Euro 2012: The Cost

As the UEFA Euro 2012 tournament opens and soccer madness grips everyone in patriotic fervor, there are already calls and questions on whether the games were actually worth it to Poland and Ukraine.  (By the way, the games opened yesterday with a 1-1 tie between Poland and Greece.  Russia stomped the Czechs (think 1968 style) 4-1.)  Several articles—a couple are here and here—bring up the enormous cost of the games as well as citing precedents, namely Greece with the 2004 Athens Olympics, but also the Euro 2004 Portugal games.
First off, cost: it's widely claimed that Poland spent $25 billion dollars getting ready for the games.  That's a staggering amount, no doubt, and one should look a little more closely at it.  The real cost was in infrastructure improvements, ($15 billion on roads alone), whilst the cost of the four stadiums (construction and renovation) amounts to something around $1.5 billion.  There are also other costs, such as: security (not just providing security, but also the cost of arrests and trials.  Notably, inmates were moved from host cities to jails in other cities to make room for expected arrests.  Many judges were put on standby to handle the increase in prosecutions as well), building the strefa kibica (fan zone), clean up, etc.  But these are paltry sums compared to the overall total.  Poland spent more than Ukraine, but then again, it did have access to EU money.
The claim that Poland spent $25 billion preparing is ludicrous and wrong.  Much of that money is EU money that was flowed in Poland to help rebuild its decaying infrastructure.  All the projects were already earmarked before Poland even made its bid for the games.  Now, the tournament probably increased the priority of certain projects—the case in point being the semi-notorious A2 Berlin-Warsaw highway.  It gained notoriety for: A) Having the Chinese contractor be kicked out because it failed to pay its sub-contractors.  B) Being opened when still incomplete for the Euro 2012, and will have to be closed afterwards to finish it up (an extra layer of pavement is needed on a good-sized portion).  But the A2 highway wasn't built for the games, it was going to be built anyway, and probably on the same schedule.  The second metro line has as much to do with the Euro 2012 as do the new trams in Lodz, Krakow, and just about everywhere else (cities that are not hosting the games, but renovated their tram lines).  It has not been noticed much, but Poland has also been using EU funds to build small, rural roads (this will be covered in a future post).
That's not to say the games did cause infrastructure and other projects to be done.  There are, but not what everyone thinks.  The real cost that can be directly attributed to the games was building the stadiums, and it's quite shocking to see the main contractor file for bankruptcy protection.  There was a big push to beautify the cities before the games came, and it shows.  Renovations the rail stations, finished just in time, have turned the dank platforms and corridors into hallways of light.  Warszawa Centralna's transformation has eased travel through there and really updated it as a gateway into the city.  Speaking of gateways, it may have been planned long ago, but the recent opening of the SKM line to the airport is sure to be a boon for travelers.
Infrastructure has received much of the attention, but the stadiums themselves have attracted their fair share of criticism.  Most barbs are aimed at the National Stadium in Warsaw.  The high cost of the structure, at almost 2 billion zlotys, has dropped some jaws.  Critics say that it'll turn into a white elephant, a costly building to maintain and will be under utilized.  The Polish National team doesn't have a long schedule to ensure that paying fans will be packing the stands every week, but events have already been scheduled.  From concerts to the Polish Bowl (I think I'll attend that), the building is a prime venue.  It has to compete will the Sluzewiec racetrack (hippodrome) and the Bemowo airport for such events like concerts and music festivals.  Other stadiums have taken the fashionable thing and sold their naming rights to offset the cost of construction and operation.  (Note:  Ironically, when the Polish National Team recently played Andorra, they played at the Pepsi Arena, home Legia Warszawa, and not in the National Stadium, which was under UEFA control.)

