Nationalist Politics and Foreign Capital in Print Media in Post-Cold War East-Central Europe (2008)...
Transcript of Nationalist Politics and Foreign Capital in Print Media in Post-Cold War East-Central Europe (2008)...
Nationalist Politics and Foreign Capital in Print Media in Post-Cold War East-Central Europe
The politicization of foreign capital in post-Cold War East-Central Europe extended beyond the initial period of economic and political transformation. Particularly sensitive was foreign capital in the print media sector and, for Poland, the presence of German banks. This article considers the factors driving attention to the identity of capital in Poland, Hungary and the Czech Republic in the period after the end of socialism with a focus on print media. Beyond a substantial increase in the liberalization of capital flows, external actors such as the EU de-emphasized state preferences for investment associated with the nation in a context featuring stark asymmetries in West→East capital movements. For Poland and the Czech Republic, memory of German domination stimulated comparisons between asymmetries in past and current capital flows.
Keywords: foreign capital, East-Central Europe, privatization, print media
Lynn M. Tesser 8 July 2008
1
Foreign land ownership raised keen political debate in post-Cold War East-Central
Europe (Wood 2004, Tesser 2004), while foreign firms and investment have at times also
been constructed as a threat (Abdelal 2001).1 The liberalization of capital flows after 1989
ran directly against communist era nationalization campaigns that had put most enterprises
and investment under centralized state control. Postsocialist privatization processes then
reversed the course of centralization, leading to the sale of public assets and the opening of
emerging capital markets to foreign investors.
Beyond the shift away from state control, several factors account for resistance to
foreign participation during times of significant political and/or economic change. First is the
chance that foreign firms might wield disproportionate influence over entire economies or
certain industries, particularly those undergoing transition or rapid development. Second was
the social/class-based protest against the relatively sudden reintroduction of unemployment
after privatization began, and for those still employed, a loss of influence over work
organization (both of which could be interpreted as resulting from inflows of foreign
capital).2 For East-Central Europe (ECE) in particular, three more reasons exist: (1)
communists’ aggrandizement of property at the outset of privatization, an act that made
public protests not merely a result of unemployment and/or a loss of worker control, but of
the process’ unjust nature; (2) an overnight introduction to a globalized economic
environment with a neoliberal orientation; and finally (3) the legacy of the communist
intermarriage of economics and politics that made all aspects of privatization intrinsically
political.
1 The phenomenon is by no means limited to East-Central Europe. Other examples of the politicization of foreign capital came with the US reaction to the Japanese purchase of Rockefeller Center in the 1980s, when BMW purchased Rolls Royce in the 1990s or when Vodafone bought Siemens cell phone in 2000. 2 The logic of this thinking often ran in one of two directions: either foreign capital buys a privatizing (or privatized) firm in order to bankrupt it, thereby reducing the competition or the modern, labor-saving technology foreign firms tend to introduce ultimately leads to lay offs.
2
While these factors explain why foreign capital was politicized at the outset of ECE’s
economic transformation, they are less helpful in understanding why reservations towards
foreign participation continued for well over a decade. A 2003 Polish public opinion survey,
for example, showed that only half or less than half of respondents felt the presence of
foreign capital to be good for the domestic economy (Kapitał Zagraniczny 2003, 2). When
another 2003 survey on EU expansion asked why some respondents did not support joining
the EU, 54% in fact mentioned the idea of ‘Poland being bought by foreign capital’ (Motywy
Poparcia 2003, 6). A 2001 survey undertaken in the Czech Republic and Hungary showed
higher approval with 50% of Czech and 57% of Hungarian respondents claiming that their
respective domestic economies are better off with foreign investment (CEORG 2001, 1). For
Slovakia, continued support for parties like Vladimír Mečiar’s People’s Party-Movement for
a Democratic Slovakia (HZDS) and Robert Fico’s Smer (Direction) signal that part of Slovak
society had not yet warmed to the rapid internationalization of the Slovak economy,
particularly the sharp increase in foreign investment.3
Of the four countries, post-Cold War Poland exhibited the most explicit resistance to
foreign investment, sentiment owing in part to elite manipulation of fears over the return of
German domination. While the Czech Republic had been more open to German investment,
ambivalence also existed among elites and society. On the one hand, Czech elites saw
Germany as the key actor promoting the Czech Republic’s EU membership (with entry seen
as the best way to diminish German influence in the region). On the other hand, they also
saw EU expansion as a way to further German influence in Central Europe (Rupnik 2003,
37). While only the communists and the far right initially expressed such concerns – likely a
reaction to the fact that German investment made up over 80% of the Czech and Slovak
Federal Republic’s total foreign investment by December 1992 (Palata 1998, 29), the view
3 While HZDS was known for preferring foreign firms that operate according to Slovak interests, Fico’s talk of a ‘third way’ suggested a similar standpoint.
3
was mainstreamed after Sudeten German expellees began to argue that the Czech Republic’s
EU entry be conditional on their compensation (Rupnik 2003, 38).
Slovakia, under the direction of Meciar’s HZDS for much of the 1990s, not only
resisted opening to foreign investment, but also the introduction of markets. Jacques Rupnik
rightly notes that Slovaks experienced the rush to introduce market reforms after 1989 as just
another top-down modernization – albeit justified by principles of economic liberalism
(Rupnik 2003, 21). Along with Slovak separatism, this led HZDS economic policy to
emphasize the development of domestic industry. The party wanted foreign investment
steered towards modernization, industrial reconstruction, and technological improvements.
While it initially approved of foreign investment “where it was necessary to further Slovak
economic development,” HZDS elites later criticized foreign firms for not acting in
accordance with Slovak interests (Haughton 2001, 749). Foreign investment did not
significantly increase – nor did privatization occur – until Meciar left office in 1998.
