2020: What Next? Poland, Europe and the World in the Last Months of the Year Dear Readers

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2020: What next? Poland, Europe and the World in the last months of the year Dear Readers,

“The one thing we can say with great certainty is that the ever-present uncer- tainty is constant, and will accompany us in the coming decade”. These are the words with which I opened the Risk and Trends 2020 conference on Jan- uary 31. This was right on target, although it is not a remarkable feat to find the future to be unpredictable. In January, I spoke about a decade of instability, about an acceleration of events, and about attention spans that have been reduced to a bare minimum. I also spoke of the best way to deal with this new reality. And these words also seem to be relevant today. If 2020 is a storm and Poland is a boat battered by incoming waves, we at Polityka Insight would like to be the crow’s nest. We don’t count the waves, we won’t predict when the sun will come out, we don’t have a map that will lead to safe, dry land. Our ambition is to stand out above the chaos, see just a bit more, and deliver to you, as soon as possible, the knowledge of coming events, dangers and glimpses of hope. This is the reason we have prepared this publication which tries to antici- pate the final months of this crazy year. Many of the things we wrote will come true, some will not. In the meantime, unexpected swans will flow in, whose existence we didn’t even imagine. I invite you to read our analyses and treat this publication as a tool that will help come to terms with reality and adjust your actions and plans accord- ingly. I believe that together we will get through these tempestuous times, see- ing and understanding what is most important.

See you on the road towards better times.

Andrzej Bobiński

Managing Director Polityka Insight

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Polityka Insight

>> Government

The coalition faces program strengthen the Prime Minister and weaken Ziobro -related decisions. and Gowin, whose parties would lose one ministry The government After getting re-elected in 2019, PiS did not re- each. MinSci, MinEdu and MinSpor (absorbed by veal its plans for rebuilding the state so as not to Piotr Glinski’s MinCult), MinInfra (taken over by alienate its voters before the presidential election. MinStat), MinEnv (set to merge with MinClim, In a way, this autumn will be the beginning of the which would be renamed MinClimEner), MinMar is waiting for the parliamentary term. PiS has announced a pro- and MinFund would disappear as separate enti- gram offensive, but there is a dispute on the right ties. The tasks of MinDig would be taken over by about what course the coalition should take. The PMChan. However, these plans have encountered hawks – represented by Zbigniew Ziobro – are in resistance from both of PiS’s coalition members favour of heating up the ideological dispute with (Gowin and Ziobro have formed a tactical alliance agreement in the the left (fighting against „LGBT ideology,” far-left on this issue) and some of PiS politicians who do politics, etc.), emphasising Poland’s distinctiveness not like the idea of strengthening Gliński. The in the EU and promoting bills in the most radical greater the friction within the coalition in connec- form possible. This direction does not appeal to tion with the reshuffle, the harder it will be to de- coalition the proponents of a softer course, including Ma- velop and carry out a program offensive. teusz Morawiecki, Piotr Gliński and Porozumienie (Agreement) head Jarosław Gowin. PiS, Solidarna Polska (Solidarity Poland) and Porozumienie have Some politicians will gain clout, others will weaken. PiS plans to deal with issues such as the had preliminary discussions about the program for the autumn – each party presented a list of projects Morawiecki will probably be among this autumn’s it is interested in. The coalition negotiations in Sep- „winners,” especially if, as unofficial announce- media and courts. In order to implement tember will determine what will be implemented ments would have it, he becomes PiS deputy lead- in the autumn and what shape it will take. er after the party conference. The same is true of these ambitious plans, it needs to reach MinDef Mariusz Błaszczak, who is also expected to become Deputy Prime Minister. Gowin will re- Key issue – cabinet reshuffle. a deal with its coalition partners and carry turn to the government as Deputy PM (and proba- In an interview for the Polish Press Agency, bly MinDev), which will mean a demotion of cur- Kaczyński said the cabinet would slim down to rent deputy PM and MinDev Jadwiga Emilewicz. out the cabinet reshuffle in an efficient about 12 ministries, which would improve the gov- An important role will be played by the head of manner. ernment’s operations. In political terms, this would the newly-formed MinEnerClim (the current

WHO WILL GAIN POWER, WHO WILL LOSE IT

Jadwiga Zbigniew Andrzej Emilewicz Ziobro Adamczyk

Wojciech Szacki Head of Political Desk Mateusz Jarosław Mariusz Morawiecki Gowin Błaszczak

4 5 Government Daily intelligence. Stay ahead of what’s relevant.

MinClim Michał Kurtyka will probably leave the cabinet). However, the key to the coalition’s future will be PiS’s relations with Ziobro: they are The Ministry of Justice’s projects currently at their worst since the United Right concerning changes to the justice was founded. According to our interviewees, if system are waiting for the green Ziobro does not cutback his media expansion and backstage attacks on the PM and PiS, an open war light from Kaczyński. The plans might erupt on the right. involve flattening the structure of the justice system. Deconcentration of media ownership. A bill on this matter is being drafted in MinCult ture of the justice system (two of the three levels (the person in charge is Deputy Minister Pawel Le- remain, making it possible to move some judges wandowski) and assumes using the French model into retirement) and standardising the position Poland’s leading analytical service for business leaders, as a basis. Politically, this would be beneficial be- of a judge. MinJus also wants to introduce the in- policy makers and diplomats. cause it would weaken the largest private media stitution of magistrates to settle minor civil and corporations, which tend to be anti-government criminal cases. All these changes would be made and are often owned by foreign shareholders (TVN, under the banner of fighting the „special caste” website Onet, tabloid Fakt). The draft has not been and will surely result in protests by the opposition made public yet, while its shape will depend on and judges. both Kaczyński’s political will and how effective the embassies of the countries concerned are in exerting pressure. On August 28, US ambassador The issue of dividing Mazowsze Georgette Mosbacher spoke out against the decon- will resurface. centration of media (the Americans own TVN and MinInt is finishing work on a bill on the admin- US investors have a stake in Ringier Axel Springer, istrative division of Mazowieckie; two regions which publishes Fakt, Newsweek and Onet). If PiS would be cut out of the present voivodeship: gives in to the US pressure, the law will only have Warsaw (capital plus neighbouring districts) and A source of daily intelligence Weekly sectoral service for financial a limited scope (for example, it may not affect the Mazowieckie (with cities such as Radom, Płock for energy sector professionals professionals, as well as advisers current state of the media market, but will only and Siedlce). The creation of the new provinces and their advisers. and lawyers working in and for the sector. concern its future). would necessitate holding local elections for two – In Polish – – In Polish – regional assemblies, enabling PiS to gain power in the Mazowiecki Voivodeship (PO would prob- Ziobro supporters want to comple- ably win in Warsaw). The local elections would Order a free trial: te changes in the judiciary. also be the first test of the popularity of Szymon The MinJus’s projects concerning changes to the Hołownia’s movement. • justice system are waiting for the green light from Dagmara Bochyńska Kaczyński. The plans involve flattening the struc- Senior Sales & Client Service Manager [email protected] (+48) 691 916 986 6 Polityka Insight

>> Parties

PiS will change its statute and hold head of the Civic Institute think tank, which has internal elections. been inactive for several years. In the Autumn, There will be The key autumn event for PiS will be the confer- Rafał Trzaskowski will inaugurate a grassroots ence at which the changes to the statute will be movement, which will likely be called Nowa Sol- adopted and Jarosław Kaczyński will be elected idarność (New Solidarity). In the weeks to come, party chair for another term. A smaller body – an expert institution will also be launched as a changes in party the Political Council – will approve Kaczyński’s part of Trzaskowski’s movement. nominations for new PiS deputy chairs (one of them will be Mateusz Morawiecki) and members of the Political Committee. The changes to Hołownia can present his the statute are intended to help rebuild the par- parliamentary team. leadership ty with the intent of rejuvenating it and prepar- On September 3, Szymon Hołownia is supposed to ing it for the next term. Kaczyński is consider- present a law on politicians’ salaries and party subsi- ing the introduction of a new type of leadership dies, followed by public consultations of the project. amongst the constituencies – the heads would Also in September, the Internet radio of the Poland be employees of the PiS headquarters on Now- 2050 movement will be launched. In the Autumn, In the coming autumn PiS will make ogrodzka Street who are not MPs. These plans could be jeopardised by the epidemic; if the sit- POLITICAL PARTIES’ changes in its statute. KO, in turn, will choose uation deteriorates significantly in the autumn, the conference may be moved to the spring of AV ER AGE SUPPORT a new caucus head, while SLD and Wiosna 2021. (per cent, July-August)

are expected to merge into a single party. KO will change caucus head, Trzaskowski will launch 42,4 PiS his movement. Wojciech Szacki Following the summer vacation, Borys Bud- 27,3 KO Head of Political Desk ka will resign as head of the KO parliamentary caucus; MPs and senators will choose his replacement. It is uncertain when exactly this will 11,4 Polska 2050 happen – the party leadership would like to hold the elections with all MPs present in one room Joanna Sawicka (this would be over 170 people), which will be 7,5 Konfederacja Senior Analyst for Political Affairs possible only when the threat of the epidemic is reduced. PO also wants to introduce statuto- ry changes in autumn, which will help the par- 5,9 Lewica ty open up to new social groups (changes in the statute are introduced by a national convention Ryszard Łuczyn of several hundred members). At the end of Sep- 4,0 PSL Political Affairs Analyst tember and the beginning of October, the party will present an idea for reconstruction and a new Source: IBRIS, United Surveys, July and August 2020.

