Poland

Categories: Overview | Political | Economic | Social | Environmental | Rule of Law | Trade Policy | Money
Graphs: Growth | Income | Inflation | Unemployment | Well-being | Trade Volume | Trade (CAB) | Debt | Spending

Related: Video | LinksView all categories for years from to | See Full Report | Print

Full Report: Poland

Overview

1910-1918: World War I pits Poland's occupiers (Russia, Germany, Austria) against each other. Russia joins the Allied Forces against Germany and Austria; Polish troops fight on both sides. After the Allies defeat Germany, Poland's Socialist Party leader, Józef Pilsudski, becomes the provisional president of Poland, independent for the first time in 123 years.

1919-1921: The ravages of war, the legacy of occupation, and territorial disputes bedevil the Second Polish Republic. Boundary disputes are resolved by skirmishes with the Red Army in the Ukraine and by the 1919 Treaty of Versailles, which creates the Danzig Corridor, a strip that affords Poland access to the Baltic Sea. The new government adopts a constitution and revives Poland's economy and culture.

1922-1938: Politics and raging partisanship in Poland's legislature lead to the resignation of President Pilsudski and the assassination of his successor, Gabriel Narutowicz, in 1922. Pilsudski retakes the presidency in a 1926 coup. He signs a political and military alliance with France, but France fails to defend its allies in the face of German expansionism under Adolf Hitler.

1939: Germany occupies neighboring Czechoslovakia. When Warsaw rebuffs Hitler's demand for Polish territory along the Baltic Sea, he joins forces with Soviet leader Joseph Stalin, and the new allies overrun Poland.

1940-1944: The Soviet Union and Germany divide Poland. Both regimes are brutal. In June 1941, after successfully invading the Soviet Union, Germany assumes control of Poland. Despite strong resistance from the Polish underground, Nazis slaughter nearly six million Poles, including three million Jews. Poland is home to infamous death camps at Auschwitz and Treblinka.

1945-1947: The Soviet Red Army drives the last German troops from Polish soil. At end-of-war conferences in Yalta and Potsdam, Allies award the Soviets large portions of Poland. Polish communists loyal to Soviet leader Joseph Stalin hold sway in the 1947 parliamentary elections, and Poland becomes a Russian satellite once again.

1948-1956: Poland's new communist government nationalizes industry, censors the press, persecutes the Roman Catholic Church, and strictly enforces Soviet rules. The Soviet grip loosens after Joseph Stalin's death in 1953. In 1956, following Polish worker protests and over the strong objections of Moscow, the Polish Communist Party picks moderate Wladyslaw Gomulka as its leader.

1957-1970: Poles are pleased with the seeming openness of the new Communist Party leadership, but frustration grows when government reforms stop short of disowning Stalinism. Polish students demonstrate in Warsaw. Workers strike in Gdansk. Hundreds are killed in government crackdowns.

1971-1980: Edward Gierek replaces Wladyslaw Gomulka as Communist Party chief. Polish cardinal Karol Wojtyla, a staunch anticommunist, succeeds the late John Paul I as pope and takes the name John Paul II. The new pope's support and the determination of labor leader Lech Walesa usher in the Solidarity movement.

1981-1988: To neutralize Solidarity's growing influence, new party leader Gen. Wojciech Jaruzelski declares martial law in 1981 and jails Solidarity leaders. Martial law is lifted in 1983, the year Lech Walesa wins the Nobel Peace Prize. Reformer Mikhail Gorbachev assumes leadership of the Soviet Union in 1985.

1989: With the economy close to collapse, Gen. Jaruzelski convenes national "Round Table" talks. One outcome is free elections that are open to Solidarity candidates. Communists are swept from power. Gorbachev tells Poland's defeated Communist Party to abide by the election results. Lech Walesa becomes president of Poland.

1990: Rejecting arguments for a gradual transition, Poland's new leadership moves overnight to a market economy. January 1, 1990, becomes known as the "big bang," the day prices are deregulated, currency devalued, and taxes reformed.

