Marcin Chruściel is director of the Service Office of the Government Plenipotentiary for Polish-Ukrainian development cooperation. Prior to that he was president of the Institute of New Europe. In this exclusive interview with Kyiv Post, he explains how and why trade between Poland and Ukraine is gaining traction.
How much trade goes on between Poland and Ukraine?
In 2021, for the first time, trade between the two nations exceeded EUR 10 billion. For 2022, preliminary data indicates that it was about EUR 15.8 billion. Poland has essentially outstripped China to become Ukraine’s biggest trade partner globally.
Expectations are that trade will increase even further.
Why is trade increasing so much?
One reason is the new legislation on trade and investment insurance provided by the Polish export credit agency – KUKE. In short, KUKE has three pillars: 1) Safe trade with Ukraine; 2) support for investments;and 3) support for Ukraine’s growth.
The first pillar offers insurance that protects against loss caused by non-payment for goods delivered or services rendered and covers a wide range of risks. This pillar also includes the reinsurance of transport and a guarantee protecting banks granting letters of credit.
The second pillar helps to secure financing for investments carried out both in Poland for the purposes of export to Ukraine as well as those that will be implemented in Ukraine itself.
Finally, the third pillar aims to secure financing for investment projects carried out by Polish or foreign entrepreneurs for investors from Ukraine (private and state) as well as for foreign investors. This will bring many new investors to the region and support trade.
Photo from the economic missions to Ukraine
How has the on-going war affected trade?
In many ways of course, but let's just look at the Black Sea.
Prior to the war, about two-thirds of all Ukrainian exportswent through the ports. Today, that is no longer an option because of Russia’s blockading and destruction ofUkraine's ports.
Ukraine, now without active seaports, predominantly trades through its western land borders. Poland is helping with that by expanding and modernizing the border crossing points with Ukraine, as well as the transport infrastructure to handle the increased demand.
Can Poland continue to act as a hub for humanitarian and military aid to Ukraine after the war is over?
Yes. In fact, we are already preparing for it. Together, with our Ukrainian partners, we are modernizing border crossings, building more rail crossing points and terminals, and working on joint border customs control to ease the movement of people and goods.
The Polish Agency for Trade and Investment did a survey of Polish companies, asking them if they would be willing to take part in the reconstruction of Ukraine. About 2,500 companies said that they were keen to participate in the reconstruction process.
However, despite the war, there are many Polish companies that are operating in Ukraine.
Really? How many Polish companies are currently in Ukraine?
We estimate there to be about 660 Polish companies in Ukraine, mostly in the western part of the country.
For that matter, we are bringing trade missions to Ukraine - and not only to Kyiv, but across a multitude of western Ukrainian cities. We are prepared to assist Polish companies in networking with their Ukrainian business counterparts and local authorities.
We assist these companies by also making sure they can obtain all the knowledge they might need about the Ukrainian legal system, the Ukrainian procurement system, and potential partnerships with Ukrainian companies.
Moreover, the Polish Development Fund is now creating the instrument of financial support for businesses that are interested in participating in the re-construction process.
But the war is not over?
We do not know when the war will end, but we do know that it is time for Polish companies to begin taking the steps necessary to dive-in and assist in Ukraine's reconstruction and modernization.
Moreover, the Ukrainian economy is obviously suffering due to the war. We want to help bring more businesses into Ukraine, now, so that Ukraine can have as much business running as possible. Keeping Ukraine’s economy going is crucial for winning the war and making future economic recovery much easier.
Photo from the economic missions to Ukraine
Why does it sometimes take 14 hours to pass the Ukraine-Polish border? What is being done to address that?
Well, demand is extremely high as currently there are noother ways in or out of Ukraine than through its western borders. When the border checkpoints were built, years ago, no one would have ever imagined that the Black Sea and all airports would be closed. Those land border crossings were simply not made to handle the huge quantity of people and goods seeking to cross the border daily.
However, we are actively taking huge steps to modernize our facilities, as well as helping Ukraine to handle this increased capacity. Polish companies are working on improving Ukraine's road infrastructureleading to the Polish border and the border crossings themselves. Currently, there are about 130 kilometers of new roads being built in the frame of an intergovernmental agreement.
Poland and Ukraine have also submitted joint projects to the Connecting Europe Facility – a key EU funding instrument for infrastructure investment. These projects include upgrading road and rail border crossings for an amount of EUR 331 million. The agreement on joint border controls and clearance is now being processed –and so it will make everyone's time at the borders shorter.
Marcin, thank you for your time today.
Thank you very much. See you in Poland.
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