8 9 Parties

In the autumn, Rafał Trzaskowski will inaugurate a grassroots movement, which will likely be called Nowa Solidarność (New Solidarity).

Hołownia will probably present the MPs who will PSL will elect local represent him in the Sejm. According to our in- leadership. formation, former Chief of Staff Jacek Cichocki Władysław Kosiniak-Kamysz’s term as PSL and the election plenipotentiary Michał Ko- leader expires in November. According to the bosko were responsible for negotiations with statute, in order to elect his successor (or re- parliamentarians. However, the former pres- elect him), the PSL congress will have to be idential candidates’ collaborators deny infor- held in the autumn. However, the election of mation about attracting new MP’s. the local leadership that appoints delegates to the congress was delayed as a result of the pandemic. They will be held in the autumn, while Two conferences on the Left the party’s new leadership will not be elected will be held. until the following spring. The new political A conference will take place on December 12, season will also see a revival of questions about at which point a formal merger of the SLD and the cohesion of the Polish Coalition. Kukiz’15 Briefings & Boardroom Wiosna will be announced; this will lead to the politicians in the PSL-KP caucus are ruling out creation of the New Left. The change of SLD’s individual transfers to the United Right, but do presentations statute – which will serve as the „foundation” not completely reject the possibility of a rap- of the new party – has yet to be approved by prochement with PiS if their leader decides to the court. The Left Coalition’s politicians hope pursue such a policy. Paweł Kukiz himself plans LEARN MORE ON ISSUES THAT MATTER TO YOU. that this will happen shortly after the summer to tour the country in the autumn; he intends to vacation. Prior to this, a program congress of talk to voters in county towns about changing Meet with our analysts to get in-depth knowledge the Left Coalition – as an ideological formation the electoral system to a mixed one and organ- rather than a party – will take place. According ising national referenda. • on political and economic topics most important to Krzysztof Gawkowski, the head of the SLD, to the well-being of your business. Wiosna and Razem Caucus, politicians such as Bernie Sanders, the would-be Democratic candidate for the US presidential election and Spain’s Prime Minister Pedro Sanchez, have been invited to the congress. At the beginning of September, Razem will form its new manage- Want to find out more about our tailored briefings? ment board. Amongst the five people chosen for Contact us: the position, only one is an MP - Paulina Mat- ysiak. Politicians such as Adrian Zandberg or Marcelina Zawisza could not stand for reelec- Maciej Michalik tion due to the term limit. Research Projects Manager [email protected] (+48) 22 436 73 12 10 Polityka Insight

>> Legislative process

Holding law and new powers of Finance will also introduce improvements for for supervisory boards. companies as part of changes to the VAT Act (oth- The legislative erwise known as the so-called SLIM VAT). The In the autumn, the parliament will discuss package will involve the reduction of the tax base amendments to the Commercial Companies Code as a result of a discount obtained, even before a prepared by the MinStat Committee to Reform corrected invoice has been obtained. It will also Corporate Governance. They will introduce a new include details of the binding information on the offensive will definition of the „commercial group.” It consists current rate and introduce e-circulation of Tax of a parent company and companies it controls, Free documents. MinFin is also working on the which – in accordance with the provisions of their introduction of the so-called Estonian CIT. statutes or contracts – will base their operation on a common economic strategy (the so-called inter- begin in the autumn New instruments for financial est of a commercial group). The parent company will issue binding instructions to the subsidiary; institutions. it will also be able to request information about its Following the summer vacation, the parliament activities at any time. At the same time, supervi- will deal with the amendment to the act on bonds sory boards will be able to commission third par- prepared by the Ministry of Finance. It intro- The government will show changes ty advisers to conduct research on the company’s duced the so-called Contingent Convertibles assets or a specific area of its activity. (CoCo) into the Polish legal system. In the event in Polish tax structure. MPs will of problems with the institutions that issued them, such securities may be converted into their additionally work on the new electronic Changes in CIT and VAT. shares. Bonds with a nominal value of at least MinDev from the MinFin wants to present CIT EUR 100,000 will not have a maturity date. Their tax relief for companies implementing new tech- issuers will periodically pay interest which, with- communications law and the support nologies (e.g. robots, 3D printers). Companies in several years, should cover the nominal value will be able to apply for co-financing of training of the bonds. The new type of securities will be is- for offshore wind-turbines. for employees who operate automated produc- sued by banks, brokerage houses, domestic insur- tion lines. In doing so, the government wants to ance and reinsurance companies. It is intended to promote production automation. The Ministry help institutions that, as a result of the pandemic, will be affected by a decline in solvency.

Facilities for investors and those struggling with drought. MinDev is to reveal the amendment to the Act on Special Economic Zones (the so-called strategic The Ministry of Finance will investor’s passport) introducing facilitations for Wojciech Pawłuszko introduce the SLIM VAT, and it investors who want to operate in the Polish In- vestment Zone. Companies might receive pref- Senior Analyst for Legal Affairs will be working on the introduction erential treatment when, for example, they hire of the so-called Estonian CIT. foreign employees. At the same time, MinMar is

12 13 Legislative process The legislative offensive will begin in the autumn

LAWS RELATED TO THE ECONOMY THAT WILL BE DEALT WITH to present a bill on investments that counteract Telecommunications Law and broaden the pow- BY THE PARLIAMENT IN THE AUTUMN the effects of droughts. In order to shorten the ers of the president of the Office of Electronic development of such projects, voivodes will issue Communications (UKE). The regulator will an- permits to implement investments in this area. alyse the situation on the country’s electronic Title of legislation Who is responsible Legislative stage MinMar is also planning changes to the Water communication services market, and then will Law to promote natural retention and simplify be able to impose various obligations on individ- Draft Law Amending the Code of Ministry of State Assets public and ministerial the procedures for building water facilities in ual companies by ordering them, for instance, 1. Commercial Companies and Certain consultations forests. A special act is also supposed to allow to make their infrastructure available to other other laws (UD113) the legalisation of existing water consumption entities. New obligations will also be imposed on facilities. telecoms – they will have to, for example, present Draft Law Amending the Act on Corporate Ministry of Development arrangements within customers with concise summaries of the terms 2. Income Tax (before it is included on the list and Ministry of Finance the department of the contract they sign for their services. This of the government’s legislative works)

More support for RES. is meant to increase consumer protection and The parliament will deal with the so-called Spe- strengthen their position compared to operators. Draft Law Amending the Act on VAT Ministry of Finance public and ministerial 3. cial Offshore Act prepared by the MinClim. It is and the Banking Law (UD118) consultations intended to help energy companies develop offshore wind energy. The government will provide Changes in the regulations Draft Law Amending the Act on Special Ministry of Development arrangements within subsidies for the production of electricity from on waste. 4. Economic Zones (before it is included on the the department offshore farms by covering the difference between Come autumn, the parliament will also deal with list of the government’s legislative work) the cost of its production and the wholesale price the draft amendment to the act on maintaining (this is the so-called contract for difference). Sup- cleanliness and order in municipalities developed Draft Law on Investment Aimed to Ministry of Marine arrangements within port will apply to projects with a total capacity of by MinClim. As part of the reform, the period of 5. Counteract the Effects of a Drought Economy and Inland the department up to 5.9 GW. Investors will also be able to obtain permissible waste storage by local governments (UD101) Navigation environmental decision and building permits will be extended from one to three years before faster; the act will also introduce a tax on offshore such waste is sent to an incineration plant. The Draft Law on Promoting Generation Ministry of Climate public and ministerial farms. In the autumn, parliament will also deal annual fees for the use of the environment will 6. of Electricity at Offshore Wind Farms consultations with the amendment to the RES Act, which ex- be frozen. The method of calculating the level of (UD34) tends until June 30, 2045 the ultimate deadline recycling is to be more favourable for municipali- for payment of support for RES under the so- ties, which will allow them to avoid high penalties Draft Law on Amending the Act on Ministry of Climate public and ministerial called system of discounts for prosumers, as well for failing to meet the thresholds for the amount 7. Renewable Energy Sources and Certain consultations as the operation of the feed-in tariff system and of processed waste. The changes are to lower the Other lLws (UD107) energy price subsidies. costs of the municipal system. As a result, the Draft Law – the Electronic Ministry of Digitisation public and ministerial price of waste collection for the country’s resi- 8. dents will also decrease. • Communications Law (UC45) consultations New Electronic Communication Law. Draft law amending the clean and order act Ministry of Climate arrangements within 9. in municipalities (before it is included on the On August 28, MinDig’s consultations on a pro- the department ject the implements the European Electronic list of the government’s legislative work) Communications Code into Polish law conclud- Draft Law Emending the Act on Bonds and Ministry of Finance public and ministerial ed, while in September parliament will discuss 10. Certain Other Laws (UC32) the draft legislation. The act is set to replace the consultations

14 15 Polityka Insight

>> Macroeconomic forecast

Recession will last two quarters. and smaller investments of businesses due to staff shortages and regulatory changes. Poland will recover PI supports its earlier forecast of a short recession – in Q3, GDP growth will be negative (-0.8 per cent year-over-year), but we will see slight Good economic situation will economic growth (0.1 per cent) again in Q4. not return to trade. Consumption, limited by negative expectations Until the end of the year, sales growth will re- from the recession and aversion to buying certain services, will on- main negative, but decreases will be much mild- ly begin to grow again in 2021. Therefore, the er than during the pandemic. Concerns about fu- role of the driving force of the economy will be ture income will prevent consumers from large taken over by public spending, supported by the spending (such as buying a car), and limited so- at the end of the year positive impact of foreign trade (higher export cial activity and fewer visits to shops will reduce growth than import growth). At the end of the the number of small, spontaneous purchases. year, in turn, the scale of declines in investments The best results will be recorded in the sale of will deepen. This is because the effects of the furniture, sporting equipment, electronics and pandemic overlapped with previous trends: com- household appliances because people, who spend pletion of infrastructure investments financed more time at home, will still want to improve Consumption and investments in Poland from the EU budget perspective for 2014-2020 their level of comfort. Sales increases can also be will be in decline till the end of the year, but the economy will exit recession due to GDP GROWTH STRUCTURE IN POLAND Change in invento- Investment Public expenditure Consumption Net exports GDP growth public spending and rebounding exports. ries (pp.) (pp.) (pp.) (pp.) (pp.) (per cent) 15 Unemployment will increase slightly, 10 while inflation will remain stable. 5

0 Hanna Cichy Business Analyst -5

-10 Adam Czerniak Chief Economist, -15 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 Director for Research Source: GUS, PI.