Now that we have spent so much time harping on the cost, let's look at the gains.  Poland is betting on two things to recoup the cost of the games: an increase in tourism (not just the short-term spike, but also long term), and an increase in investment.  Tackling the second hope first, Poland is trying to show that it can execute big projects on time, plus show off its shiny new roads and rails.  An influx of foreign capital will cause the ever-growing forest of stationary cranes standing above halted construction projects to finally move once more.  The first hope is for an increase of tourism, on which Europe is increasingly becoming reliant (think Greece and Portugal).  Poland wants to show that they're not all racist anti-semites, regardless of what the BBC aired.  The increase of tourists during the games is a given, and they'll spend big, buying all sorts of bric-a-brac and crap in the form of Euro 2012 souvenirs.  As for the future, Poland hasn't showcased its crown jewels (read: Krakow), here, but the hosting cities are known to be beautiful, Wroclaw and Gdansk in particular.

While the games are costly, the cost isn't so high as is reported.  Most of the work done was financed with EU help, but there were also smaller contributions, such as the EEA and Norway grants.  The great part of the infrastructure improvements were already set forth and would have happened anyway.  What we're seeing is a developed economy rapidly modernize, closing the gap in deficiencies, and increasing its debt.  This happens all the time with developing economies, and is now going on in China (all eyes are on them).  The question is whether the EU money will continue to flow, especially as other countries are one-by-one seeking bailouts.  The spigot could be turned off and Poland could be left with a mess of half-finished projects and join the sad graveyard of countries who were too ambitious in their hopes to host major international competitions.
What will the future be and what will the games leave as their legacy?  I don't know and no one does, but they have served a purpose to strengthen national pride and open Poland to the rest of Europe.  Whether the gamble that they'll increase tourism and investment will pay off, that's something we'll just have to wait and see.

Go Buy Some Flour

Why you should stock up on flour next time you go shopping.

We've all heard about the rampaging forest fires in Russia this summer.  They blanketed Moscow in dense, poisonous fog (doubling the death rate) and burned millions of acres.  What they also did was burn one third of Russia's wheat crop.  With Russia the fourth-largest producer of wheat in the world, you can bet that come harvest time, the prices are going to rise.  With the rise of wheat prices, naturally comes the rise in flour prices.  Prices are pretty low right now, so you ought to stock up.

Recently, every time I've gone out shopping I have bought a kilo or two of flour (usually tortowa typ 450 (cake flour, at 1.14zl), but luksusowa typ 550 is cheaper (1.03zl).  I now have around seven kilos flour, which will probably last me a month or two.  Due to my baking habits, I generally run through flour faster than most.  But, taking no chances, in order to preserve the extra flour and increase its longevity, I stash a couple of kilos in the freezer (to ward of creepy crawlies and bugs.)

Flour prices will not be the ones to rise; prices for wheat-based products (bread, prepared foods, confections, etc.) will probably rise as well.  As we all know, Poles are pretty passionate about their bread, so they might grumble if the prices rise a little too much.  The problem is that they can't be stored as long as flour can.  The rise in wheat will ripple through the agricultural sector, creating increases of varying sizes in places you might not expect.  It's not unlike an increase in oil prices.  When oil rises, it's not just gasoline and home heating prices that rise, but also things like: paving the roads (asphalt is made of petroleum), flight and bus tickets, food prices (cost of transportation), cosmetics, etc.
Of course, this is all speculation.  I hesitate to actually scream from the rooftops that flour may rise a couple grosze, or expect that anyone would care much.  A strengthening zloty would make up much of the difference (while a weakening zloty would make it worse.)  There might be bumper crops, not only in Poland, but also in Ukraine, the US, China, France, and Turkey.  Together, they might make up the difference and cancel it all out.  But, it doesn't hurt to be prepared.  It's more likely that the prices will rise rather than drop, so shell out a few extra zloty not to grab a couple extra kilos of flour.  It keeps a long time (if stored properly) and we're heading in to cooler weather, which will make storage all the more easier.

I make a mean sourdough out of this stuff.

Poland's Shale Gas: Benefits and Drawbacks

Again on the shale gas issue.

