hiszpański of Euler Hermes, Paweł Ziemba of Skandia, Piotr Kondratowicz of KPMG and Anna Rulkiewicz of Lux Med. In all, the event attracted 478 participants and 51 media people, with 121 speakers taking part in panel discussions. The Banking & Insurance Forum is the biggest conference for this sector in Poland. It is held twice a year. The next one is scheduled to take place on October 22-23, 2014 in Warsaw. You are welcome to participate. :: Tomasz Petruk Junior Project Manager Strategic Projects Department Tel.: +48 22 379 29 41 Mobile: +48 883 784 084 Fax: +48 22 379 29 01 e-mail: t.petruk@mmcpolska.pl www: www.mmcpolska.pl


Ecology

Environmental protection – a showcase for Polish transformation

Maciej Nowicki, former Minister of Environment

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oday, not many people remember that before 1989 Poland was one of the most polluted countries in Europe and even in the whole world. More than 30% of its population lived in areas, in which environmental standards were constantly breached. A cloud of acid smog, which ruined people’s health, accelerated the corrosion of metals and buildings, and caused devastation of trees and bushes, was in the winter season a frequent visitor to Upper Silesia, Kraków and other urban and industrial centres, and also to mountain spa towns. Beautiful mountain forests in the Sudetes were dying due to acid rains. Property damage caused by environmental pollution was estimated to reach 5-10% of national income, not to mention great, but immeasurable, damage to health. Polish society was then paying a dire price for many years of pushing the industrial development of the country without observing the rules of environmental protection. Not surprisingly, in the 1980s, many social movements and ecological organisations were established to demand the right for citizens to live in a clean environment. In spring 1989, as part of the Polish Round Table Talks, an ecological sub-table was organised, which saw the signing by the Government of the public’s 27 demands. These involved the vital reform of the legal system and the introduction of economic mechanisms to environmental protection. The demands were implemented

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by the Government over the two years following the 1989 nonviolent revolution. Twenty five years have passed, so we can now summarise the progress we have made since then. And this progress has been enormous. In the air protection sector, the emissions of sulphur dioxide in Poland decreased by 80%, of particulates as much as 90%, and of heavy metals by 50-70%. The average annual concentration of sulphur dioxide in the cities of Katowice and Kraków amounts to merely 30-50% of the maximum, and thus is 70-80% lower than the concentration recorded in the 1980s. All industrial plants are now equipped with air-pollutant emission-reduction facilities. However, the concentration of the smallest particulate fractions in Polish cities is too high. Therefore, our main objectives are being focussed on getting rid of masonry heaters and small boiler rooms from city centres, and also on reducing traffic in these areas. Almost all people living in urban areas and 75% of those living in rural areas have access to good-quality tap water, and more than half of the industrial plants have closed-circuit water-service systems. While 25 years ago 37% of sewage was disposed of into rivers and lakes without any treatment, currently almost all sewage is treated in water-treatment plants, some of which are of top European class. It is also worth highlighting that the national programme for the creation of water and sewage systems is currently the largest infrastructural

enterprise in the country, even larger than the motorway construction programme. It is a great progress, which is facilitating the betterment of environmental conditions and the health of the whole of society. We hope that this monumental programme will be successfully completed within several years, thanks to support granted by ecology-oriented national and European funds. We can also see great progress in the field of industrial-waste management. Despite a 100% increase in industrial production, the amount of waste has decreased by 35%. Twenty five years ago half the industrial waste ended up in landfill sites; nowadays this amount has decreased to 18%. Unfortunately, when it comes to municipal waste, the situation has not changed for the better. Not so long ago, almost 100% of such waste was dumped on landfill sites, which resulted from a flawed law in force in Poland. Recently, this law has been greatly amended, and, hopefully, the problem will be successfully solved, turning waste into valuable recyclables, and a source of biogas and energy for municipal heat and power-generation plants, just like it is in many other countries. These are only a few examples demonstrating the extent of progress that we have observed in the field of environmental protection in Poland in the last 25 years. This sector, which is extremely important for the whole of society, can be the showcase for changes that are taking place before our very eyes. ::


