A New Strategy for Difficult Times

Five areas that will determine the future of Poland and Europe

.Europe today has fallen into what I call the ‘impossible trinity’ trap, a concept borrowed from economics that asserts a fixed currency exchange rate, independent monetary policy and free capital flow cannot all be achieved simultaneously.

The European Union faces a similar dilemma as it tries to maintain generous social policies, dramatically increase defence spending and pursue an ambitious climate agenda. In the current financial and geopolitical context, these three goals cannot be achieved at the same time – we must prioritise two. Every day of inaction deepens the crisis Europe is already mired in, from economic stagnation to the military threat from Russia and the loss of technological competitiveness.

Faced with these challenges, we must focus on a strong, competitive economy that will provide the foundation for Europe’s security and defence. Both Poland and Europe need a fresh strategy to safeguard our greatest civilisational accomplishments – freedom and prosperity. In this article, I will outline five areas for implementing such a strategy.

1. Poland and Europe as a factory of the future

.In an effort to cut production costs, Europe has moved much of its industry to Asia, particularly China, severely weakening its own manufacturing base. This short-sighted strategy, driven purely by economic concerns, has twice shown its dangerous consequences: first during the COVID-19 pandemic, when supply chains broke down, and later following Russia’s invasion of Ukraine. Indeed, relocating industry beyond the EU’s borders has meant consciously giving up strategic autonomy. In the face of potential trade wars and military aggression, Europe cannot effectively defend itself if it remains reliant on Asian supplies.

Further complicating matters, Germany and other highly competitive European nations have (whether intentionally or unintentionally) sold their advanced technologies to China, which now uses them effectively, often to the detriment of European companies. Moreover, it is becoming increasingly difficult for us to compete with Chinese companies, particularly as they bypass environmental regulations and benefit from large-scale state subsidies, allowing them to offer goods at dumping prices. To counteract the decline of manufacturing in Europe, actions need to be taken to foster a revival of the industry on the continent. This would benefit both large and small companies, including Polish enterprises.

Key barriers to reindustrialisation include high energy costs, complex regulations, dependence on imported raw materials and the lack of coherent incentives for businesses. A successful industrial revival requires the following steps:

• Rebuilding raw material independence. Europe needs to diversify its imports of crucial raw materials, such as strategic metals and rare earths, which are vital for technology development and the energy transition.
• Ending climate hypocrisy. Moving carbon-heavy industries outside the EU does not reduce global emissions; it merely deprives Europe of jobs and sovereignty while requiring stable energy supplies.
• Ensuring stable and cheap energy. Europe must pursue a smart energy transition by developing both large and small nuclear reactors to reduce reliance on Chinese components. Affordable and competitive energy is crucial for the development of modern industry in Europe.
• Exempting strategic sectors from the ETS. The ETS places a heavy burden on the EU economy, lowering competitiveness, raising prices and hindering the energy transition. Therefore, strategic sectors should be governed by different regulations.
• Relaxing state aid rules and offering effective investment incentives. Loosening state aid regulations and introducing strong incentives will improve both Europe’s external and internal competitiveness.

Fulfilling these requirements is crucial to restoring the competitiveness of the European industry and strengthening Europe’s position on the global stage. It is the only way for Europe to become the factory of the future.

2. An active state as a tool for building competitive advantages

.Producing all the discussed changes requires a modern, efficient, ambitious and investment-driven state. Poland faces an especially difficult task. We need to strengthen public trust in government institutions and reassure the next generation that their talents and energy are worth devoting to the common good.

To achieve that, the Polish state must embrace a bold course of development. It is time to raise our level of strategic culture. Especially, since our history is filled with examples of how weak institutions and elites have obstructed progress, preventing us from joining the economic top league.

Aversion to public investment, tax avoidance and hostility towards the state  – attitudes dating back to the old magnate elite – have seeped into our national DNA. A thug who impoverished the state and entrenched oligarchic structures was the predecessor of today’s tax mafias and corporations exploiting tax havens. Institutional ineffectiveness, often resulting from multiple systemic dysfunctions, discourages talented young people from pursuing public service, which, ultimately, reduces the quality of the nation’s elites.

That is why we need a mental transformation. The state can – and should – be an initiator, investor, innovator and reliable, patient partner. The recent successes of government institutions, such as public finance reforms or investments by the Polish Development Fund, prove that an effective state can build lasting competitive advantages. This is the path we have to follow.

Adding to its many advantages, an active, ambitious state also offers a real opportunity to end the internal Polish conflicts that tear us apart. The younger generation rejects old quarrels and models, seeking an ambitious, dynamic Poland. Projects like the Central Transport Hub (CTH) demonstrate how a bold vision of development can bring people together despite differences. Therefore, strategic decision-making bodies, such as those overseeing the CTH, nuclear energy or the defence sector, should be run by top specialists from various backgrounds. This is the way to overcome historical limitations and build a modern, globally competitive state.

3. The army of the future and a responsible society – a new system of security and resilience

.Building a competitive economy, fostering a prosperous society and achieving ambitious climate goals will be for nought if we fall victim to external aggression. Russia’s invasion of Ukraine and the hybrid attack on Poland’s border with Belarus have shown that peace in Europe cannot be taken for granted. Although alliances are crucial to our security, we cannot rely solely on external help. Multilateral political decisions often take too long. If push comes to shove, our own defence capabilities will be decisive.

