We invite you to read the interview with Prof. Adam Glapiński, Governor of Narodowy Bank Polski, which appeared in the “Sieci” weekly.
Michał Karnowski: At the moment when this interview appears in the weekly “Sieci”, there is less than a week remaining until the parliamentary elections. How important is the result from your point of view, as the Governor of NBP?
Adam Glapiński: Very important. If the governors of other central banks ask me something, it is precisely about whether a stable and strong government will be formed after the elections. And if so, what kind and what policy will it conduct. This circle understands what is at stake on 15 October.
What do you tell them?
The truth: that it will definitely be the case, that Poland will remain a stable and well-managed state. It can be seen that the markets have a lot of confidence in our country, our economy and our state institutions. The policies carried out in the last eight years, the responses to external crises, are rated as exemplary. The performance of the Polish economy is an undeniable argument here.
However, a much more critical picture of Poland emerges from the reports of some of the western press.
This is not information, but pure propaganda, made to a large extent by the Polish opposition, which sometimes echoes back to us. However, it has nothing in common with reality, and serious people, such as the majority of the central bank governors and generally the world of finance, have a real picture of Poland. They know that Poland is a country of great success and if they are wondering about something, it is about what part of our approach is worth copying. A confirmation of this is the increasing inflow of foreign capital, particularly investment capital, which wants to anchor here for longer. Portfolio capital, sometimes called speculative, is a different matter, because it flows in when interest rates are raised and leaves when they are cut.
Over the last eight years, Poles have been told that it will collapse soon. Depending on the propaganda needs of the opposition in Poland, our country was to be a second Greece, Portugal, Venezuela or Turkey. None of this came true. Was it deliberate scaremongering?
Professional economists rarely scared people. Most often it was politicians, with, at the most, a background in economics. These were slogans, lies. Unfortunately this caused Poland great harm. How many Poles made wrong decisions as a result of these campaigns? How many unnecessarily bought foreign currency, which then depreciated? Or made unfavourable panic investments? These are serious matters. The facts are such that Poland is an exemplary pupil with healthy public finances, with very responsible management of budget, tax and state matters.
So they won’t apologise. Marek Belka has even recently criticised the 500+ programme again and stated that, “for the first time since the transformation the independent Narodowy Bank Polski practically recognises that its main goal is to help the government although the constitution requires it to ensure that prices do not rise too quickly.” Could you comment on that?
These words are precisely an example of politicking. NBP is effective in protecting the Polish currency. Inflation, which arrived from outside and affected the whole world, has been successfully suppressed and, at the same time, unemployment has not risen, firms have not collapsed. If this worries anybody, it is only the opposition politicians.
Is the problem of high inflation behind us?
Yes, we have left this painful problem behind. The latest interest rate cut of 0.25 pp. is proof of how good the situation is. And again: buckets of ridicule were poured on me when I announced it. But they are the ones who have deceived Poles. I spoke the truth, I was right pointing to the temporary nature of this phenomenon.
Could this inflation have been avoided?
Unfortunately not, because it was the result of external crises: the pandemic, war and the energy shock. Nobody foresaw this, just as nobody foresaw such a rapid economic recovery after the pandemic. The choice we faced was how to escape inflation. We did it in such a way as to minimise the social effects. We responded quickly – we were one of the first, just after the Czech Republic, raising interest rates from 0.1% to 6.75%. Economists linked with the opposition, including certain members of the Monetary Policy Council, from the very beginning proposed even more radical, much larger interest rate hikes. Their intention, in my opinion, was political. The idea was to make zloty borrowers cry, investment loans inaccessible, the economy slump, unemployment rise, and the government collapse. Fortunately, this scenario did not arise and today the fall in inflation is rapid and in line with our forecasts. We expect inflation to fall below 7% as early as October.
Where does the pressure come from to sell off the national assets on the part of the opposition?
It’s easy money for the budget. Everything that could be sold off in Poland was sold ages ago. The official ideology was such that we would get rid of the weakest factories. But in fact, what was sold was the best, what could have worked and developed while remaining in Polish hands. Now all that remains is the infrastructure. Who in their right minds sells off the water supply networks, railways, ports, airports, motorways and energy firms? Do the Germans, French and Belgians do that? Do any normal countries do it? No! Then why do they try to force us to do so? Because it leads to the dependence of Poland on big capital and other powers.
