Poland struggles to shape up for Europe

EU entry will be granted when it suits Brussels, writes Sarah Helm in Warsaw

European businessmen outnumber the tourists in the narrow streets of Warsaw's impeccably restored old city. Investors from France, Sweden, and Germany ponder their figures over a coffee in the newly privatised Telmina cafe. "I am getting into textiles," says aSwede. "Tourism," says a German. "I am into tourism."

Poland looks attractive to European investors. More than 5,000 new foreign companies are investing in Poland every year, according to government figures, and the Polish airline Lot reports an 85 per cent rise in business- class passengers between London and Warsaw this year.

Polish ministers argue that the country is now so advanced that it is ready to join the European Union by 2000.

Grzegorz Kolodko, the Minister of Finance, reels off the figures of the "soaring eagle", boasting $52bn (pounds 35bn) in foreign investment last year. Poland's deficit is now below the 3 per cent ceiling set for membership of European Monetary Union, he says. In 1993 inflation in Poland was 38 per cent and today it is 17 per cent. Average salaries are $300 a month and look set to rise to $500 by 2000.

But how do EU decision-makers view Poland and the nine other potential members from central and eastern Europe? Polish officials dream of entry in 2000, and some predict 2002, but a date has yet to be set. In Warsaw the transformation of the economy is evident. But in some areas of the countryside, unemployment is as high as 35 per cent. The horse and cart is still a common sight alongside the tractor, and agricultural modernisation has scarcely begun. More than 35 per cent of Poles still live on the land, with half of these depending wholly on farming for their livelihoods. In many areas, the average farm is about three acres, and the landscape is a patchwork of tiny strips. The European Commission has estimated that it would cost the EU agricultural budget 10-15 billion ecu ( pounds 8-12bn) to aid the farmers of the 10 prospective members under existing support arrangements.

The biggest of the new applicants, with nearly 40 million people, Poland has always been the self-appointed leader of the prospective new members, and clamours louder than any to be let in first. Germany, which wants Poland as a buffer state, has always put the country at the top of the new members list.

Other member states, meanwhile, have argued that if security is the main concern, better let the Baltic states in first, where the threat from Russia is clearly much more real. The very size of Poland also meant it was going to be the hardest for Europe to swallow.

Despite Poland's economic successes, there are rumblings in the corridors of EU capitals that under the new communist government, privatisation may be slowing down. The Polish government says that inflation stands at 17 per cent, but banks say it is the figure is more than 20 per cent.

Poland's own business community sends out warning signals about a new reluctance among the post-communist regime to see through radical reform. "The rate of growth is far too slow. We will achieve the current level of the Spanish economy in 2030. We cannot be happy with that," says Henryka Bochniarz, president of Nicom, a leading Polish consulting company.

In the end, the EU's big powers will not be too concerned about economic factors when they make their decision about the timing of enlargement. "Spain, Portugal and Greece were all poor as church mice when they joined. Portugal's agriculture is still almost medieval," said one commission official.

Nor will member states take too much notice of the ever greater warnings that time is running out to cement the new democracies. The fact that former communists have taken power in Poland seems to worry nobody in Brussels.

"These new communists know that it does not pay to be old fashioned communists. They know the previous system has been broken," says Peter Ludlow, director of the Centre for European Policy Studies. "As for self-perpetuating oligarchies, they are not unknown in Western Europe."

The decision in principal to accept the new members was taken by the EU in 1993. The decision on timing will largely be a political decision, to be taken once existing members have traded off their own particular foreign policy and trade interests and carved up the Brussels budget.

The Union must also complete the painful task of reforming its institutions to make room for the new members. Poland, therefore, can bang on the door as much as it likes, but will still be made to wait outside until the ponderous political machine of Brussels has turned.