16 17 Macroeconomic forecast Poland will recover from the recession at the end of the year

INFLATION FORECAST In Q3, GDP growth will be negative, but we will see slight economic growth again in Q4; inflation will remain core inflation food energy carriers infation CPI around 3 per cent. 5

4 Number of unemployed will not fall Services will still be expensive. below one million. By the end of the year, inflation will remain

3 The return of most children to kindergartens around 3 per cent. The record high, 4 per cent core and schools will free parents up to work; so far, inflation will remain the main component of price they have been benefitting from care allowanc- growth. It will decline slightly only at the end of 2 es. As a result, employment in Q4 will be slightly the year due to statistical effects (an increase in higher than in Q3 and lower by about 0.3 per cent core inflation at the end of 2019). The rate of con- 1 compared to a year ago. Come autumn, regis- sumer services price growth will remain high due tered unemployment will amount to 6.2 per cent to high operating costs, especially labour costs,

0 at the end of the year, compared to 6 per cent in and the supply constraints related to the pandem- August (following a temporary drop in Septem- ic. Fuel prices will rise steadily, although they will

-1 ber). In addition to people who have completed remain below last year’s level. Food prices will be their seasonal activities in agriculture and con- relatively stable; a good harvest will translate to a 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 struction, labour offices will receive beneficiar- slower growth in the prices of vegetables, fruit and ies of the expiring solidarity allowance, as well as bread. The seasonal development of the ASF epi- Source: GUS, PI. some economically inactive people, encouraged demic, in turn, will result in an increase in pork by a higher allowance and improving economic prices. • expected at the end of the year; consumers can scale of industrial production will be hampered situation, or freed from caring responsibilities stockpile in anticipation of price increases next by the increased employee absenteeism (quar- by the opening of educational institutions. Em- year as a result of the introduction of the trade antine, sick leave, child care in case of returning ployment reductions in gastronomy, tourism and tax and sugary drinks tax. Demand will contin- to remote education), as well as concerns about recreational services are also possible. Similar to ue to be low in consumer services, especially in reduced demand, especially in the area of invest- the previous year, in anticipation of an increase catering, tourism, culture and entertainment. ment goods and vehicles. Import-intensive and in the minimum wage in 2021, employers will Business services will be in a better shape, al- export-oriented industries will also be sensi- freeze increases at the end of the year, limiting though problems may be experienced by the tive to the epidemic situation in the countries of the dynamics of average wages. transport, marketing, and consulting industries trading partners – temporary closure of factories and, together with a decrease in investment, also and difficulties in international transport will by architectural industry. run the risk of forced downtime in Poland. The crisis in construction will deepen due to falling demand for flats and office space. The industry Industry will stagnate, construc- will not feel the impact of the planned increase tion will be in recession. in public investments in road and rail infrastruc- In the second half of the year, the industrial sec- ture until next year. tor will return to positive but low dynamics (an average of 0.5 per cent on an annual basis). The

18 19 Polityka Insight

>> Economy One of the projects of the Solidarity Transport Hub (CPK) The government will use investments to strengthen the economy

Projects postponed due to the pandemic Government will want In the autumn, there might be two to accelerate public investments. will accelerate. This will include mergers, big company debuts on the main The idea is to strengthen the message that the floor of the GPW: Canal+ the construction of a food holding and ruling party is doing everything to help the Polish economy to recover from the crisis. After the gov- and Allegro, which would change ernment increased its spending limit under the the unfavourable trend. preparations for the 5G auctions. National Roads Construction Programme in June from PLN 142.2 billion to nearly PLN 164 billion, Large stock market debuts The problems of small banks will intensify. GDDKiA said that it would announce additional are also expected. tenders for the construction of 222 km of roads by the end of the year. In the following months, ten- From the beginning of the year to the end of Ju- ders will cover 342 km of roads (in total, 575 km ly, only two companies made their debuts on the in 2020). The government will also soon decide main floor of the WSE, while 14 entities withdrew on the financing of preparations for the construc- from it. However, the unfavourable trend can re- tion of the Central Communication Port (CPK) by verse. In mid-July, Canal+ Polska announced 2023, which will open the way to the purchase of that it had already submitted its prospectus to the Hanna Cichy land for the airport and new railroads. The pre- Polish Financial Supervision Authority (KNF), al- Business Analyst liminary draft resolution of the CouMin provided though the final decision on the debut has yet to for about PLN 12 billion for this purpos. be made. It will depend on market conditions. Un- officially, it is said that a package of Allegro shares, the largest e-commerce platform in Poland, could also be listed on the stock exchange. The compa- Leszek Baj ny’s shares could be worth as much as PLN 8.5-11 Head of Business Desk billion. This would be the biggest debut since PZU in 2010.

20 21 Economy The government will use investments to strengthen economy

Banks will struggle with a drop in Small and mid-sized employers will profitability. introduce PPKs. With the end of credit holidays (suspension of The deadline for choosing a financial institu- instalment payments usually for three months), tion and signing an agreement on managing By the end of the year, Orlen is banks will learn the real scale of their customers’ employee capital plans (PPK) is October 27. planning to apply to the European financial problems. Already in Q2, some of them By November 10, they have to sign contracts for noticed worse repayment of cash loans for indi- the management of PPKs on behalf of employ- Commission for permission to take vidual customers and loans for smaller companies. ees. Financial institutions will have to serve over PGNiG. This will translate into an increase in the number about 80,000 entities at the same time. Train- of loan restructurings and increased spending on ing in PPKs for numerous companies scattered Parliament will work soft debt collection. Banks will also struggle with across the country will be done mostly remotely on two budgets. the requirements, with the most likely increase the commitment of further provisions for litiga- through webinars, videos and brochures. Reach- in investment requirements for new transmitters tion with frank loan holders, a decrease in inter- ing some of the employees in this way may be The Sejm is already amending the budget for providing 5G coverage. The requirements related est income (the effect of interest rate cuts) and low difficult, but participation in the PPK will be en- 2020, while the Social Dialogue Council is con- to cybersecurity of the telecommunications net- demand from companies. Idea Bank and Getin couraged by the stock market rebound and low sulting the draft budget for 2021. The deficit is work will also be tightened. Possible changes may Noble may be in a particularly difficult situation, interest rates, which reduce the attractiveness expected to reach PLN 109.3 billion this year also include allocating a larger part of the band to but so too are Alior Bank (in Q2, it had the highest of traditional forms of saving. In turn, the im- and up to PLN 82.3 billion next year. Next year’s auction and lifting the bidding limit of one frequen- loss in history) and cooperative banks. plementation of PPKs in micro-companies and budget revenues, in turn, are expected to reach cy block by one operator. The decision in this mat- the public sector will begin at the beginning of PLN 403.7 billion, only PLN 5 billion more than ter will be made by the new UKE president, who 2021 • in the current year. The so-called Estonian Cor- will probably be Jacek Oko. porate Tax (CIT) and other reliefs will bring about a decrease in corporate tax revenues, while the budget is to be supplied with PLN 1.5 billion Fuel and power mergers will begin. from trade tax. The expenditure will be PLN In the autumn, Orlen is expected to start imple- 22 billion lower than in 2020 and will amount menting the conditions for its merger with Lotos, to PLN 486 billion. The savings will include a which will be set by EurCom. Both companies wage freeze and reduction of employment in the must significantly reduce their shares in do- public sector, as well as keeping the indexation mestic production and sales of fuels in wholesale of pensions at a minimum level. In turn, broadly and retail. By the end of the year, Orlen is also understood public investments in infrastructure, planning to apply to the EurCom for permission science and defence are to increase. to take over PGNiG. The government may also start the process of transferring coal-fired power plants from state-controlled energy groups The shape of frequency auction to the new National Energy Security Agency (3.4-3.8 GHz) for the 5G network (NABE) and consolidating the latter. The scenar- will be decided. io currently being considered by the government The implementation of PPKs in small After MinDig changed the regulations and the auc- assumes first a Tauron-Enea merger, then their and medium companies will begin in tion was cancelled by the president of the Office of absorption by PGE. Establishing a Polish Food Electronic Communications (UKE), the proceed- Holding based on the Polish Sugar Company by the autumn, in micro-companies it ings have to start again. UKE can change some of the end of the year has also been planned. will begin at the beginning of 2021.