You have consistently strengthened the position of the Polish central bank, accumulating currency and gold reserves. What is the aim?
Yes, I’m doing so. Today the value of our foreign exchange reserves amounts to over USD 180 billion, of which almost 11% are gold reserves, standing at 314 tonnes. These are factors stabilising the position of the Polish currency and the Polish economy. Investors, rating agencies and other central banks and governments see this.
Why is the stability of the government in Poland so important? There are countries, such as Belgium, where there was no government for a year and nothing happened.
These economies are on a different stage of development, these states are in a different situation, not threatened by a loss of independence. In our case, if after the elections we were to enter a period of political instability, drawn-out coalition negotiations, and instability, it would have very bad repercussions. The world knows that we border a country in the grip of war. There would be a risk of a downgrading of Poland’s economy rating, investment would be suspended. There would also be a question mark over the continuation of important programmes launched by the present government, such as the development of nuclear energy and the arms programme. Unfortunately, the opposition speaks about this openly and it is heard.
Why is the Polish arms programme, the strengthening of the army, important for financial markets and investors?
Because who will want to invest or at least keep their investments in a country which could soon be occupied? A strong Polish army, well-equipped, with well-trained soldiers, is a guarantee of our security, including economic security, and also underlines our position as leader of the region. In this way we also become a distributor of security for our neighbours. It is not the case that this is not seen by the mighty powers next to us, which would prefer Poland to be weak, dependent and submissive. This is why they give so much support to political forces that pointlessly attack objectively crucial issues for Poland’s development, such as investment in infrastructure and the expansion of the army.
Chaos as the greatest threat?
The effects could be dramatic. Looking at it objectively, from the perspective of NBP, the best thing would be to continue the current path of development. This model simply works very well, improving peoples’ lives, developing the economy, and strengthening state security. I have 50 years of academic and scientific work behind me, a presence in public life, and I am already serving my second term as Governor of NBP, and I can see that it is a very good period for Poland and for Poles. Some even say that it’s the best period in history. They are very right, although it of course opens up an interesting debate about the position of Poland in the 16th and 17th centuries, and there’s no room here for that. Certainly we all agree that since 2016 we have had a period of economic triumph, catching up with the West, and this development can easily be ruined by unwise, irresponsible and unpatriotic policies.
What do we owe such rapid and stable development to?
The main factor has remained unchanged since the formal fall of communism: the intensive, long and effective work of Poles. In addition, the very high quality of Polish employees at all levels, their good education, personal culture, everyday culture, which is emphasized by all investors who come here and which we ourselves do not appreciate enough. What is important, and what is also visible among Poles living abroad, is the ability for self-development, ambition, desire for promotion, desire to educate one’s children, to possess a flat or house. We are a good, exemplary product of western Christian civilisation.
And the remaining factors?
The next is the leap in infrastructure development made in recent years. Roads, ports, airports, plans in these areas, such as the Centralny Port Komunikacyjny (central transportation port), petrochemical industry, energy infrastructure – it all fuels development. If we slow down here, the effects will be felt quickly. Then we have the effective and efficient functioning of the state institutions. We often complain about them, I could also write a long article on this subject, but compared with others and with what once was, they are on a high level. For example, corruption has been reduced to a minimum, much to the credit of the Central Anti-Corruption Bureau, which primarily monitors those in power. Little is said about the fact that we are absolute leaders when it comes to ensuring that EU funds are not stolen.
Because it does not fit the propaganda image of a country with “rule of law problems”. There are countries in our part of Europe which took similar funds for roads as we have, and when you drive on them you don’t see the effects. And nobody will say a word that there is a problem. What’s going on here?
It’s that these countries are “well-behaved” and want to join the euro area and the centralised European state under the leadership of Germany. All the EU’s criticism of Poland is a way to force us into submission.
Which is why they are blocking the National Recovery and Resilience Plan?