Hungary, on the other hand, witnessed considerably less outward concerns towards
foreign investment. Two reasons explain why postcommunist Hungary’s privatization policy
emphasized selling state firms directly to foreign buyers when under the leadership of the
more nationalistic Hungarian Democratic Forum (MDF) (Bartlett 2000, 135): (1) experience
with and acceptance of communist-era foreign investment, and (2) the fact that Hungarians
generally do not possess negative memories of (German) revanchism. Germany along with
Japan and the U.S., in fact, were at the top of the list in a 1992 survey asking Hungarian
respondents which foreign countries’ firms would be most preferable in Hungary (Gedeon
1997, 105). Despite Hungary’s general openness, however, the swift rise of foreign
investment in print media after 1989 generated considerable debate over whether foreign
control might threaten Hungarian culture.
4
This article presents a comparative case study of the varied reactions to foreign and
German capital in the print media industry in Hungary, Poland, and the Czech Republic in the
1990s. Foreign publishing conglomerates controlled between 50-70% of the print media
markets in Poland, the Czech Republic, and Hungary by the mid-1990’s, control that led to
varying debates over whether foreign ownership might threaten national culture (Giorgi
1995, 5). While reactions to foreign capital in print media privatization is not necessarily
representative of reactions to foreign investment more generally, this particular sector has
been chosen precisely given that: (1) the general public is more likely to be aware of foreign
ownership in this sector because of its greater visibility as an industry; and (2) the greater
sensitivity over print media allows the observance of an ambivalence that might otherwise be
obscured within other industries. Slovakia is generally excluded given the fact that
hindrances to privatization during most of the 1990’s kept foreign capital largely out of this
market.
Foreign and German Capital in Print Media
Foreign capital in print media was more likely to be politicized than in sectors less
directly tied to culture. Three other factors also mattered. First, the possibility that a few
multinational conglomerates might dominate the market led to concerns that cartels would
form and that the often unprofitable quality publications might not survive. Second, editors,
journalists, and others directly involved in publishing feared a general loss of control over the
media’s content, particularly in firms producing translated and modified versions of foreign
titles. Some publishing houses would even dictate how articles should be written (i.e., as if all
text in a singular publication was written by one person) (Kraszewska-Ey and Janicki 1995,
9). Third, resistance to foreign capital could well be expected in countries recently introduced
to the internationalization of media.
5
Yet, these additional accounts cannot explain why Hungary and Poland experienced
the most heated and protracted debates in East-Central Europe over foreign capital’s potential
effects on culture and national identity (Giorgi 1995, 10). Nor do they illuminate the reasons
for Polish (and some Czech) ambivalence over German capital, or why it was Poland in
particular that took steps to keep German companies from entering the Polish print media
market. Legislation passed in the early 1990’s dealing with privatization and foreign capital
in print media did not reflect these variations. Hungary was the first to begin reforming its
press regulations after passing the 1986 Press Law creating conditions for a print media
market. Though a January 1990 amendment to the 1986 law gave private individuals the
ability to establish their own publications, the Hungarian government had a difficult time
passing media laws thereafter given the protracted disagreement over how to regulate foreign
investment and ensure media independence.4 While Czechoslovakia too had difficulty
passing a definitive press law, the Czechoslovak Federal Assembly did approve legislation in
March 1990 allowing both private citizens and foreigners to establish publications. Interested
parties were no longer forced to seek authorities’ permission and were required only to
register their activities. Foreigners were also required to register as well as to gain
permission to establish print media companies (Pehe 1992, 34).
Similarly, Poland’s primary postcommunist press law passed in April 1990 did not
attempt to formally regulate foreign participation in the Polish print media market.5
Ownership of Polish publications continued to be defined by the 1934 Commercial Code (and
subsequent amendments) along with the 1982 Law on Cooperatives. No codified restrictions
existed concerning the entry of foreign capital with the exception of the 1982 Law’s
4 Despite the amendment, the Press Law remained silent on the issue of setting rules for media privatization and for the entry of foreign investment (Oltay 1990b, 19). 5 Yet, original general privatization legislation allowed only 10% foreign participation in privatized Polish firms in the absence of special permission (Fischer 1992, 37).
6
restriction of membership to Polish citizens.6 Foreign capital’s presence during privatization
was instead to be regulated on a case-by-case basis via Poland’s 1990 Law on Liquidation.
This particular piece of legislation established a framework necessary for the liquidation of
the party-controlled Polish print media organization, the Workers’ Publishing Cooperative
[Robotnicza Spółdzielnia Wydawnicza ‘Prasa-Książka-Ruch’ (RSW)] (Schliep 1999, 117).
At the height of its control, the RSW ran over 92% and 87% of Poland’s newspaper
and magazine circulation respectively (Bajka 1999, 84). During the late 1980’s, the RSW
held a total of 247 publications and employed approximately 90,000 people. Once the Law
on Liquidation was passed, Prime Minister Tadeusz Mazowiecki formed the Liquidation
Commission to break up the RSW.7 Though political elites certainly noted the benefits of
foreign capital, criticism prevailing at the time maintained that foreign companies only
wanted to purchase the most profitable titles, leaving the quality, high culture publications to
potentially fade out of existence (Schliep 1999, 120). The Commission had essentially
completed its task by the spring of 1991, allowing the sale of 78 titles. It also allowed
another 8 titles along with approximately 24,000 kiosks and 19 printing houses to either be
sold or allotted to the State Treasury while handing over a combined total of 70 titles and
publishing enterprises to journalists’ cooperatives (Giorgi 1995, 22).
Though foreign capital’s participation in the Polish print media market was not
regulated by law, the establishment and action of the Liquidation Commission showed more
obvious state involvement in privatization in Poland than in Hungary and the Czech
Republic/Czechoslovakia. This general absence of formal legal regulation combined with the
lack of organizational equivalents to Poland’s Liquidation Commission gave foreigners easier
access to the Hungarian and, to a lesser extent, the Czechoslovak markets – though publishers
in Czechoslovakia were initially far more reluctant to give up control to foreign companies 6 However, joint ventures with foreign investors were allowed (Giorgi 1995, 83). 7 The Commission consisted of an expert on civil law, an economist, several journalists as well as a representative of a journalists’ organization (Schliep 1999, 119).