1991-1994: The 1990 reforms are generally successful and spark rapid growth and a thorough transformation of the economy. By 1994, the country is a major destination for U.S. exports. By 1997, new businesses have created more than two million new jobs. Old industrial sectors, however, struggle to adapt.

1995-1997: Walesa loses his 1995 reelection bid to leftist Aleksander Kwasniewski. Solidarity retains leadership of the governing coalition, and all major parties remain committed to free market and democratic principles. Poland's economic performance is the strongest in Central Europe. Ties with the European Union grow in economic and political importance.

1998-2001: Poland enjoys full membership in NATO and expects to join the European Union in 2004. The Solidarity movement wanes. Prime Minister Leszek Miller heads a center-left coalition of the former Communist Party and the Peasants Party. Certain key industries remain under state control, but Poland continues to attract more foreign investment than any Central European country.

2002-2003: The global economic slowdown hits Poland, and growth stalls while unemployment surges. Prime Minister Miller is tarnished by a corruption scandal involving a major media holding company. European Union membership is on track, with Poland invited to join in 2004; if approved by a referendum in 2003, membership will transform political and economic life.

back to top

Political

1945: The Red Army's strong performance in the war's final days gives Soviet dictator Joseph Stalin leverage when Allied leaders meet at Yalta and again in Potsdam to divide up the spoils. After convincing two U.S. presidents and British Prime Minister Winston Churchill that he'll allow free elections in any Soviet-occupied part of Poland, Stalin wins control over a large portion of the country.

1946-1947: A provisional government of communists and Western-style democrats is formed. Communist Boleslaw Bierut becomes president. Communists enjoy strong Soviet support, and Soviet authorities gradually frustrate the opposition. After a stage-managed referendum nationalizes the economy and eliminates the upper house of Parliament, the Communists win a large majority in the Sejm, or lower house.

1948-1953: Communists co-opt the socialist-leaning Peasant Party and become the Polish United Workers' Party (Polska Zjednoczona Partia Robotnicza, or PZPR). As leadership gradually clamps down on political, economic, and social life, the Catholic Church stands firm against repression. In 1949 the Vatican excommunicates Catholic PZPR members. In 1953 outspoken Catholic prelate Stefan Wyszynski is arrested.

1954-1967: Growing unrest and the 1956 death of party leader Boleslaw Bierut bring PZPR moderate Wladyslaw Gomulka to power. Gomulka promises a more "Polish road to socialism." His "Polish October" reforms curb secret police and free political prisoners, including now Cardinal Stefan Wyszynski. But Gomulka's reforms are about quelling opposition to the party, not displacing it.

1968-1969: As disenchantment with Gomulka's rule grows, students take to the streets in Warsaw. Inspired by the ill-fated Prague Spring uprising in neighboring Czechoslovakia, they demand more intellectual freedom. Gomulka calls out the militia, and bloody clashes result.

1970: Workers at the Lenin Shipyard in Gdansk strike to protest another government price increase. The strike spreads to other Baltic coast factories. Misinterpreting the work stoppages as the prelude to a major insurrection, Gomulka reacts with deadly force. The party forces Gomulka to step down.

1971-1974: Gomulka's successor is party technocrat Edward Gierek. In an effort to revitalize and modernize Poland's economy, Gierek secures huge loans and new technologies from Western governments. The strategy briefly raises the standard of living. But Poland's cumbersome bureaucracy and a global recession stymie the recovery and leave its economy still ailing and burdened with foreign debt.

1975-1979: The 1975 Helsinki Accords, which spotlight global human rights abuses, forge a loose coalition of workers, students, clergy, and intellectuals. In 1978 popular Polish cardinal Karol Wojtyla becomes Pope John Paul II. A vocal anticommunist, the pope rallies the Church behind Polish dissidents. His triumphant 1979 tour of Poland focuses international attention on the country's plight.