Ecology

Organic food exports to China Maciej Bartoń

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olish exports continue to grow. According to estimates by the Institute of Agricultural and Food Economics, the value of Polish agri-food exports is likely to exceed EUR 18.2 billion this year. In the coming years, Poland will be Europe’s second frontrunner in terms of export growth, suggests “Global Connections,” a report by Oxford Economics ordered by HSBC. Other European countries are already jealous of our export growth. A total value of exported goods is currently EUR 140 billion, and by the end of the year, the revenue from exports is expected to rise by a further 5.8%. Analysts from Oxford Economics found China to be one of Poland’s most promising export destinations. It is estimated that China will become in 2018 the world’s largest importer of health food, and we have a unique opportunity to prepare to win our share in the USD 79 billion that the Middle Kingdom is expected to spend. The most important factors determining China’s market of food imports are now shortages of products, environmental pollution and its consequences reaching in some product segments the size of ecological disaster. It is also specific about the Chinese economic system that businesses are strongly dependent on the government. A meeting on new agricultural trade prospects with China and Hong Kong, which took place on April 24, 2014 at the Ministry of Agriculture and Rural Development, was an excellent opportunity to establish new business contacts. One of the organizers of this meeting was the Polish Ecology Association. Polish food is reputed in the world for its high quality, and a genuine gem is Polish organic food. It is the essence of Polish traditions, culture and taste. Currently, the organic food market in Poland is valued at EUR 150 million, which is not much compared to

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Western countries, but still more than two years ago when it was only EUR 50 million. Forecasts suggest that the organic food market will continue to grow at the current rate. Polish organic food exports increase every year. When looking for commercial partners, it is worth turning to associations which bring together many organic producers. One of the most active players of the Polish organic farming market is the Polish Ecology Association, whose main goal is to develop and promote Polish organic foods by participating in fairs and exhibitions, including the biggest organic food event – BioFach. The Polish Ecology Association has a very diverse product range: from breads, cakes, flours and groats, through juices, frozen foods and jams, to dairy and meat. It is worth pointing out originality of the products offered by the Polish Ecology. The Association brings together producers from all over Poland, who showcase regional specialties. In addition, members of the Association meet quality control standards. One of the processors belonging to the Association is Runoland, a company involved in the processing of undergrowth. Its products have been appreciated by consumers from the United States and Canada, with almost half of the output going for export. Raw materials for production come from chemically pure, uncontaminated Lower Silesian forests. Runoland focuses on traditional production methods, the company’s leading products being dried fruits, mushrooms and herbs, as well as processed fruits and vegetables. Dried mushrooms are the essence of Polish forest: they add a touch of unique flavor to dishes. Another company with an attractive product range is Korab Garden Sp. z.o.o. It offers the delivery of fresh organic fruits with a guarantee of quality and continuity of supply. It has a large storage facilities and refrigerated

chambers. The company produces fruit juices. For each product an appropriate production process is developed that allows preservation of valuable ingredients contained in fresh fruits. Another major player on the organic food market and a member of the Polish Ecology Association is Symbio. The company’s dynamic development, culminated in an IPO in 2008. Symbio operates not only on the domestic market, but is also an active exporter. Raw materials for the production are sourced all over the world, which makes the company’s product range rich and diverse. Symbio sells: cereals, flours, biscuits, pasta, juices, jams and sweetmeats. Symbio also provides leading baby food manufacturers with organic frozen fruits and vegetables. Among members of the Polish Ecology Association there are also producers of what Poles are most proud of – the Polish sausage. Polish organic meat processors can be counted on the fingers of one hand. One of them is Jasiołka, which has belonged to the Polish Ecology Association right from the beginning of its existence. This company combines attention for the tradition with eco-innovation. Jasiołka produces organic meats based on traditional recipes. What deserves a special attention is Grandfather’s Sausage (Kiełbasa Pradziadka) with ham and liver, which delights many gourmets. Jasiołka produces also eco-innovative dry-cured meats using lactic acid bacteria. These are the meats with high storage stability, as well as unique taste and aroma. These are only some of more than 40 companies that make part of the prestigious Polish Ecology Association. More information is available at www.polskaekologia.org. Polish organic food is not only a perfect quality to price ratio, but also health and unique taste. Let us hope that Polish organic products will soon reach Chinese consumers. ::


Culture

Photo: Eugeniusz Knapik, the composer’s archive

Chasing destiny

Eugeniusz Knapik, one of Poland’s most important contemporary composers, Henryk Mikołaj Górecki’s student whose compositions have become modern classics, is making a debut on the stage of the Grand Theatre National Opera in Warsaw with the first ever performance of his opera “Moby Dick.” Commissioned by the National Opera, “Moby Dick” is directed by Barbara Wysocka, a winner of the “Polityka” weekly’s award granted to her for the staging of Philip Glass’ opera “The Fall of the House of Usher.” “Moby Dick” will have its premiere on June 26, 2014. Maciej Proliński

