Failing to Understand Diplomacy, Poland May Realize Value of Money

Ambroise Louis Garneray "The Taking of the 'Kent'" // Public domain

The conservative Law and Justice (PiS) government has conducted a calculated attack on the rule of law in Poland since it came into power in 2015, securing an overall majority in the Sejm, the lower house of the Parliament.

Its strategies have undermined the integrity of Poland’s democratic institutions, the separation of powers and independence of the media, in effect failing to fulfil its obligations under the EU law. All this while Poland, since joining in 2004, has consistently been the biggest net recipient of the EU.

In 2017, the EU triggered Article 7 of the Treaty of the European Union, a procedure resulting from breaches of the rule of law by a Member State, concerning Poland’s judicial reforms thought by the European Commission to be inconsistent with the separation of powers.

Nonetheless, PiS continues to ignore it and accuses the EU of infringing on Poland’s sovereignty, using the state-controlled media to broadcast misinformation about the legal jurisdiction of the EU.

In January 2020, Vera Jourova, the EU Values and Transparency Commissioner, visited Warsaw as s result of a growing concern over judicial independence and the rule of law in Poland.

She had hoped to begin a ‘new dialogue’ that would help improve the alignment of Poland’s domestic politics with the EU law. During the visit, she remained highly diplomatic and cautious with her words, allowing Poland the space to implement changes voluntarily. Still, PiS continued to show disregard for European opinion, claiming these to be purely ‘national’ matters’.

On April 8, the European Court of Justice issued a long-anticipated opinion:

Poland must immediately suspend the application of the national provisions on the powers of the Disciplinary Chamber of the Supreme Court with regard to disciplinary cases concerning judges”

In other words, by giving the Disciplinary Chamber powers to use disciplinary measures against judges, PiS is breaking the EU law. It continues,

[…] although the organisation of justice in the Member States falls within the competence of those Member States, the fact remains that, when exercising that competence, the Member States are required to comply with their obligations deriving from EU law.”

Disciplinary Chamber of the Supreme Court is made up of judges selected by the National Council of the Judiciary, of which 15 out of 25 members appoints Sejm, the PiS controlled lower house of Parliament. This politically appointed chamber can treat contents of judiciary decisions as disciplinary offences, in effect allowing a politically selected group to silence judges for court rulings unfavourable to the government.

The Court demands an immediate shutdown of the Disciplinary Chamber and will give an official verdict on the case in the second half of 2020, due to pandemic related delays.

However, despite the EU’s continued diplomatic intervention, PiS prevails to neglect its obligations under the EU law and continues to conduct politics in a way that is inconsistent with European values of liberalism and democracy.

If Poland does not change course, the verdict will mark the beginning of Warsaw’s exclusion from the European legal community. For business and international investors in Poland, this will mean severe financial consequences. It will likely result in a long-term fall in FDI and end Poland’s image as the EU’s economic success story

Poland Needs the EU

PiS may have their views and motivations, but one thing is sure – Poland’s economy is dependent on EU funding. Poland has been the largest net beneficiary of EU funding since it first joined in 2004. The total of EU investment funding allocated for Poland since its EU membership is EUR 175 billion.

The significance of this sum is apparent when one learns that Poland’s GDP per capita doubled over the period of 2003 and 2018, growing 22 percentage points compared to the EU average.

EU funding accounts for 56% of all public investment in Poland. It is EU funding that has ensured Poland’s economy stays afloat despite PiS’s irresponsible campaign of ‘cash for votes’.

The politically motivated policy of monthly allowances of 500PLN for each child to families regardless of their income, fails to effectively allocate resources where they are most needed. Such mismanagement of taxpayers’ money creates no investment, only consumption, leaving the EU to pick up the slack.

Poland would not be the economic success it is today had it not been for the EU. Joining the Union marked a symbolic (yet significant) final closure of the Soviet chapter. Membership was an invitation to unite with Western Europe’s old democracies in a joint mission founded on a shared belief in liberal democratic values.

And, indeed, Poland had made significant democratic strides in the years leading up to its official EU membership as new members were required to fulfil specific democratic standards.

At the time, no one could reasonably predict what consequences the 2004 enlargements would bring. But the gamble was necessary. One couldn’t reasonably imagine that the newly formed independent post-communist states would be left to fend for themselves when dealing with Russia.

Poland yet again appears as the top beneficiary of EU funds, this time in the fight against coronavirus. It set to receive EUR 1.13 billion from unused cohesion money and another EUR 6.39 billion in EU structural funds, payments quickly made available that would otherwise Poland would receive overtime.