1980: Pope John Paul II's support and more price increases propel Gdansk shipyard workers off the job again in August. Thousands of Polish workers join them, and behind Gdansk electrician Lech Walesa they form the Solidarity movement. Three weeks into the strike, the government relents, legalizing labor unions and granting workers the right to strike. Edward Gierek steps down.

1981-1982: Playing the strike card effectively, Solidarity exerts a strong influence over government affairs. But infighting weakens the movement. When hard-line Gen. Wojciech Jaruzelski takes over as Communist Party leader, he declares martial law, bans Solidarity, and jails thousands of its leaders, including Lech Walesa.

1983-1988: Martial law is lifted in July 1983, shortly before Lech Walesa, who remains under house arrest, wins the Nobel Peace Prize. The award buoys Solidarity, which has managed to survive underground. In 1985 Mikhail Gorbachev assumes leadership of the Soviet Union; his liberal policies of glasnost and perestroika open the door for major reforms in Soviet satellite states.

1989: A historic "Round Table" of labor, Church, PZPR, and opposition agrees to restore basic freedoms, revive the Senate, and hold free parliamentary elections. The agreement reserves 60 percent of lower house seats for PZPR, but voters defiantly cross off PZPR candidates and give Solidarity an overwhelming victory. Jaruzelski remains president, but Walesa ally Tadeusz Mazowiecki is prime minister.

1990: Mazowiecki builds a coalition government and pursues dramatic democratic and free-market reforms. The PZPR formally dissolves. Tension builds between Mazowiecki and Walesa. A constitutional amendment mandates that the Polish president be elected by popular vote. Walesa defeats Mazowiecki and four others in a runoff to become the first popularly elected Polish president.

1991-1994: The bitter presidential battle sullies Walesa's image and weakens Solidarity. The 1992 "Little Constitution" clarifies the largely ceremonial role of president and that of the prime minister. Walesa's term is hobbled by ongoing feuds with a fragmented Sejm (lower house of Parliament). Four prime ministers in two years fail to overcome gridlock between executive and legislative branches.

1995-1997: Walesa loses his 1995 reelection bid to young ex-Communist Aleksander Kwasniewski. But Solidarity's influence persists in the 1997 parliamentary elections when two parties with roots in the movement form a coalition committed to free market and democratic principles. Polish citizens ratify a new constitution in 1997.

1998-2003: Though the Democratic Left Alliance comes close with 41 percent of the popular vote, no party wins an outright majority in Poland's September 2001 elections. President Aleksander Kwasniewski and Prime Minister Leszek Miller preside over a coalition government formed by Miller's Democratic Left Alliance (the former Communist Party) and the Polish Peasants Party.

back to top

Economic

1945-1949: Poland's economy is in complete disarray at the close of World War II. New Communist leadership charts a more socialist course at first, investing in consumer goods and allowing some decentralization. By 1949 signs of a more centralized model appear.

1950-1956: The 1950 Six-Year Plan formalizes Poland's shift to a true Soviet-style economy. The plan calls for rapid industrial development, particularly mining and manufacturing, at the expense of agriculture and consumer goods and services. The state takes control of farms larger than 125 acres and nearly all commercial enterprises. Only family-run shops remained in the private sector.

1957-1975: The government's singular industrial focus creates a stagnant economy, a shortage of consumer goods, and growing labor unrest that brings a change in leadership. Communist leader Edward Gierek secures advanced Western equipment and licenses new technologies in an effort to modernize mines and factories and produce exportable goods. Gierek borrows from Western countries to finance his plan.

1976-1979: Despite millions of dollars in loans from Western governments, Poland's centralized system is incapable of quickly upgrading its infrastructure and expanding exports. Meanwhile, an oil crisis-induced global recession reduces demand for Polish goods. By the late 1970s, Poland suffers high foreign debt, huge trade deficits, and shortages of food and other essentials.

1980-1988: Driven by the Soviet Union's maritime ambitions, Poland is poised to become the world's fifth largest producer of ships. By the end of the 1980s the industry employs 57,000 workers in the many shipyards and factories along the Baltic Coast. As the Polish economy unravels, striking shipyard workers form the legendary Solidarity union.