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he opera, based on Herman Melville’s novel, tells a story of a sea voyage in pursuit of a sperm whale called Moby Dick. The main character, Ahab, is the captain of the whaling ship Pequod. He chases Moby Dick to take revenge on the whale for making him disabled. The pursuit, having lasted for many months, ends with the ship being sunk by the whale and the death of all crew members except for Izmael, the narrator and the person chosen to bear witness to the truth. As the composer says, this adventure story is permeated with Biblical symbolism about man’s fate and relations with God, Nature and Destiny. The author of the libretto, based on Herman Melville’ novel, is Krzysztof Koehler. Born in the southern Polish city of Ruda Śląska in 1951, Eugeniusz Knapik is a special figure in Polish contemporary music. He debuted with instrumental compositions, but quickly turned to music combining vocal and instrumental forms and finally wrote a great opera trilogy, joining the group of contemporary opera composers. His music is exceptionally natural, characterized by melodiousness and intense expression free from pomposity - features which seem to have been forgotten in the music of the recent time. All the means that the composer uses serve to render a mood or an idea, which is sometimes entrusted to the human voice and sometimes

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– in instrumental pieces – placed in the form of a quote. In each case, the composer contemplates the mystery of the world, the meaning of human existence, man’s eternal longing for happiness, and the quest for beauty and goodness. Knapik’s music is a stylistic synthesis of all that was innovative in the music of the end of the 19th and the first half of the 20th century – from Mahler to Debussy to Messiaen. This concerns particularly the kind of expression they use and spiritual affinity. But despite these inspirations, Knapik is a composer of exceptionally distinct personality. The crossing of the barrier of time through the “long breath” which gives one a sense of space, and the composer’s composure and confidence – after all, he is Górecki’s student - allow us to call him a master of the monumental form. The premiere of “Moby Dick” will be held as part of the series of meetings with contemporary music called “Terytoria” (Territories). “(…) meetings at which we try to find and define the new image of opera, a genre which is now being redefined, conquering new territories, conceiving different meanings and proposing a new aesthetics,” says Waldemar Dąbrowski, the director of the Grand Theatre National Opera. “In this series, we present both the most important pieces of contemporary music and debuts by Polish composers,

completely obscure compositions and classic pieces of the avant-garde. We contrast debuts by Polish directors with leading European productions. Opera is alive, doing well and glowering at us with Phoenix’s cybernetic eye.” Barbara Wysocka, an actor and director, graduate of the Acting and Directing Departments of the PWST school of drama in Kraków, is preparing the staging of the opera. Before graduating from the PWST, she studied violin at Hochschule für Music in Freiburg. In 2009, she was nominated for the award of the “Polityka” weekly called Polityka’s Passport, one of Poland’s most prestigious awards in the sphere of culture, in two categories: Theatre and Serious Music. She won the award in the latter category for “her debut as an opera director, showing her ability to see music and hear theatre.” Gabriel Chmura, one of the most outstanding Polish contemporary conductors, will lead the Choir and Orchestra of the Grand Theatre. Since 2012 he has been artistic director at the Grand Theatre in Poznań. In conjunction with outstanding orchestras and soloists, he has made many award-winning recordings for reputable record companies, like for example Deutsche Grammophon. Arnold Rawls, Ralf Lukas and Caroline Whisnant will be singing the soloist parts. ::


Treasures

from distant places More than 170 precious works of Pre-Columbian art are on display at the Royal Castle in Warsaw until June 3, 2014. Entitled “The Gold of Colombia: The Art of the Old America,” the exhibition features awesome pieces from the Gold Museum in Bogota, which boasts a huge collections of over 30,000 works of pre-Columbian art. Another part of this collection has recently been shown at the British Museum in London.

Anthropomorphic Darién pendant; 5.1 cm by 3.6 cm; Calima-Malagana region, Yotoco period, 200 BC – 1,300 AD; lost-wax casting

