The European Commission has readied for confrontation with Poland after deciding today to order its shipyards to repay state aid -- a move that could bankrupt firms where the Solidarity movement was born.
After a three-year probe, the European Union executive said it was preparing to declare the EU newcomer's aid to state-controlled shipyards Gdynia and Szczecin illegal under the bloc's single-market rules.
Having to return the aid, worth hundreds of millions of euros, would probably bankrupt the shipyards, which employ 8,200 people and produce some 18 vessels annually.
The issue is politically sensitive in Poland, which, like Malta, joined the EU in 2004, and would be a blow to the centre-right government of Prime Minister Donald Tusk eight months after he came to power.
"As regards Szczecin and Gdynia, the Commission has no choice but to make preparations for a negative opinion," Commission spokesman Jonathan Todd told a daily news briefing.
The third major shipyard, Gdansk, bought last year by Ukrainian group Industrial Donbass Union, has been given a month to send an overhaul programme to Brussels which could allow the Commission to authorise state aid the yard has received.
Todd said Poland's government could still submit restructuring plans for Gdynia and Szczecin, which the Commission would analyse before taking a final decision on whether their state aid could be authorised.
PRIVATISATION
Polish Economy Minister Waldemar Pawlak said in Warsaw that he hoped Gdynia and Szczecin could be privatised by the end of June, which he said could save the companies. Todd said state aid for all three yards was estimated at 5 billion zlotys (1.5 billion euros, $2.3 billion).
The situation in Poland will no doubt be closely watched in Malta, where state aid to Malta Shipyards is due to cease at the end of the year. The yard has continued to make losses despite restructuring.
The Commission has long delayed its decision on the shipyards, giving Poland's subsequent governments a chance to present restructuring programmes involving production capacity cuts that would allow the aid to be approved under EU rules.
Officials have said privately the EU executive also fears potential bad publicity as some media might accuse it of destroying the firms whose workers defied the communist authorities up to 1989.