1989-1990: The crisis Round Table meetings take place against a backdrop of 344 percent hyperinflation and goods in short supply. After Solidarity takes power, economist Leszek Balcerowicz becomes minister of finance. His nationwide "shock therapy" on January 1, 1990, deregulates prices, devalues currency, freezes wages and taxes, and establishes a stock market on the way to an overnight free-market economy.

1991: The Balcerowicz Plan brings expected hardships and surprising success. Within a month shortages ease as farmers begin to sell their produce on the streets. Annual price increases decline from 250 percent in 1990 to 70 percent in 1991. The loss of Soviet orders and government subsidies hurt shipbuilding, but its skilled labor force lures Western contracts and expert aid to restructure the industry.

1992-1994: Unemployment soars, but the swift privatization of small and medium-sized businesses -- mostly retail, trade, and construction -- offsets losses in state-run sectors. Western firms help improve outdated telecommunications networks. By mid-1992, there are more than 700,000 new companies and thousands of new jobs. Wages rise sevenfold, and Poland is being called Europe's "new tiger."

1995-1996: With annual growth of Poland's gross national product the highest in Europe, the new government vows to continue market reforms. Small and medium-sized businesses are thriving. But costly changes in state-run health care, education, and pension systems soak up capital necessary for the continued reform and upgrading of large state-run energy, transportation, and communications industries.

1997-1998: Poland's desire to join the European Union shapes and propels its economic policies. The government passes laws and institutes timetables for turning over heavily subsidized electricity and gas enterprises. The privatization process remains a slow one, and the country relies on foreign investment to help underwrite the transformation.

1999-2001: After a long period of strong growth, Poland's GDP shows signs of slowing. Rising unemployment shrinks government revenues. The new coalition leadership urges the Central Bank to relax monetary policy to spur growth and create jobs. Meanwhile, Prime Minister Miller pledges to trim the budget and continue decentralization and reform.

2002-2003: Unemployment remains high at 17 percent and a major concern. The trade balance and budget show high deficits, cause for worry in advance of European Union accession. Hurt by the global economic slowdown, overall growth is mediocre, at under 2 percent annually. But E.U. membership, scheduled for 2004, will substantially change economic policymaking and the movement of goods, workers, and money.

back to top

Social

1945: Post-World War II Poland is a shambles. Bent on obliterating Polish culture, Nazi Germany murdered millions of Poles and sent millions more into forced labor camps in Germany. Catholic churches and schools are closed, clergy imprisoned. Much of the intelligentsia is either dead or in exile. Allied leaders hand large portions of Poland to the Soviet Union.

1946-1947: The Nazis' extermination of Jews and the Soviets' acquisition of territory result in a more ethnically and religiously homogenous Poland. Industrialization replaces agriculture as a state priority, and Poland shifts from an agrarian to an industrial society. As the state appropriates rural land, members of the landed aristocracy along with thousands of peasant farmers migrate to the cities.

1948-1950: The rural exodus leaves an aging farm population and spawns a government campaign to educate its new workforce. Thousands of lower-class workers and peasants earn college degrees, diversifying Poland's postwar intelligentsia and breaking down traditional class barriers. The state also provides health care, though services are limited in rural areas.

1951-1960: Newly educated laborers form workers' councils, and council leaders openly criticize the state's centralized economic policies. Workers enjoy unprecedented prestige and influence. Their unrest brings Communist Party moderate Wladyslaw Gomulka to power and presages the powerful labor movement that will eventually topple Poland's Communist Party.

1961-1967: Poles cool to the Gomulka regime when its reforms don't go far enough. Communism never captures the hearts and minds of the Polish people. For support and guidance, Poles rely instead on the Catholic Church, the family, and the dojscie, informal networks of family and friends credited with preserving Polish culture and helping citizens survive ongoing suppression and shortages.

