The New Polish Commonwealth (Part1)

The upcoming Eastern power

Poland’s astonishing growth

As I live next door in Estonia, Poland is a country I am reasonably familiar with. So I often forget how obscure of a location it is for most investors. Together with the Baltic states, this is THE success story of post-Soviet Eastern Europe.

Both total GDP and GDP per capita roughly multiplied 10-fold in the last 30 years. Not even international crises like the 2000 dot-com bubble or the 2008 financial crisis could dent Polish growth.

Source: https://www.macrotrends.net/countries/POL/poland/gdp-gross-domestic-product

Similarly, the geopolitical image of Poland is obscured by outdated perceptions. It is often described as a country partitioned multiple times. The international perception of Poland is that of a minor country brutalized by its bigger, more successful neighbors, Germany and Russia.

This perception has of course some basis. Poland was partitioned and removed from the map several times in the last 2 centuries. This however ignores Poland as a Great Power before this period.

Polish geography

To explain Poland's geopolitical situation, we need to look at Eastern Europe's geography. I will use this very pretty map I found online, depicting the Europe map with a Lord of the Ring style that simplifies geographical features.

The Great European Plain starts in Germany. From Berlin to the Ural Mountain in the middle of Russia, there is no natural frontier, like mountains or large rivers to determine where each nation starts and ends. This plain extends in the South to Ukraine and the Black Sea and in the North to the Finnish forests and tundra.

To give an idea of how flat the area is, in Estonian, the words for hill and mountain are the same. And the country’s tallest “mountain” is a 300m above sea level hill.

This meant constant border conflicts between the dominant powers of the region: Germany, Poland, and Russia (and at times Sweden). Here, borders are determined not by geography but by the temporary military might of each nation/people.

It also has an ugly corollary. Borders in the European Plain are determined by who lives there, not geography. So the easiest way to change permanently a border is to move the people.

Often through deportation, sometimes through mass murder. Germans got deported from the Baltic coast. Baltic people were deported to be replaced by a Russian-ethnic population. Ukrainians repressed Polish and Hungarian minorities.

Please note I am not picking sides here. Literally, all the countries and ethnicities of the region have been guilty of doing it to some extent at one point in the last centuries. This is not out of wickedness but cold, rational geopolitics.

Polish past glory

At its height, Poland (The Polish-Lithuanian Commonwealth) incorporated modern Poland, most of the Baltic states, Belarus, a large part of Ukraine, and even bits of modern Russia.

You can see more details in this great Wikipedia article.

It was the largest and one of the most populous states in Europe at the time. Poland was powerful enough to have one of its own elected as Russia’s tsar in Moscow. This extension deep in Russia did not last long but was still quite impressive.

Maybe this will change a bit your perception of Poland being necessarily the weaker country in the region.

Poland getting back on its feet

At the end of the Cold War, Poland was like the rest of the USSR, an impoverished country lagging behind economically. Contrary to Russia, it also lacked the natural resources (oil, gas, minerals) to provide capital for its rebuilding.

While a lot has been written about globalization and factories being moved to China, the same happened discreetly in Europe.

Poland (and the Baltic states as well as Central Europe) had to capitalize on its human capital. The population was well educated, familiar with European work culture, and more importantly, very cheap. This led Western corporations to move their factories East, especially German firms, but also French, English, Swedish, etc…

Plenty of “Western” companies are reliant on Eastern Europe for their production. Poland-made Ikea ‘Swedish” furniture; “German” cars with Czech, Polish and Hungarian parts, etc…

In a very similar fashion to East Asia, Eastern Europe used this capital influx to modernize rapidly. With the help of EU development funding, this gave countries like Poland first-class infrastructures (highways, water stations, railroads, universities, hospitals, …).

It also gave the population the know-how and connections to perform as well as the best Western professionals. Returning ex-pats who worked and lived 10 or 20 years abroad also brought a lot of talent (and money) back home.

For now, the Polish economic success is based on 2 pillars: cost-effective production in high-value supply chains (especially automotive) and production of consumer goods (construction material, processed food, electric appliances, etc…).

A rising IT and telecom sector and the rebuilding of its defense sector will offer it opportunities to keep growing in other sectors and diversify even more its economy.

I was unable to find an English-language version of this OECD report. Still, here is a diagram of Poland’s exports, goods, and services. Manufacturing and transportation-related goods make up more than half of all exports.

The way forward

In part 2 (for subscribers only), we will explore how a new Polish commonwealth is being forged right now. It will not be a unified nation, but a coalition of Poland + a constellation of smaller countries gravitating around it.

This new power could reach up to 100 million people and a GDP as high as Germany’s (and much higher than Russia’s).

We will explore how Poland is the natural rally point for the other smaller Eastern European nations.

How a Polish-dominated Eastern Europe would look, socially, economically, religiously, and militarily.

The weaknesses that could make these ambitions fail, and what is being done to solve them.

And why the new Polish commonwealth might be a serious competitor to the EU in the long run.