That is why we must continue to modernise the army – a task which my government has made its priority in recent years. However, improving defence capabilities is not just about financial investment; institutional and systemic reforms are also necessary. These changes must streamline military operations, shorten decision-making processes and increase flexibility. The army must also cooperate more effectively with other security bodies.

The military is the primary element of national defence, but not the only one. The true measure of our strength lies in how the state and society – as a whole and at all levels, from local to national, public to private, professional to amateur and affiliated and dispersed – respond in times of crisis. All this builds the resilience of the state.

We need a model of state resilience that fully harnesses the social capital developed by the welfare state, integrating the intellectual potential of skilled professionals, civic awareness and operational capacity derived from local, long-standing institutional continuity. This would create a holistic, even total, resilience system that would allow us to utilise the potential of urban managerial staff, established TSO structures, the intellectual capital of academics and the operational capacity of civil servants and local community leaders. It would give our resilience a whole new dimension.

4. A technological revolution serving both citizens and the environment

.Over the next 20–30 years, the labour market will undergo a significant transformation. To prepare for technological changes, the state must increase productivity and prevent workers from being replaced by machines. A new social contract will be necessary to ensure social cohesion in the face of demographic and technological shifts.

Changes in the labour market are inevitable. No profession – from creative industries to IT – is immune from the impact of artificial intelligence. We must rethink the rules governing work and adapt to growing automation.

Potential scenarios of automation and robotisation development include:

• Wage stagnation and job reduction wherever machines replace human workers. A rise in the importance of well-paid managerial roles with a concomitant decrease in the importance of mid-level employees.
• The need for retraining and rebranding, along with growing regional disparities in access to jobs.
• A declining share of wages in GDP, rising unemployment and increased corporate profits.

Poland’s national strategy must address these scenarios. Yesterday, we fought for decent salaries for our work. Today, we fight for our work to provide a good quality of life and contribute to national security. But in the world of tomorrow, work will be radically different from what it is now.

Some may find my proposal surprising, but it is high time for Poland to start preparing the laboratories of the future, where new models for the development of such institutions as a universal, albeit conditional, basic income would be created. The new development strategy must address the issue of providing people with a stable income in a post-work world while ensuring that they remain engaged in society. The tax system must be adapted to the labour market of the future while maintaining the competitiveness of the economy. These are the models we are working on now.

Poland should continue investing in green technologies, such as lithium-ion battery production, where it holds a prominent position. It is critical to increase funding for research, the commercialisation of new technologies and the energy transition.

While climate policy has revolutionised the world, it is essential that green technologies enhance Europe’s competitiveness rather than hinder its growth. Competitiveness should be prioritised to ensure that the advancement of green technologies aligns with climate objectives and upholds social standards.

5. Poland for All – a new population policy

.Finally, the shape of the future will be defined by demography. As Auguste Comte famously said, demography is destiny. Today, it is one of the most pressing challenges for economies around the world. Countries that will succeed in addressing demographic issues will gain a competitive edge. Poland finds itself in a unique situation, balancing on a fine line between an immigration crisis (driven by political and climate factors) and a demographic crisis. In light of these circumstances, we must adopt a wise population policy.

Addressing the mentioned challenges requires a comprehensive and innovative strategy. Here are the key directions:

• Integral family policy – supporting families at every stage of life. The dignity revolution of 2015–2022 was an important first step on this path.
• Inclusive development model – guaranteeing social mobility and tackling systemic inequalities to ensure that all citizens have equal opportunities regardless of where they live.
• Repatriation strategy – developing comprehensive repatriation programmes for Poles from Kazakhstan, Brazil and South Africa, as well as supporting students of Polish descent. Encouraging the return of Poles who emigrated after 2004 and during the martial law era.
• Attracting workers from culturally compatible countries – drawing skilled workers from regions with a similar cultural heritage.

Every new citizen should be regarded as a valuable resource. We must present a cohesive image of Poland as an attractive place to live and work while avoiding the mistakes made by the architects of the EU’s current migration policy. The ‘accept or pay’ formula and uniform social benefits approach have proven quite ineffective. They force rather than assist. Ultimately, they can lead to integration issues and destabilisation of society. Europe needs a realistic approach that combines social protection with attracting skilled workers.

The Danish model could serve as an example, as it focuses on recruiting intellectual capital and skilled professionals. In Denmark, the integration – or even assimilation – of newcomers is comprehensive and generally effective. Such immigrants, unlike those brought in as cheap labour, integrate better and contribute more to building competitive advantages. Poland, with its rich history of inclusivity dating back to the First Polish Republic, has strong foundations to draw from in this area to build an innovative system that will meet future challenges.

.To make the strategy mentioned above a reality, we require determined leaders who will implement the necessary changes in public policies. We must strengthen institutions, not dismantle them and start afresh. We need a development-oriented approach rooted in continuity, not one that undermines the achievements of predecessors. In short, we need strategic maturity and a pro-state mindset. This is the only way we – as a state, society and economy – can make the leap in development. A leap that, after years of difficult history, we are finally ready to take.

Mateusz Morawiecki