1968-1975: Student and labor unrest in neighboring Czechoslovakia is met with bloody force. But members of Poland's new intelligentsia gradually infiltrate the Communist Party bureaucracy, where they exert a progressive influence, and student and labor ranks, where they encourage dissent. Women make up nearly half the Polish workforce. Underground presses print opposition literature.

1976-1979: From its pre-World War II elitism, the Catholic Church has evolved into a populist anticommunist force. When Karol Wojtyla, cardinal of Krakow, is elected pope, a coalition of clergy, students, workers, and intelligentsia rallies around him. Millions turn out for the new pontiff's 1979 tour of Poland. Underground presses continue to churn out opposition leaflets, pamphlets, journals, and books.

1980: The government raises food prices. Gdansk shipyard workers, led by electrician Lech Walesa, walk off the job in protest. Thanks to support from Pope John Paul II, the defiant three-week strike by their fledgling Solidarity movement wins global support. Poland's Communist Party finally recognizes Solidarity, a grassroots group completely outside the regime's control.

1981-1984: Solidarity's success is short lived. The Communist Party declares martial law in December 1981, closing universities and underground presses, jailing Solidarity leaders, including Lech Walesa, and cracking down on all opposition. But Solidarity and the stubborn resistance to Communist rule survive.

1985-1988: Reformer Mikhail Gorbachev becomes leader of the Soviet Union. His liberal policies pave the way for the rise of organized opposition movements. Communist Party chief Jaruzelski unmuzzles the publishing industry and the press. In a historic step, he invites representatives from Solidarity, the Church, and other opposition groups to help craft a solution to the country's profound economic woes.

1989: The Round Table Agreement produces free, multiparty elections. The agreement reserves a majority of parliamentary seats for Communist Party candidates, but at the polls voters give Solidarity a decisive victory.

1990-1991: The overnight shift to a market economy on January 1, 1990, is largely successful. New businesses create new jobs, and the standard of living rises. Candidate Lech Walesa makes anti-Semitic remarks during his heated presidential race with Prime Minister Tadeusz Mazowiecki. Once president, he apologizes.

1992-1995: Inexperienced Solidarity leaders struggle with an outdated bureaucracy and party infighting. The public's longstanding mistrust of government makes it difficult to maintain support for the sacrifices necessary to transform the economy. Change hits some sectors hard. Coal miners and automobile workers strike in 1992 to protest the lower wages brought on by market reforms.

1996-2001: In aggregate Poland is upwardly mobile, a success story of post-Communist transformation, with flourishing entrepreneurship and a vibrant political life. But unemployment and inequalities are high, breeding resentment and sometimes nostalgia. Corruption is still prevalent.

2002-2003: Poland is officially invited to join the European Union in 2004, with a referendum to approve accession scheduled for spring 2003. The urban political and business elite strongly favor E.U. membership, but there is some skepticism among farmers and industrial workers who fear their sectors will be uncompetitive and overexposed.

back to top

Environmental

1945-1969: Southern Poland's Silesian region contains the largest deposit of brown coal in Europe. Under Soviet rule, Silesia is the center of coal mining and the coal-fired steel industry. The environmental consequences of such intense industrial activity in such a small geographic area are ignored.

1970-1989: Poland is one of Europe's most polluted countries. The heavily industrialized, highly populated area of Upper Silesia, which produces roughly 200 million tons of coal a year, is called the "Black Triangle." Severe acid rain all but destroys the area's mountain forests and acidifies the soil. Infant mortality, along with rates of cancer and other diseases, far exceed the national average.

1990-1997: Poland's dramatic shift to a market economy includes measures to curb runaway environmental pollution. Many aging factories are closed. A 1997 law creates a national energy policy. Poland invests in equipment to reduce industrial emissions. Levels of air and river pollutants drop significantly. Introduction of unleaded gasoline helps stem pollution from the growing number of cars.