One of the reasons Poland was able to avoid a recession whilst everyone around them contracted was that Poland had an independent currency that happened to be valued lower than both the dollar and the euro.  This low-value currency makes Polish goods and services cheaper (and imports more expensive, which incentives Poles to buy Polish goods), also it makes Poland an attractive place to invest.  Foreign companies are tripping over themselves to set up shop in Poland (Dell, Fiat, GM, and now energy companies.)  The zloty is now being looked at as a cherished pillar of the Polish economy, and skepticism of the euro has grown (especially after seeing what happened recently to Greece.  Many in Greece lamented being tethered, which was relatively strong, and not being able to de-value the currency to give a jump start to Greek exports.  Also, China keeps the yuan pegged lower to the dollar for just this reason: to make Chinese exports more attractive.  Right now, many countries are engaged in a 'race to the bottom' of de-valuing their currencies.)
Huge energy reserves are a mixed blessing, and it is right to fear the onset of Dutch disease.  Dutch disease describes an economic condition where one commodity (usually energy or natural resources) becomes a main engine of the economy and the currency rapidly gains value against other currencies.  It's called a disease because with the rise in the currency, the country no longer becomes a feasible place to manufacture goods and its agricultural exports become more expensive.  Commonly-cited examples are Venezuela (oil), the US (financial services in the '80s and '90s), Russia (oil and gas), and, of course, the Netherlands (the discovery of gas).  When prices are high and everything is humming alone, it's all good; once the price of gas crashes, Poland's economy goes into a tailspin and only recovers when the price of gas does (this recently happened to Russia (the price of oil and steel dropped in 2008) and Venezuela.  It also happened to Ireland and Iceland with the banking crises.)  This can be mitigated by proper investment into wider areas of the economy.
A huge explosion (pardon the pun) of gas exports from Poland would undoubtedly cause the zloty to rise, maybe even overtaking the euro.  If that were to happen, Poland's developing manufacturing and agriculture base would come to a screeching halt.  Foreign companies would move their factories to cheaper countries and Polish-manufactured goods would become quite expensive.
The zloty's rise would, however, coincide with the mandated move to the euro (if the euro still exists around then.  Some think that the euro will be gone within five years, probably because Germany will pull out.  NOTE:  I'm not going to opine whether I think the euro will stick around.  I honestly don't know.)  So, the zloty's rise would be drowned out, because then Poland would enter into the euro area and the currency would depend more on the strength of the area than just that of Poland alone.

Beyond this sudden "doom and gloom" image I painted, the outlook certainly looks good.  Even if the zloty rises, that means that imports, and thus variety, are cheaper (I went shopping today, so I can tell you that I was none too pleased over the choices and variety of foodstuffs.  500 types of pickles, but no tahini: this isn't fair.)  The average salary in Poland, which now stands under $20K, would most certainly rise.  Poland would pour even more money into infrastructure improvements.  Also, it would help mitigate the problem of Poland's aging and shrinking population (another topic to which I will devote a post) by helping to prop up their pension and health programs.
Money is money, and resources are resources.  But Poland will have to be careful how it handles this new-found gas.  If they don't handle it just right, it might come around to bite them in the ass years down the road.

