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Anne W McNeill  10/06/2006 12:07:08 PM  From  DB/Inbox:  Search Results

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UNCLAS        WARSAW 01632

SIPDIS
CXWARSAW:
    ACTION: ECON
    INFO:   ADM MGT ORA FCS POL DCM AMB PAS

DISSEMINATION: ECOX
CHARGE: PROG

APPROVED: ECON:LGRIESMER
DRAFTED: ECON:MSKWARCZEK/AJAR
CLEARED: ECON:NONE

VZCZCWRI163
PP RUEHC RUCNMEM RUEATRS RUCPDOC RUEHKW
DE RUEHWR #1632/01 2200651
ZNR UUUUU ZZH
P 080651Z AUG 06
FM AMEMBASSY WARSAW
TO RUEHC/SECSTATE WASHDC PRIORITY 1596
INFO RUCNMEM/EU MEMBER STATES  PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUEHKW/AMCONSUL KRAKOW PRIORITY 1248

UNCLAS SECTION 01 OF 03 WARSAW 001632 
 
SIPDIS 
 
Sensitive 
 
STATE FOR EB/EUR/NCE KOSTELANCIK AND SESSUMS 
USDOC FOR 4232/ITA/MAC/EUR/JBURGESS, MWILSON, JKIMBALL 
TREASURY FOR OASIA MATTHEW GAERTNER 
FRANKFURT FOR TREASURY JIM WALLAR 
 
E.O. 12958: N/A 
TAGS: EFIN ECON ENRG PREL PL
SUBJECT: Poland: Frank Mermoud's Visit 
 
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SUMMARY 
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¶1.  (SBU)  Frank Mermoud, Special Representative for Commercial and 
Business Affairs, visited Warsaw July 14 to urge the Polish 
government to change its position on the 13% reduction in 
reimbursement prices for imported drugs that became effective July 
¶1.  Other topics discussed included energy security, European 
integration and the Poland-U.S. bilateral economic relationship. 
Mermoud advocated that Poland take a bolder approach to energy 
supply diversification and look to alternative energy sources.  He 
suggested that Poland turn to the private sector, including U.S. 
companies, for energy diversification.   End Summary. 
 
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Ministry of Health 
------------------ 
 
¶2.  (SBU)  At the Ministry of Health, Mr. Mermoud met with Deputy 
Minister Boleslaw Piecha, Piotr Blaszczyk, the Director of the Drug 
Policy Department and Zbigniew Niewojt, Chief Pharmaceutical 
Inspector.  Mermoud began by discussing U.S. dismay at the recently 
enacted 13% reduction in the reimbursement prices of imported drugs 
and asked the Deputy Minister to cancel these price cuts.  He also 
reminded Piecha of the promise Minister Religa made to Secretary of 
Commerce Gutierrez at a meeting in Warsaw earlier this year to 
maintain a dialogue with industry, which had not happened. 
 
¶3.  (SBU)  Piecha assured Mermoud that he has maintained a dialogue 
with industry and said that he would set up an additional meeting 
with the American pharmaceutical companies in order to discuss the 
price cuts and expansion of the reimbursement list directly.  In the 
interim, Piecha said that he did not have the authority to cancel 
the price cuts because a decision to change the ordinance would 
require all of the ministries' input and agreement.  He explained 
that the reason for the price reductions in the first place was to 
free up funds in order to raise salaries of healthcare workers and 
to place more innovative drugs on the reimbursement list.  Piecha 
also described in detail  planned changes in Poland's reimbursement 
policy including increased transparency and efficiency and the 
addition of even more R&D drugs to the reimbursement list. 
 
-------------------- 
Ministry of Economy 
-------------------- 
¶4.  (SBU)  At the Ministry of Economy, Mermoud met with Andrzej 
Kaczmarek, Deputy Minister of Economy, Cezariusz Kwaterski, Director 
of the Department of Bilateral International Cooperation, Zofia 
Schnitzer, a specialist in the same department, Zbigniew Barszcz, a 
specialist at the Department of Economic Development and Wojciech 
Szelagowski, Vice President of the Polish Information and Foreign 
Investment Agency.  Kaczmarek stated that Poland is interested in 
cooperation with U.S. companies in the field of clean coal 
technologies as it is rich in coal and anticipates utilizing coal as 
a its main source of electric power production in the future. 
Poland is also interested in joining the Coal Sequestration Forum. 
During the upcoming US-EU Summit, Poles hope to have meetings with 
American companies to convince them to participate in projects 
including an LNG terminal and the Odessa-Brody-Plock pipeline. 
 
¶5.  (SBU)  Kaczmarek was aware of the reduction of reimbursement 
prices on imported drugs but said that he did not have the authority 
to significantly influence the government on this issue, citing the 
Ministry of Health as the point of contact.  He emphasized that 
Poland wants to maintain a good business relationship with the U.S. 
In regards to the Caterpillar issue, Kaczmarek said that the new 
Energy Bill that will take effect in 2007 will help solve the 
controversy.  Addressing the AIG real estate development issue, 
Kaczmarek said that any potential decisions would be made by the 
local government in Raszyn.  He was frustrated that the central 
government could not do more to solve the problem. 
 
