SCENESETTER FOR SECRETARY GUTIERREZ' VISIT TO POLAND - 90TH ANNIVERSARY OF INDEPENDENCE

UNCLAS SECTION 01 OF 03 WARSAW 001274 SENSITIVE SIPDIS DEPARTMENT OF COMMERCE FOR MIKE ROGERS AND SECRETARY GUTIERREZ E.O. 12958: N/A TAGS: ECON PGOVPM PREL ETRD KIPR PL SUBJECT: SCENESETTER FOR SECRETARY GUTIERREZ' VISIT TO POLAND - 90TH ANNIVERSARY OF INDEPENDENCE ¶1. Mr. Secretary, you are coming to Poland at an exciting time, following several high-profile bilateral successes: the August signing of the Missile Defense Agreement; the successful conclusion of a five-year Polish deployment in Iraq; and the simultaneous strengthening of support for the NATO mission in Afghanistan. These achievements reflect the changing nature of our relationship with Poland, which increasingly has become a proactive, collaborative partner on regional and global issues. Your leadership of the Presidential Delegation to the events marking the 90th anniversary of Polish independence will strengthen an already positive relationship with one of our most important European partners. You will be joined by Heads of State and senior dignitaries from over 50 countries expected in Warsaw for the celebrations. ¶2. The event is a celebration to mark the 90th anniversary of independent Poland. Polish independence was regained after WWI following more than 120 years of partition, with Poland divided among the Prussian, Austro-Hungarian and Russian empires. Independence came with strong US support - Polish independence was point 13 of Woodrow Wilson's famous "14 points" speech to the US Congress. This independence was to last just over 20 years before being interrupted by the Nazi invasion and the 45 years of Soviet-influenced communist rule which followed WWII. Since 1989 and the fall of communism, Poland has been a regional leader in adopting democratic and free-market reforms, quickly moving to gain NATO and EU membership, and now planning to join the Euro zone. The success of these bold reforms is reflected in Poland's stable democracy and in economic growth well above EU averages. As Poland has developed, so too has its role as a partner for the US on some of our most important foreign policy initiatives. -------------- Your Meetings -------------- ¶3. You currently co-chair the US-Polish Economic and Commercial Dialogue with your counterpart Deputy Prime Minister/Economy Minister Pawlak which was launched in 2002. I understand that your Department is briefing you in greater detail on the bilateral commercial relationship as well as preparing you for your meeting with Minister Pawlak. The �0A;relationship is and has been positive. Poland is not among the 10 largest trading partners for the US, nor does the US make Poland's top 10. However, the US is a major investor in Poland. The US has invested over $15 billion in Poland since the fall of communism in 1989. The vast majority of investors remain very positive about their experience. However, the pharmaceuticals sector stands out for persistent market access problems. Meaningful access to the Polish market often hinges on whether a drug appears on the government's reimbursement list. While the government added a number of innovative drugs to the list last year, the Ministry of Health continues to make regulatory decisions in a highly non-transparent manner. ¶4. You will meet with President Kaczynski on the margins of the November 11 gala event. Despite relatively low polling numbers, Kaczynski is expected to run for re-election in 2010, but has not yet declared his candidacy. Prime Minister Tusk, also undeclared, is expected to be another leading contender. Almost one year into his term, Tusk enjoys high public approval ratings, despite widespread criticism that his government has yet to deliver on major campaign promises. Political tensions between Kaczynski's populist Law and Justice (PiS) party, currently in the opposition in parliament, and Tusk's center-right, market-oriented Civic Platform (PO),have produced gridlock. In a recent high-level meeting, President Kaczynski and Tusk managed to set aside their strong personal differences to discuss the global financial crisis. Nonetheless, political insiders expect the difficult relationship between PO and PiS will make it all but impossible to enact significant economic and financial reforms over the next two years. ¶5. We are planning a Cuba-related roundtable for you the morning of November 12 with Polish MFA officials, NGOs such as the Lech Walesa Institute, and members of a Parliamentary group called "Free Cuba." The Polish government and NGO community are actively engaged on many fronts in helping Cuba achieve a peaceful transition to democracy. At times the Poles have provided highly visible moral support, including videoconferences between Polish leaders and Cuban dissidents; at times they have quietly advised and supplied Cuban WARSAW 00001274 002 OF 003 democratic activists, taking advantage of a lower profile than U.S. officials and NGOs to evade obstruction by the Cuban regime. Poland reluctantly did not oppose the recent EU decision to end sanctions, but did insist on a mechanism to evaluate the impact in Cuba. The MFA has already reached out to Cuba to initiate a dialogue but is insisting that the Cuban government authorize Polish officials to meet with the opposition, a condition Cuba is stubbornly resisting. -------------- The Bilateral Relationship: A Global Partner -------------- ¶6. Poland's commitment and active engagement in Iraq began in the first days of Operation Iraqi Freedom and continued with distinction until their last troops returned on October ¶28. Poles were among the first members of the coalition to commit troops to Iraq. Their deployment lasted five years and survived the transitions of two governments. The decision to withdraw after the 2007 elections was coordinated with U.S. and Iraqi forces over the course of a full year. Poland leaves behind a stable province in Qadisiyah that is now secured by Polish-trained Iraqi soldiers. Importantly, as they withdrew from Iraq, the Poles plussed up their mission in Afghanistan. We appreciate their support and recognize the losses they suffered during the Iraq mission - twenty two Polish soldiers died and seventy were wounded over the course of their deployment. ¶7. Poland recently increased its military presence and took on new responsibilities in Afghanistan. Poland assumed full authority for all of Ghazni, a key province located between Kabul and Kandahar. The Polish task force consists of almost 1600 troops. Poland