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EU and Poland headed for showdown over shipyards



European Commission chief Jose Manuel Barroso was expected to raise the thorny issue of Poland's state aid to three struggling shipyards in talks with Prime Minister Jaroslaw Kaczynski on Wednesday.

It is "possible" their talks will include the aid to the shipyards, which saw the EU's executive write to Poland for clarification last month, the commission's spokesman for competition issues, Jonathan Todd, said Tuesday.

Brussels has said that it expects the Polish authorities to clarify by the end of the month its restructuring plans for the Gdansk, Gdynia and Szczecin yards, the country's biggest and which employ around 16,000 people.

The commission, the EU's competition regulator, in June 2005 opened a formal inquiry into the aid and said at the time that it would only be legal if it was accompanied by "meaningful restructuring plans" for the three yards.

It estimated last year that the aid totalled around 385 million euros (493 million dollars) but now believes that the figure is far higher.

Todd said on Tuesday that EU Competition Commissioner Neelie Kroes had written the letter "to alert the Polish authorities of the seriousness of the situation and to the fact that we would of course like to be able to approve this aid but in the present circumstances we would be unable to do so."

"We hope we will receive a reply towards the end of this week and we sincerely hope that the restructuring plans will be amended so as to meet our concerns and to ensure that these shipyards would be viable in the long term," he said.

In Warsaw Polish deputy economy minister Pawel Poncyliusz told AFP: "We agree with what Mrs. Kroes has written and we are trying to make the shipywards understand."

He said the Commission was principally concerned by the restructuring of shipyards in economic difficulty, which would justify public support, and by the absence of strategic private investors.

"We have informed the shipyards of the remarks of the European commissioner and we hope to get their response tomorrow (Wednesday)," Poncyliusz said.

Todd said that responses from Warsaw had so far proved inadequate, and that the EU executive was reluctant to have to take action.

"The commission doesn't gladly close down shipyards," he said.

The Gdansk yard in particular holds historic as well as economic importance.

A strike by 17,000 Gdansk shipyard workers in August 1980, which forced the authorities to negotiate, led to the creation of Solidarity, the communist bloc's first free trade union.

30 August 2006, 22:06 CET