22 23 Polityka Insight

>> Energy and Climate

The EU will want to accelerate September 3 transition. Enea will present the results for the 1H The reconstruction In September, the EurCom will present scenar- September 15 ios for adopting more ambitious goals of reduc- PGE will present the results for the 1H ing CO2 emissions from 40 to 50-55 per cent by 2030. Such measures are necessary for the EU to September of the energy sector achieve climate neutrality by 2050. If Brussels EurCom will present scenarios of recommends moving the target above 50 per cent, increasing the target of reducing CO2 CO2 prices will register a sharp increase, which emissions from 40 to 50-55 percent by will negatively affect the coal-based energy sec- 2030 will start in the autumn tor. By the end of the year, Brussels also wants to By the end of September revise EU directives on renewable energy sources A plan to save Polish Mining Group and energy efficiency. The review of both acts will is to be ready probably end with setting new ambitious targets, which will accelerate the transition of the sector. October 22 The Polish government plans to rebuild Orlen will show the results for the 3Q the energy sector and new company Coal mining sector could reach October 29 a turning point. Lotos will publish its results for the 3Q strategies will emerge. The situation A plan to rescue Polska Grupa Górnicza (PGG) November 5 and the entire mining sector is expected to be Energa will publish its results for the 3Q ready by the end of September. Mines are plung- in Silesia may also reach a turning point. ing into crisis as demand for coal has dramati- November 9 cally declined due to the EU’s climate policy and PGE will publish its results for the 3Q the coronavirus pandemic. To rebuild the sector, November 18 coal production has to be adjusted to demand, Tauron will show the results for the 3Q which means closing the least profitable mines. The MinStat presented such a plan in July, but November 19 coal miners rejected it and threatened to go on a PGNiG and JSW will present their strike. It is not known yet what the government’s results for the 3Q new proposals will include. The promise of high November 26 Enea will show the results for the 3Q

By the end of the year Orlen is to present a new strategy that The European Commission will will take into account the company’s achievement of climate neutrality want to adopt more ambitious Robert Tomaszewski Senior Energy Analyst goals of reducing CO2 emissions from 40 to 50-55 per cent by 2030.

24 25 Energy and Climate The reconstruction of the energy sector will start in the autumn

Climate Ministry to refine WHEN WILL THE the energy policy and hydrogen BIGGEST POWER PLANTS strategy. BE SHUT DOWN?* By the end of the year, Michał Kurtyka’s ministry should complete an update of Poland’s Ener- The country’s largest power gy Policy Until 2050 (its time horizon has been plant, Bełchatów, will be shut extended by 10 years), as well as the Hydrogen down by 2036. Strategy, which is supposed to help decarbonise the Polish economy. The ministry is also working on a national transition plan, which is expected to Most of the units at the Turów serve as a road map for local governments devel- power plant will be shut down by oping Territorial Just Transition Plans (TPSTs). 2030, and the last unit (currently The preparation of the latter will be crucial when under construction) will stay obtaining money from the Just Transition Fund operational until 203 – Poland is to receive EUR 3 billion between 2021 and 2027. The autumn will be the time of the escalation of tensions in Silesia, Two modern units commissioned in September, the plan to rescue the entire mining sector. in 2019 at the Opole power plant Government to unlock will be closed in 2037 and 2038. the development of offshore severance pay for coal miners leaving their jobs PGE, Orlen and PGNiG to update and onshore windmills. may not be enough to stop the escalation of ten- their strategies. According to MinClim‚s statements, a draft law In 2037, the new coal-fired unit sions in Silesia. The energy consolidation plan will be crucial for on offshore wind farms should be sent to the at the Kozienice power plant the changes included in the strategies of treas- Sejm in October. The new law creates a support will be shut down, and the block ury companies. In the autumn, PGE is to pres- system for such farms, allowing their construc- in Jaworzno, which is currently The Ministry of Assets will show ent a new strategy for the next decade; the doc- tion to commence. However, businesses are under construction. plans to reform the energy sector. ument will take into account the path of moving concerned that the planned energy consolida- Changes to the coal mining industry will be away from coal and focusing on the group’s core tion and the uncertain future of the coal mining linked to the reconstruction of the energy sector, activity (generation of electricity). Orlen will al- industry may force the government to put its * According to the initial plan of the the assumptions of which are still being devel- so release a new strategy by the end of the year adoption on the back burner. Changes are also consolidation of the energy sector, which oped by the MinStat. No publication date of the – it is to take into account the company’s goal of set to occur in the so-called Distance Act, which Polityka Insight has gained access to. document has been revealed, but it is clear that achieving climate neutrality by 2050. Its priori- determines where onshore wind farms can be the ministry intends to separate old coal-fired ty actions include the development of hydrogen, built. Currently, the regulations allow wind tur- power plants from old structures. They will be electrification of transport and opening of the bines to be placed at a distance of ten times of its gradually transferred to a new entity: the Na- Baltic Sea to offshore wind farms. The updated overall height from residential buildings, which tional Energy Security Agency. Additionally, a strategy was also to be presented by PGNiG, but in practice amounts to 1.5-2 km. The MinDev timeline for their shutdown will be adopted. Lat- the announcement that Orlen would absorb the wants to shorten this distance to 0.5 km. • er, the consolidation of the three energy groups natural gas monopolist may undermine this plan. will be carried out by PGE. The coal-free and in- tegrated energy sector is supposed to have better access to funding.

26 27 Polityka Insight

>> Pandemic

Schools likely to become which will cut off some sources of the disease’s new hotspots. spread. Infections outside large hotspots will The COVID-19 probably become more frequent (the so-called It is difficult to predict how the COVID-19 pan- horizontal transmission). The number of districts demic will develop, but this coming autumn is with a stricter sanitary regime will also increase. likely to see a further increase in the number of infections. The first contributing factor will be the pandemic will reopening of schools. Long-term models predict Healthcare system will be that the number of cases can increase by a factor under pressure. of ten if the transmission between students is at The number of actual and suspected cases of least half as high as among adults. The end of the the flu (and flu-like illnesses) during the flu -sea not go away summer season will also bring new outbreaks son of recent years (last and first quarter of the at workplaces, but there will be fewer weddings, year) was about 3-4 million. This autumn, some

PROJECTED NUMBER OF CASES IN POLAND COVID-19 will overlap with the flu number forecast confidence interval season, which will pose a challenge for the of detected cases of the forecast 2000

healthcare system. The government 1800

will try to avoid full lockdown. 1600

1400

1200

1000

800

600

400

Piotr Żakowiecki 200 01.08 08.08 15.08 22.08 29.08 05.09 12.09 15.09 Senior Healthcare Analyst Source: PI forecast.

28 29 Pandemic

flu patients will be suspected of being infected and safety is confirmed, several hundred million with SARS-CoV-2. This will increase the burden doses will be made available to EU countries on facilities, including hospital admissions rooms. based on agreements negotiated by EurCom. Another potential problem will be the possible Vaccines produced by China and Russia will al- spread of coronavirus among hospitals and nurs- so appear on the market; they are already being ing homes and the so-called corona domino effect ordered by the governments of developing coun- associated with it. The inefficiency of the state tries. The results of additional studies on coro- sanitary inspection service – mostly resulting navirus will also be published in the autumn. Sci- from incomplete digitalisation and staffing short- entists still do not know for certain how the virus ages – remains an unresolved problem and will spreads, how immunity is acquired and what risk translate to the limited effectiveness of epidemi- factors are involved for different populations (in- ological investigations and outbreak containment. cluding children, the elderly and workers that are exposed to the disease).

MinHea will implement its strategy. Government will want to avoid First of all, MinHea wants to double the daily an economic lockdown. number of tests performed from about 30,000 to Come autumn, the authorities will continue to 60,000 and make it possible for GPs to prescribe weigh the health and economic risks, trying to them. The number of hospitals dedicated solely postpone the decision to introduce far-reach- to COVID-19 patients will also decrease in the ing restrictions for as long as possible. The re- events autumn, while COVID-19 isolation rooms will cord-breaking budget deficit planned for this year appear in all other hospitals. The enforcement of (over PLN 109.3 billion) suggests that the govern- restrictions at the district level will continue and ment is reckoning with the fact that it will have JOIN THE DEBATE. the services will be more rigorous in enforcing ex- to provide further support to the economy, but isting restrictions and apply more severe financial probably on a smaller scale than during the first Debates, briefings, round tables and report presentations penalties. The effectiveness of the restrictions and lockdown. The government will introduce a new with business leaders, policy makers and renowned experts. rules will largely depend on the public communi- anti-crisis shield for the tourism industry and cations of MinHea and other government officials cultural institutions but this assistance may not We meet online in a professional manner and structure. – the tone of their statements and the consistency be enough to protect companies from bankrupt- of their actions will determine whether Poles will cy. It is possible that additional support for the accept restrictions and abide by the rules. economy will come from previously unused PFR (Polish Development Fund) resources (PLN 15-20 billion), as well as from the EU SURE mechanism Vaccines against SARS-CoV-2 will (EUR 11 billion). • become available. Interested in organising an online event? It is expected that the vaccines developed by Contact us: Western manufacturers – AstraZeneca and John- son & Johnson in particular – will be approved for use by regulators in Q4. If their effectiveness Katarzyna Szajewska Senior Event & Communication Manager [email protected] (+48) 501 087 006 30 Polityka Insight

>> Defence August 4, 2020. Ceremony of confimation of the agreement on enhanced defence cooperation between PL and the US. The US will increase its military presence in Poland

A Polish general may soon be selected

for the highest military post in NATO. Ministry of Defence will spend the purchase of military equipment and will be more on equipment. used by the end of 2021. The MinDef has not yet Defence Ministry spending will increase presented what it will exactly spend the funds on. On August 20th – in the amendment to the 2020 Certain possible options include the outstanding budget – MinFin announced an increase in de- payments for earlier orders from the U.S (Patri- after the budget amendment. fense spending by 3 billion zł. The decision comes ots, HIMARS, F-35’s), the purchase of another as a surprise – as most forecasts predicted that HIMARS squadron, launching new domestic in- defense spending, which constitutes 2.1 percent dustry projects (such as the modernization of the of GDP, would fall due to the recession caused BWP-1), or buying additional domestic weaponry, by the COVID-19 pandemic. The MinFin points which would also be an anti-crisis measure, by out that the additional funds will be allocated to supporting the Polish industry.