Culture

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eventy five years ago Colombia’s central bank, Banco de la Republica, started to build the collection the Colombians are so proud of today. The exhibition arrived in Poland thanks to the joint effort of Prof. Andrzej Rottermund, the director of the Royal Castle, Victoria Gonzalez-Ariza, the Colombian ambassador to Poland, and Alicia Uribe-Villegas, the director of the Gold Museum. They organized the exhibition to strengthen the ties of friendship and cooperation between the two countries. “Anthropomorphic Muisca figures called Tunjos, Calima breastplates and Quimbaya necklaces are symbols of Colombian identity, just as the Royal Castle is a symbol of the rebuilding of Warsaw,” says Agnieszka Bocheńska, a commissioner of the exhibition and senior staff member at the Royal Castle’s Archaeological Research Department. “The two heritages will open a dialogue between our countries about their national treasures. The exhibition is a kind of journey across Colombia, an unusual country where the warmth of the shining gold is like the friendly and hospitable warmth of its inhabitants.” Visitors to the exhibition can see the gold diadems, jewellery, shining breastplates, and other ornamental gold pieces made by people who 2,500 years ago inhabited the Andes, the jungle, and the Caribbean and Pacific coast in what is now Colombia. There are realistic animal figures, like birds, snails and caimans, some taking on fairy-tale forms as creatures combining body parts of a snake and jaguar, fish and bird, or jaguar and frog. There are hybrids of people and animals – a bat-man, lobster-man, jaguar-man. The figures combine human attributes with features which

enable them to fly, swim and hunt in the dark. The exhibits display a variety of styles, highly individualized forms and rich ornamentation. They make the visitor discover a mysterious world of people so different culturally from us. The metal objects made by these people reflect the complex relations between man and nature. Many of the pieces of gold, copper and tumbaga, an alloy of gold and copper, have religious and symbolic meaning. The exhibition shows the heritage of indigenous tribes, works made by specialised artists - goldsmiths who enclosed the world of myths and symbols in delicate and fragile objects. “We show the items making up our exhibition as beautiful works and a testimony to the skills of craftsmen of the ‘golden’ pre-Columbian cultures,” says Agnieszka Bocheńska. “The objects remind us that South America was inhabited not only by the Incas, Mayans and Aztecs but also people of many other cultures. In what is now Colombia, these were the Muisca, Nariño, Tairona, Quimbaya, Tolima, Calima, Zenu and Chibcha. A goldsmith was an important person in these cultures. He played the role of someone who conveyed thought - a shaman.” Albrecht Dürer, a great German Renaissance painter, was the first to enthuse about the gold work of the pre-Columbian cultures. He saw objects brought from Montezuma’s Kingdom at the court of Charles V while visiting the Netherlands. He wrote: “I have seen things brought for the king from the new country of gold. Splendid things of every kind … Exquisite utilitarian objects, more beautiful than in a fairy-tale. Throughout my life, I have not seen anything that would gladden my heart as much as these pieces.” ::

Anthropomorphic votive figure; 15 cm by 4.1 cm; Muisca region, Muisca period, 600 AD – 1,600 AD; lost-wax casting

Maciej Proliński

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Cultural Monitor

The notes, sounds and films which will stay on with us beyond the spring of 2014. Recommendations by Maciej Proliński.

“Venus in Fur” directed by Roman Polański – Monolith – DVD

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ne of the world’s top film directors for several decades now, Polański follows here in the footsteps of his previous film – the full-blooded comedy “Carnage.” In his latest film, which is even more intimate than the previous one because the cast is composed of only two actors, he again excellently portrays male and female characters. Polański, who has already received this year the César Award of the French Academy of Cinema Arts and Techniques for “Venus in Fur,” suggests - in a skilful, funny and perverse way - that it is the woman who is the director and main character, both in life and in art. The film features two characters: an actress and a theatre director, who holds auditions for his new play. The actress dashes in for the auditions. She is late, arrogant but desperate to be allowed to read for the part. Subsequently, the actress herself and her relationship with the director undergo an interesting metamorphosis. The main part, played by Emanuelle Seigner, who has been Polański’s wife since 1989, is a kind of gift from him to his spouse. And looking at the face of Mathieu Amalric, who plays the part of theatre director, it is impossible not to notice his unusual physical resemblance to Polański.

Regina Carter, “Southern Comfort” – Sony – CD

“Jan Kanty Pawluśkiewicz, Antologia” Part 4 and 5 – Polish Radio – 2CDs

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lthough it is not a Polish production, the album is so sensational musically it is simply worth noting that for several weeks now it has been present on the Polish market as well. The ninth album of Regina Carter, who is now one of the best jazz violinists, is a mixture of blues, jazz, country, gospel and certainly a few more kinds of music. “Southern Comfort” is another leg in the artist’s journey across the history of her family, who is descended from Western Africa, Europe and America. Carter started this journey in 2012 with her album entitled “Reverse Thread,” a celebration of traditional African music. In turn, the album released in 2014 is a tribute to American music. The past lives on in us - it is a collection of the cultural heritage no one could do without. The music in her latest album is again rooted strongly in tradition. But rather than being a sentimental journey into the past, it is made up of contemporary and very personal notes derived from the tradition. The music is an example of how to achieve tension, intimacy and smile by using the right phrases. A brilliant improviser, Carter shows the big potential of the violin, irrespectively of the kind of music performed.

