Who Benefits from the Trade War between Ukraine and Poland?

On September 19th,2023 Ukraine filed a complaint with the World Trade Organization against Hungary, Poland, and Slovakia. This is Kiev’s response to the decision by these countries to extend the embargo on grain. Furthermore, Ukraine is threatening retaliation – a ban on the import of Polish fruits and vegetables is being considered.

Polish commentators share a common view – Ukraine is starting a senseless war with its most vocal advocate and friend.

What is the root of this problem?

Due to the blockade of Ukrainian ports by the Russian warships, Ukrainian grain reaches its recipients through the territory of Poland. It is sent in transit, but in practice, some of the Ukrainian grain remains in Poland, which is a blow to Polish agriculture. The grain from Ukraine – often of lower quality and not meeting the strict European Union standards (unlike Polish grain) – is simply cheaper.

In mid-September, the European Commission lifted its embargo on Ukrainian grain for five countries — Poland, Hungary, Slovakia, Bulgaria, and Romania. Following this decision, Warsaw, Budapest, and Bratislava extended the ban on the import of agricultural products from Ukraine.

This is undoubtedly a significant blow to some Polish politicians and commentators – those who had hoped that the current rapprochement between Poland and Ukraine would continue even after the war. In fact, just a few months ago, the concept of a common, federative state was actively discussed in Poland. Now, voices of disappointment and even outrage can be heard in Poland.

Ukraine’s actions are perceived in Poland as self-destructive, as Kiev is suing one of its closest allies. Poland is one of the leaders in providing military assistance to Ukraine, an active advocate on the international stage, and a critical transport hub – any military and humanitarian support to Ukraine is directed through Poland, using the port of Gdańsk for maritime transport and the Rzeszów airport for air traffic. Since the outbreak of the open war in February 2022, Rzeszów airport has become one of the most important airports within NATO.

Now, in the face of Ukraine’s actions, there have been voices – though not from decision-makers – suggesting that, as a retaliatory measure, Rzeszów airport should be temporarily closed (which, of course, will not happen).

So why is Kiev taking such action?

After all, it leads to a deterioration of relations between Poland and Ukraine (which have also experienced other problems in recent months). This action weakens Ukraine’s capital of support and sympathy among the Polish population, some of whom have begun to see Ukrainians as ungrateful.

It is also a self-destructive action in the sense that if Ukraine actually started negotiations with the European Union. Ukraine and the European Union would have to contend with the reluctance of some Central and Eastern European countries, which – mindful of the current crisis – could slow down negotiations in the agricultural sector.

When analyzing Ukraine’s actions, the first thing to note is a specific nature of Ukrainian agriculture. There are very few individual farmers in Ukraine. The sector is dominated by companies – it is estimated that there are around 70,000 of them, and they control about ¾ of all land. Among them are particularly powerful companies that use their position and corruption to pursue their interests. Top firms controlling agricultural land in Ukraine are registered outside Ukraine – they are international conglomerates.

In other words, this dispute is perceived in Poland as an illustration of corruption in Ukraine, and above all, enduring power of oligarchs. A quarrel with Poland is a result of financial interests of a small group. It is noteworthy that Leonid Kozachenko – a Ukrainian politician and President of the Ukrainian Agrarian Confederation – has spoken out against the trade war with the countries of Central and Eastern Europe.

Secondly, attention is drawn to the beneficiaries of the Polish-Ukrainian dispute. Primarily, it is Russia for whom breaking a deep cooperation between Warsaw and Kiev is a crucial matter. However, in Poland, it is noted that a true architect of the current dispute is Germany, which has recently increased its presence in Ukraine.

Germany is not interested in close cooperation between Poland and Ukraine because it undermines Berlin’s ambitions to be an architect and executor of the European Union’s eastern policy. A stronger and more active Central and Eastern Europe is seen as a threat to Germany – especially after the current war, when Berlin will seek to rebuild its relations with Moscow.

The current agricultural dispute is increasing Germany’s position. It is not coincidental that almost immediately, German Minister of Agriculture Cem Oezdemir criticized the grain embargo without addressing any problems faced by Polish, Hungarian, and Slovak farmers.

Financial connections are not known, but some commentators in Poland argue that German money is also behind Ukrainian agro-firms, and behind that, there may also be Russian money (some of mentioned agricultural firms in Ukraine are registered in tax havens such as Cyprus, which has also been favorable for Russia).

Thirdly, it is believed that a timing of the dispute’s onset is not coincidental. Parliamentary elections will take place in Poland in mid-October. The right-wing party that has been in power for eight years (which, by the way, is economically and socially left-leaning) is not certain of victory.

The still influential agricultural communities in Poland may turn away from the government in the current situation and vote for the opposition. The Confederation, a coalition of far-right groups, could also benefit. Its main stream is characterized by an anti-Ukrainian approach and generally pro-Russian stance.

If Ukraine truly believes that Germany – which now portrays itself as a great ally of Kiev and an advocate for the Ukrainian cause in the European Union – will become its partner, they are very naive. Since the beginning of the war, it has been clear that Germany primarily aims to strengthen itself, while any increase of power of Central and Eastern Europe, including Ukraine, is not their goal.