Energy Independence

“Diversity: the art of thinking independently together”. The words of US publisher Malcolm Forbes. And, when it comes to Poland’s gas needs, diversity of supply to lessen dependence on gas supplies from Russia is the objective, with the longer term aim of becoming a regional supplier, so that Poland and other countries may be independent together.

According to Poland’s deputy prime minister, Poland wishes to achieve energy independence within five years, and to become a gas distribution hub in the next ten. Mateusz Morawiecki made his comments following President Donald Trump’s visit to Warsaw last week, with Poland considering more purchases of US gas following the delivery of the first one-off consignment in June. After meeting Trump on Thursday, Polish president Duda said that the delivery opens the way to new contracts. For his part, Trump told a press conference: “America stands ready to help Poland and other European nations diversify their energy supplies so you can never be held hostage to a single supplier.” He added: “We look forward to making the economic ties between the US and Poland even stronger,” and that trade relationships should be “reciprocal.”

“The government policy of diversifying gas supplies means we will be getting an ever larger group of suppliers,” Morawiecki said. “Within the next five years we want to lead to Poland’s full energy independence”, Morawiecki said. “Today we are bound to the Russian [gas] monopoly [Gazprom] by a bad deal, we pay more for gas supplies than Germany.” Morawiecki suggested that US gas would be competitively priced.

Since its Liquified Natural Gas terminal opened in Świnoujście in late 2015, Poland has been importing LNG from Qatar, and there are discussions about a Baltic pipeline to enable Poland to receive supplies from the North Sea. The president of Croatia has said that planned gas terminal on the island of Krk would be linked to Poland’s Świnoujście terminal. This is significant since Marowiecki said that Poland’s regional energy ambitions hinge on the Three Seas Initiative, which is a joint Polish-Croatian project aimed at strengthening trade, infrastructure, energy and political co-operation among countries bordering the Adriatic, Baltic, and Black seas.

“As the largest country in Central and Eastern Europe, naturally we think about our responsibility to the energy security of not only Poland but also the remaining countries of the Three Seas initiative and, for example, Ukraine,” Morawiecki said. “We want to be a partner which will, in real terms, bring about the diversification of energy supplies for all countries in our region.”

Twelve countries are part of the initiative: Poland, Hungary, Czech Republic, Slovakia, Romania, Bulgaria, Lithuania, Estonia, Latvia, Croatia, Slovenia and Austria. Last week the presidents of ten of those countries (the presidents on Austria and Czech were not present) met for a summit in Warsaw, at which President Trump put in an appearance describing it as “incredibly successful.” Polish and Croatian logistics and transport companies signed the first deals under the Initiative, and Croatian President Kolinda Grabar-Kitarović and Polish President Andrzej Duda were at the signing.

Which all seems eminently sensible for the long term, and suggests that whatever may be happening elsewhere within the Polish government at least the economy is being run rationally. Thus, international ratings agency Fitch has kept Poland’s rating unchanged at A- with the outlook stable. The reason for the A- rating is because of the high share of foreign currency loans in Poland’s government debt which means that the level debt is dependent on currency exchange rates.

Fitch also forecast GDP growth of 3.3 per cent for 2017, up from 2.7 in 2016. According to Fitch people are benefitting from record low unemployment and the monthly benefit payments under the government’s 500+ programme. It also said that the inflation rate of 1.5 per cent year on year was lower than the central bank’s target of 2.5 per cent, but that both wages and prices would rise as a result of low unemployment. The unemployment rate dropped to 7.2 per cent in June which is the lowers June rate for 26 years. Unemployment was down 0.1 percentage points on May, and 1.5 percentage points down on a year ago, with 1.15 million people being registered as unemployed at the end of June, down by 49,300 from May.

If all goes to plan, the Three Seas Initiative will indeed have demonstrated the truth of Malcolm Forbes’s words, with benefit to Poland and the region.

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