1998-2003: Poland widens environmental regulations, upgrades monitoring equipment, and enacts fines for violators. Industrial air pollution decreases by as much as 50 percent. The Kyoto Protocol calls for Poland to reduce greenhouse gases 6 percent below 1988 levels by 2012. To comply, the country must reduce its reliance on dirty coal, find money to finance cleanup projects, and step up enforcement.

back to top

Rule of Law

1945-1955: Under Soviet rule, the Polish legal system becomes an instrument of the state. Supreme Court justices are political appointments. The courts are forbidden to rule on the constitutionality of laws and statutes. Police and militia operate under the hard-line Ministry of Internal Affairs, which preserves order and protects the Communist regime.

1956-1970: Enforcement policies relax for a time under moderate Communist Party chief Wladyslaw Gomulka, who curbs Poland's Secret Service and frees some political prisoners. But Gomulka's regime becomes more hard-line over time. He publicly supports the Soviet invasion of Czechoslovakia in 1968 and sends troops to break up Polish student protests in 1968 and worker strikes in 1970.

1971-1979: Once again, Secret Service cracks down on dissidents. The Citizens' Militia, with as many as 600,000 volunteers, helps police identify troublemakers. Prison conditions are harsh. The 1969 Penal Code allows judges to investigate prisoner complaints, but since the state controls the judiciary, prison investigations are rare and often meaningless.

1980: When Lenin Shipyard workers strike to protest government price increases, thousands join in. Despite government riot troops and harassment from Citizens' Militia members who are rewarded for reporting on their peers, the resulting Solidarity movement wins concessions from the government.

1981: Party chief Gen. Wojciech Jaruzelski declares martial law, bans Solidarity, and locks up the movement's leaders. Thousands more are arrested for displaying Solidarity symbols, organizing marches, possessing leaflets. The government monitors court proceedings, administering loyalty oaths to judges and dismissing those thought to be unreliable.

1982: After charges of high-level corruption, Gen. Jaruzelski creates the Constitutional Tribunal to pass judgment on office holders accused of violating the constitution. Decisions can be overruled by a two-thirds majority of the Sejm, Poland's parliament. The Tribunal never hears a case.

1983-1986: Gen. Jaruzelski lifts martial law in July 1983. Secret police murder Father Jerzy Popieluszko, Solidarity's spiritual advisor. Liberal reformer Mikhail Gorbachev assumes leadership of the Soviet Union.

1987-1990: Gen. Jaruzelski convenes historic Round Table meetings to rescue the Polish economy. The subsequent agreement resurrects Poland's independent judiciary system. The parliament appoints an independent National Judicial Council to set and police professional standards. The president appoints Supreme Court justices from a list provided by the National Judicial Council. These justices serve for life.

1991: A rise in crime leads to a wave of police reforms. Local jurisdictions mount their own forces. Uniforms are issued, personnel retrained, and laws enacted to protect civil rights. Parliament expands the number of courts. The government dissolves Secret Services departments that previously monitored social, cultural, political, and religious organizations.

1992: As police make strides against crime, they earn back the public trust. The level of professionalism in the judiciary is up. New judges are either qualified academics or experienced litigators. But Poland's penal code is still rife with vague, out-of-date Soviet-style statutes, and the country's prisons are still crumbling and overcrowded.

1993-2000: A 1997 referendum confirms the Polish Constitution as the supreme law of the land. The constitution strengthens the legal system and guarantees a wide range of civil rights. Law enforcement continues to struggle against fraud, drug trafficking, organized crime, and corruption.

2001-2003: Corruption is still seen as a major problem in Poland, more so than in rivals Czech Republic or Hungary. A high-profile case involving industrialists, the government, and a major newspaper erupts in late 2002. The prospect of European Union accession pushes Poland to harmonize legislation in many areas with E.U. norms.

back to top

Trade Policy

1945-1970: Poland is the largest food producer in Eastern Europe and the world's fourth largest supplier of coal. The Communist government emphasizes heavy industry over agriculture and other sectors, and restricts foreign trade to Soviet-dominated Comecon (Council for Mutual Economic Assistance) countries. Poland becomes dependent on Soviet raw materials.

