"Iron Lady" to Poland's Rescue

Can a new Treasury chief sell off state companies--fast?

No one trifles with Aldona Kamela-Sowinska, Poland's new Treasury Minister. Gabriel Janowski learned that within hours of Kamela-Sowinska's appointment on Feb. 28. One of her first official acts was to throw him out of her office. Janowski, a Rural Solidarity party leader and gadfly, had occupied the Treasury for two weeks to protest the sale of some sugar factories. "I wanted him out and called the police," she says. Janowski claimed parliamentary immunity--a line that worked on Kamela-Sowinska's predecessor. She stood firm, and he left.

So much for that crisis. The sugar plant sale will go on. Still, Poland's larger privatization program faces big hurdles. The climate for emerging markets investments is sour. Finance Minister Jaroslaw Bauc is counting on Kamela-Sowinska, a 51-year-old former accounting professor, to raise $4.5 billion this year to fund social programs without widening the deficit. Most should come from stakes in telecom company Telekomunikacja Polska (TPSA), insurer Powszechny Zaklad Ubezpieczen (PZU), and Polski Koncern Naftowy (PKN Orlen), a petrochemicals company. Also for sale are power and defense plants.

"We can raise the money," says Kamela-Sowinska resolutely. She's off to a brisk start. One company sold, and the government is weighing bids for many more. But Kamela-Sowinska must contend with the bad image privatization got under her predecessor, Andrzej Chronowski. Last year, Chronowski, an ally of Solidarity party leaders, tried to reassert state control over several companies in which private investors had stakes. Notably, he punished Dutch insurer Eureko and Poland's BIG Bank Gdanski after their 1999 deal to buy 30% of PZU. When the companies tried to fire his friend, Grzegorz Wieczerzak, the head of PZU's life unit, Chronowski cut them from its management and supervisory boards. They sued and complained to the EU. Embarrassed, the government pushed Chronowski out.

ENEMIES. Kamela-Sowinska, who had been Chronowski's deputy, quickly brokered a truce, letting Eureko and BIG Bank Gdanski buy control of PZU in an initial offering this year. Still, says the chief investment officer for a London fund group, before he'll partake of more privatizations, Kamela-Sowinska "would have to convince us the Ministry has changed its ways."

Poland's "Iron Lady" has little time. Pollsters project that the Democratic Left Alliance--successor to the Communists--will beat the ruling Solidarity Electoral Action coalition in an election this year. Kamela-Sowinska would likely be replaced, despite her lack of party affiliation and solid reputation for getting things done. Her enemies include Economy Minister Janusz Steinhoff. And she accuses Wieczerzak, who will stay in his job until May 31, of obstructing the closing of PZU's books and possibly its sale. The outlook is brighter for TPSA. Analysts think France Telecom will raise its stake to 30% from 14%. "Nobody can speed up privatization more than I," says Kamela-Sowinska. She may need to eject a few more obstructionists from her office, however, to pull it off.

By David Fairlamb in Frankfurt, with Bogdan Turek in Warsaw

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