7
than in Hungary (Kusin 1991, 7). The Polish case was also unique in the emphasis placed on
distributing ownership in a way that would provide various social interests with a voice, and
not merely foreign capitalists. Its uniqueness stemmed from the lingering power of the
journalist cooperatives and their association with Solidarity.8
Beyond the German firms Bertelsmann AG, Axel Springer-Verlag, Heinrich Bauer
Verlag, Gruner+Jahr, and Burda Holding, media tycoons such as Robert Maxwell, Rupert
Murdoch, and Robert Hersant burst into the East-Central European print market after 1989,
particularly in Hungary (Oniszczuk 1999, 53-54). During the initial entry phase, foreign
investors tended to target regional presses rather than statewide newspapers for three reasons:
(1) less competition from domestic investors; (2) lower financial risk; and (3) less political
controversy stemming from a lower political profile (Giorgi 1995, 5). Foreign firms also
tended to take over already-existing firms and continued to publish pre-existing titles rather
than to establish new companies.
Hungary
With its greater overall openness to foreign capital, Hungary gained the most foreign
investment in the print media sector. The reform communist regime of Prime Minister
Miklós Németh essentially began the privatization of this industry, leaving a majority of
Hungary’s 32 local and statewide dailies to be converted into joint stock companies (Oltay
1992, 40). To counter fears of attempts to influence editorial direction, the editorial boards of
privatized Hungarian papers were allowed to hold a symbolic fraction of shares in the
investing firms (both for domestic and foreign companies) and received assurances that
investors would not interfere with their direction.9
8 On these journalistic organizations see Załuski 1996 and Borkowska 1999. 9 These boards took steps to improve the papers’ quality so that these presses might succeed in the race for capital investment (Oltay 1992, 40 and Oltay 1990, 20).
8
Already in 1991 foreign investors owned 82% of Hungary’s print media industry
(with a majority based either in English- or German-language countries). Concerning
German firms’ penetration of the Hungarian market, Axel Springer-Verlag acquired 85%
ownership in seven of a total of 19 regional newspapers by April 1990. Soon afterward,
Bertelsmann acquired 41% of the shares in Népszabadság, the Hungarian daily with the
widest circulation. Later that same year, the Westdeutsche Allgemeine Zeitungsverlag
(WAZ) purchased three of the regional Hungarian papers still available. Of total foreign
investment in print media listed in 1991, Axel Springer-Verlag and Bertelsmann held the
largest percentage of the country’s total foreign investment (15% and 14% respectively)
(Oniszczuk 1999, 54).
However, it was Axel Springer-Verlag’s purchase of a majority of shares (85%) in the
four regional papers (later a total of seven) that raised the most controversy in Hungary. It
catalyzed a heated debate over whether the participation of foreign capital in Hungarian
presses ultimately threatened Hungarian culture. Two particular aspects of Springer’s tactics
contributed to such a result. First, the company took advantage of legal loopholes (i.e., the
general absence of legislation specifying foreign capital’s participation in the press) and took
over the dailies without paying any financial compensation. Second, Springer then took
control over the editorial staff, changed the titles of the respective publications, and
proceeded to publish ‘new’ papers (Giorgi 1995, 17). All major political parties protested
these actions. Their concern, however, was not only due to the nature of the takeover, but
also because foreigners would henceforth be responsible for providing a major source of
news in Hungary (Oltay 1990b, 21). Consisting of representatives from the six parties in
parliament, an ad hoc parliamentary committee was then established to supervise
privatization as well as the entry of foreign capital into the market – provided that pending
legislation regulating investment in the media would be passed (Oltay 1992, 41). The
9
Hungarian government also passed an anti-monopoly decree in 1990 forbidding foreign
investors to purchase more than two newspapers (Glasperlen 1994, 143). This attempt to
limit foreign investment via decree, however, turned out to be short lived. The committee’s
1990 report investigating foreign buy-outs indicated that the sale of the Hungarian presses
occurred legally. It also explained the high level of foreign ownership as a result of the
dissolution of a state-based monopoly as well as a deficit of national capital to invest
(Oniszczuk 1999, 54).
Left without legal means to diminish foreign investment, the Hungarian government
instead bought back three country-wide papers from British-based publishing houses. The
immediate catalyst, however, was not concern over maintaining Hungarian culture, but a pure
political move by the right to remove obstacles to its support. After having noted the left-
liberal character of most countrywide papers, the conservative Antall government sought to
buy up some titles, presumably to reduce their effect on public opinion. Later in 1994, the
government also purchased Hersant’s 92% stake in the daily Magyar Nemzet (Oniszczuk
1999, 54 and Giorgi 1995, 17). The repurchase effort certainly had an effect. The percent of
Hungarian ownership in countrywide dailies, for example, rose from 30% in 1991 to 50.5%
in 1993 (Gulyás 1998, 114). Noteworthy was the fact that repurchases were from British or
French firms, thus indicating that it was not Springer’s German identity that made its
takeover controversial. Ultimately, the Springer incident was the key catalyst bringing to
light concerns over foreign control; concerns not only resulting from the avalanche of foreign
capital cascading into Hungary in the immediate post-Cold War era, but from the idea of
foreigners having control over a major conduit of national values.