Delays in armaments are the main topics of discussion.

MinDef will be under pressure to explain the The proposed command post of delays in upgrading Leopard tanks to the 2PL standard and modifying the T-72 tanks. Addi- the US Army Corps is to operate Marek Świerczyński tionally, the planned modification of the 230 T-72 may fail to reach completion. The Ministry Head of Security in Europe from October 2020. should also complete its analysis of the Narew and International Affairs Desk short-range air defence system in the autumn. The decision is urged by the British partner (MB-

32 33 Defence The US will increase its military presence in Poland

The president will want changes to PLANNED DEFENCE security management. EXPENDITURES The act on national security management, which President Andrzej Duda announced as part of no less than: The Ministry of Defence will the work on the new National Security Strate- be under pressure to explain gy (SBN), is in the process of being agreed upon with PMChan. It will likely be submitted to the the delays in upgrading Leopard Sejm in September or October, but likely after 2.1% tanks to the 2PL standard. the government reshuffle. The law provides for setting up a government permanent security in 2020 committee, sorting out the hierarchy of strate- DA-UK) and the government in London, which although territorial defence forces command- gic documents and increasing the powers of the will act as the leading country at the Septem- er Gen. Wiesław Kukuła also boasts a strong National Security Office. After the election vic- ber defence fair (MSPO) and send a ministerial position. tory and the signing of an agreement with the delegation. Raytheon, on the other hand, is ex- Americans, Duda increased his influence in the 2.2% pected to make an agreement with Polska Gru- PGZ may be hurt by its results government camp, but the final shape of the law in the years pa Zbrojeniowa (PGZ) over a two-year delay in depends on the balance of power in PiS. The gov- and the reconstruction implementing the offset agreement. In August, ernment’s response is also awaited by the postu- 2021-2023 of the government. MinDef Mariusz Błaszczak discussed used sub- late in the SBN to increase defence spending to marines with the Swedish Defence Minister, so President Andrzej Kensbok admitted in a press 2.5 per cent of GDP from 2024. the agreement will be one of the issues discussed interview that the group registered a loss of this autumn. over 1 billion zł in 2019 (detailed PGZ financial The command post of the 5th US statements are awaiting publication by the Na- Army Corps will come to Poland. % tional Court Register). He explained that the 2.3 The Chief of General Staff may be loss resulted from the inclusion in this year’s Neither the exact date, nor the location is known promoted in NATO. in the years balance sheet of the reduced valuation of the yet, but according to the provisions of American 2026-2029 Gen. Rajmund Andrzejczak was nominated by shipbuilding assets of the MARS fund, omit- laws, the proposed command post of the US Army Poland as a candidate for the successor to Stuart ted by the previous management board in the Corps is to operate in Europe from October 2020. Peach (Great Britain) as the head of the NATO 2018 results. This, alongside with the planned After the decision of the Pentagon in May 2020, Military Committee, the highest military body reconstruction of the government, may lead it is known that this staff will be directed to Po- of the Alliance. Andrzejczak competes with to another change in the management of PGZ land and that there will be about 200 officers in Dutch General Roben Bauer. Earlier the Cana- during the autumn, especially if the changes in it. At the same time, it will be the first stage of the dian Jonathan Vance withdrew. This is Poland’s government include the head of the Ministry implementation of the Polish-US agreement on 2.5% second approach to taking over the most impor- of State Assets Jacek Sasin and deputy min- enhanced defence cooperation, which was signed tant military function in NATO; the Smolensk ister Maciej Małecki - who is responsible for on August 15. If necessary, the command post can in 2030 catastrophe interrupted General Franciszek the armaments industry. If Andrzej Kensbok be expanded to a full corps staff with a three-star and next years Gągor’s efforts back in 2010. If Andrzejczak is - who was appointed in March - departs PGZ in general at the head. The US Army Corps is capa- accepted as committee head in September, he the autumn, he will become the shortest-serv- ble of commanding autonomous operations with will leave the position in the General Staff. His ing president in the history of the group. 20,000 troops. • most probable successor will be General Com- mander of the armed forces Gen. Jarosław Mika,

34 35 Polityka Insight

>> European Union

The last battle for the new budget. 7-11 September 2020 EU-UK Negotiations Following an agreement at the level of EU leaders The EU will return on the general principles and the pool of new EU (Round 8) funds for 2021-2027, as well as on the Reconstruc- 24-25 September 2020 tion Fund, European capitals are still facing diffi- European Council cult negotiations with EurParl on almost 40 regulations that will determine how the EU budget will 28 September - 2 October 2020 to the discussion EU-UK Negotiations be spent. MEPs will demand more influence on how the money is spent, more clarity on how the (Round 9) new EU debt will be financed and more money for October 2020 education, housing and health. Although ultimate- EU-Africa Summit on its future ly MEPs will not block the budget, the European Council will have to make some concessions in or- 8-9 October 2020 der to conclude the negotiations as soon as possible. Justice and Home Affairs Council (migration) Economic recovery after the pandemic Another clash between Warsaw and 23 October 2020 Brussels on rule of law. Environment Council will remain a major challenge for the EU. EU rules in this respect will be part of the negoti- (EU Climate Law) ations on the new EU budget. European Commis- 23-26 November 2020 This will affect the existing items sioner for Justice Diedier Rayners assured that EurParl plenary session EurCom would seek to resume talks between the on the EU agenda: the budget, climate European Council and the Parliament on a reg- 10-11 December 2020 ulation introducing a mechanism for suspend- European Council ing funds for rule of law violations. He also an- and digital policy. 14-17 December 2020 nounced that EurCom is preparing alternatives EurParl plenary session to this solution, which will better protect EU funds from misspending. Poland will not be able 31 December 2020 to block these regulations as decisions are taken End of post-Brexit by a qualified majority. In the autumn, Warsaw transition period will be weakened by a report assessing the state of

In the autumn, there will be hearings dr Agnieszka Smoleńska in the Court of Justice of the EU with Senior European Affairs Analyst regard to the independence of the Polish judiciary.

36 37 European Union The EU will come back to the discussion on its future

President of the European Commisision Ursula von der Leyen and President of the European Council Charles Michel,

achieving neutrality by 2050. EurParl wants to cial assistance to civil society. The conflict over use the ongoing negotiations to put pressure on the EU’s asylum policy will escalate again in the capitals and further increase the EU’s emission autumn: EurCom is expected to present a package reduction commitments by 2030. In Septem- of new regulations, the publication of which has ber, EurCom is expected to present scenarios been postponed due to budget negotiations. on how this target could be increased to 55 per cent (currently 40 per cent), in line with the commitments of the Paris agreement. Finding Digital regulations will return to a consensus on this issue, which traditionally the agenda. creates divisions between capitals, is one of the By the end of the year, EurCom will present an priorities of the German presidency. amendment to the regulation on Internet services. The issue is highly controversial, as the planned changes could lead to a radical revision Debate on the future of Europe of the rules that have been in force for 20 years, resumes. especially in relation to the liability of Internet The pandemic has put work on the project platforms towards consumers. The Executive of the biennial Conference on the Future of Vice President of the European Commission for Europe, which was supposed to start in May A Europe Fit for the Digital Age and the Commis- rule of law in EU member states, which is sched- as there will not even be time for the necessary 2020, on the back burner. A forum composed sioner for Competition will present proposals for uled to be presented in September, as well as by ratifications. As a result, even the negotiation of of representatives of the institutions, states improving the ability of the EU’s competition pol- the continued presence of the issue in the CJEU. a limited free trade agreement by October will be and society will discuss the necessary treaty icy to deal with unfair competition. • Two hearings will be held on September 22 with an achievement. This means that cooperation and changes and institutional reforms of the Eu- regard to the independence of the Polish judici- relations between EU operators and the UK will ropean Union. The epidemiological situation ary. On October 15, the Advocate General of the be difficult starting January 2021. not only made it difficult to organise the con- CJEU will give his opinion on the question of the ference, but also increased its stakes in view of Supreme Administrative Court’s preliminary rul- the unprecedented decisions taken to finance ing on Supreme Court judges. A new level of EU climate ambition. the EU’s economic recovery with debt. The is- By the end of the year, work should be complet- sue is particularly important for EurParl. ed on the so-called climate law, which incorpo- Decisions on new London-Brussels rates into the European legal order the goal of relations. EU will fight for a place on the The transitional period stipulated in the agree- geopolitical map. ment on the United Kingdom’s withdrawal from A number of meetings will be held in the autumn the EU ends on December 31. Negotiations on to formulate the EU’s strategy against existing the agreement – which will determine the shape threats (such as Turkey’s provocations in the of future trade relations, regulatory cooperation Eastern Mediterranean) and new challenges (in- and the movement of persons between the two The transitional period stipulated cluding Africa). EU policy on the ongoing protests entities – will enter a crucial phase at the turn in the agreement on the United in Belarus will also remain high on the agenda. If of September and October. It is unlikely to be the situation in this country does not change rad- comprehensive and allow for a similar economic Kingdom’s withdrawal from the ically, the EU is unlikely to turn to more powerful exchange between the EU and the UK as before, EU ends on December 31. instruments than individual sanctions and finan-