---------------------------- 
Ministry of Foreign Affairs 
---------------------------- 
¶6.  (SBU)  At the Ministry of Foreign Affairs, Mermoud met with 
Beata Kolecka, Deputy Director of the Department of the European 
Union.  Kolecka enumerated Poland's priorities in its bilateral 
relationship with the U.S. as energy security, the Balkans, the WTO 
and changing the current non-immigrant visa regime. 
 
¶7.  (SBU)  Kolecka stated that the diversification of energy sources 
was a priority for Poland and emphasized the need for transparency. 
She urged the U.S. government to press for equal treatment, 
transparency and ratification of the energy charter and transit 
protocol at the G-8 summit.  Kolecka stated that EU cooperation on 
energy security issues should also be extended to other Easter 
European countries, notably Ukraine.  She mentioned several times 
that Poland and the EU are very interested in keeping Ukraine part 
the European sphere of influence and do not want to see it 
cooperating closely with Russia.  Mermoud echoed this sentiment. 
When Mermoud asked about the recent Ministry of Health price cuts on 
imported drugs, Kolecka was unaware of the problem but agreed that 
all pharmaceutical companies should be treated equally under the 
law.  She assured Mermoud that she would follow up with the Ministry 
of Health to attain additional information.  At the end of the 
meeting, Kolecka raised the issue of the US-EU Passenger Name Record 
(PNR) agreement. 
--------------------------------------------- ------ 
Polish Confederation of Private Employers Lewiatan 
--------------------------------------------- ------ 
¶8.  (SBU)  Janusz Kaczuba, an advisor on international relations to 
the Polish Confederation of Private Employers, Lewiatan, and former 
Minister of Finance also met with Mermoud.  Kaczurba explained that 
populism in Poland is on the rise and that organizations like 
Lewiatan are vital in counteracting the trend by supporting liberal 
ideas.  Kaczurba is concerned that a booming economy will put 
pressure on the GOP to increase social transfers, asserting that 
excessive social spending can be detrimental to the budget and the 
economy.  Asked about the revised Lisbon Agenda, Kaczurba  said that 
Lewiatan is determined to work actively with the current government 
on implementing the Agenda in Poland, especially in the area of 
innovation.  A recent survey carried out by Lewiatan found that 
innovation is at the bottom of the list of priorities for Polish 
businesses. 
 
¶9.  (SBU)  Kaczurba believes a more flexible labor law in Poland is 
needed, but is not sure the current government will take up the 
challenge.  Kaczurba supports introducing labor laws that emulate 
those found in other EU countries.  Lewiatan is also interested in 
exchanging best practices with the U.S. on management techniques and 
labor relations, especially in medium-sized companies.  Mermoud 
suggested organizing a seminar between Polish and U.S. partners on 
topics such as technological development, management practices and 
trade issues. 
 
¶10.  (SBU)  At the end of the meeting Mermoud promised to introduce 
Lewiatan to the Council of Competitiveness as the first step towards 
developing a relationship between the two institutions.  Both sides 
agreed that it would be worthwhile to encourage Polish officials to 
visit business organizations in the U.S., with the Chicago Executive 
Club being named as a good starting point. 
 
--------------------------------------------- --------- 
Department of Economic and Social Analysis, Office of European 
Integration 
--------------------------------------------- --------- 
¶11.  (SBU)  Piotr Serafin, Director of the Department of Economic 
and Social Analysis of the Office for European Integration and Jan 
Hofmokl, an expert from the same department also met with Mermoud. 
Serafin explained that at the request of the League of Polish 
Families, the Office for European Integration prepared a report on 
the costs and benefits of Poland's membership in the EU for the 
period May 2004-May 2006.  The report shows that the Polish economy 
benefited from joining the EU as exports are rising, the Zloty 
remains strong and foreign investment has increased.  The sector 
which appears to have benefited most from EU accession is 
agriculture.  Hofmokl observed that during the two years of EU 
membership, Poland's trade has increased faster with its eastern 
neighbors (Russia and Ukraine) and with other Visegrad countries 
than with the West.  Nevertheless, Germany still remains Poland's 
main trade partner. 
 
¶12.  (SBU)  Serafin noted that energy diversification is the obvious 
course for Poland and that the involvement of U.S. companies in 
energy security planning is a good idea.  He added that Poland made 
a mistake by taking the energy security issue outside of the EU at 
the March 2006 summit. 
With regard to absorption of EU funds, Serafin believes it is 
necessary to wait a few more months for an accurate assessment of 
the situation.  Currently he observes a huge demand for funds from 
local governments and NGOs.  The quality of the projects has 
improved, with about 80% of submitted projects receiving a positive 
assessment.  In addition, local and regional authorities are doing 
well regarding spending of EU funds.  However, problems remain with 
large infrastructure projects and it is estimated that only 0.01% of 
funds have been spent on them. 
 
¶13.  (SBU)  Special Representative for Commercial and Business 
Affairs Mermoud cleared on this cable. 
 
HILLAS