also intends to increase its commitment to political and economic development in Ghazni by replacing the U.S. led PRT over the course of the coming year. The growing Polish footprint in Afghanistan reflects Warsaw's determination to bolster the military credibility of its own forces as well as those of the Alliance as a whole. We continue to offer the Poles our insights, aid and encouragement. ¶8. Secretary Rice traveled to Warsaw in August to sign an agreement to station 10 missile interceptors on Polish territory in the northwest city of Slupsk (swoopsk). The signing marked the conclusion of 18 months of tough but cordial negotiations. The interceptors have no warheads as they are designed to destroy ICBMs through kinetic energy, and pose no offensive threat. European deployment of this system is intended to counter the threat to European allies from a small number of ballistic missiles potentially originating in the Middle East. We are currently negotiating a Status of Forces Agreement and the necessary Implementing Agreements that would allow us to begin actual deployment by ¶2012. Public support for the system ticked up in August, when the popular Tusk government communicated that it had driven a hard bargain and struck a good deal with the U.S. The disproportionate use of Russian force in Georgia also served to convince Polish public opinion of the benefits of an enhanced security relationship with the U.S. at a time when Russia is flexing its muscles. -------------- Poland's Strategic Interests -------------- ¶9. Poland increasingly sees itself as a regional and global player. The country has tried to take the lead in shaping major EU policies on such issues as emissions caps, energy security and Eastern Policy, particularly relations with Ukraine, Belarus, and the Caucasus region. Poland has transitioned from an aid recipient to an assistance provider. Polish aid programs often follow in the wake of Polish military engagement (NATO and UN missions) or target countries of strategic interest such as Belarus, Ukraine, Moldova and Georgia. Together with the US, Poland was a strong voice in support of Georgia during the August crisis. The Poles have recently reached out as far as China in search of allies on climate change negotiations, energy diversification and trade expansion. ¶10. Energy is another area of shared interest with the U.S. The Poles not only seek greater diversification for their own energy security, but they are out front in encouraging an EU-wide diversification and energy security strategy. We share an interest in better use of coal (Poland generates more than 90% of its power from coal) and cooperate on WARSAW 00001274 003 OF 003 several research and development initiatives for advancements in clean coal and carbon capture and storage capabilities. Due to this reliance on coal, a reluctance to rely too heavily on Eastern suppliers, and a perceived lack of dependable alternative sources of energy, Poland acutely feels the pressure of EU and Kyoto emissions caps initiatives. -------------- The Current Mood in Poland -------------- ¶11. Poland has not completely escaped the financial crisis despite its sound fundamentals and relatively strong domestic banking sector. While it certainly has not suffered the financial meltdowns of its neighbors, global markets seem to lump Poland together with other emerging markets - at least temporarily. Poland has not escaped the crunch, particularly in the strength of its currency and interbank lending markets (both of which have somewhat rebounded in recent days). Much of the domestic banking sector is foreign owned, and global freezing of credit and interbank lending has at least temporarily impacted local subsidiaries. The real effects of the crisis, however, will be transmitted through the real economy in the form of weakened export markets and decreased foreign and domestic investment. Though somewhat mitigated by strong domestic demand, Polish GDP growth is expected to come down to more modest levels of growth over the next year or so (2-4%) from rates of over 6% in recent years. ¶12. Your visit comes against the backdrop of the U.S. Presidential election, which Poles have followed closely since the primary process. There is great fascination in the U.S. democratic process, combined with some uncertainty about what a transition in administrations might mean when it comes to following up on the bilateral successes of the summer already mentioned. Besides these prominent issues, there are persistent frictions and distorted conventional wisdom surrounding U.S. visa policy and the Visa Waiver Program, foreign military sales of U.S. equipment to Poland, most notably the F-16, and the transfer of older military hardware (navy frigates, C-130s) that some critics claim are out-dated. ¶13. Many Poles feel that Poland is underappreciated. We regularly hear the message that Poland is a loyal strategic partner, who committed and engaged early in Afghanistan and Iraq, and who continues to suffer casualties by putting its forces in harm's way with no restrictive caveats like other NATO partners. In the same breath, Poles will voice their disappointment that its citizens still require tourist visas to visit the U.S. (Poland's failure to qualify for the Visa Waiver Program this year was particularly painful, since neighbors such as the Czech Republic will be able to travel visa-free starting November 21.) The undercurrent is: "We've done all these things for the benefit of the U.S. - Iraq, Afghanistan, buying F-16s and now agreeing to missile defense...but what have you done for us?" Despite these frictions, we are still seen as their strongest single ally. ¶14. You are visiting a dynamic Poland that has undergone dramatic changes since its return to full independence in ¶1989. Poland is increasingly confident in the EU as well as on the regional and global stage. Despite crosswinds from the financial crisis, it is an economy that has flourished by rapidly adopting free-market economic principles and fostering democratic values. Our partnership has rapidly transformed from one of bilateral assistance and cooperation to one based on broadly shared values and mutual interest in multilateral fora. While they increasingly see themselves as an EU member and a regional leader, they continue to value their relationship with the U.S. Your participation in marking the 90th anniversary of an independent Poland and the U.S. role in support of that independence will help to strengthen our already robust ties. ASHE