38 39 Polityka Insight

>> International affairs August 17-20, 2020. The Democratic Party Convention. The world will look at the US and Belarus

On November 3, US voters will The presidential election will dominate evaluate Donald Trump’s four- year presidency – currently Joe politics in the US this coming autumn. Election will dominate US politics. Biden has a better chance in the On November 3, US voters will evaluate Don- election. Its outcome will also affect armed ald Trump’s four-year presidency, especially the most recent part defined by the COVID-19 Europe, Asia and South America conflicts and crises around the world. pandemic. Since receiving his nomination, the will also vote. incumbent president’s rival has enjoyed a steady lead of nearly 7-9 per cent in polls, including In Burma, the parliamentary elections on No- those states where Trump won in 2016. How- vember 8 will determine the fate of the party led ever, the president could still make up for the by Aung San Suu Kyi, the former icon of democ- losses thanks to good debate performance and racy who is now accused of inspiring the purges a softening of rhetoric. He already says that he of Rohingya tribes. The result of the presidential has a remedy for the economic crisis, promising election in Northern Cyprus (November 11) may a vaccine in the autumn. The election in the US determine future Turkey-Greece relations. In is important not only for the Americans but al- Venezuela, which is facing a humanitarian and so for the whole world, given that the US is one economic crisis, the parties of Juan Guaido, whom of the most important international players. If Poland recognised as the country’s interim presi- the difference in votes between the candidates dent, and Nicolas Maduro – whom Russia consid- dr Piotr Łukasiewicz is small, one can expect attempts by the can- ers to be the president – will face off on December Analyst for Security didates to undermine the result and a tedious 6. The outcome of the elections may determine procedure to determine the outcome. whether Venezuela will continue to plunge into and International Affairs chaos. On October 11, parliamentary elections will

40 41 International affairs The world will look at the US and Belarus

1-3 September 30 September 2020 11 October 2020 11 October 2020 3 November 8 November 10 November 30 November 6 December 2020 Trump - Biden Lithuanian Northern Cypriot 2020 2020 2020 2020 2020 Chinese foreign TV debate parlamentary presidential US presidential Myanmar General elections US troops Parliamentary elections election minister Wang Yi election general in Jordan reduction in elections travels Europe elections Afghanistan in Venezuela

be held in Lithuania; the parties currently form- The European Union considered the presidential senators from both parties has already introduced nese leader Xi Jinping this autumn. European ing a coalition (the Farmers and Greens Union election to be rigged, so President Alyaksandr an amendment to the law on the use of the armed leaders are also increasingly concerned about hu- and the Homeland Union) have a good chance of Lukashenka can now only count on help from forces, prohibiting the president from reduc- man rights violations in Hong Kong and the per- winning, especially since the government is being Russia. The risk of armed conflict still exists, ing the number of soldiers in Germany. So while secution of the Uighurs on the part of the Chinese. strengthened by its successful efforts in connec- but so too does the chance for peaceful regime Trump is determined to implement the plan to tion with the situation in Belarus. change. The EU may publish a list of people sanc- reduce the number of troops in Germany, which tioned for the violent suppression of demonstra- he accuses of failing to keep its allied promises, he Humanitarian crises on tions after the informal meeting of the Foreign must convince his own supporters in the party to a global scale. Belarus will remain the focus of Affairs Council on August 27-28, which could be do so. Biden’s victory in the election could radical- The COVID-19 pandemic worsened the situation attention. expanded in the weeks to come. For the time be- ly change these plans. in countries affected by wars or natural disasters. The scale of protests against Belarus’s incumbent ing, Washington’s response to the events has been The UN estimates that in 2020, 34 crisis-stricken president is unprecedented. Their strength does less decisive, especially considering that it tried to countries out of the 63 under consideration will not seem likely to diminish in the near future, establish new relations with Lukashenka this year China will fight for influence require additional assistance, but the deepening especially since people who were usually neither by exchanging ambassadors in Europe. global crisis will block it. In Yemen, where 80 politically, nor socially active took to the streets. China’s MinFor Wang Yi’s visit to Europe at the per cent of the population needs help, as many turn of August and September will be his first trip as 200,000 people may die as a result of the pan- Uncertain withdrawal of US troops abroad since the outbreak of the pandemic. Chi- demic in 2020. The crisis means that in the sec- from Germany. na decided that medical diplomacy (e.g. handing ond half of 2020, Yemen will receive only USD Donald Trump announced the withdrawal of over medical equipment, doctors’ visits) during 500 million, though it received USD 1.5 billion 6,400 soldiers from Germany and the transfer of the pandemic did not bring the desired effect; in the same period during the previous year. The The autumn will be intense in another 5,900 to Italy and Belgium. US Secretary instead, the image of their country in the EU has situation in countries such as Venezuela and Leb- Belarus - the risk of armed conflict of Defense Mark Esper assured that the entire deteriorated. Europe is crucial for China due to its anon is also difficult. Afghanistan may also be -af operation could be completed before September worsening relations with the US and the risk that fected on a smaller scale if after the withdrawal still exists, but so too does the 30. These intentions, however, have been crit- the EU will side with the US (on digital issues, 5G, of troops expected in November, the country be- chance for peaceful regime change. icised by the US Congress, which is going to de- etc.). Despite earlier announcements, however, comes cut off from assistance tied to the mission bate the Pentagon’s budget in autumn. A group of there will be no summit of EU leaders with Chi- of the US and NATO. •

42 43 Companies Polityka Insight

TIKTOK’S FATE TO BE DECIDED BY NOVEMBER 12

Companies The online video platform, which has gained massive popularity among young people, has been targeted by US President Donald Trump, who promised to block it from the US market. The reason for this is the fact that it is owned by the Chinese company ByteDance. The US administration fears that the company may be sharing information about its US users with the Chinese authori- to watch ties (the company denies this) or that it may be spreading Chinese propaganda. Trump first gave ByteDance 45 days to sell its US assets and then extended the deadline to 90 days, which gives the company time until November 12. Micro- soft, as well as Oracle, have been mentioned as possible buyers.

CD PROJEKT WILL LAUNCH CYBERPUNK 2077 POLISH FOOD HOLDING COMPANY TO BE CREATED

The new game from Poland’s biggest studio has been eagerly awaited by It is to be established by the end of 2020 on the foundation of the National gamers all around the world. It was supposed to have been released on Sugar Company. KPMG is working on the plans and Deputy MinAssets Artur April 16, but it was then postponed until September 17 and then November Soboń is responsible for the project. In July, he said that 17 state companies 19. That has not affected the company’s share price. Although its revenue that could be a part of the holding company have been selected. They are now is just a fraction of the likes of PKN Orlen or PKO BP, CD Projekt has a undergoing financial audits and assessment of their ability to be a part of the much bigger market capitalisation, at around PLN 40 bln. Investors are larger group. The company will be involved in the production of sugar, grains, continuing to buy up the stock because they hope Cyberpunk 2077 will be potato starch, and others; it will also own farms and seed companies. The new an even greater global success than its predecessor, The Witcher 3, Wild company will also expand into new markets, such as fruit processing. Hunt. If they are right, CD Projekt’s revenue - which in 2019 amounted to PLN 521.3 million - will increase several times.

HORUM WILL PRESENT A NEW OFFERING

ALLEGRO IPO IN WARSAW During the autumn, the Polish fintech will launch a new social platform for micro, small, and mid-sized companies. At first, it will allow them to securely According to unofficial reports, Poland’s biggest online shopping site could sign contracts using so-called smart contracts. Its customers will be able to launch its initial offer in October. It could be worth up to PLN 11 bln. The take advantage of factoring and legal advice and at the next stage - book- company has not commented on the press reports. Most of the shares will keeping, leasing, debt collection, and loans. Launching the platform before be sold to institutional investors. Since 2017, Allegro has been owned by receiving a banking licence (Horum is seeking one in Lithuania) will allow investment funds Permira, Cinven, and Mid Europa, which bought the the company to gain customers. A banking licence will allow Horum to offer company for USD 3.25 bln. The website has more than 18 mln users. Last banking services, such as loans, and it will also let customers sell products year, it reported sales of PLN 2.4 bln (+31 percent year-on-year) and a net and services to each other. Access to the platform will require a subscription. profit of PLN 399 mln (+73 percent). Around PLN 2.1 bln of its sales come from a commission on online sales.

