Country Overview
Country Facts
Overview of U.S. Government Assistance
In FY 2005, the USG allocated an estimated $139.65 million in assistance to Poland, including:
In FY 2005, a total of 189 Polish residents traveled to the United States on USG-funded exchange programs.
The last year for new SEED bilateral funding to Poland was FY 2000. Some additional SEED funding for public diplomacy and democracy initiatives were provided to Poland through FY 2003. Other forms of U.S. Government (USG) assistance to Poland continued through FY 2005.
FY 2005 Assistance Overview
U.S. STRATEGIC INTERESTS
Poland is a staunch ally of the United States in the global war on terror, most notably by contributing to the liberation and reconstruction of Iraq. A close working partner in the North Atlantic Treaty Organization (NATO), Poland also provided important assistance in the Balkans and Afghanistan. Poland has served as a model of successful economic transformation since its transition from Communism after 1989, creating a sound financial market.
KEY ISSUES
Poland is a fully functioning democratic society with a market economy, a member of the EU and NATO. USG-funded assistance programs for the Polish military continue, reflecting strong bilateral international strategic cooperation. The USG also continues public diplomacy programming. SEED-funded assistance programs were very effective in helping Poland meet the challenges of transition and development. They were also influential in creating lasting institutional ties between Polish organizations and their American counterparts. Poland graduated from bilateral SEED funding in FY 2000, although some forms of funding such as the Democracy Commission Small Grants Program continued in graduated countries through FY2003. Poland is no longer receiving new SEED funding but in FY 2005 a few activities continued with funding from prior fiscal years.
Current USG assistance to Poland is targeted on key areas of interest to the United States including: strengthening the bilateral relationship; deepening the understanding of the United States by Polish decision makers; assisting in military modernization to meet Poland's NATO commitments; and providing Polish military leaders with the needed training to integrate their armed forces better with U.S. forces in NATO and elsewhere internationally. In FY 2005, the United States increased funding to Poland in the Foreign Military Financing (FMF) program to enhance Polish, and thus NATO, airlift capability. Lastly, in FY 2005 Congress appropriated an additional $57 million for Poland as part of the Coalition Solidarity Fund, funded through a supplemental appropriation.
FY 2005 Country Program Performance
Democratic Reform
Poland is a fully functioning democratic society, most recently evidenced by Parliamentary and Presidential elections in the fall of 2005. With its accession to the EU in May 2004, Poland achieved all the major goals it set after the fall of communism in 1989. It is now firmly established as a member of NATO and the EU, and there is strong public support for Poland's membership in both these organizations. Poland played a critical role in bringing about the democratic transition in Ukraine in 2004 and supports pro-democracy programs in Belarus. Some legacies from Poland's transition from communism remain, most notably in the relatively underdeveloped state of civil society and the country's non-governmental organization (NGO) sector.
U.S. ASSISTANCE PRIORITIES
In FY 2005, the limited U.S. assistance provided by USG agencies was targeted at both improving relations between the countries and the knowledge of future Polish decision makers of how democracy in the United States functions, through public diplomacy programming and exchanges.
PROGRAM PERFORMANCE
Poland is no longer receiving SEED assistance in the area of democratic reform. With Poland a member of the EU, the United States wants to maintain its historically close ties. During FY 2005, USG assistance sent 58 Poles to the United States as part of the International Visitors program, the Voluntary Visitors Program, and similar public diplomacy programs, at a cost of $300,000. These programs were targeted to help Polish decision makers improve their understanding of how the United States approaches a wide range of issues. Also during the year, USG assistance provided public diplomacy grants to non-governmental organizations and institutions to promote democracy and U.S. culture. The USG also provided $1.5 million to the Fulbright program during the fiscal year.