The Problem With Russia

It's no secret that not a lot of people like the Russians.  The Poles despise them, the rest of Europe doesn't trust them, and the North Americans view them with a mixture of distrust and misunderstanding.  Places like India and Armenia have warm relations with Russia (party because Armenia is surrounded by enemies and India needs an arms supplier that is not an ally of either Pakistan or China.)  The Serbs adore Russia and Ukraine is split: part of Ukraine wants warmer relations with Russia and the other parts loathes it.  I can also bring in the opinions of the Abkhaz, the Ossetians, the Georgians, the Chechens, the Ingush, and Kyrygz and the rest from Central Asia.
But let's move beyond lists of Russian-Foreign relationships.  Russia remains a center of concern for much of the West.  The 2008 war with Georgia drew widespread alarm (from the Baltic States, Poland, and Ukraine) and condemnation.  Don't be fooled, Russia is modernizing its military (the recently flight for the Sukhoi PAK FA T-50, the development of the S-500 missile system, the introduction of the T-90 tank, etc), and it aims to not be the embarrassing mess of the 1990s.  Beyond the military, Russia is trying to regain its sphere of influence (by using grants and loans) and push against US and EU intervention in the near abroad.  But, the biggest thing about Russia; what just gets those in the EU the most, is that it is an energy superpower with a heavy hand.
What is surprising is that Angela Merkel, the Chancellor of Germany, has had her nose hilt-deep in Putin's ass.  Or maybe it's not very surprising at all.  Germany, like most of Europe, needs Russia's oil and gas, and Russia is happy to oblige.  It's not that Germany admires Russia, or holds it in any esteem, it just wants easy access to reliable hydrocarbons.  Russia, however, is anything but reliable.  It seems like every winter they get into a tussle with Ukraine over unpaid bills, prices, and accusations of syphoning, and they threaten to turn off the taps, which they have done.  This actually does little to affect most of western Europe, since that gas goes through Belarus and Poland.  It will affect them even less when the Nord Stream pipeline is completed.  There are moves, such as the Azerbaijan-Georgia-Turkey pipeline to curb reliance on Russia, but it's not seen as much.
Beyond the common spats with Ukraine that disrupt supplies, Europe (consequentially NATO and its allies) has a bigger problems.  They can't really criticize or confront Russia very much, for fear that Russia might use energy as a weapon.  Thus, both the EU and NATO are usually bound with one hand behind their backs when dealing with Russia.  Russia throws a tantrum over something, and the rest of Europe is scrambling to think of how to calm it down without angering it too much.  If there was a serious mixup with Russia (politically or militarily), Europe would face a catastrophic shortage of natural gas, and Russia knows it.

Enter Poland and shale gas.  Optimistic forecasts of Poland's new shale gas wealth are extremely high.  Some are even calling Poland the next Qatar (don't pull your pricks out of your pants just yet, lads.  Let's see how much gas there really is in that rock before your start rolling on your rubbers to party.)  Interest in Poland's potential gas wealth has exploded, with big-time US energy companies signing on.  Many an economist and energy trader suffered whiplash from the speed at which they turned their heads to Poland.
Shale gas is becoming quite lucrative in the US, with many companies 'perfecting' its mining.  New wells are being drilled constantly, often without thought of environmental impact.  It's been said that many families in rural Pennsylvania (a top shale gas-producing state) can light their tap water on fire.  It's likely that there will be greater restrictions and discretion in the permit process than currently in the States, which might slow development down a bit, but also might protect the inhabitants and environment a bit more.
But what does massive gas deposits mean for Poland?  Will Poland turn into one of those hydrocarbon-reliant wonderlands where no one pays taxes, the government builds massive phallic buildings, and everyone is rolling around in obscene amounts of petrodollars while getting laid?  Who knows (don't try to predict what will happen; you won't be right.)  The point is, is that Poland stands a lot to gain both economically and geopolitically.  Poland now gets about 70% of its gas from Russia and if Poland could produce enough gas to meet domestic demand (which would inevitably rise), it would be a amazing.  If Poland could export gas to the conveniently-close-and-in-the-European-Union Germany, Czech Republic, Slovakia, Lithuania, and Austria, it would a miracle.  Many of these countries are overwhelmingly reliant on Russian gas, and most of them think of Russia as kind of a dick.
The role of Poland in European politics would be immensely bolstered.  Poland would be seen as a stable, reasonable ally that was worth protecting.  Its strategic importance to the EU (and NATO) would expand greatly.  Not only would it be a frontier state, it would be an important source of energy for its allies (this translates into: Europe and NATO would do a shitload to protect Poland from any sort of aggression (just like the US did with Kuwait) because it would be in their (Europe's and NATO's) strategic and economic interest.)  Some might say that Russia would also sight its sights more keenly on Poland, since Poland would be seen as a key state to Europe's security (from an energy standpoint.)  A worry and criticism from Poland, is that the US did not do enough to shield Georgia from Russia; they worried that the US would do the same to them (this is one of the reasons spurring Poland to accept the missile silos, which were downgraded to patriot missiles.  They felt that if Russia was to invade (and the Poles don't put it past the Russians) that the US would only come to their aid because American troops and interests would be directly threatened.)
Poland, meanwhile, is hedging its bets and is in the process of signing a deal with Russia that will last until 2045.  Until the real results can start flowing from Poland's gas fields, Poland and the EU will still be suckling on the metaphoric gas-nipple of Mother Russia.

