Polish restructuring plans not convincing

The European Commission is still awaiting details from Poland on government subsidies for shipyards after warning Warsaw that failure to reply could force the EU to demand the troubled yards repay the funds. Poland missed a 31 August deadline to provide more information to prove that the aid was legal and had then promised to send it on 2 September, said EU spokesman Jonathan Todd.

“The Commission received a letter Friday afternoon by fax from the two Polish ministers concerned,” he said. “They were taking the situation seriously while finalizing their plans with a view to us receiving it today.” It had not arrived by midday today, Monday, he said.

The EU is currently investigating whether government and local support given to restructure the Gdynia, Gdansk and Szczecin shipyards since 2002 break EU rules. The EU head office said it wants to make sure that state subsidies would not be used to keep the shipyards afloat artificially but could approve a rescue plan to restore them to commercial viability. Todd said last week the Commission was still trying to determine the amount of government money at stake. Earlier estimates have put the state aid at ?593 million ($731 million).

The EU executive is responsible for upholding EU laws that prohibit governments from granting money to shore up businesses that would otherwise fail. It must check that state subsidies do not give companies an unfair advantage over rivals. It can allow state aid in certain circumstances, such as a one-off cash injection to turn around a troubled firm, but it does not allow governments to pay a firm’s running costs.

It usually demands that businesses pay back illegal aid already granted. Money given before Poland joined the EU in May 2004 is exempted from the EU probe.