In recent years, Poland has undergone significant political and economic transformations, marking a departure from its earlier reputation as a shining example among the New Member States of the European Union. The United Right coalition, led by the Law and Justice Party (PiS), assumed power in 2015, ushering in a wave of change that has sparked both controversy and introspection.

These transformations have encompassed economic, institutional, and cultural dimensions. Under the influential leadership of Jaroslaw Kaczysnki, PiS has embarked on a mission to reshape Poland’s identity. Their vision aims to elevate the nation from a post-communist outsourcing hub into a high-income economy, firmly grounded in Catholic conservative values. This endeavor has seen a resurgence in the role of the state in the economy, the implementation of generous social programs for families, and a comprehensive restructuring of the justice system. Intervening in economic matters is no longer considered taboo.

However, critics, both domestically and internationally, have raised concerns about the centralization of power, particularly regarding the influence of politics on independent institutions such as the judiciary. Despite punitive actions taken by the European Commission, Poland’s United Right coalition remains a dominant political force, securing an unprecedented 45% of the vote in the 2019 parliamentary elections, albeit while ceding control of the Senate to the unified opposition.

Foreign investors, on the other hand, initially faced a challenging environment due to a series of protectionist measures introduced since 2015. These measures included special taxes on banks and insurance companies, exit taxes on capital transferred abroad, restrictions on trading agricultural land, and bans on large retail stores trading on Sundays. Furthermore, state ownership in specific companies, including the second-largest bank, Pekao SA, and the suspension of privatizations in strategic sectors like energy, heightened contract and taxation risks for foreign investors. Notably, Mateusz Morawiecki, a former international banker who assumed the role of prime minister in December 2017, is the architect of the government’s economic strategy, emphasizing the strengthening of domestic companies and reducing foreign ownership.

The impact of this interventionist approach is evident in Poland’s decline in the World Bank’s Ease of Doing Business rating, falling from 26th place in 2016 to 40th in 2019. Despite this, Poland’s qualitative appeal as a business destination remains intact. Structural conditions are favorable, with Poland being the largest recipient of EU Cohesion and Structural Funds under the 2014-2020 Multiannual Financial Framework, receiving approximately EUR 105 billion. Its strategic geographical location, as a logistical hub, and generous incentive schemes for foreign investors continue to make Poland an attractive option, especially as it grapples with an impending recession due to the Covid-19 pandemic.

Poland also offers avenues for resolving investor-state disputes through arbitration, despite challenges in the energy sector, where a significant share is under state control. Energy is a politically sensitive domain, with the four main power producers being state-owned. Nonetheless, the reorganization of the energy sector in December 2019 reflects a shift towards renewables, creating investment opportunities in this evolving landscape.

Barriers to market entry in the energy sector are minimal, with regulatory obstacles being scarce. The prospective licensee must meet specific criteria, such as having a presence in the EU, European Free Trade Area (EFTA), Switzerland, or Turkey, along with other requirements.

The Energy Regulatory Authority (URE) oversees all energy markets, and despite some concerns about its independence, it has actively challenged the government on competition and pricing issues.

Coal still plays a dominant role in Poland’s energy sector, but global trends are driving a reconsideration of its position. The Energy Policy of Poland for 2040 (EPP 2040) envisions a reduction in coal’s share in electricity generation from 80% to 56-60% by 2030, with renewables accounting for a larger portion. However, these targets are non-binding and subject to potential political changes. Covid-19 is expected to impact industries like coal, possibly leading to increased fiscal support in the short term but driving a long-term shift away from fossil fuels.

The decreasing profitability of coal is expected to spur the adoption of low-carbon technologies, including renewables and nuclear energy. Challenges and opportunities exist in this transition, particularly in addressing deficiencies in low-carbon technologies, rising electricity prices, and competition from other EU Member States. Additionally, the government’s commitment to environmental protection projects, as part of its public investment program, presents opportunities for investors with expertise in this field.

In conclusion, Poland’s journey is characterized by transformation and adaptation, offering a mix of challenges and opportunities across various sectors. Regardless of political dynamics, the trend appears to favor a feast of opportunities for investors willing to navigate the evolving landscape.