March 2017

The institutional mechanisms of Polish-Russian economic relations

The Intergovernmental Commission for Economic Cooperation between the Russian Federation and the Republic of Poland is the main official platform for communication and information exchange for economic cooperation. The Intergovernmental Commission was established in February 2005 in line with the Intergovernmental Agreement on Economic Cooperation which was signed several months prior. A new legal framework was required in the aftermath of Poland’s accession to the European Union. Apart from the above-mentioned commission, there are a number of other bodies which deal with specific issues such as the Polish-Russian Standing Committee for Transport, Joint Fisheries Commission and the Bilateral Commission for Regional Cooperation. The Intergovernmental Commission consists of a number of working groups on transport, trade and investment, energy, tourism, military-and-technical cooperation, agriculture and customs. In addition, two other organizations which represent the interests of businesses in relations with the governments of both states – the Polish-Russian Chamber of Commerce and Industry and the Poland-Russia Business Council – have been active for several years.

So far, the Intergovernmental Commission has not only been seeking to identify new areas for cooperation (in accordance with the declared objective) but has been heavily involved in managing regular tensions in bilateral commercial relations. A total of six meetings have been held. The last meeting took place in 2013. The commission’s work was suspended in the aftermath of the Polish government’s critical assessment of Russia’s aggression against Ukraine and the subsequent imposition of sanctions against Poland’s eastern neighbour by the European Union. Barring some exceptions, the above-mentioned working groups no longer convene, either.

Indeed, since 2014, problems related to economic relations have been addressed during bilateral meetings between representatives of ministries or during ad hoc working meetings of experts from a given field. A typical example is a dispute over restrictions on the number of freight transport permits issued to Polish entrepreneurs (a European leader in this segment) introduced unilaterally by the Russian party. The dispute rumbled on for several months at the level of the Joint Commission on International Road Transport. An agreement over the number of permits required for the subsequent year was reached in late 2016. This dispute served to highlight a certain pattern in bilateral relations formed in recent years based on crisis management.

In a sense, this can be viewed as a Russian response to the denial of access to strategic sectors in Poland. Russia has made several attempts to gain access to these sectors over the course of more than a dozen years under different governments in Poland. Due to the failure of these attempts, well-developed cooperation over trade outside strategic sectors has sometimes suffered as a result of Russia’s inclination to interfere in other areas and to inflate the cost of denying Russia entry into strategic sectors.

The relatively small scope of economic cooperation, especially in terms of investment, and its further decline post 2014 as well as the political context in the aftermath of Russia’s aggression against Ukraine have discouraged Poland from taking advantage of the fully-fledged institutional mechanisms of cooperation as the political costs of mutual openness would exceed the potential economic benefits given the conditions. Against the backdrop of the insignificant scope of bilateral cooperation, both parties shifted to emergency mode: ad hoc crisis management.

There have been signs that the parties would like to revive the Intergovernmental Commission. The Polish deputy minister of development met his Russian counterpart during the 2016 St Petersburg International Economic Forum in order to discuss this very issue. So far, favourable messages from both sides have not led to a qualitative change, despite the fact that both parties have declared their willingness to reinstate the mechanism. As regards Poland, the Polish chairman of the Commission is yet to be appointed. Even if the Commission’s work is resumed, one cannot expect a radical change in the nature of cooperation given the fundamental political differences between the West and Russia. As long as economic sanctions remain in place, the development of bilateral institutional mechanisms will be impeded. Besides, the decline in the scope and dynamics of Polish-Russian economic cooperation has often been accompanied by increased cooperation with other, also non-EU partners. The diversification of markets and partners has become an important tool for mitigating the effects of trade restrictions for the Polish government. Thus, one can observe enhanced activity in the area of establishing institutional mechanisms of cooperation with other states. In the case of economic relations with Russia, the ‘wait and see’ approach has been adopted in the light of both the international situation and the evolution of the Eastern neighbour’s policy.