Gas had become Russia’s new weapon, and she did not hesitate to use it as a reminder of her power and her interest in the area by cutting off the supply to Ukraine in February 2004. Poland continued to take a keen interest in Ukraine, despite a resurgence of anti-Polish nationalism there, and when the interference of Moscow and electoral fraud robbed Viktor Yushchenko of victory in the Ukrainian presidential election of November 2004, precipitating the so-called Orange Revolution, thousands of Poles, including Wałęsa and other leading figures, went to Kiev to support him. And it was Poland’s President Aleksander Kwaśniewski who played the decisive role in defusing the crisis and negotiating a settlement.
This had an immediate effect on Polish-Russian relations. Having previously revealed secret documents and admitted the truth about crimes committed against the Polish people in Stalin’s day, various Russian agencies now began to backtrack and to take the Stalinist line on subjects such as Russia’s involvement in the Warsaw Uprising of 1944. In the autumn of 2005, a new Russian national day was instituted, 4 November, the date the Poles were ejected from the Kremlin in 1612, and the following day Russia banned the import of Polish meat on grounds of hygiene. Poland involved the EU in the trade issues, and in 2006 Prime Minister Marcinkiewicz suggested a European joint energy security pact in the face of renewed Russian threats to use gas supply as a weapon of coercion.
By then, Poland had developed a close relationship with the United States, which had come to view it, along with the Czech Republic, as part of its global security system. By calling for the admission of Ukraine and Georgia to NATO and building up links with Moldavia and Azerbaijan, Poland was also turning itself into the diplomatic pivot of NATO in the region. This placed it in the front line of America’s confrontation with Russia, but, ironically, probably made it more secure. Russia remained wedded to an oldfashioned sense of greatness, one that would be affronted by a confident sovereign Poland, whether it was in alliance with the United States or not.
Polish society has certainly not shown itself to be devoid of patriotism and a wish to enhance its international standing, but it has also, like other European societies, shown a greater interest in economic development. And in this it achieved a remarkable degree of success.
The transformation from a Soviet centrally planned command economy to a free-market one was bound to be slow and painful, and it was made more so by the catastrophic condition of the Polish economy in 1989. The new government inherited vast debts, a burdensome welfare system that could not cope with the demands placed on it, and inflation of 586 per cent. The Soviet-era flagship industries such as steel and shipbuilding were not only unable to pull the economy out of the crisis, they were haemorrhaging money.
The bold moves made by Balcerowicz in the first months convinced the outside world that Poland was serious, and in 1990 the IMF granted a credit of $700 million and the World Bank $1.5 billion. A number of state enterprises were privatised and a stock exchange was opened in Warsaw at the beginning of 1991 (in the redundant former Party headquarters). In March of that year nearly half of Poland’s foreign debt was cancelled. In the following year all state farms were sold off, and the first signs of improvement were visible, despite the difficult conditions created by the world recession. Industrial output rose in 1992 by 4 per cent and agricultural production by 12. In 1993, GDP grew by 3.8 per cent, half of it accounted for by the private sector. Inflation was down to 35 per cent and the people of Poland were accustoming themselves to personal income tax and VAT.
By 1995, when the zloty lost four zeros and the exchange rate was floated, GDP had reached 7 per cent growth. The break-up and privatisation of the large state enterprises were under way, and while a complicated regulatory and tax system discouraged it, foreign investment began to flow in—$33 billion over the next five years. The economy was damaged by the crisis in Russia in the late 1990s, weighed down by unemployment hovering between 15 and 20 per cent, and by the lack of firm direction and the difficulty of voting budgets attendant on weak coalition governments. Yet by the end of the decade inflation had fallen to 10 per cent and the zloty was rising steadily against the dollar and the euro. By then the private sector accounted for over three-quarters of GDP, and when, in 2002, inflation was brought down to 3 per cent, the country’s economy could be said to have come out of the woods.