Poland
10
The Polish government, on the other hand, was far more reticent towards allowing
foreign, and particularly German, capital into print media in the immediate post-Cold War
era. While Polish elites too recognized the need for foreign capital, the strong influence of
Solidarity in postcommunist Poland and its alliance with journalists’ organizations reduced
the appeal of Hungary’s exclusively profit-oriented strategy, leading the Liquidation
Commission to prefer a more balanced participation of social and political actors in the print
media sector. The Commission’s favoritism towards Solidarity, or rather the numerous
enterprises and cooperatives formed under the latter’s umbrella, reflected this attitude (Giorgi
1995, 22). The first foreign investment in Polish print media came with the September 1989
establishment of Dziennik Dolnośląski in Wrocław with the Norwegian firm, Orkla Media,
holding majority ownership. Soon afterwards publishing giants Robert Maxwell and Robert
Hersant appeared on the scene together with the Heinrich Bauer Verlag from Germany.
These foreign firms soon discovered that a large number of titles were up for sale, that their
selling price was very affordable from the perspective of Western investors, and finally, that
each title had an already-established market of regular readers (Bajka 1999, 84).
Yet, not all foreign publishing houses could take advantage of the situation given that
the Commission showed a negative disposition towards offers from German and Austrian
firms (Giorgi 1995, 78). Nevertheless, German firms made inroads into Poland’s specialty
publication market. Burda Verlag, for example, began to offer a Polish version of its Burda
Moden and later published several other publications via Polish-German joint ventures
established to offset anti-German prejudices (Oniszczak 1999, 55). More Polish translations
of German magazines soon appeared.
1991 was also the first year a German firm was able to enter the more serious Polish
news market. Germany’s Passauer Neue Presse acquired shares in Wrocław’s Gazeta
Robotnicza, but only with the help of the middleman Swiss publisher Sweizer
11
Interpublication AG. Bauer also entered the market by publishing the women’s magazine
Tina, 80% of which consisted of translated articles. While 1991 was a landmark year for the
entry of German investment in Poland, in 1993 its presence increased significantly. The firm
Gruner+Jahr, for example, opened an office in Warsaw and began publishing the women’s
monthlies Claudia and Sandra, the home-oriented women’s magazines Sekrety Kuchni
(Secrets of the Kitchen) and Moje Mieszkanie (My Apartment) as well as numerous other
specialty titles. Axel Springer-Verlag, the firm that raised considerable controversy in
Hungary, entered the Polish market only in 1995 by publishing the highly popular weekly
Pani Domu (Lady of the House) modeled off of Germany’s Bild der Frau.
Compared to these German firms, the French publishing giant Robert Hersant, had
unparalleled success in purchasing shares in regional daily presses during the RSW
liquidation. By late 1992, Hersant held a majority stake in eight major Polish daily papers.
These included: Dziennik Bałtycki, Wieczor Wybrzeża (both in Gdańsk), Dziennik Łódzki,
Express Ilustrowany (Łódź), Dziennik Zachodni, Trybuna Śląska (Katowice), Gazeta
Krakowska, and Tempo (Kraków). During the bidding for Dziennik Bałtycki, for example,
Hersant prevailed despite the fact that his offer was not the highest (Kraszewska-Ey 1994, 6).
Beyond not being identified with a German-language country, his firm had such success for
three reasons: (1) guarantees given against interference in editorial decision-making; (2)
financial offers made to employees of the titles to be acquired as well as the Liquidation
Commission; and finally, (3) the practice of seeking local Solidarity committees’ approval as
well as to form a basis on which joint companies could be funded (Giorgi 1995, 78-79).
German firms interpreted the Liquidation Commission’s good will towards Hersant,
particularly concerning the sale of papers in Silesia and in the area around Gdansk (two
regions that had lied in Germany prior to the end of the Second World War), as a sign of
disfavor towards German-owned firms in general (Oniszczuk 1999, 55 and Gasperlen 1994,
12
142-143). The Commission’s good will towards the French multimedia media giant was also
based on the myth of Hersant’s aid for the underground press associated with Solidarity. Yet,
Donald Tusk, then one of the members of the Liquidation Committee, could not recall
Hersant’s involvement with any publications associated with the underground when
interviewed on the matter. What Tusk instead recalled was Hersant’s alliance with Solidarity
on a number of titles and commented that “Hersant was a good partner for Solidarity; a well-
financed manager that did not interfere with editorial matters.”10 Due to financial difficulties,
however, Hersant was soon forced to sell all his shares in the Polish print media market in
1994 with the exception of a 49% stake in the national daily Rzeczpospolita. The Hersant
sale was quite significant because it essentially allowed the first major ‘German’ penetration
of the serious Polish print media market, occurring only after the Liquidation Commission
ended its work. Passauer Neue Presse bought Hersant’s shares in the eight Polish dailies for
a sum of DM 100 million.
Overnight the largest foreign publisher of news-focused dailies in Poland went from
being ‘French’ to ‘German,’ a change that sharply escalated debate over foreign participation
in print media. The narrative of German domination in conjunction with liberalization
ultimately made identity salient, first, in the Liquidation Commission’s refusal to seriously
consider German and Austrian offers, and second, in controversy arising over Passauer’s
buyout of Hersant. Foreign participation in the serious regional press was not controversial,
after all, until Passauer bought Hersant’s shares.
By 1995, foreign capital was indeed manifest with foreign ownership comprising 50%
of regional publications and 56% of national ones. Passauer Neue Presse by then held a
prominent position in Poland’s print media as well as a near monopoly status over the Czech
Republic’s regional presses (Katzenstein 1997, 7). German capital again sparked additional
10 Hersant usually bid for papers ‘behind the shield’ of Polish companies in which several of the following possessed shares: local governments, journalists’ cooperatives, and Solidarity (Kraszewska-Ey 1994).