Despite this, the claims of Prime Minister Mateusz Morawiecki that the EU is not doing enough to support the Member States in the fight against coronavirus.

The Prime Ministers’ stance is a diplomatic disaster for Poland. As a country that has never been a net contributor to the shared budget, it is a profoundly ignorant stance to take.

EU’s emergency funds for Poland’s are almost three-fold those made available to Italy. At the moment Poland reported over 10,000 confirmed cases of COVID-19 (although the actual numbers are believed to be significantly higher) compared to Italy’s 162,488 recorded cases.

While the EU Member States focus on fighting the pandemic together, with Denmark sending ventilators and a mobile hospital to support doctors in Italy, the Polish Prime Minister dares to complain that the EU is not doing enough – forgetting to include Poland in his grievances.

Poland in Economic Crisis

Poland’s economic circumstances are alarmingly dire. Its been a month since Poland closed its schools and all nonessential economic activity. First implementing emergency financial legislation could only cover 1.5% of GDP, which is far too little.

For a month, PiS left the economy shut and without adequate support, allowing businesses to go bankrupt and people to lose their jobs. Only after public outcry did they pass a more generous package that can make up for 4.5% of GDP, a lot better, but still not enough to make up for the lost time.

Poland will need to borrow heavily if it is to survive the economic downturn, but the government (and the opposition) are skeptical of increasing national debt.

The Polish Constitution states that national debt cannot be larger than 60% of GDP, which still gives the government enough legroom for much more generous emergency spending policy. The government’s policy of economic shutdown without adequate support for businesses is tremendously irresponsible and could lead to nationwide economic collapse.

Further, the government is without a sensible plan of how to ‘unfreeze’ the economy after lockdown. Poland’s COVID-19 testing capacity is limited, and many believe it is in the government’s interest not to expose the real scale of the problem before the May presidential elections, which PiS is unwilling to reschedule despite growing criticism.

Shutting off all nonessential economic activity is the most brute of tools the government has in its tool kit, testing is the least. Adequate mass testing and tracking of the virus are likely to be the most viable solutions to curbing the spread of the infection without destroying the economy, which is far from the ruling party’s current epidemic policy.

And as if to add salt to the wound, PiS government ministers were seen gathering on the 10th anniversary of the Smolensk air crash, openly breaking the same social distancing laws they expect citizens to abide.

What Can the EU Do?

Having exhausted its diplomatic patience, the EU signals it is willing to use monetary tools against Poland for its disregard for the EU law.

The EU’s emergency financial coronavirus response has given the EU an opportunity to add additional democratic spending conditions as the new budget will need to be decided, for which the negotiations will begin at the end of April.

“Now we have a chance, in the new budget negotiations, to keep the conditionality alive, and maybe now, we can see better than before why it’s important to have some financial instrument in hand,” says Vera Jourova, in response to Poland’s persistence to hold an election.

“To be blunt, I think that if somebody doesn’t understand our values, they should [at least] understand [the value of] money.”

So far Poland has felt confident in the EU’s inability to act due to Member States’ veto power and Poland’s friendship with the also problematic Hungry, meaning the two can always protect each other by vetoing proposals that are unfavourable to the other. While this is true, PiS should not underestimate the seriousness of the European Court of Justice ruling.

Having bailed Poland out during the coronavirus pandemic, the net contributing Member States’ patience will dwindle, as they began to demand more should she want to continue to benefit from their generosity. Replying on veto power alone won’t save her.

As was apparent in the Karlsruhe Higher Regional Court case, where Germany refused to extradite a Polish suspect wanted on a European Arrest Warrant because the Court cannot be sure the suspect will receive a fair trial in Poland.

It shows that other European Member States can, and are willing to, refuse cooperation with Poland. Frustrations may grow as post-pandemic Europe looks to rebuild its economy. Its success will be dependent on the reliability of its laws and the strength of the Union.

The rule of law is fundamental to the proper economic functioning of any country. Failing to ensure it, Poland will be excluded from Europe’s legal community, which will result in long term costs borne by its people.

Distrust in the legal system will drastically reduce Poland’s chance of economic recovery as investors, both domestic and international, take their money elsewhere, where they can trust the law to protect their investments.

Right now, in the midst of a pandemic outbreak, the future looks uncertain. Whether the European Union will survive this health and economic crisis remains to be seen. Its future will depend on the political will of its members.

By refusing to play by the rules, Poland is ultimately compromising its future safety and prosperity. Once there is no Union, there will be no payout.

Maria Slominska-Fabis