EU funds Polish infrastructure

Poland may be celebrating its newfound position as the EU's economic growth champion, but its infrastructure lags far behind the developed European country it has become in so many other respects. Poor roads in particular cost the economy millions each year.

"Our roads are a tragedy," says trucker Jerzy Urbanik, just back from Dunkirk, France. "They're the butt of all jokes". As yet, no motorway reaches Warsaw - the stretch between Poznan and Lodz ends 116 kilometres from the capital.

As this one of the main freight routes from Europe to Russia, much of the Berlin-Warsaw road is a seemingly endless line of trucks moving at around 50 kilometres an hour - and that's when they aren't queuing at the numerous traffic lights.

The Polish government is working to remedy the situation, with an ambitious programme to build more than 800 kilometres of motorway in time for the Euro 2012 Football Championship, and more after that.

Of more than 8 billion euro earmarked for the 2012 deadline, 6 billion is European Union money - mainly from EU structural funds or the European Investment Bank.

Eyebrows were raised,though, when the government granted contracts for two sections of the Lodz to Warsaw motorway to the Chinese firm, COVEC.

"Their bid came in at 20 percent lower than the next valid bid," says Wojciech Malusi, head of the Polish Roadbuilders Chamber of Commerce. "Either someone is helping them, or they are going to pay their subcontractors extremely badly". Moreover, Malusi points out, Beijing would never entertain a bid from a European firm to build a motorway in China under the same conditions applied to COVEC. He compained to the European Commission.

The Commission replied that while there is no agreement requiring EU governments to entertain tenders from Chinese firms, it is up to individual states to refuse them. Warsaw preferred to let COVEC into the market - partly, by its own admission, in the hopes that it would force local contractors to lower their own prices.

As to the suspicions that COVEC put in a lower bid thanks to subsidies, the Commission states: "It is not possible for the time being to use existing EU legislation on trade defence to target subsidies for construction services granted by third countries."

This is the first time a Chinese firm has won this kind of public engineering contract in Europe. For Malusi, COVEC is using Poland to break a taboo: "They'd never have won a contract in France or Italy, say, if they hadn't already built a road in Poland. If there's a precedent, it will be easier in future. Poland is opening the gate to them... But they won't finish it on time, no way", he grins.

COVEC, for its part, denies allegations of dumping and insists its bid "is a rational price at which we are able to still earn a profit". The firm admits that it will use some Chinese labour, but denies accusations that it is taking jobs away from Polish workers. "With the money it saves, the Polish government can build more projects, creating additional job opportunities"...