EU Warns Polish Government on PZU

February 27, 2002

The European Commission in Brussels has warned the Polish Government that continued efforts to block the Eureko Consortium from acquiring a majority interest in Poland’s largest insurer Powszechny Zaklad Ubezpieczen (PZU) could have a negative impact on foreign investment in the country.

Eureko has formally requested that the matter be negotiated between the Dutch and Polish governments (see IJ Website Feb. 18), and that if no agreement is reached it be submitted to arbitration in Stockholm under existing treaties.

While the immediate issue is the reluctance of the Polish government to honor a commitment by its predecessor to commence an initial public offering of PZU shares, with 21 percent going to Eureko and its Polish partner BIG Bank Gdanski, which would give them a 51 percent stake and majority controls, the larger question posed by the Commission is whether the reluctance of the present government to continue with privatization plans threatens much needed foreign investment in Poland.

It also puts a potential roadblock in the way of Poland’s application for membership in the European Union, as member states are required to reduce state controls over essential industries, including the financial services sector.

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