Maciej Frąckiewicz – Dux – CD

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an Kanty Pawluśkiewicz is one of the best known Polish composers. He began his artistic career in 1966 as one of the founders of the legendary band Anawa. Polish Radio offers music lovers an important anthology of his work. An architect and composer based in Cracow, Pawluśkiewicz has always written ambitious compositions, combining various influences, including classical and folk music, even in songs. His own distinct composing style has many innovative and interesting features. Part 4 of the series, entitled “Radość miłosierdzia” (Joy of Mercy), is an oratorio composed by Pawluśkiewicz to Leszek Aleksander Moczulski’s lyrics. It was commissioned by the Poznań Philharmonic to mark the 30th anniversary of Cardinal Karol Wojtyła being elected as pope. The oratorio had its premiere in the Poznań Parish Church in October 2008. Elżbieta Towarnicka, soprano, Marzena Michałowska, soprano, Andrzej Biegun, baritone, Sebastian Karpiel-Bułecka, Poznań Symphony Orchestra, Poznań choirs and conductor Rafał Jacek Delekta took part in the recording. Strongly atmospheric in some parts while elevated and epic in others, the oratorio is a very original composition throughout. Part Five is a collection of various compositions written for Grzegorz Turnau, a well-known bard from Cracow. The collection features popular and less known songs, including some recorded anew. The music develops our ability to dream and reminds us what is the most important about art song.

CD debut of one of the most promising Polish young accordionists, the winner of the Arrasate Hiria International Competition in Spain in 2012 and a graduate of the Fryderyk Chopin University of Music in Warsaw where he studied under the guidance of Prof. Klaudiusz Baran. The album is made up exclusively of solo compositions for accordion: compositions written especially for this instrument and transcriptions. When selecting the repertoire, Frąckiewicz tried to show the whole range of capabilities, in terms of expression and technique, of the accordion, which is treated as a concert instrument relatively rarely. In the hands of the young virtuoso the accordion puts the listener in a contemplative or even prayerful mood, whether the composition is by Johann Sebastian Bach or Sofia Gubaidulina.

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Cultural Monitor

Cultural Monitor – May 2014 “Polish Radio Jazz Archives. Jazz Jamboree’63” – Polish Radio – 2CDs

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t is yet another release in the Polish Radio Jazz Archives series, a part of the “Jazz Jamboree’63” collection. Most of the first album is a concert by Rita Reys, an excellent Dutch jazz vocalist of international renown who appeared at the jazz festival in Warsaw with the Pim Jacobs Trio, with whom she worked for decades. The album contains a dozen or so pieces performed by Rita as well as standards played by Polish vibraphonist Jerzy Milian accompanied by the Krzysztof Komeda section with Maciej Sizin on bass and Leszek Dudziak on drums. The second album features two proper jazz compositions by the Johnny Griffin and Kenny Drew Duo accompanied by European musicians. The Jazz Jamboree festival, initiated in Poland more than 50 years ago, is an annual feast of the spirit of jazz. It is easier to indicate the jazz stars who have not performed at the festival, for example Louis Armstrong and John Coltrane, than to list all those who have taken part in it. No artistic event in Poland can match Jazz Jamboree in terms of the calibre of participating artists. It is the sphere of culture where Poland has been open to the world the widest. The festival is of world-class standards and it is great that a series of albums has been designed to remind us about it.

