Minnesota meets the ‘New Europe’

They are among the newest entrants to the European Union, recent converts to the free market who, in their rush to catch up to wealthier E.U. partners, need everything from bulldozers to disc drives. And that makes Poland and the Czech Republic attractive to states like Minnesota.

In his first overseas trade mission, Gov. Tim Pawlenty returned Sunday to his ancestral homeland of Eastern Europe and will spend the next four days in Warsaw, the capital of Poland, and in Prague, the capital of the Czech Republic. His mission will be to get in on the ground floor of two countries that bill themselves as the gateway to the “New Europe,” as the former Soviet-bloc countries are sometimes called.

Pawlenty said the trip is an attempt to reach far down on Minnesota’s list of trading partners — the two countries currently rank about 30th — and broaden the state’s reach.

“These two are intriguing from an economic development standpoint,” Pawlenty said. “These are transition economies with great potential for growth, and we want to be right there at the beginning.”

Tony Lorusso, of the state Department of Trade and Economic Development, said that when countries join the European Union, the other more-established nations invest significantly in the new members’ infrastructure, roads and bridges to bring them up to E.U. standards. “That makes for tremendous opportunities for business,” he said. “We want to make sure Minnesota gets in on that.”

Lorusso said Minnesota is the first state to conduct a formal trade mission since Poland and the Czech Republic’s entry into the union last month.

They were part of a 10-nation group, comprising mostly Central and Eastern European countries, that joined the European Union in May, increasing the union’s size by two-thirds, to 25 nations. That makes the European Union a formidable economic force, with a collective population of 455 million and a combined gross domestic product larger than that of the United States.

This trip will focus on environmental and informational technology, Lorusso said — two areas where Poland and the Czech Republic have acute needs. Poland, in particular, has some of the most environmentally devastated areas in Europe. Years of Communist rule that emphasized heavy industry with little regard for environmental preservation inflicted serious damage on the environments of both countries, including acid rain and poor air quality.

Officials there are scrambling for ways to restore damaged forests, reduce harmful emissions and cleanse the water. The task is huge. In rural Poland, for instance, more than 90 percent of sewage remains untreated. Coal mining has added to the devastation of an area between Poland and Germany dubbed the “Black Triangle.” E.U. officials have estimated the costs of bringing Poland up to E.U. standards at between $22 billion and $43 billion.

The Czech Republic fares little better on the environmental score. Widespread use of highly sulfurous brown coal made for one of the worst air-quality standards in Europe at one time, and on several occasions officials have closed central Prague to traffic to bring air pollution down to manageable levels. On bad days, children wear masks.

New ways

Czechs and Poles are eager to shed the old ways and the dowdy lack of style that the Eastern bloc was known for. They have become voracious consumers of high-tech hardware, with cell phones outnumbering land lines and high-speed Internet access sprouting everywhere.

That, Lorusso said, taps into another Minnesota advantage. “Our largest export category happens to be computer electronic products,” he said. “When you’re talking about data storage, computer parts, telecommunications devices, new infrastructure development, we are a global player in that field.” Computer electronics make up a third of Minnesota’s worldwide exports.

“Poland and the Czech Republic have been the most adept of the Central and Eastern European countries at moving toward a market economy,” Pawlenty said. “There’s lots of potential there, and we want to beat the other states to it.”

Pawlenty arrived in Warsaw on Sunday, accompanied by First Lady Mary Pawlenty and representatives of Minnesota businesses, most of which are involved in either environmental or IT products. While in the city, Pawlenty will meet with the outgoing U.S. ambassador to Poland, Christopher Hill. Hill will be leaving this month after four years in Warsaw, to be replaced by Victor Ashe, the former mayor of Knoxville, Tenn.

Pawlenty will also meet with senior government officials and deliver a lecture on economic development at the Warsaw School of Economics. The school has a joint MBA program with the University of Minnesota’s Carlson School of Management.

His last stop in the country will be a somber one. Pawlenty will make a quick side trip to Lomianki, a small town outside Warsaw. There, he will lay a wreath at a memorial to the World War II crew of a B-17 Flying Fortress that was shot down over Lomianki as it attempted to airlift supplies to Polish resistance fighters in the 1944 Warsaw Uprising. Among the 10-man crew was Walter Shimshock, a 19-year-old tail gunner from Columbia Heights. Shimshock and seven others died in the crash or shortly after it.

Although Pawlenty’s roots are Polish — his great-grandmother was a Polish immigrant — he will not make any personal stops in Poland, said his press secretary, Leslie Kupchella.

Different customs

There are other cultural differences, he said. Czechs can be reserved to a degree that unsettles Americans. “People there are very formal,” he said. “Where here people kind of mingle informally, there you would find that you need to be introduced by someone else. And they would expect you to already know a little bit about their country, their ways.”

Mike Houston, associate dean of the international program at the Carlson School of Management, said Poland and the Czech Republic are two countries on the move.

It was just 12 years ago, he said, that the Carlson School received a federal grant to help the Warsaw School of Economics with a very basic problem: converting its curriculum from the rigidly planned Soviet-style economy to a free-market economy.

Back then, he said, shops were few and featured little choice. Now, “there is a street they call the Fifth Avenue of Warsaw. You’ll see high-end shops. You’ll see IKEA. Major hotel chains are there now.”

Poland remains plagued by high unemployment and a surfeit of small, inefficient rural farms and bad roads outside the central cities, Houston said. But universal free education has made for a well-educated populace, he said, and embedded in the Polish people is “a westward-looking vision and an entrepreneurial spirit just waiting for a chance to break through.”

Poland’s economy has “a lot of potential,” Houston said, “but it would be a mistake to look at it as a singular market. Poland and the Czech Republic are good places to position yourself to pursue the entire Central and Eastern European market.”

© Patricia Lopez, Star Tribune