13
controversy after Passauer’s 1998 purchase of a prominent local newspaper in Olsztyn, in a
province formerly lying in Germany until the end of the Second World War. Local Polish
politicians from both the more right-wing Solidarity Electoral Action (AWS) as well as from
the center-left Democratic Left Alliance (SLD) protested the sale. SLD representative and
former Olsztyn Province Governor Janusz Lorentz not only sent Passauer’s owner Franz
Xavier Hirtreiter a letter indicating that a group had been formed to buy the paper back, but
make a statement claiming: “Mr. Hirtreiter, I will try to tell you that you do not buy symbols
of other nations” (quoted in Pawlak 1998). Halina Nowina-Konopka, a representative
affiliated with the AWS, asked Hirtreiter to cancel the sale and stated “I consider this
situation as the first stage in the realization of the disintegration of our fatherland” (quoted in
Pawlak 1998).
The original Gazeta Olsztyńska was known for being a medium to preserve Polish
culture and identity against German domination in the former East Prussia. Its historic role in
keeping Polish culture alive, however, ended when the paper closed down in 1939. After the
war, the party paper Głos Olsztyński took its place, with Gazeta Olsztyńska reappearing again
only in 1970. In 1986, the editors of Gazeta Olsztyńska decided to inscribe “published since
1886” under the paper’s title, a change that led to protests over the association of a party
paper with more august prewar times (Pawlak 1998). It was only with Passauer’s purchase of
the paper that a number of local residents began to see Gazeta Olsztyńska as a symbolic
descendent of its prewar counterpart and once again as a bearer of Polish identity and culture.
Passauer’s purchase of Gazeta Olsztyńska, in other words, led to the near instantaneous
creation of continuity between the its prewar version and the post-party paper published
today. Conceiving a potential German buyout as a threat was indeed crucial in altering
memory about the paper.
14
Such resistance to Passauer’s expansion into the Polish market and the Liquidation
Commission’s tacit rejection of German capital signal clear ambivalence towards German
capital. It is here that memory of German domination, particularly when combined with
liberalized and asymmetric capital flows flowing from West to East, can provoke such
outcomes. Polish media firms, after all, could not have reciprocal influence on German or
other European markets to counter the presumed effects of German publishing firms on
Polish culture.
The Czech Republic
Like Poland, Czechoslovakia – and later the Czech Republic – did not initially attract
the stream of foreign capital flowing into Hungary. Though foreign attempts to acquire
ownership in presses had allegedly been made, local Czech and Slovak publishers carefully
guarded their presses (Kusin 1991, 12). Foreign as well as domestic buyouts were also
hindered by the Czechoslovak government’s imposition of a 22% turnover tax in 1990 on all
publications, a move that has been interpreted as a way to keep foreign investment at bay
(Giorgi 1995, 25). Unlike Poland, however, German firms were not excluded from the more
serious news market. While Passauer had to wait until 1994 to enter the Polish market, by
the end of 1990 this firm had established over 30 local papers in Czechoslovakia. This figure
increased to 47 titles in 1991, making Passauer the leader in this market and eventually the
largest publishing house in Czechoslovakia/the Czech Republic (Oniszczuk 1999, 56 and
Giorgi 1995, 28).
Also noteworthy at the time was the highly symbolic sale of Skoda in 1990, an auto
manufacturer strongly associated with Czech identity, to Germany’s Volkswagen. The
government’s decision to sell a majority stake met accusations of a national sell out. Though
some public officials declared it a key step towards the sale of Czechoslovak industry to the
15
powerful German economy – potentially leading to German cultural domination, the
government in the end chose Volkswagen’s offer over Renault-Volvo for at least three
reasons: (1) Volkswagen offered generous social benefits for Skoda employees; (2) the Skoda
brandname would remain; and (3) that Renault-Volvo had a relatively poor business
reputation at the time.11
Compared to the automobile sector, foreign capital entered print media more slowly
and on a smaller scale (Jeřábek and Zich 1997, 165). Initial foreign investment came from
Hersant and the Swiss Ringier group. By 1992, a firm in the Hersant group (Socpresse)
acquired 47% of the Czech daily with the second largest circulation – Mladá Fronta Dnes
(Young Front Today) as well as significant minority holdings in three regional papers
(Jeřábek and Zich 1997, 170). Ringier at this time held majority ownership in an important
Moravian daily while also owning the daily Blesk (Lightening) (Jeřábek and Zich 1997, 170).
In 1992, only nine of 24 of the Czech dailies were owned by foreign firms – with two of the
nine owned by German firms (Jeřábek and Zich 1997, 172).
Foreign expansion into the Czech regional press, however, has been more apparent.
By founding several regional publishing houses and modernizing the production of regional
papers, Passauer has been particularly successful in introducing a system in which a basic
daily was produced with local variations.12 By the end of 1992, Passauer had gained control
of almost 80% of the Czech regional presses, a fact that spurred discussion over the firm’s
rapid rise in the Czech regional market. Passauer’s success also catalyzed a 1993
investigation by the Ministry for Economic Competition over whether the regional presses
were breaking the anti-monopoly law via maintaining near monopolies within each region.
While the investigation revealed that the companies involved (all owned by Passauer) did not 11 It also likely helped that high level managers from Volkswagen delivered a clear plan for the company’s future while Renault’s low-rank officials were less clear about the plant’s future (Obrman 1991b, 7). For a more extensive discussion of Volkswagen’s buyout of Skoda see Jeřábek and Zich 1997. 12 These include Passauer for eastern Bohemia, Labe Ltd. for northern Bohemia, and Vltava Ltd for southern, western, and part of central Bohemia (Jeřábek and Zich 1997, 173).
16
consult the Ministry in deciding to merge eleven periodicals (and ordered that they do so), the
fact that the papers’ distribution extended beyond the specific regions led the Ministry to
conclude that Passauer’s actions in merging the publications had not created a monopoly
(Jeřábek and Zich 1997, 174). This ultimately derailed the effort to hinder Passauer. Known
for taking steps to keep enterprises in Czech hands (Siemssen 2001, 8), then Prime Minister
Václav Klaus stated at the time that “there are no indications suggesting that there is a
development towards a monopoly situation in the regional press which would hinder free
competition and lead to an increase of prices” (quoted in Giorgi 1995, 26).