Wojciech Kilar – “Triptych” – Dux – CD

“Kilar/Aukso/ Moś”– Katowice Culture Institution – City of Gardens – 2CDs

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wo important releases with the music of Wojciech Kilar (1932-2013), a Polish composer of international renown who showed in his pieces – symphonies inspired by folk music, compositions with religious and national themes, and film music - the beauty of Polish melody. The album released by Dux is a concert played in the St Mary Magdalene Church in Wrocław as part of the International Wratislavia Cantans Festival in 1997. The concert featured Kilar’s three great religious compositions he wrote in different periods of his activity: “Bogurodzica” (Mother of God), “Angelus,” and “Exodus.” The compositions were performed by the National Philharmonic Choir, Polish National Radio Symphony Orchestra Katowice under the baton of Antoni Wit and Izabela Kłosińska (soprano). As intended by the composer, the pieces were performed with short breaks between, which made then a closed musical whole. In the album, the recordings are arranged in the same way, preserving the atmosphere of the festival concert. Kilar / Aukso / Moś” is the first part in the Music Masters series. It is the first album with Kilar’s music released after his death. The composer did not live to see the album but he had taken an active part in preparing it. He gladly accepted the proposal of Marek Moś, the director of the Aukso Chamber Orchestra, to make a recording with the Orchestra. Kilar selected the compositions and supervised the recording process. The discs contain “Small Overture,” “Second Piano Concerto,” “Exodus,” “Orawa,” “Krzesany,” “Siwa Mgła” and “Kościelec.” The two releases will certainly be appreciated by those who do not judge the greatness of music by the number of notes. The compositions, which exude strength and hope, will be inspiring and appealing to sensitive people. The Aukso interpretations will enable the listener to discover all shades of this simple, strong and transcendental music.

Kuba Płużek – “First Album”– V Records – CD

Eugeniusz Rudnik– “ERdada na taśmę” – National Culture Centre; Requiem Records – CD

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he recording debut of the great hope of Polish jazz, a young pianist combining instrumental virtuosity with great knowledge of the history and present day of improvised music. Płużek, 26, was born in Kraków and still lives in the city. Despite his young age, he has already worked with artists of such stature as Janusz Muniak and Zbigniew Namysłowski. In “First Album” Płużek plays his own compositions in a trio with Maks Mucha on double bass and Dawid Fortuna on drums, and in a quarter with the two musicians and Marek Pospieszalski on saxophone. All the musicians improvise with passion, concentration and engaging lightness, creating colourful music images – expressive and mature men’s tales. Every sound of the music is an infallible combination of simplicity, clear melody, magic and balancing skills.

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ugeniusz Rudnik came to Polish Radio in 1955. Initially, he supervised plumbers and painters working for the Radio. But he soon became a popular audio engineer and then an independent and recognized composer, who contributed to one of the most important aspects of Polish culture of the 20th century - the Polish Radio Experimental Studio, which was one of the first electronic music centres in the world. Let us remember that for several decades the Studio attracted the most outstanding composers, like Krzysztof Penderecki, Bogusław Schaeffer and Arne Nordheim. Rudnik’s latest album, recorded in the Bolesław Błaszczyk Studio, is “a requiem for the magnetic tape.” By cutting and gluing together kilometres of magnetic tape, the composer created a new portion of electronic music. The 70-minute album is composed of four sound visions, a multidimensional universe of sound strongly appealing to imagination. The CD cover designed by Łukasz Pawlak also moves the listener to the glorious times of magnetic tape. 5 /2014  ::  polish market  ::  81


Events

21st Economic Forum in Toruń

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he 21st Economic Forum was held in the northern city of Toruń on March 4-5, 2013 under the slogan “Integration and Cooperation.” The Forum is one of the biggest economic congresses in Poland, a platform for dialogue about the Polish economy in a globalized world. This year, the panel discussions focused on issues concerning micro, small and medium enterprises. More than 1,000 people from Poland and other countries took part in the Forum. Among them were outstanding personalities active in the sphere of economy, politics, science and culture. The conference provided an opportunity for the participants to share experience and provide up-to-date information about economic issues. Thanks to huge interest from the media, the Forum has got a lot of publicity in the world and will initiate many important decisions. A plenary session, seminars, numerous discussions and business meetings

were held during the two days of the Forum. As usual, taking part in discussions were officials of the European Union, ambassadors, central and local government officials, parliamentarians, media people, politicians and people representing businesses operating locally, and on the Polish and international market. The topics discussed included analysing the most important challenges that the Polish, European and global economy faces in the context of the economic crisis, and integration and globalization processes. The range of topics discussed was very wide and included energy and renewable energy sources, agriculture, rail transport, infrastructure projects, the role of the media, banking, health service, tourism and social issues. ::