44 45 Companies Polityka Insight

NETTO WILL GROW QUICKLY ORLEN WILL PRESENT ITS NEW STRATEGY

This will happen if the UOKiK agrees to its purchase of 301 stores from Tes- In Q4, the Płock-based company is to present a new development plan for the co, which will nearly double the number of its stores (to 687) and will bridge coming years, which is to include the goal to be climate-neutral by 2050. But the gap with Lidl (who owns more than 700 locations). The purchase will the main part of the plans is the creation of a multi-energy company based on also add two distribution centres to Netto’s existing three. The takeover of the takeover of state-controlled enterprises. So far, Orlen has taken over elec- the stores from their British owner will also more-than-double the number tric utility Energa and has received a conditional backing for its purchase of of its employees from 5,500 to 12,00. The Tesco stores will need to be up- Lotos. It is also preparing to buy PGNiG. However, the plans by Daniel Obajtek graded for which Netto intends to spend PLN 1 billion in the next 18 months. are meeting resistance from the government’s Plenipotentiary for Strategic The CEO of its owner, Salling Group, told Danish media that Netto would Energy Infrastructure Piotr Naimski. For now, Orlen CEO has the backing open 35-40 new stores annually in the coming years. of Jarosław Kaczyński, but the company is facing headwinds in its markets, such as shrinking refining margins, which are weighing on PKN’s valuation. If Orlen encounters financial woes, Obajtek’s expansion may slow. PGZ IN THE RED, MAY LOSE ITS CEO

The company’s loss in 2019 exceeded PLN 1 bln, according to Chief Exec- utive Andrzej Kensbok (the annual report is awaiting publication at KRS). ASTRAZENECA MAY DELIVER A VACCINE FOR This is the company’s biggest-ever loss, mainly caused by the shipyard com- CORONAVIRUS panies owned by the MARSfund, which were not included in the company’s consolidated results from May 2019. After the supervision over PGZ The UK/Swedish company is amongst the most advanced producers in was transferred from MinDef to MinAssets, it has reassessed the value of terms of research and supply negotiations with the governments of the USA its loss-making shipyards. Kensbok believes that PGZ earned more on the and EU countries. As early as October, AstraZeneca may be ready to reg- production of weapons, but it is still missing export contracts. As a result, ister the vaccine developed at the University of Oxford, provided clinical the current management may fall victim to a situation over which it had trials continue as planned and the vaccine proves to be effective and safe. Al- no control and the government may attempt another reform of the state’s though the EurCom and US authorities plan to receive vaccines from several defense group. western companies, AstraZeneca’s vaccine will likely be distributed first. The company may come under pressure to decide where to prioritize the vaccine first, as orders from around the world currently stand at 2 bln doses. ESOLEO TO EXPAND PV MARKET THANKS TO SOLORZ

The sales of the company that installs photovoltaic panels stood at barely PLN 3.8 mln in 2018, while its net profit reached PLN 81,000. However, its future development will be linked to media and telecoms group Cyfrowy Polsat, which bought a majority stake in January 2020. Thanks to the businesses of its controlling owner, Zygmunt Solorz, Eseleo will gain access to new promotional channels, which will have a significant impact on its expansion. The company will also benefit from the growing popularity of RES. According to the Renewable Energy Institute, PV panels generated 924 GWh of electricity in 2019. If the trend from the first half of the year contin- ues, this could more-than-double to 2200 GWh in 2020.

46 47 People Polityka Insight

Who will be in the news

Gen. Rajmund Mariusz Błaszczak Tomasz Chróstny Swiatłana Anna Dalkowska Wojciech Andrzejczak Cichanouska Dąbrowski

He is a candidate to head the As part of the planned cabinet The head of UOKiK is already She became the face of the On August 25, the deputy The autumn will show whether NATO Military Committee for reshuffle, the MinDef will taking advantage of the tools new Belarussian opposition MinJust took over the the ambitious plans of the PGE a three-year term starting in probably receive the position to fight payment backlogs. as Alyaksandr Lukashenka’s supervision over the CEO regarding the separation May 2021. The election will of deputy PM. Błaszczak The regulator is conducting main opponent in this year’s department of legislation of coal assets from energy be agreed upon by the heads is better at managing the proceedings against companies presidential election. She for the court system, which companies will become a of defense of the Alliance’s ministry than his predecessor such as Auchan, Eurocash, launched her presidential is drafting an amendment reality. Dąbrowski’s vision was member states in September. Antoni Macierewicz, and Makro Cash&Carry, and campaign after her husband, to the law on the system of approved at the political level, The Pole will be supported by the agreement with the US Intermarche, which despite being Siarhei Tsikhanouski, was common courts, that would but it is not yet clear what it the US and NATO’s eastern to increase the presence of required to, have failed to pay arrested, preventing him from flatten the structure of courts. will look like. The MinAssets is flank. Western Europe may opt American soldiers in Poland their contractors. The total value running for the position. Her The proposal being prepared still working on the final plan. to back a Dutchman (after the can be credited to his account. of their unpaid bills is PLN 88.3 campaign events attracted large by Dałkowska will again put The most likely scenario is Canadian candidate withdrew). The title of deputy PM will be mln, which means they could crowds. The announcement of the judiciary at the centre of shifting coal-powered plants A Pole has never held such a symbolic acknowledgement face financial penalties from the the official results of the August the political debate. In her to a separate state company a senior position in NATO. of this success, but will also head of UOKiK. In the autumn, 9 election, which showed public comments, Dałkowska followed by the consolidation of Andrzejczak has a high opinion sanction Błaszczak’s large Chróstny may also audit the Tsikhanouskaya receiving only did not indicate whether the the energy sector, consisting of amongst the alliance members, political ambitions. The cabinet first investments of non-OECD 10 percent of the votes, sparked district, regional or appellate the takeover of Enea and Tauron and thanks to a mission in promotion in combination with entities, made into the domestic pro-democracy protests by courts would disappear. She by PGE. If this plan is successful, Afghanistan, he knows a large his high position within the stock exchange or infrastructure Belarussians. The regime’s violent is also a judge and in June the Dąbrowski will become the number of generals from the US, party (Błaszczak is its deputy companies based on his new reaction against the protesters National Judiciary Council second most powerful CEO in UK, and Germany. If appointed, head) means he will be seen powers under the new law on forced Tsikhanouskaya to flee to issued a positive opinion on her state-owned companies after he will resign from his position as a potential replacement subsidies to interest rates on Lithuania, where she established candidacy to join the Supreme Daniel Obajtek. as the Chief of General Staff of for Mateusz Morawiecki loans. After the summer, PiS contact with European leaders Administrative Court (NSA). the Polish armed forces, which and possibly even, an heir to may present draft legislation that and institutions. After completing the changes would benefit MinDef Mariusz Jarosław Kaczyński. would transfer the tasks of the to the court system, Dałkowska Błaszczak, who is at odds with financial ombudsman to the head will likely leave the ministry to Andrzejczak. of UOKiK. become an NSA judge.

48 49 People Polityka Insight

Kamala Harris Maciej Adam Niedzielski Jacek Oko Mark Rutte Rafał Mataczyński Trzaskowski

Harris will be at Joe Biden’s He is a partner at The new MinHea will After the expected The Dutch PM will play a side during the battle for SMM Legal. His team become the face of the appointment as the head of central role in European In the wake of the the White House in the supported Orlen in fight against COVID-19 UKE, Jacek Oko will decide politics this autumn, especially presidential election, he has November presidential getting the EurCom’s in the autumn and winter on the format of the selection in the negotiations on the EU become the most popular election in the US. The conditional approval for season. Niedzielski is an procedure for 5G frequency budget for 2021-2027. The KO politician. This autumn 55-year old former California its fusion with Lotos, economist and former bands. He will also be able to leader of the Dutch liberal he will remain the main actor attorney general and current Poland’s largest merger head of the National decide the fate of the Chinese party VVD, Rutte has been amongst the opposition. Senator for the same state in history. Mataczyński is Health Fund (NFZ, 2019- equipment in the Polish 5G the head of the government On September 5, the was chosen as the candidate currently working on the 2020), he is also trusted by network. As the head of UKE, since 2010, which makes him Warsaw mayor will launch for vice-president out of 12 implementation of related Mateusz Morawiecki. He Oko, in line with the new law one of the longest-serving a civic movement, likely people under consideration. measures and transactional will implement the strategy on electronic communication, European leaders. In the to be called New Solidarity, She is the first African- documentation for PKN, to make the health care will have additional powers. negotiations, he is seen as the which will seek to tap the American woman who could which will take up the next system more effective while He will be able to examine spokesman for the “stingy” EU political energy of the take the second-highest several months to come. also seeking to prevent the alternative variants of the countries (Austria, Denmark, non-political activists who office in the country. Harris, He is also an advisor on the economy from coming to functioning of the market Finland, Sweden, and the helped Trzaskowski during who has become a sort ongoing integration of Orlen a standstill as a result of and diagnose, among other Netherlands). It is the ability his campaign. The creation of symbol of the changes and Energa. His law firm will a lockdown. As an expert things, all significant sources to build a coalition that makes of an apolitical institution taking place in America, will also play a key role in the in public management, of competitive pressure in the the Netherlands one of the by the deputy head of PO certainly help Biden with her planned merger of PKN and he will also be open to wholesale and retail markets. most influential EU states. will cause tensions between experience and charisma. Her PGNiG. implementing deeper system Due to being picked directly Rutte will seek to tighten the the movement and the nomination also gives her reforms, such as the further by the prime minister, he rules for granting EU funds in party, which may become a chance to place her own expansion of e-health will work more closely with order to fend off attacks by an additional burden bid in the 2024 presidential and the consolidation of the government than his Eurosceptic parties, which for the opposition in its election, as Biden, if elected, hospitals, as long as he is predecessors, which may may win more votes in the rivalry with PiS. will probably be a one-term able to manage the crisis raise questions about his parliamentary elections taking president. during the pandemic. independence in the future. place in March.