By mid-1994, the low participation of foreign capital in Czech print media was a
thing of the past. Over 50% of Czech publications had foreign owners and foreign firms
owned more than 16 of the 25 largest dailies (Kettle 1995, 4), with foreign ownership even
clearer in the regional presses. German ownership here was not relegated mainly to the
specialty magazines market as in Poland. German firms were instead able to acquire regional
weekly and daily papers, leaving German firms to own 10 of the 23 dailies (Jeřábek and Zich
1997, 172). The rapid and noticeable German expansion into the Czech print media market
likely contributed to 1996 survey results indicating that over half of Czech respondents saw
Germany as a threat to the Czech economy even though only 1% of Germany’s foreign trade
was then with the Czech Republic.13
While the Czech Republic has indeed been more open to German capital in print
media than Poland, concerns over German control arose particularly with Sudeten German
expellees’ demands that Czech entry into the EU be conditional on their
compensation/restitution, concerns that have been addressed across the political spectrum. A
comment from the victorious Social Democratic Party candidate for Prime Minister in the
June 2002 elections, Vladimír Špidla, illustrated that a left-wing party not known for playing
13 Thompson 2001, 936. Thompson also noted that 4 of the Czech Republic’s top 20 firms were German.
17
on national symbolism (like the SLD in Poland) can nevertheless draw on fears of German
economic domination – fears that were tied to Passauer’s enormous and well-publicized
success in the Czech print media market. Concerning EU entry, Špidla later remarked that the
country faced no risk of losing sovereignty and added that “we would become partially
dependent on Germany” and that “German influence would be of greater significance than it
is now” if the Czech Republic would not join” [quoted in RFE/RL Newsline (12 June 2002)].
Špidla’s statements, along with comparatively greater Czech openness to German capital,
signal that Czechs have been less likely to interpret the high levels of German capital as
necessarily leading to cultural domination (as in the Polish case), but instead as complete
economic control.
German Banks in Poland
Beyond print media, the presence of German capital was particularly controversial in
Poland’s banking sector following the acceleration of bank privatization in 1999. Foreign
banks met resistance not merely here but across the region as they were the largest group of
foreign direct investors, contributing to approximately one third of FDI (Wagstyl 2000).
International banks’ presence in the region have risen significantly – contributing from an
average of 20% to 41% of investment’s market share from 1997 to 1999 (Wagstyl 2000).
The debate in Poland has been particularly heated, not merely because foreign capital in the
banking sector increased substantially around the turn of the millennium [from 48% at the
end of 1998 (Tarnowski 1999) to 70% in mid-2000 (Gdzie te banki 2000, 32)], but due to
German banks’ comparably high participation (listed at over 18% in June 1999). This swift
rise in foreign ownership can be traced, in part, to the 1997 law passed to meet EU and
OECD membership requirements. This legislation ended the need to gain permission to
acquire shares in Polish banks listed publicly and allowed foreign banks to acquire property
18
under special conditions. Generally speaking, governments of ECE states slated to join the
EU in the 2004 enlargement wave rushed to push legislation on banking and capital markets
through parliament to prepare for accession; yet, making its quality unclear (Berecz 2000,
45). Full liberalization then followed only upon accession in 2004.
Debates reached a high point when Deutsche Bank (DB) attempted to increase its
shares in Poland’s BIG Bank Gdański (BIG) in Winter 2000. Questions over whether the
transfer of these shares was legal and beneficial for Poland set off a heated public discussion
over how much foreign capital should be allowed in the banking sector as well as to the
expression of fears over having already sold off too much. Phrases heard frequently during
the controversy suggest a prominent role of nationalist politicians: “the sell out of national
capital” (wyprzedaż majątku narodowego), “the threat of a loss of economic sovereignty”
(groźba utraty suwerenności gospodarczej), and claims of the existence of a “fifth column of
foreign banks” (piąta kolumna obcych banków) (Bachmann 2000). As in the case of
Passauer’s 1998 purchase of Gazeta Olsztyńska, however, such phrases came instead from
representatives of parties closer to the center, thus indicating that supporters and opponents of
expanding foreign capital’s participation in Polish banking can come from all positions along
the political spectrum (Mackiewicz 2000a, 15). Representatives of the center-right wing
AWS, for example, demanded the dismissal of Poland’s treasury minister, Emil Wąsacz, for
the “irresponsible sell out of Polish banks to foreign investors” (Mackiewicz 2000, 15).
President Alexander Kwaśniewski’s (SLD) chief economic advisor Marek Belka proposed
that forthcoming bank privatizations be restricted only to domestic capital (Mackiewicz 2000,
15). Statements like these suggest that it was difficult to think of capital solely as a
commodity, rather than as in the nation’s service.
A public opinion survey conducted in December 2000, shortly before the DB – BIG
debate erupted, also showed only a weak link between party identification and support or lack
19
thereof for foreign capital in Poland (Opinie o Przemianach 2000, 11). Both supporters of the
more nationalist Polish People’s Party (PSL) (50%) and of the left-wing SLD (42%) tended
to think that foreign capital in the Polish economy was too great.14 A significant one third of
the more liberal-free market Freedom Union (UW)-identifying respondents as well as those
inclined towards the AWS also agreed.15 When controlling for factors other than party
identification, it appears that approval or disapproval towards foreign capital correlated most
with occupation. Though the difference with other groups was not great, managers, directors,
and other officials along with white-collar workers tended to think that there was too much
foreign capital in the Polish economy (Opinie o Przemianach 2000, 11). Those employed in
the private sector (agriculture excepted), on the other hand, tended to think there was too little
foreign investment (Opinie o Przemianach 2000, 11). When asked a similar question –
whether the presence of foreign capital in the Polish economy is advantageous,
disadvantageous, or whether it is simply hard to say – differences of opinion were not
strongly correlated with party identification. There was a clearer correlation between
favorable attitudes towards foreign capital and wealth, higher social position, residence in
larger cities, and higher education.16 This challenges the presumption that identity politics
surrounding capital are driven simply by nationalist parties, rather than from a certain
resistance to the EU’s de-emphasis on having capital and firms serve the nation.