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Events

Personalities and Successes of the Year 2014

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ore than 700 people took part in the grand gala of Personalities and Successes of the Year 2014. The annual event, originated by Mariusz Pujszo, was held in the prestigious Courtyard by Marriott Warsaw Airport hotel on March 24. The organizer was the Excellent Events company. Statuettes were awarded to the most outstanding personalities and the most successful companies. Awards were also granted to the winners of the national poll for those who achieved the biggest success in 2014. Wiola Gut and Ryszard Rembiszewski were the hosts of the evening. The title Personality of the Year 2014 went to Eva Minge, Maria Czubaszek, Joanna Moro, Łukasz Jemioł, Marek Durlik, Jerzy Połomski, Ewa Błaszczyk, Prof. Michał Kleiber and his wife Teresa Sukniewicz-Kleiber, Jerzy Woy-Wojciechowski, Joanna Racewicz, Piotr Guział, Andżelika Możdżanowska, Władysław Kozakiewicz, Mariusz Gazda, Piotr Fronczewski, Krzysztof “Diablo” Włodarczyk, Radosław Liszewski, the Poparzeni Kawą Trzy band and former President of Poland Lech Wałęsa. Among those who won the title Success of the Year 2014 was the KSW Federation, the TV programme entitled “Pytanie na śniadanie” (A Question for Breakfast), Marta Grycan’s book entitled “Przewodnik Smaków” (A Guide to Tastes), the Wittchen line of

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Winners of the title Personality of the Year

luggage products, Energy Invest Group, Alma Market SA, Dolcan Plus SA, the Mikołajki hotel and Kupiec Sp. z o.o. The artistic part of the gala was equally exciting, with Jerzy Grunwald, Mateusz Mijal, Natalia Pujszo, Katarzyna Andruszko of the Oh! Pera foundation and Alicja Węgorzewska, a laureate of the previous edition of the gala, appearing on the stage.

Present at the gala were business people and people working in show business. They had a good time until late in the night and Mariusz Pujszo said: “It is not the one who gets up early that achieves success but the one who gets up smiling.” ::

Photos: Łukasz Giersz


Events

The WITTCHEN

brand

Aleksandra Defitowska, Director of Advertising Products Department at Wittchen, talks to Maciej Proliński.

Wittchen has, for a couple of years, been one of the strongest Polish brands. There are few of them, especially those that matter in the world. Why do you think it is so difficult to develop Polish brands? Poland has not developed global brands indeed, but in my opinion we have to come to terms with the fact that we rather provide services than create our own big brands. In the past some new foreign-like brands were created. The 1990’s was a time when we all were somewhat ashamed of what was Polish, because we were seduced by what was basically foreign. The Wittchen comapany was founded in 1990 by Jędrzej Wittchen. Since then, it has continuously gained popularity and today it is leader on the exclusive a leather market. We have never hidden that we are a Polish brand, but Wittchen was considered as a foreign company because of its foreignlike name. Therefore, for many years, the company has communicated strongly that it is a Polish brand with an entirely Polish capital, and that everything we have done has Polish roots. pm

You have started at a time when a private entrepreneur was associated more with a street vendor than with the production and sale of luxury goods. The year 1990 was a breakthrough one also for such businesses as ours. The company’s origins are associated with many favorauble factors, but also the enthusiasm of our boss Jędrzej Wittchen. After a year, it was clear that the business standed a chance to be successful. Our boss was then a student at the Faculty of Geography of the Adam Mickiewicz University in Poznań. He loved traveling, especially to Asia, and from one of such expeditions he pm

brought some leather wallets that were supposed to repay the cost of the airfares, that were expensive for a student’s budget. The wallets were all sold in one day. That is when the idea was born to start to produce and sell such products under his own logo, which he designed by himself and put his name on it. Over time, Wittchen products have become a recognizable luxury brand. And what is the company’s strategy today? Do you follow what your competition is doing? And - that is my next question - does Wittchen have competitors in Poland at all? Over years of image-building, our crucial values have remained unchanged: reliability and modernity in all activities. We attach great importance to the highest quality, which is why all our products are handmade. Each of them has an individual certificate of authenticity, which is the guarantee of originality and high quality. As a leather goods’ champion, we are a company that inspires many other brands. What we offer includes a wide range of luxury leather products (haberdashery and clothing), characterized by elegance and highest quality. Our collections are: Da Vinci, Arizona, Italy and Signature with a monogram consisting of all elements of the brand’s logo: the coat of arms with the initials of Jędrzej Rafał Wittchen, lions defending him, the crown and “W” symbolizing the first letter of the company’s name. Wittchen has also seasonal collections of leather handbags: Elegance, Venus and Young - a combination of fabrics with leather or ecological leather. Since 2005, the company has a wide selection of shoes for men and women, luggage and travel pm

accessories, leather jackets, sheepskin coats, scarves, shawls and perfumes. I remember the year 2002 when I joined Wittchen, then a 90-strong company. Today it employs approx. 500 people. Such a large expansion occurred through the development of our own retail network, B2B sales and exports. I have to mention also our professional logistics centre in Palmiry with  a storehouse, a customs warehouse and the quality department. Following these changes - from a family business to a corporation - was a fascinating experience. Companies that are trying to compete with us find it very difficult to meet our market standards. This is true not only about high quality of our products, but also about innovation and professional customer service. And where are you present outside Poland? We continue to develop exports. Currently, our brand can boast many shops on eastern markets - mainly in Russia, Ukraine and Belarus - where it is recognizable and appreciated. Today, we focus greatly on developing online sales, both in Poland and abroad. pm