Currently Poland's top gas producer.

Angela Merkel.  Her boner will be second only to Tusk's in the event that Poland exports gas.

Tail-Whip

The recent, and rapid, decline of both the Euro and the Zloty against the US Dollar has left me a little unnerved. I expected the Euro to drop according to Greece's woes (as well as those of the entire so-called PIIGS Bloc) but was a little shocked to see how the Zloty fell as well. It's a common misconception that the Zloty is pegged to the Euro, much like the Lithuanian Litas, but isn't. This misconception, as well as the thought that the EU's economies are so tightly integrated, creates a psuedo-pegging.

See, the Zloty isn't pegged to any currency and its governing body is the NBP; however, the Polish economy is so heavily reliant on those in the Euro Area. Since Poland's economy relies so much on countries that use the Euro, it is necessary to take these economies into account when valuing the Zloty. As such, the Zloty fluctuates wildly against the US Dollar, mimicking—in a greater degree—the Euro. When the Euro rises against the dollar, the Zloty will appreciate more; when the Euro falls, the Zloty will fall even further.

All of this is fine and dandy, but it creates a problem for me: I get paid in Zloty, but I generally think of myself earning in dollars (my debts are in dollars.) Summer, 2008, was a very good time when the exchange rate was near 2:1. The Zloty had been falling against the dollar this spring (2.8:1) but has recently dropped to levels I haven't seen since the summer of last year. The Euro has dropped to about 1.2:1 and is expected to reach parity. So, this is generally good news for Europe (especially Airbus, which sells its planes in dollars, but reports earnings in Euros.)

Good for Poland? You bet. Poland is looking ripe for investment. The weaker Zloty makes Polish goods and services cheaper in international trade. Many countries are in a "race to the bottom" to devalue their currency (China has held this as national policy and it's pissing the US off.) The US was hoping to make the greenback crap its pants and lose so much value that American goods would become the most viable choice when buying big-ticket items (planes, guns, machinery.) Unfortunately, Greece had to screw everything up.

The New Hot Thing: Shale Gas

Everyone is bulging in their pants talking about shale gas (at least that the idea I get while cruising the Interscape.) But it's not just those blogging on the Interbutts or politicians giving sound bites, there is real action going on.

The big news is that companies such as ConocoPhillips and Marathon Oil have bought leases to explore potential new gas sources in Poland. The natural gas exists in beds of shale, not just in a porous material. The rock is fractured to let the gas escape and be extracted by a well. It was, up until recently, not very economical to extract gas this way; however, newer techniques, such as horizontal drilling, have led to an explosion of exploitation of shale gas reserves. Shale gas has been mined in the US for some time now, and it's looking to export the expertise to the rest of the world.

As the cost of oil climbs, natural gas is almost constantly getting cheaper. Europe has a ravenous appetite for natural gas, which it uses for heating. Europe is particularly at the mercy of Russia, which exports most of its gas that way through Ukraine. Every winter, it seems like, Ukraine and Russia play a game a chicken, where Russia threatens to shut off the gas (which it did in the winter of 2008-2009) unless Ukraine pays higher prices and stops stealing it for their own use. Countries in Central and Eastern Europe are particularly vulnerable to Ukraine and Russia's game over energy. States such as Bulgaria, Serbia, and Romania are usually the first feel the pinch when the valves close.