When the debate over DB’s attempted takeover of BIG really took off in January
2000, 60% of all shares in Polish banks were foreign owned (with German firms owning
approximately 19%) (Mackiewicz 2000). Beyond the German identity of DB, controversy
14 15% of SLD supporters said foreign capital’s participation is too small, 22% said it is appropriate, and a significant 21% said it was hard to tell. 15 28% of UW supporters indicated that foreign capital’s participation is too small, 28% said that it is appropriate, while 14% indicated that it is hard to say. The AWS breakdown is quite similar for this particular question: 21% said there is too little foreign capital in the economy, 26% said it is just right, and a comparably higher 26% indicated that it was hard to say. 16 In short, the higher the education and satisfaction with one’s living standards, the greater the likelihood of viewing foreign capital favorably. Those less disposed to accepting its presence tend to be rural residents and those living in smaller towns (Opinie o Przemianach 2000, 13-14).
20
stemmed from the ‘inbreeding’ of investment in the firms involved, meaning that the
investing firms sometimes owned parts of one another. Among the shareholders of BIG, for
example, was the 70% State-Treasury-owned insurance carrier Powszechny Zakład
Ubezpieczenia (PZU) in which BIG also owns shares. PZU’s support for the DB takeover
was also at issue given that Wąsacz (the Treasury’s head) did not support the sale of these
shares to DB. Thus, PZU’s approval of the German bank’s actions appeared to fly in the face
of its primary shareholder’s wishes. Among his criticisms of the attempted takeover, Wąsacz
accused DB at the time of trying to hide the transaction from the public eye. He claimed:
“By avoiding publicity, the Germans undermine the trust of the Polish market. It is a scandal
that a foreign investor enters a large Polish bank through the kitchen doors” (Mackiewicz and
Samcik 2000). After questioning the legality of these actions, the situation finally came to a
conclusion in June 2000 when DB sold its 19% stake in BIG to the Commercial Bank of
Portugal (Węglewski 2000, 26).
Admittedly, public officials prevented DB from acquiring BIG essentially to court
different national varieties of foreign banks,17 not necessarily to diminish the penetration of
‘German capital’ in the Polish economy. Yet, four reasons exist to suggest that German
identity might have mattered: 1) the controversy escalated when DB attempted to increase
its shares in BIG; 2) DB expressed interest in buying other Polish banks but was rebuffed; 3)
the fact that ambivalence towards German capital appears in Polish public opinion surveys;
and 4) that German identity was clearly significant in print media privatization. All suggest
that the German factor can be influential even when it is not directly observable. Subtle
statements such as Wąsacz’s also allude to the particular meaning of German capital in
Poland.
17 Joshua Heatley confirmed this line of reasoning via personal communication.
21
Conclusion
Stemming both from the need for capital and from international organization’s
pressures to liberalize, Poland, Hungary, and Czechoslovakia opened their emerging capital
markets early on in the post-Cold War era. While noting several possible explanations for
the politicization of foreign capital during times of significant economic and political change
at the outset, this article emphasizes several factors explaining why reservations towards
foreign participation continued for over a decade: (1) the substantial increase in the
liberalization of capital flows since 1989; (2) the de-emphasis on state preferences for
investment of a particular nationality coming from external actors like the EU; (3) stark
asymmetries in West→East capital movements; and for Poland and the Czech Republic, (4)
memory of German domination stimulating comparisons between asymmetries in past and
current capital flows.
References Abdelal, Rawi. 2001. National Purpose in the World Economy. Ithaca: Cornell University Press. Bachmann, Klaus. 2000. ‘Obrońcy Ludu i Obrońcy Bankowości’ [Defenders of the People and of Banking]. Rzeczpospolita, 2 March, A10. Bajka, Zbigniew. 1995. ‘Kapitał Zagraniczny w Polskich Mediach’ [Foreign Capital in Polish Media]. Przegląd Polityczny 27/28: 102-103. Bartlett, David. 2000. ‘Foreign Direct Investment and Privatization Policy: The Causes and Consequences of Hungary’s Route to Capitalism.’ In M. Donald Hancock and John Logue (eds.) Transitions to Capitalism and Democracy in Russia and Central Europe, 135-154. Bartoszewski, Władysław. 2001. Above Divisions: Selected Speeches and Interviews July-December 2000. Warsaw: Ministry of Foreign Affairs. Berecz, Csaba. 2000. ‘Central Europe Fights Over Final Privatizations.’ International Financial Law Review 19 (10): 44-46. Borkowska, Anna. 1999. ‘Polnische Journalisten und Journalistische Organisationen’ [Polish Journalists and Journalist Organizations]. In Gerd G. Kopper, Ignacy Rutkiewicz, and Katharina Schliep (eds.) Mediatransformation und Journalismus in Polen 1989-1996 [Media
22
Transformation and Journalism in Poland 1989-1996], 271-279. Berlin: VISTAS Verlag GmbH. ‘CEORG October/November 2001 Economic Survey.’ 2001. Budapest: Central European Opinion Research Group (CEORG). N=1,505 for Hungary and N=1,199 for the Czech Republic. Fischer, Bryan J. 1992. ‘Large Privatization in Poland, Hungary, and Czechoslovakia.’ RFE/RL Research Report 1 (44):34-39. ‘Gasperlen für Kolonien’ [Glass Beads for the Colonies]. 1994. Der Spiegel, 12 December, 143. ‘Gdzie te banki’ [Where the Banks Are]. 2000. Gazeta Wyborcza, 29 April-1 May, 32. Gedeon, Péter. 1997. ‘Hungary: German and European Influences on the Post-Socialist Transition.’ In Peter J. Katzenstein (ed.) Mitteleuropa: Between Europe and Germany, 101-148. Providence, RI: Berghahn Books. Giorgi, Liana. 1995. The Post-Socialist Media: What Power the West? Aldershot: Avebury. Gulyás, Ágnes. 1998. ‘Kolonizacja Czy Wyzwolenie Rynku?’ [Colonization or Liberation of the Market?] Translated by Jacek H. Kołodziej. Zeszyty Prasoznawcze 41 (1-2): 104-124.
