Poland to Sell State-Owned Industries : Lawmakers Pass Law to Privatize Mines, Steel Mills, Factories

Lawmakers voted today to sell off Poland’s state-owned industries, a major step in the Solidarity-led government’s 7-month-old radical reform program.

More than 80% of the country’s industry is government-owned, including steel mills, coal mines and factories. Government officials said no sectors of the economy would be off limits to privatization.

The Sejm, or the lower house of Parliament, passed the legislation 328 to 2, with 39 abstentions. The vote came one day after the long-delayed measure reached the floor.

The privatization measure still needs Senate approval, but with 99 of 100 senators elected from the non-Communist Solidarity movement, it is not expected to have any difficulty.

Companies in the best financial shape would be put on the auction block first.

“I think this is the most fundamental bill ever passed by the Polish Parliament, said Deputy Prime Minister Leszek Balcerowicz. “This is a foundation of the new economic system in Poland.”

Introducing the bills a day earlier, Balcerowicz told lawmakers that the ownership changes must come quickly.

“Without a decisive change in the ownership of the economy, further progress of the reforms is not possible,” he said.

Poland, whose Communist regime was replaced by the Solidarity government of Prime Minister Tadeusz Mazowiecki last August, embarked in January on a radical economic reform program. The first goal was to stabilize runaway inflation.

The program whittled inflation down to 3.4% in June, compared to 600% to 1,000% inflation in 1989. But the social cost has been high--real incomes have dropped 30%.

The privatization measure bogged down for some time because of disputes over how to proceed. Many people feared that foreign investors or the former Communist elite would be the only ones with the capital to buy state property. But the government promised that “privatization coupons,” which can be used toward purchase of state-owned property, will be issued to all citizens.

“In this way, the idea of citizens’ stock ownership will be put into practice,” Balcerowicz said.