IV. Political Environment A. Nature of the Bilateral Relationship with the U.S. The United States and Poland have enjoyed warm bilateral relations since 1989 despite Poland's often tempestuous domestic political scene and a rapid succession of ideologically diverse governments. Every post-communist Polish government has been a strong supporter of a continued American military and economic presence in Europe, and has identified membership in NATO, the European Union and other Western security and economic structures as Poland's principal foreign policy priority. Poland has done a superb job as the formal protector of American interests in Iraq since the Gulf War, and cooperates closely with American diplomacy on such issues as nuclear proliferation, human rights, regional cooperation in Central and Eastern Europe and reform of the United Nations. Poland is by far the largest recipient of U.S. assistance to Central and Eastern Europe, with more than $4 billion committed since 1989 to such areas as debt reduction, privatization, financial stabilization, financial institution building, entrepreneurial training, support for a free press and other democratic institutions, and efforts to improve Poland's environment. The Peace Corps' largest program in the world is in Poland. A graphic illustration of Poland's close cooperation with the United States has been the large number of high level visits exchanged between the two countries in recent years. In the first eight months of 1994 alone, President Clinton, Vice President Gore, Secretary of State Christopher, Commerce Secretary Brown, Chairman of the Joint Chiefs of Staff General Shalikashvili, FBI Director Freeh, Ex-Im Bank Chairman Brody and UN Ambassador Albright were among the high-ranking U.S. officials to visit Poland. Problems in the bilateral relationship have been relatively few. The most serious have stemmed from disappointment with what Polish political leaders have perceived to be American reluctance to move quickly enough to admit Poland to NATO. Trade issues have also featured occasionally in the relationship: the Polish Government believes it is unfairly penalized by U.S. anti-dumping legislation and it also seeks easier access to the American market in textiles and some food exports. The Polish government also occasionally complains about the trade deficit Poland runs with the United States, which amounted to $462 million in 1993. Concerns about Polish protection of intellectual property rights were largely addressed with the passage of a copyright law early in 1994. Poland acceded to the Berne Convention on intellectual property in July 1994. One domestic political problem which has occasionally spilled into the bilateral relationship has been the poor condition of Poland's defense industry following the loss of its markets at the end of the Cold War. Every Polish government since 1989 has been under pressure from defense industry workers to improve Polish arms exports regardless of international political considerations. In 1993, the United States Justice Department tried five Polish arms manufacturers on charges of conspiring to sell rifles to Iraq after arresting them in a sting operation in Germany. Although the defendants were acquitted, their lengthy incarceration provoked some anti-American feeling along with charges that the case was commercially motivated. Poland was initially skeptical of the NATO "Partnership for Peace" (PFP) initiative, but it has become the most enthusiastic participant of any of the former Warsaw Pact states. It will host the first PFP military exercise on former Warsaw Pact territory in September 1994. The government of Prime Minister Waldemar Pawlak has sought to tie the partnership to an economic partnership which would feature procurement of Polish products for NATO's use. B. Major Political Issues Affecting the Business Climate Poland's political leaders have repeatedly given strong public encouragement to western and specifically U.S. investment: "We need American Generals," President Walesa recently said. "General Electric and General Motors." There are nevertheless domestic political factors at play which can impinge on Poland's hospitality to foreign investment. Prime Minister Pawlak's Polish Peasant Party (PSL) contains fiercely protectionist elements which occasionally prompt hostility toward foreign investors. In one recent case, a significant portion of the PSL parliamentary caucus demanded the dismissal of the Minister of Privatization for his plan to open up the Polish tobacco industry to foreign investors. Prime Minister Pawlak has also recently signaled an intention to slow the mass privatization program to allow more time for the Polish government to assess the economic impact of the program. The Polish government has also imposed variable tariff levies on food imports to protect Polish domestic products. Trade union politics are also an element for foreign business to consider. The Polish trade union movement, the engine of communism's collapse in the 1980's, has occasionally been problematic for foreign investors, particularly when managers of newly-privatized state enterprises have instituted management changes. Strike activity at Polish coal mines in early 1994 briefly threatened power supplies in some localities, but generally strikes have not threatened or noticeably compromised Poland's industrial infrastructure. C. Brief Synopsis