Since Russia can be a pretty big dick about it, Europe is constantly looking for new energy supplies. Pipelines through the Caucus Region and through Turkey are particularly prized. It would be even better if Europe could produce the gas themselves. In steps the USA with its massive energy companies who have been doing this thing for some time now. The companies are looking beyond US borders for even bigger prospects in places you might not think.

Poland will be the first to start seeing if it has what every sovereign state covets: a massive energy supply sitting under their pasty, white tushes. Ukraine, seeing that its neighbor is expecting a windfall right near the border, is positively euphoric about the possibility of finding one of their own. No more having to bicker with Russia about gas (or bicker as much, as these gas finds probably won't fulfill their needs.)

The whole thing is though, is that no one really knows if there is gas there and how much. Everyone knows that Poland has coal (coal and gas often go hand-in-hand) but coal is dirty, can be dangerous to mine, and isn't the moneymaker that gas can be. Natural gas is used in industry, for heating, used to generate electricity, is used pumped into oil wells to force the oil up, and can help enrich fertilizers. To be short, gas is gaining importance rapidly, and Poland could (or could not) become a player in the field.

It's Official: Buy Złoty!!!

With Greece still swirling around in the toilet, waiting for Germany to scoop them out and pat them down, the Euro is taking a moderate beating. Many economists see the depreciation of the Euro as a moderate-term event; meaning both the Dollar and the Zloty will be gaining ground against it in the immediate future. The US is expected to raise rates from the near-0% it has now before the ECB does, since the Euro Area has to deal with this new crisis. Poland already has higher rates than both the ECB (Euro Area) and the US, so it behooves one to to borrow from the ECB and invest in Poland. You borrow money for almost nothing, and get a higher return.

In a previous post, I commented how the weakness of the Zloty helped the Polish economy by making Polish goods and services cheaper compared to other countries. I also noted that it was a double-edged sword in that it make imports more expensive (it did: the prices rose by about 30%) especially for energy, namely, oil. Well, I have a two points to make concerning the Zloty's weakness.

I forgot to add that while the Zloty was weaker, making energy more expensive, energy prices themselves were falling rapidly. Oil dropped from $147/barrel to almost $30 faster than you could say "Well, fuck me!" So, while the Zloty was trading near 2 PLN to the $1 in mid-2008, it dropped to almost 3.50 PLN to the Dollar in early 2009, but also energy prices followed suit, taking care of the difference.

The second point, is based on Poland as a brand. Let's face it, Poland isn't exactly known for the quality of its products (Belvedere Vodka excluded, which is known as a premium vodka brand in the US.) Countries like China, India, and the Philippines aren't either, while countries like Switzerland, Germany, and Japan are. The point I'm trying to make is that people will buy Polish goods because they are cheap, not because they are expecting quality. People will buy Swiss and German goods (and pay a little extra) because they think they are getting a superior product, especially in the terms of quality. So, until Poland because a known for its high standard of quality, it should have every bit of help it needs to make its goods cheaper, i.e. a weak Zloty.

By the way, I'm looking forward to seeing how this all turns out. If I'm wrong, so what (barely anyone reads this anyway, and I'm sure even fewer actually take my advice to heart.)

Polish Soccer Fans: Bunch of Damn Hooligans or an Elusive Species?

As the Polish preparations for the Euro 2012 precede from truly shambolic to little-more-than-pathetic (compared to Ukraine, they seem on the ball and ahead of schedule) I come to wonder if Poland is really, truly jazzed about it.