What is your recipe for success? In my view, a recipe for success is high requirements that we set to our retailers with respect to customer service. It is extremely important to pay attention to detail at every stage of production, logistics and imagebuilding, while maintaining high quality of services at the same time. We are also successful thanks to skillful PR, outdoor and press campaigns, as well as presence in the social media and e-commerce. :: pm

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Events

Europe needs bold leaders The second European Executive Forum was held on 10 and 11 April 2014 in Warsaw. The discussion on the challenges facing contemporary leaders featured renowned business, political, and scientific authorities. The leaders discussed the future of European leadership. Distinguished foreign guests such as Horst Koehler, Pat Cox, and General James L. Jones also shared their experience and opinions.

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he two-day Forum, which was organised by the Executive Club, President Aleksander Kwaśniewski’s “Amicus Europae” Foundation, and the CEED Institute think-tank, filled the Warsaw Sheraton Hotel with the presidents of the most prominent Polish businesses, political representatives, and experts of the top domestic and foreign business schools. The current political events made the subject of this year’s conference particularly relevant. The Ukrainian crisis was also a popular topic due to the profiles of the foreign guests. Former President Aleksander Kwaśniewski, during his discussions with former President of Germany Horst Koehler, Pat Cox, and General James L. Jones, former NATO Commander, tabled subjects associated with the changing image of political leadership. “The time of crisis produces the need for personalities and behaviour which engage people and give hope. We need trustworthy and credible leaders, who are ready to take risks,” said Mr Kwaśniewski during the speech opening the European Executive Forum. The former President stressed that the Ukrainian situation and the challenges associated with the evolution of European integration

are complex issues which cannot be solved in a quick and simple manner. “This situation benefits from the fact that the generation in power is free from the dramatic experiences of World War II and the subsequent building of the common Europe. It does not have the sense of drama which accompanied past decisions. In the spirit of the peace and stability of the last two decades, they are convinced that the great hazards of today are not that frightening and do not have to lead us to the end of history,” noted Mr Kwaśniewski. The business part of the discussions saw the distinguished guests searching for answers to the question of how and on what level the individuals in power should be held accountable for the decisions affecting the quality of life of entire societies. The debate included the voices of people with great experience and many years’ professional practice, who run the biggest Polish companies, such as Andrzej Klesyk, Mirosław Bieliński, Dr Kulczyk, and Zbigniew Jagiełło. During his particularly well-received speech, Professor Charles Handy, a remarkable management theoretician and long-time Professor at the London Business School, provided the guests of the Forum with practical

From left: Aleksander Kwaśniewski, Pat Cox, Prof. Koźmiński, Paweł Jaguś, Daniel Vasella, Prof. Santiago de la Cierva Alvarez de Sotomayor

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Prof. Charles Handy and Beata Radomska, President of Executive Club

guidelines on how to improve the role of leader and make it more effective. Professor Handy also referred to the current political situation, which forms the framework for business. “Most companies are more similar to Putin’s Russia than to Obama’s America. Their leaders are expected to be strong and focused on growth,” the Irish Professor said. “In England, I often hear that Poland is one of the few European countries with a future better than the present or past”, Professor Handy confronted his optimistic perception of Poland’s development potential with the more negative depiction of the rest of the continent. “I do not believe that Europe should be considered as a museum at this point in time, but Western Europe is definitely taking a prolonged siesta,” noted Professor Handy. The next European Executive Forum will be held in March/April 2015, once again in Warsaw. The Strategic Partner of the European Executive Forum 2014 is PKN Orlen, while the main partners are Energa SA and Microsoft Polska. For more information on the European Executive Forum, please go to www.executive-club.com.pl. ::


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WOJSKOWE ZAKŁADY MECHANICZNE SPÓŁKA AKCYJNA

One vehicle – Many POssibilities


Polish Market No. 5 (211) / 2014