Yes, although the funds from the National Recovery and Resilience Plan are of minimal importance for economic development. They would give economic growth of 0.3–0.4% of GDP. With our normal growth of around 4% this doesn’t matter much. The political character of this blockade, its actual illegality, is beyond doubt, and it is not even particularly hidden. It is worth underlining that Poland’s accession to the European Union gave us such a leap, not because money started raining down on us, because that wasn’t the case and it was intended from above for predetermined purposes, but because we obtained access to the single market and we were able to make use of this chance. We should also remember that the western states gained from this much more than we did. They entered a hungry, poor market, they built powerful firms, trade networks, they enjoy huge profits. The National Recovery and Resilience Plan is used as primitive economic blackmail against Poland. We shouldn’t succumb to it.
This also concerned the banking system and the media. That’s good?
In these key areas for the state it is a bad, unhealthy situation, because we are talking about pillars of the economy where a note of patriotism is necessary, where we also need to be guided by national interest. Only the current government has restored the necessary balance in the banking sector, “repolonising” some of the banks via market transactions. It wasn’t successful in the case of the media industry. After all, everyone can see that German capital in the media industry is not guided by Polish interests, but German interests. And that is actually in every case. This situation is harmful. We also see this in the debate about the shape of the EU. These media vigorously promote ideas, which are harmful to Poland, of changing EU Treaties, abolition of veto powers, and extremely limiting state sovereignty.
Do you agree with the argument that this would represent a threat to Polish independence?
Plans made in Germany – whether it is in the coalition agreement or announced directly by Chancellor Scholz – mean a loss of political, economic and defence sovereignty. Here there can be no doubts. On top of this is the argument that all this will ultimately result in pushing the United States out of Europe strategically and militarily, the dismantling of the security system, and the end of NATO as we know it. This would be the end of an independent Poland. We would then merge into some sort of centralised structure which would be a modified version of the German Reich and whose decision-making centre we would have no influence on. This is, after all, the eternal dream of the Germans. I even understand them, after all, it is an old, attractive vision. But from the Polish point of view it is an extremely dangerous change. I feel a Pole, not a German, and I am strongly against this.
Perhaps we would at least become as wealthy as Germany?
Of course not! It’ll be the opposite. Today, as a sovereign state, we are catching up to living standards of the West. It is no accident that in the political debate in the United Kingdom it is mentioned that in 2030 Polish families will have higher incomes than British families. In this new “federal” Europe, our growth rate will be equal to the West’s, which will mean stagnation. They have already accumulated so much wealth that it’s enough for them, but we have to go faster.
What are the consequences of joining the euro zone for countries such as Poland?
It is a currency formed and managed in such a way as to favour the richest states. It takes away the dynamism, competitiveness and possibility to respond to crises of those that are growing.
They encourage us to join the euro area, saying that – lying in a dangerous place – we will gain another anchor to the West. Is that a strong argument?
According to this logic, it would be better to dissolve the Polish state, become a German land and then we would be fully anchored. It is always necessary to see all the consequences. And our geographical location is, from a political point of view, tragic, but economically, between the East and the West, it is currently very favourable. If we don’t halt the process of building a strong army, the risk factors related to our place on the map will significantly reduce the impact. Every investor will know that Poland will defend itself. I urge all economists and entrepreneurs not to ignore this factor. In our place in Europe there is no possibility to be economically strong without having military strength.
Several days ago I participated in a panel discussion at the NNW Film Festival in Gdynia. The wise Polish entrepreneurs present there emphasised the same thing: without a strong Polish state, nobody will keep their wealth and life’s work. Sooner or later it will all be lost, just like the fortunes of the Polish aristocracy were lost during the Partitions.
I agree, fortunately many Polish entrepreneurs also understand this. There is no Polish economy without Polish independence. I don’t want to praise the government too much, but this great organisational and financial effort is implemented very efficiently, with effective use of the available tools. For example, the United States recently granted Poland a USD 2 billion loan for this purpose.
We are developing our own defence industry, but we buy the bulk of the equipment – from the United States and South Korea. Is this the right thing to do?