Haughton, Tim. 2001. ‘HZDS: The Ideology, Organization and Support Base of Slovakia’s Most Successful Party.’ Europe-Asia Studies 52(5): 745-769. Howzan, Arthur. 1994. ‘Uderzenie w Głowę’ [A Hit on the Head]. Polityka, 10 December, 23. Jeřábek, Hynek and František Zich. 1997. ‘The Czech Republic: Internationalization and Dependency.’ In Peter J. Katzenstein (ed.), Mitteleuropa: Between Europe and Germany, 149-191. Providence, RI: Berghahn Books. Katzenstein, Peter J. 1997. Mitteleuropa: Between Europe and Germany. Providence, RI: Berghahn Books. Kettle, Steve. 1995. ‘The Czech Republic Struggles to Define an Independent Press.’ Transitions 1 (18):4-15. Kraszewska-Ey, Joanna. 1994. ‘Gazetowa Zdrapka’ [The Scrapbook Newspaper]. Polityka, 1 October, 6. Kusin, Vladimir. 1991. ‘Media in Transition.’ Report on Eastern Europe 2 (18):12-13. Mackiewicz, Anna. 2000a. ‘Banki dla Narodu’ [Banks for the Nation]. Gazeta Wyborcza, 20 January, 15.
_______. 2000b. ‘Amerykanie czy Niemcy’ [Americans or Germans]. Gazeta Wyborcza, 4 February, 22.
23
Machiewicz, Anna and Maciej Samcik. 2000. ‘Średni Bank Wielkie Spęcie’ [A Medium-Sized Bank with a Strong Grip]. Gazeta Wyborcza, 31 January, 20. ‘Motywy Poparcia Lub Odrzucenia Integracji’ [The Motivations for Supporting or Rejecting Integration]. 2003. Survey #4 (N=133). Warsaw: Centrum Badania Opinie Społecznej (CBOS). Oltay, Edith. 1990. ‘Media Face New Opportunities and Challenges.’ Report on Eastern Europe. 1 (47):19-22. _______. 1992. ‘Hungary.’ RFE/RL Research Report 1 (39):39-43. Oniszczuk, Zbigniew. 1999. ‘Ekpansja Kapitału Niemieckiego na Rynku Prasowym Węgier, Polski i Czech’ [The Expansion of German Capital in the Hungarian, Polish, and Czech Print Media Market]. Transodra 19:53-62. ‘Opinie o Przemianach Własnościowych i Obecności Kapitału Zagranicznego w Polskiej Gospodarce’ [Opinions on the Transformation of Property and the Presence of Foreign Capital in the Polish Economy]. 2000. Survey #173 (N=1028). Warsaw: CBOS. Palata, Lubos. 1998. ‘Unsettled Scores.’ Translated by Dora Slaba. Transitions 5(11): 28-32. Pawlak, Beata. 1998. ‘Kupił Gość Gazetę’ [The Guest Bought the Newspaper]. Gazeta Wyborcza, 3 September, 14. Pehe, Jiri. 1992. ‘Czechoslovakia.’ RFE/RL Research Report 1(39): 34-37. Rupnik, Jacques. 2003. ‘Joining Europe Together or Separately? The Implications of the Czecho-Slovak Divorce for EU Enlargement.’ In Jacques Rupnik and Jan Zielonka (eds.), The Road to European Union, Vol. 1, 16-50. Manchester: Manchester University Press.
Schliep, Katharina. 1999. ‘Die Privatisierung der Polnischen Press’ [The Privatization of the Polish Press]. In Gerd G. Kopper, Ignacy Rutkiewicz, and Katharina Schliep (eds.) Mediatransformation und Journalismus in Polen 1989-1996 [Media Transformation and Journalism in Poland 1989-1996], 117-145. Berlin: VISTAS Verlag GmbH. Siemssen, Jan Hendrik. 2001. ‘Populist Klaus.’ The Economist, 17 February, 8. Tarnowski, Paweł. 1999. ‘Handel Bankowy’ [The Banking Trade]. Polityka, 23 January, 62-63. Tesser, Lynn. 2004. ‘East-Central Europe’s New Security Concern: Foreign Land Ownership.’ Communist and Post-Communist Studies 37: 213-239. Thompson, Wayne C. 2001. ‘Germany and the East.’ Europe-Asia Studies 53(6): 921-952.
Wagstyl, Stefan. 2000. ‘Banks Build Many Bridges From EU to the East.’ Financial Times, 24 October, 3.
24
Węglewski, Milosz. 2000. ‘Niemcy Odeszli’ [The Germans Left]. Gazeta Wyborcza, 8 June, 26.
S. Wood (2004) ‘A Common European Space? National Identity, Foreign Land Ownership and EU Enlargement: The Polish and Czech Cases.’ Geopolitics 9(3): 588-607. Załuski, Mariusz. 1996. ‘Prywatyzacja Spółdzielni Dziennikarskich: Dylematy Zmiany Formy Własności’ [The Privatization of the Journalists’ Cooperatives: Dilemmas of Changing the Form of Property]. In Alina Słomkowska (ed.) Transformacja Mediów 1989-1995 [Media Transformation 1989-1995], 88-94. Warsaw: Dom Wydawniczy ELIPSA.