50 51 Conferences Polityka Insight

EUROPEAN ECONOMIC CONGRESS (EEC) Autumn SEPTEMBER 2-4, KATOWICE The event organised by the Polish Society for the Support of Entrepreneurship (PTWP) will be held for the 12th time and will open the autumn conference season. It is the first big conferences political-business meeting since the beginning of the coronavirus epidemic in Poland, and therefore, will be closely observed by both participants and competitors. The EKG takes place in a mixed form - both physically and online. The conference organiser Wojciech Kuśpik assures that the safety standards at the venue are higher than those required by regulations and that there are 4-5 square metres per participant. Among the guests of CONFERENCE NAME DATE VENUE the event are Vice-President of the EurCom Frans Timmermans, President of the Office for Competition and Consumer Protection (UOKiK) Tomasz Chróstny, and Deputy Head European Economic September 2-4 Katowice, of the Ministry if State Assets Janusz Kowalski. The topics that will be discussed by the participants include the economy in recession, the new EU budget, and the digital trans- Congress International formation of the economy. Congress Centre

ECONOMIC FORUM Economic Forum September 8-10 Karpacz, Hotel Gołębiewski SEPTEMBER 8-10, KARPACZ 2020 The event, whose originator and organiser is Zygmunt Berdychowski and the Institute of Eastern Studies, was moved from Krynica-Zdrój to Karpacz, due to the Nowosądecki Impact’20 Connected September 23-24 Warsaw, Expo Warsaw powiat being included in the so-called Ministry of Health’s red list. The organisers chose Karpacz because of its previous cooperation with the Gołębiewski Hotel in hosting other EFNI 9 and a half October 1-2 Sopot, Hotel Sheraton events. The Economic Forum is one of the most important events on the autumn map of an/or RadissonBlu conferences. Debates during the event will be held in a traditional form and only some of them will be broadcast over the Internet. The participants of the event will discuss, DISE Congress October 7-8 Wrocław, The Bridge among other things, how the economy dealt with the coronavirus crisis, the development Wrocław – MGallery of the 5G network, foreign expansion of Polish companies, necessary economic reforms, and Poland’s economic relations with, for example, EU countries and the US. Among the guests who have already confirmed their presence are MinDev Jadwiga Emilewicz, CEO European Financial October 12-14 Sopot, Hotel Sheraton, of PGNiG Jerzy Kwieciński, and CEO of Maspex Krzysztof Pawiński. Congress Hotel Grand, Hotel Haffner IMPACT’20 CONNECTED EDITION 590 Congress October 21-23 Jasionka near Rzeszów, SEPTEMBER 23-24, WARSAW G2 Arenawa The event, organised by the Impact Foundation, will take place in hybrid form, meaning that the speakers and participants of the debates will physically appear at the conference, OEES 2020 November 17-18 Kraków, ICE while the audience will follow the talks via live transmission. Most of the speakers have confirmed their presence at the conference. Amongst them will be Prime Minister Mateusz Morawiecki, Deputy PM Jadwiga Emilewicz, and Head of MinAssets Jacek Sasin. The organisers have planned nine thematic paths: Mobility, Finance and E-commerce, Digital Industry, Energy, Next Health, Green Economy and Planet Tech, Open Science, Applied The overview was prepared by Karol Tokarczyk, Digital Economy Analyst. AI, 5G and Cloud Solutions, Urban Next.

52 53 Conferences

Abbreviations used MinEnv - Ministry of Environment / MinTrea - Ministry of State Treasury / by Polityka Insight: Minister of Environment, Minister of State Treasury, ”EFNI 9 AND A HALF” MinEur - European Affairs Minister, NSA - Supreme Administrative Court, OCTOBER 1-2, SOPOT PiS - Law and Justice, MinEco - Ministry of Economy / The event, organised by the Leviathan Confederation, will host 350 instead of 1000 people due to PJN - Poland Comes First, Minister of Economy, the coronavirus pandemic. For the same reason, the tenth edition, which should take place this PO - Civic Platform, MinFam - Ministry of Family, Labour CJEU - Court of Justice of the year, has been postponed until 2021. One of the main topics of the conference held in Sopot will PSL - Polish People’s Party, and Social Policy / Minister of Family, European Union, be the functioning and reconstruction of the Polish and European economy during and after the SLD - Democratic Left Alliance, Labour and Social Policy, ECB - European Central Bank, crisis. The program also includes, amongst other things, debates on the challenges and opportu- SP - United Poland, MinFin - Ministry of Finance / ECHR - European Court of Human nities associated with the European Green Deal, support for businesses, and changes in the labour Minister of Finance, Rights, markets. The opening ceremony will be attended by Prof. Magdalena Środa and Edwin Bendyk, CouMin - Council of Ministers, MinFor - Ministry of Foreign Affairs / EurCom - European Commission, President of the Batory Foundation. ConTrib - Constitutional Tribunal, Minister of Foreign Affairs, EurCou - European Council, MinFun - Ministry of Development EurParl - European Parliament, DISE CONGRESS MinAgr - Ministry of Agriculture Funds and Regional Policy / Minister EU Council - Council of the OCTOBER 7-8, WROCŁAW and Rural Development / Minister of of Development Funds and Regional European Union, The event, organised by the Lower Silesian Institute for Energy Studies Foundation (its vice-pres- Agriculture and Rural Development, Policy, ident is, among others, former MinTreasury Dawid Jackiewicz)will be held for the sixth time. The MinClim - Ministry of Climate / MinHea - Ministry of Health / DRF - Demographic Reserve Fund, main topic of this year’s meeting is the European Green Deal, which assumes that the European Minister of Climate, Minister of Health, FED - Federal Reserve System, Union will achieve climate neutrality by 2050. The participants of the meeting will develop mod- MinCul - Ministry of Culture and MinInfra - Ministry of Infrastructure / GPW - Warsaw Stock Exchange, els for the transformation of the Polish energy sector, which will simultaneously ensure energy National Heritage / Minister of Culture Minister of Infrastructure, GUS - Central Statistical Office, security for the country and competitiveness of the economy. The guests of the event will include and National Heritage, MinInt - Ministry of the Interior and KNF - Financial Supervision Authority, MinClim Michał Kurtyka and President of the Energy Regulatory Office (URE) Rafał Gawin. MinCult - Ministry of Culture and Administration / Minister of the KRUS - The Agricultural Social National Heritage / Minister of Culture Interior and Administration, Insurance Fund, 590 CONGRESS and National Heritage, MinJus - Ministry of Justice / Minister NBP - National Bank of Poland, OCTOBER 21-23, JASIONKA NEAR RZESZÓW MinDef - Ministry of Defence / of Justice, NFZ - National Health Fund, The conference, organised by the company of the same name is one of the main programmatic fo- Minister of Defence, MinMar - Ministry of Maritime NSA - Supreme Administrative Court, rums associated with the ruling camp. In the backstage of the congress, one can meet both minis- MinDev - Ministry of Investments Economy and Inland Navigation / OFE - Pension fund, ters and managers of state-owned enterprises. The event will take place in the G2Arena Exhibition and Development / Minister of Minister of Maritime Economy and PPK - Employees Capital Plans, Center in Jasionka near Rzeszów. Instead of about 170 events, the organisers have planned about 50 Investments and Development, Inland Navigation, RPP - Monetary Policy Council, debates, all of which will be broadcast over the internet. Every day the conference will be attended by MinDigi - Ministry of Digitisation / MinSci - Ministry of Science and TFI - Investment Funds Society, about 500 people. The organisers confirm the presence of both President Andrzej Duda and Prime Minister of Digitisation, Higher Education / Minister of Science ZUS - Social Insurance Institution, Minister Mateusz Morawiecki, who also visited the congress in previous years. MinEdu - Ministry of National and Higher Education, Education / Minister of National MinSpor - Ministry of Sport and OPEN EYES ECONOMY SUMMIT 2020 Education, Tourism / Minister of Sport and NOVEMBER 17-18, KRAKÓW MinEner - Ministry of Energy / Tourism, The event, whose originator is Professor Jerzy Hausner, is organised by the Foundation for the Minister of Energy, MinStat - Ministry of State Assets / Economy and Public Administration, composed mainly of the graduates and students of the Minister of State Assets, Krakow University of Economics. The debates will be held in a hybrid form (stationary debates MinTech - Ministry of and online audience). The organisers are ready to open the ICE Krakow Conference Centre for Entrepreneurship and Technology the participants, but they will ultimately decide this issue when closer to the conference date. The / Minister of Entrepreneurship and congress consists of four thematic blocks (company-idea, brand-culture, city-idea, and interna- Technology, tional order), the participants will talk, amongst other things, about the relationship between humans and A.I, the adaptation of cities to climate change, and education.

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