Economic Reform
Poland was one of the leaders of the economic transformation of Central and Eastern Europe in the 1990s, having adopted an aggressive program of market-oriented reforms ("shock therapy") following the fall of communism in 1989. Poland has experienced economic growth every year since 1989, and the economy is forecast to expand by 4.5 percent in 2005. Exports have been an important economic driving mechanism, growing 18 percent in the first three quarters of 2005 (from January 2005 through September 2005). Foreign direct investment (FDI) has remained relatively constant over the last four years. An additional $7.86 billion of FDI flowed into Poland in 2004, with the 2005 inflow expected to total approximately $6 to 8 billion. Inflation remains low (1.8 percent in September) despite the continuing growth.
Poland's entry into the EU was much smoother than most analysts expected. The Belka government introduced several important fiscal reform measures and trimmed administrative expenses in the budget. It also introduced a number of reforms to cut red tape, reduce the regulatory compliance burden for companies, and lower corporate tax rates, all in an effort to boost growth and create jobs. The Marcinkiewicz government announced that it welcomes foreign investment and will work to further reduce bureaucratic red tape, increase employment, and increase the utilization of EU funds.
While the economy is improving, important challenges remain. Unemployment, at 17.6 percent in September 2005, is the highest in the EU. Wages are low by Western European standards, with average gross monthly earnings of only $850. Despite new legislation that somewhat liberalized the labor market in 2002, companies complain that high labor taxes and the rigid labor code make it hard to increase employment. Poland still needs to consolidate and continue to modernize its agricultural sector, which accounts for about 20 percent of the working population, but approximately three percent of GDP. Heavy social service spending, particularly on pensions and the health sector, will continue to present a problem for the government. Poor infrastructure, particularly an underdeveloped road network, limits foreign investment as companies find more attractive options in neighboring countries.
U.S. ASSISTANCE PRIORITIES
The United States no longer provides assistance to Poland in the area of economic reform. The U.S. Overseas Private Investment Corporation (OPIC), the U.S. Export-Import Bank, and U.S. Trade and Development Agency (USTDA) are all active in Poland, supporting the development of U.S. trade and investment projects. The Department of Agriculture provides limited assistance to promote Polish understanding of agricultural topics.
PROGRAM PERFORMANCE
Poland is no longer receiving SEED assistance in the area of economic reform, and Poland has a fully functioning economy which is integrated with the economies of the other members of the European Union. In FY 2005 the U.S. Department of Agriculture hosted six Poles on visits to the United States under the Cochran Fellowship Program, which provides short-term training to specialists and administrators in agricultural trade, agribusiness development, management, policy, marketing, and technology transfer. Assistance provided in previous years under the regional Partners for Financial Stability (PFS) Program to the National Bank of Poland's Training Initiative on Banking Supervision (TIBS) created a training institution that now trains banking supervisors from Eurasia, Central Europe, and Eastern Europe.
Social Reform and Humanitarian Assistance
Unemployment, 17.6 percent in September 2005, is the highest in an EU member state, while wages remain low. Many young workers with limited employment opportunities leave for the United Kingdom, Ireland, and Sweden, which allowed the immediate employment of citizens of new EU member states upon their accession. One of Europe's lowest birthrates (a lifetime average of 1.22 children per woman) and continuing net outflow of job-seekers are expected to shrink Poland's population steadily over the next 25 years. Some economists cite the difficulty young people have in establishing themselves economically for the low birthrate. The high unemployment rate, high housing prices, and the absence of tax breaks for families are often cited by Poles as reasons for dissatisfaction with their lives. However, extreme poverty has decreased markedly since 2003. In the last year, as part of its commitments to the EU, Poland began redirecting its citizens' mindset from that of a recipient of foreign assistance to that of a donor country.
U.S. ASSISTANCE PRIORITIES
Poland is no longer receiving U.S. assistance in the area of social reform and humanitarian assistance. During the year, the embassy started a dialogue with the Polish government about its nascent assistance program and priorities as Poland evolves from an aid recipient to a donor country.