My unscientific, broadly assumptive survey consists of me talking to my students. I interrogate them about their feelings about the Euro 2012, Widzew vs. Legia, and soccer in general. Coming into Poland, I presumed that they would be nuts about soccer. Technically, they are. They have fans that riot and scream and yell, but the rub is, is that I haven't met any of them. I have had class after class, student after student, and all of them claim to apathetic to soccer in any way shape or form. Most couldn't care less about the Euro 2012; they think it'll be an embarrassment for Poland and a hassle with all those pesky tourists clogging up the roads and subway and spending their money. Their apathy is appalling. Fans of soccer they may not be, but they need to look around them and see the massive investment in Poland's infrastructure. Plus, this is the chance for Poland to take center stage (Ukraine will most likely be limping behind, partially in Poland's shadow in the limelight.) Already, the UEFA has threatened Ukraine that Poland might have to host the bulk of the matches (Poland has confirmed they are ready, willing, and able) if Ukraine doesn't pick up the pace. The National Stadium is being transformed from a crumbling pit that hosts a flea market to a big muddy pit to a beautiful new stadium.

The Poles put up more of a fight against each other than against invading Germans and Soviets. (Oh, that's right. I went there.)

To say that I don't know any fans is a lie. A low-down, dirty lie. I actually know one, and he's a huge fan of Widzew Lodz, and an even bigger fan of AC Milan. He gave me a Widzew Lodz scarf, which I proudly displayed in my room. I was warned to never wear it in Warsaw or else I'd "get my ass beat."

I was later informed that Poland has a "league" of fighting armies or whatever. A hundred half-naked fans of one soccer team meets in a field with a hundred equally-half-naked fans of a rival soccer team, and they proceed to do violence upon each other. Sounds fun. This truly brings hooliganism too a new level.

To be honest, with all this talk of hooligans, and the silence of apathy, the most raucous display of fandom was on a bus in Kraków: a few youths chanted "Jazda! Jazda! Jazda! Biala Gwiazda!" Nothing too out of the way of fans in New England chanting, "Yankees Suck!" on the subway, at concerts, at Red Sox vs. KC Royals games, inaugurations, and Ted Kennedy's funeral.

Oh, Euro

There is a big focus and scrutiny of the Euro these days. Many analysts are wondering if the decade-old mega-currency can actually survive this economic downturn. Greece, Ireland, Portugal, Spain and any other countries ready to step forward with their massive debts, have all cast a pall over their common currency. This leaves many questions for Poland, which is currently not in the Eurozone.

The Euro: The next world currency? Or resigned to the dustbin of economic history?

Poland, which was aiming to go over to the Euro in 2012 (just in time for the Euro Cup) probably won't any time soon. I can't blame them. It makes economic sense; many credit the Zloty for helping Poland be the only EU country not to head into recession.

See, the weakness of the Zloty makes Polish goods cheaper to foreign buyers, even for other EU countries (which use the Euro.) While a struggling country, like Ireland, has seen its costs of production rise with the Euro's strength, Poland's remain relatively low. It's the same strategy that the Chinese are using. Companies have responded by shifting a great deal of production to Poland (Dell, for one, moved its massive computer plant from Limerick to Lodz.) Poland and the Czech Republic recently overtook Italy for the amount of cars produced. The exchange rate of the Euro-Zloty can also have a effect on tourism. With the rise of the Euro against the dollar, the Americans have found that it's becoming more expensive to visit the typical places like France, Spain, and Italy. Tours to Poland and the rest of Eastern Europe (including Russia) have risen over 100% since the recession began. Medical tourism is also a small cash cow; many Germans pass over the border for dentist visits and such (don't expect many Brits to do that though; they just come for the strippers.)

A weak Zloty is not all good news though, it makes things like foreign imports (energy especially) more expensive. But, with all this production shifting to Poland anyway, that might just deaden the blow; that, and the fact that the Poles have accepted that foreign stuff is going to cost an arm and a leg.

Talking to people on the street, one may get the sense that they aren't really looking forward to the Euro. Many believe it will drive prices up (see: Cappuccino Effect) and that wages won't follow. Not all are against it, the Government is pro-Euro as are some businessmen. The cost of intra-European trade would decrease and become stable and predictable. Ask a Pole on the street what the greatest benefit the Euro would bring, and the answer would be, "I wouldn't have to change money when going to Ireland/Germany/Italy."