April 22, 2006


Polish forces 'may stay in Iraq' (BBC, 4/22/06)

Poland may not pull its troops out of Iraq at the end of the year as planned, its defence minister has said.

Radek Sikorski told the BBC that while he thought it was unlikely Polish forces would stay on, that could change depending on circumstances.

Poland has about 1,500 troops currently serving in Iraq.

The previous government had said it would withdraw them at the start of the year, but the present administration reversed this when it took power.

THE LURE OF POLAND: Foreign Investment Flooding East: With attractive rebates for investors and low corporate taxes, Poland's special economic zones are attracting companies from all over Europe. The first wave brought big businesses like Volkswagen to Poland. Now, more and more small businesses are going east. (Sebastian Ramspeck, 4/21/06, Der Spiegel)
Two years after its entry into the European Union, Poland is still home to 14 special economic zones that it uses to attract foreign investment. Companies that set up shop there are allowed to deduct up to 65 percent of their investment from their company taxes. During the first few years, they don't even have to pay a single zloty to the tax office. Companies that invested in the economic zones prior to 2001 could even profit from a 100-percent rebate. Outside the special economic zone, businesses still have a huge advantage over Germany and other Western European countries: the corporate flat tax is 19 percent compared to a 39.4 percent rate in Germany.

It's an offer that many businesses have been unable to refuse. At its plant in the Legnica special economic zone, Volkswagen has been assembling automobiles since 1998. From there, it can also quickly service its fast-growing Eastern European market. Sweden's Electrolux recently moved part of its production facility for its AEG brand from Nuremberg to Poland's Walbryzch economic zone.

But more and more small- and medium-sized German firms are also taking advantage of the tax rebate. The Wuppertal-based die casting firm Paul Hirsch recently bought parcel 23 in the Kostrzyn-Slubice zone. And just next door to Dieckmann's property, on parcel 22, the Cologne electronics firm Fraba is building an assembly plant. Bremen-based Karl Könecke produces sausages here. A company called Brinkhaus, based in the western German city of Warendorf, makes pillows and Hanke of Dortmund makes toilet paper.

Eike Schulz, the CEO of Paul Hirsch, is enthusiastic about doing business in the special zones. It only took two months before he got the go-ahead for construction here. "In Germany, I would have had to wait until 2008 just to get the permits," he says, laughing. But more than anything, he's pleased with his Polish workers. "In Germany, the workers have gotten fat and spoiled," he says, "but here they are hungry for work."

EASTERN EUROPE'S ECONOMIC BOOM: The Tiny Tigers: Accepted into the European Union last year, the former eastern bloc countries are the latest to capitalize on globalization. Followed by Slovenia and Slovakia, the Baltic States have set a cracking pace with their radical economic reforms. Their fervor is alarming its old-school neighbors in the West. (Marion Kraske and Jan Puhl, 4/21/06, der Spiegel)
The Slovenian economy is booming "thanks to our successful export industry," says Irena Rostan from the Chamber of Commerce in Ljubljana. This year the EU newcomer is targeting 3.7 percent growth - a rate exceeding that of many long-time members, although most of these still play in a different economic league. But for how much longer?

Like Slovenia, other fresh arrivals in the European Union are producing stellar figures - thanks to their burning ambition, demand born of dispossession, a near-obsession with reforms, and a fearless approach to competition. Eighteen months after the eight countries were officially accepted into the European family, a region is clearly emerging between Tallinn in the north and Ljubljana in the south that is focusing its sights on the global market. The prospect has sent a shudder through the powerful yet lethargic industrial nations of Old Europe.

In Brussels, leaders are therefore eying the lengthening shadows cast by the brilliant newcomers: Service regulations? Need reworking fast. Social dumping? More controls required. Turkey, Bulgaria and Romania as the next new members? Agreed, only to be hotly contested again. And how long will net contributors like the German government continue to subsidize the new EU competitors from the East? While Franz M√ľntefering, until recently SPD chairman, garners public approval for condemning the evil power of international capital, the EU newcomers are putting it to profitable use.

German politicians know they are caught in a pincer movement: between new regulations coming from Brussels and low-wage workers coming from the East. A sense of unease has gripped Germany, producing more questions than answers - even among experts. True, the waves of cleaners and seasonal workers were welcomed with open arms. But will they soon be followed by a tide of migrants prepared to work more for less? Will the bloodletting continue, driving more German companies to the supposedly cheap-production countries?

Skyrocketing growth rates have set the tone of public debate in the new EU member states. They reflect a success painfully wrought from reforms engulfing everything from the job market to the healthcare system.

To follow the Anglosphere is indeed radical.

Posted by Orrin Judd at April 22, 2006 7:47 AM
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