Travel notes, Poland, Warsaw and Lodz, Tuesday, 5 November – Friday, 8 November 1991
Meeting with Mrs Edwards, newly appointed (August 1991) director of the U.S. Trade Development Office. She makes the following points:
Warsaw has full employment. Anyone seeking work can find it, though salaries may be below expectations
Similar situation in other major cities
Most lively economically is the corridor of Warsaw-Poznan and Warsaw-Szczecin. Least dynamic is the South, particularly Krakow.
Is the mass influx of Western goods being paid for my exports? No, it is paid by the mattress money – the $5 – 12 billion which was kept hidden awaiting attractive consumables
The objective of the Polish government a year ago was to sate their pent-up demand by opening the Polish borders to all imports. Import duties were dropped to nil. Now in September 1991 the duties were put back – to levels above the EEC, in time for negotiations with the Economic Community and also to re-start industry.
Why is privatization so slow? Because the government has sought to proceed prudently with utmost transparency and avoiding back room deals. They have hired international consultants to guide the privatization of each industrial sector.
Official statistics vastly under-report the real economic activity because so much of it is not captured in tax or other statistics gathering = black economy.
Salary levels in Warsaw are twice the national average, which remains $70-80 per month in both state and private enterprises. Therefore the buying power is not there to sustain the present consumption binge. It is at the expense of past forced savings over many years.
The opening of frontiers for imports over the first three quarters of 1991 wiped out a whole stratum of manufacturing entrepreneurs. Once burned, these people will think 10 times before starting up production enterprise again. The real economy today is a retailing, not a manufacturing economy.
However laudable the use of prestigious consultants to map privatization may be, it’s a serious mistake to disdain those companies which came forward now with money in hand to buy up assets. Consultants take no risks. Their advice is of limited value. Better to believe those who come with money in hands. Those assets have no intrinsic value – are worth only what bidders will pay.
Edwards is enthusiastic – enjoys her work , without any sense of self-consciousness or false pride.
Meeting with the Vice President of the newly founded Tourist Bank, Mr. Jerzak. 85% Treasury owned, with participation of PTTK, Committee on Tourism.
So far the EBRD, Jacques Attali, have done nothing, only given good press. And they fear Attali is looking too much at Russia.
More relevant is Czech banking operation in support of trade financing. The Tourist Bank is closely interested as an essentially investment bank.
Banking is what E. Europe needs most acutely now. Only trade finance can restore what has fallen away with Comecon.
I find that Jerzak is a clever, impressive guy.
©Gilbert Doctorow, 2020