of the Political System Poland is organized as a parliamentary democracy according to the so-called "Little Constitution" adopted by the Polish parliament in 1991, pending the passage of a permanent constitution. Poland's parliamentary leaders are now at work on drafting a new constitution which they expect to submit to the Polish electorate in the spring of 1995. Since 1989, Poles have enjoyed largely unfettered rights to free speech, press and assembly as well as other commonly accepted Western human rights. Poland has a bicameral parliament, comprised of a lower house (Sejm) and upper house (Senate). Within the legislative branch of the government, the Sejm has most of the power; the Senate may only suggest amendments to legislation passed by the Sejm or delay it. Both bodies are democratically elected. Poland's last parliamentary elections were in September 1993 when the Democratic Left Alliance (SLD) and PSL won nearly two-thirds of the 460 seats in the Sejm and formed a coalition government. The parliament and government were elected to a four year term which expires in September 1997. The President may dissolve the parliament and call new elections before then, if the government fails a vote of confidence or is unable to pass a budget. The Polish Prime Minister, whom the President nominates to constitute a government and win a vote of confidence in the Sejm, chairs the Council of Ministers and serves as Poland's chief of government. There are 18 cabinet ministers, three of whom serve as deputy prime ministers, mostly drawn from the governing coalition parties. There are a few ministers without any party affiliation. The "Little Constitution" stipulates that three ministers -- foreign affairs, defense, and internal affairs -- must be appointed in consultation with the President. During the formation of the Pawlak government, the governing coalition decided not to challenge President Walesa's candidates for these three positions, though it is attempting to put in place coalition partisans as deputy ministers in those ministries. Poland's president, who serves as the country's head of state, has a five-year term. The next presidential election is scheduled for December 1995. If no candidate wins an absolute majority, the top two vote-getters must compete in a run-off election. The Polish president is the commander of the armed forces and may veto legislation passed by the Sejm. Presidential vetoes can be overturned by a two-thirds vote in each parliamentary house. There are seven political parties represented in the Polish parliament: --Democratic Left Alliance (SLD): the biggest party in the Sejm, the SLD is a coalition comprised mostly of successor parties to the Communist Polish United Workers party (PZPR) and is headed by Aleksander Kwasniewski. The party's leadership generally supports liberal economic policies but stresses the importance of cushioning the harsher effects of economic reform. --Polish Peasant Party (PSL): headed by Prime Minister Waldemar Pawlak, the PSL has grown from a communist subordinated party into a classic European agrarian party. --Union of Freedom (UW): the most popular party with origins in the Solidarity movement, the UW pursues a mainly centrist course. Its membership is a diverse mix of liberal free market thinkers, intellectuals, social activists, feminists and christian nationalists. Its parliamentary leader is Solidarity veteran Bronislaw Geremek; its national leader is former Prime Minister Tadeusz Mazowiecki. --Union of Labor (UP): another party with Solidarity origins, UP claims to be the most legitimate representative of the social democratic movement in Poland and has been outspoken in its criticism of capitalism's social costs and has generally sought to slow the process of privatization. --Non-Party Bloc in Support of Reform (BBWR): launched at President Walesa's suggestion in the run-up to the 1993 parliamentary elections, BBWR supports conservative social policies in conjunction with economic policies that protect those disadvantaged by Poland's recent reforms. --Confederation for an Independent Poland (KPN): Poland's oldest non-communist political party, KPN pursues a blend of nationalism and economic protectionism. Its leader is opposition veteran Leszek Moczulski. --Polish Socialist Party (PPS): PPS's three members were expelled from the SLD after they refused to support the Pawlak government's budget in March 1994. They support a classical socialist ideology. Poland's political parties on the right, representing a broad range of christian nationalism, anti-communism, libertarianism, and statism, lost their parliamentary seats in the 1993 elections as a result of their gradual fragmentation since 1989. Many parties on the right are attempting to unify in order to improve their electoral chances. The Solidarity trade union also lost all of its seats in parliament in 1993 and has since been reconsidering its role in politics. Provincial and local government can play an important role in facilitating or hindering trade and investment in Poland. Poland is divided into 49 provinces (voivodships) each of which is headed by a provincial governor (voivode) appointed by the central government. There are also city and village governments. Party affiliations play an increasingly important role in local Polish politics, particularly in larger cities, but are not yet as significant as in the United States.