Security, Regional Stability and Law Enforcement
Poland has significantly improved its ability to counter threats to security and regional stability and uphold the rule of law since 1989. Since joining NATO in March 1999, Poland has supported a number of top U.S. security priorities including the war on terrorism, NATO enlargement, and USG efforts to find a workable compromise on a European Security and Defense Policy (ESDP). At the end of 2002, Poland signaled its desire to maintain close defense ties with the United States over the long term by deciding to buy 48 F-16 fighters. In 2003, the Government of Poland (GOP) signed letters of offer and acceptance worth $3.8 billion for the F-16 sale. The highlight of U.S. security cooperation with Poland, however, is Poland's strong contribution to both the liberation and reconstruction of Iraq. It contributed troops to the liberation and has taken a leadership role in providing security for the reconstruction.
U.S. ASSISTANCE PRIORITIES
In FY 2005, U.S. security-related assistance focused on supporting military modernization to meet Poland's NATO commitments and on providing Polish military leaders with the training needed to integrate their armed forces better with U.S. forces in NATO and elsewhere internationally, as in Iraq. The U.S. significantly increased Foreign Military Financing (FMF) to Poland in FY 2005, largely to enhance airlift capability. Lastly, in an FY 2005 supplemental appropriation, Congress appropriated an additional $57 million for Poland through the Coalition Solidarity Fund.
In order to assist Poland in controlling its borders, the United States provided equipment and training to the Polish Border Guards to detect contraband crossing its borders. In addition, the USG provided training for the police on human dignity, human rights, leadership management and community policing. A Department of Treasury program, using funding from previous years, is providing training to the National Bank of Poland on analysis of use of the monetary system for terrorism financing or money laundering.
PROGRAM PERFORMANCE
Poland is a key regional partner and a critical ally in the War on Terror, contributing equipment and ammunition to the Georgia Train and Equip Program (GTEP) and the Afghan National Army (ANA), commanding the Multinational Division-Central South in Iraq, preparing to assume command of the ISAF mission in Afghanistan in 2007, and providing crucial Special Operations Forces (SOF) assets to the same theater in 2006 and 2007. Polish SOF has fought side-by-side with U.S. SOF since the first Gulf War. U.S. assistance since the fall of the Berlin Wall is a key reason why Polish SOF is in its current status and set to improve with continued bilateral training and equipment initiatives.
During FY 2005, the United States provided $133.5 million in FMF in 2005 to help the GOP meet NATO force modernization obligations while also contributing equipment to Iraq. In particular, FMF was used to help Poland refurbish five donated C-130s, in order to enhance airlift capability among NATO allies.
The USG also provided $2.2 million in International Military Education and Training (IMET) assistance to improve the professional education of Polish military officers. During FY 2005, a total of 156 Poles traveled to the United States for training, 89 under the IMET program and 67 under the Security Assistance (SA) programs.
During FY 2005, USG assistance provided radiation isotope identifiers, integrity awareness training and contraband detection kits valued at $87,000 to the Polish Customs and Border Guards. Under a Letter of Agreement from FY 2002, the USG obligated $181,000 for the purchase of computers and software for the Central Bureau of Investigations to use in its fight with organized crime. As part of the Department of Justice International Criminal Investigative Training and Assistance Program (ICITAP) Letter of Agreement on Police Modernization and Training, USG assistance also provided training on human dignity and human rights, leadership management and community policing valued at $45,000.
During FY 2005, using funding from prior fiscal years, the Department of Treasury provided computer software and technical assistance for the National Bank of Poland valued at approximately $55,000 for use in the monitoring and analysis of suspect financial transactions that could be related to terrorism financing or money laundering. In addition, seven Polish officials received training in the United States at the U.S. Treasury Department Financial Crimes Enforcement Network (FinCen). The training and assistance will be completed in FY 2006.
Lastly, in FY 2005 the USG funded the Coalition Solidarity Fund through a supplemental appropriation. That fund designated $57 million for Poland for unmanned aerial vehicles (UAVs) and F-16 pilot training.
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