1971-1980: In the early '70s, Communist Party chief Edward Gierek secures Western capital and technology to modernize industry. Poland begins to manufacture construction machinery for Western firms, but when its centralized production system fails to churn out enough exports to the West, trade deficits mount, and Poland's government restricts Western imports.

1981-1989: By the 1980s, exports include processed metals, chemicals, machinery, electronic and computer equipment, and all manner of cars, trucks, and ships. Fueled by Soviet aspirations to dominate the seas, Poland has become the fifth largest ship producer in the world, exporting most maritime products to the Soviet Union.

1990-1991: The "shock therapy" reform program launched on January 1 abandons centralized planning in favor of a freewheeling, Western-style market economy. Poland establishes trade ties with the European Union (EU). The rapid decline of Comecon and its imports leads to shortages of fuel and raw materials at a time when Polish products need to grab a share of foreign and domestic markets.

1992-1995: Poland agrees to lower or eliminate tariffs on many European Union imports. Homegrown industries, among them agriculture, construction, electronics, and shipbuilding, struggle to adapt to these new market realities. In 1992 farmers demand higher tariffs and guaranteed minimum prices to protect their products and livelihoods. Poland joins the World Trade Organization (WTO) in 1995.

1996-2001: Poland's major exports include manufactured goods (44 percent), machinery and transport equipment (34 percent), food (8 percent), and chemicals (7 percent). The European Union countries are Poland's main trading partners, as Poland prepares to join the European single market and become a full member of the Union.

2002-2003: The prospect of E.U. accession, scheduled for 2004, dominates Polish economic and political life, and bodes for a transformation of the landscape of trade. The E.U. is already Poland's main trading partner. But many Poles fear that E.U. membership might overwhelm some sectors of the economy, and a tight result is foreseen in the 2003 referendum to approve membership.

back to top

Money

1945-1970: The Communist state-planned economy shelters the national currency, the zloty, from free-exchange markets. The currency is traded at an official rate unrelated to economic reality. Prices are regimented, and vast amounts of capital are diverted to heavy industries such as coal and steel. The artificial manipulation creates chronic consumer shortages.

1971-1980: Reeling from economic decline and public unrest, the Polish government borrows millions from Western governments. It intends to use this foreign capital to hold down ballooning food prices while it modernizes industry. But Poland's outdated system and a global recession thwart the plan. The country is left with an enormous foreign debt that it cannot service or repay.

1981-1989: As economic conditions worsen, the zloty's unofficial and official rates diverge wildly. After the Round Table agreements and Solidarity's victory, inexperienced Solidarity leaders turn to Harvard professor Jeffrey Sachs, the movement's economic advisor, for help in charting a new economic course.

1990: Using Jeffrey Sachs's plan as a blueprint, new Minister of Finance Leszek Balcerowicz launches his daring economic "shock therapy" program on January 1. He devalues the Polish zloty and makes it convertible, freezes wages, reforms taxes, deregulates prices, and creates a stock market overnight. Prices leap 78 percent in the first few days but eventually stabilize.

1991-1998: With the 1990 reform behind them as an example, Polish governments follow sound fiscal policies. The Warsaw Stock Exchange and the Polish zloty weather financial crises in Russian and Asian markets. The National Bank of Poland regulates domestic demand by keeping interest rates high. In 1998 Polish exports outpace imports, in part as a result of the zloty's depreciation against the dollar.

1999-2003: Inflation is at a historic low, but unemployment is on the rise. As the economy slows, the new coalition government asks the Central Bank to lower interest rates. Prime Minister Leszek Miller commences spending cuts to bring the budget under control. Poland is slated to join the European Union in 2004, which will bring adoption of the euro and the retirement of the zloty.

back to top


Categories: Overview | Political | Economic | Social | Environmental | Rule of Law | Trade Policy | Money
Graphs: Growth | Income | Inflation | Unemployment | Well-being | Trade Volume | Trade (CAB) | Debt | Spending

Related: Video | LinksView all categories for years from to | See Full Report | Print