Poland: Some Quick Observations

I wrote the article pubished below with expert insight and input from Ms. Jadwiga Stoklosa, Chief Financial Officer of Capital Funding Alliance, LLC and Vice President of CEE Chambers of Commerce Federation, Miami, Florida. My thanks to her.

A recent Brookings Brief[1] that I read online and is referenced below had very insightful observations and opinions about an expert’s point of view on a current event; and in this case it was that President Biden should press Poland and the EU to make up and work together to overcome their differences regarding the unfortunate war that continues to rage in Ukraine due to Russia’s unprovoked actions there.

As we are well aware, Poland has been one of the brightest stars in the global factoring skies over the past nearly 20 years in terms of growth and unwavering support of the SMEs they serve their and provide working capital to. In fact, total factoring volume in Poland reached a record level of over ninety-eight billion € in 2022, up more than 24% YOY. A quick glance at the FCI data below reinforces how much factoring in Poland has grown over the past 7 years. For the year 2016, total factoring volume for the country of Poland was about forty billion €, and since then it has more than doubled in size. Only Belgium, France, Germany, Italy, Netherlands, Spain, and the UK had larger total factoring volumes in 2022 in the EU region than Poland recorded.

But a much more impressive statistic to calculate and think about is the remarkably high penetration rate earned by the Polish factoring industry relative to the GDP of the entire country. Using World Bank/IMF data, the nominal total GDP of the country of Poland in 2023 is $748 billion, and this ranks it the 22nd largest GDP in the world. Per capita, the nominal GDP of Poland in 2023 is estimated to be $19,913 according to IMF data.
The key metric to consider is the total factoring volume for a given geopolitical country or region to the total GDP of the area. And when you do the math on Poland, the effective factoring penetration rate to total GDP is an impressive 13.8% ($748 billion using a current exchange rate of the € works out to total GDP of about 706 billion € divided by 98 billion € = about 14%). This confirms the key role the factoring industry in Poland plays in supporting SMEs by providing working capital to support growth and financial stability.

But let us get back to the original conversation that presented an expert’s point of view on a current event. Entitled “Biden Should Press Poland and the EU to Make Up,” the opinion piece written by Sophia Besch who is a fellow in the Europe Program at the Carnegie Endowment for International Peace, and Tara Varma, a visiting fellow at Brookings provided insight into the current situation and tension between Poland and the EU. I found it of excellent value. It was originally published on September 22, 2023, and is © The Brookings Institute.
I am only going to note the key takeaways that I learned after reviewing their work with the hope/goal that you will seek the entire excellent article online yourself. The most important concepts from the article for me were as follows:

1. Poland has all the makings of a new European power, and it could emerge as a critical part of the Western defense plan against Russia.
2. They were one of the first countries to come to Ukraine’s aid and are currently engaged in a massive buildup of their armed forces and weapons.
3. At the same time, Germany and France no longer have the monopoly on EU leadership that once made them the United States preferred strategic partners.
4. In the author’s opinion, “Poland, however, is nowhere near fulfilling its potential as a strategic actor.”
5. Assuming this is true, this could be a severe problem for the West and the United States who needs strong and trusted partners that can constructively shape the European agenda.
6. As a result, it is in the United States vital strategic interest that “Warsaw, Berlin, Paris, and Brussels reconcile and work together in shaping Europe’s future security order.”
   
   • Their article discussed concrete steps that all of the parties involved should consider to accomplish this important goal. These include but are not limited to encouraging the “the United States to be pragmatic when it comes to concerns over the state of democracy in an important ally.” And in addition, they suggest that “Washington should encourage its European partners to focus on finding agreement on the strategic challenges ahead.”
     They conclude their work by noting that “resolving these issues will take demanding work that should not be overshadowed by even bigger disagreements. Warsaw’s ability and willingness to work with its European partners—which Washington should encourage—is thus a prerequisite for Ukraine’s future in the EU.” Sage counsel for a part of the world that needs our continued support and attention until the Russian scourge is repelled finally.
     
     • Here is a link to the entire article.
       https://foreignpolicy.com/2023/09/22/poland-election-germany-france-eu-us-biden-russia-military-strategy-deterrence-europe