This dilemma was resolved in 1939. Because the authorities of the Second Polish Republic were also faced with a choice of whether to focus on their own defence industry or purchase ready-made weapons. They chose to build the Central Industrial District and, unfortunately, they didn’t manage to launch mass production of weapons before the German and Soviet invasions. Today, the government concluded that we cannot take that risk, that we must arm ourselves immediately. And they are right to do so. However, we should remember that these agreements include technology transfer. We will see the results in a few years, we will become a producer and certainly an exporter of modern weapons. We are mixing Korean and Polish technology. This could yield great results.
Someone could say: isn’t it better to rely on our allies? Wait for help?
On the Vistula line, as Donald Tusk’s defence plans provided for? In such a situation Poland would be destroyed and a large part of the territory occupied. The Americans would certainly react. But when? And the Germans? Here I am not so sure. I repeat: in such matters, it is best to rely on yourself first, and only then on your allies. And it is not worth listening to that part of the elite that looks with distaste at the idea of building a strong army. The truth is that when the Russian invasion of Ukraine began, many of them packed their bags and wondered whether to leave or whether to wait a while.
This is why they are also not worried about the effects of mass illegal migration? It most often affects normal, hard-working people.
It is worth looking at this issue from the economic point of view. Our advantage is the lack of serious cultural and national conflicts or a whole series of unfavourable phenomena related to mass illegal migration. We have a chance to avoid the mistakes of the West. Which of course does not mean that we do not have employees from abroad. They are here, but they function here on the basis of equal rules for all, respecting Polish law and customs. Every country has the right to accept those that it wants, to establish certain criteria, and to refuse to accept those that it does not want. And this is not racism, but protecting our security, social cohesion and the economy. We are doing it well and it works. Belarussians, Ukrainians, Filipinos, Vietnamese and others fit in well with us.
However, Germany want us to accept unproductive people from Africa. Lukashenko and Putin also want to break our border. What would happen if we submitted?
The sovereign state must firmly reject this pressure. Every country exists as long as it defends its borders effectively. When they fall, then misfortune begins. Poles remember this well. That is why NBP issued coins devoted to the defence of the eastern border and the Border Guard. I am pleased when I see the success it has among collectors.
What is your view of the shameful words of some of the opposition politicians, media and celebrities regarding the defenders of the Polish border?
They were scandalous and should be condemned. This is how the treacherous fifth column behaves. In a situation where such a bloody, ruthless war is taking place in Ukraine, when the entire West understands that the free world, our civilization and political and economic community, is being defended there, how can one attack our armed forces so falsely? The forces defending the border? The government and other state institutions? The Constitutional Tribunal? And also Narodowy Bank Polski? It is hard to resist the impression that these attacks are also an element of the hybrid war against Poland. I am not speaking of criticism, because that is something normal, but about striving for “nullification”, taking away legitimacy.
What motivates the authors of these attacks? Do they want to return to power so badly?
Some of them are conscious traitors, others have been deceived, fooled and duped. It is all the easier because a large part of the media in Poland is owned by German capital. It is an element of stirring up emotions so that people don’t think rationally, so that they don’t calmly judge their lives and the state of the country.
Prof. Zdzisław Krasnodębski has recently said how he asks German journalists why they don’t tell their readers what language Donald Tusk uses in his campaign. Because in Germany they value substance and calm, and they elect a downright boring Chancellor Scholz, while the coalition agreement is a precise plan for governing. And meanwhile, a politician from the same European faction offers us only emotions and jokes that no programme is needed. What are the Germans playing at?
We all know how it is. The eternal Russian-German tendency to create a condominium out of Poland, more or less deepened, unfortunately, comes back from time to time. This is also the case this time. This desire to divide spheres of influence somewhere along the Vistula line is visible, unfortunately. We are constantly hindering some of their plans. Poland is too big to passively submit to their authority, to focus solely on urban beautification and the well-being of citizens. But at the same time, we are so small that conducting independent politics requires enormous effort and means tension and conflict. However, ultimately it pays off very well. I encourage Poles to stay on track. It is not much, but as our historical experience shows, it is impossible without a sufficiently numerous, determined and courageous elite.