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This Article is From Sep 07, 2017

EU Risks Ruin If Some States Turn Second Class, Poland Warns

Poland Says Multi-Speed EU Would Be Less Attractive, Risks Ruin

(Bloomberg) -- The European Union may ultimately fall apart if some of its members pursue deeper integration faster than others, Polish President Andrzej Duda said.

Rather than contemplating the multi-speed EU supported by French President Emmanuel Macron, the bloc should be a union of “free” and equal nations, Duda told an economic forum in Krynica, Poland. While the EU is preoccupied with the U.K.'s exit, its biggest risk is if some countries integrate further and leave others behind in a “B-class,” he said.

Duda's comments come as the EU's executive has threatened unprecedented sanctions against Poland, a formerly communist nation that joined the bloc in 2004, for what it sees as the government's erosion of democratic standards and a power grab in the judiciary.

“Brexit is not a risk for the EU, if it even comes to that,” Duda said on Tuesday. “A bigger threat is if the EU starts to break apart into a multi-speed union, into blocs where some are stronger and can decide about others. Then it would lose attractiveness not only for those in the B- and C-classes, but also those seated in the A-class.”

Poland is fearful it will lose sway in the EU if a core group of countries, such as those sharing the euro, decides to integrate further. On the other hand, it's struggling to find allies who want to dilute the powers of EU institutions and give national parliaments more say, especially as the bloc's hitherto biggest advocate of a looser union -- the U.K. -- is negotiating its exit from the club.

“The end result could be a divided EU that's not politically or economically viable, which may break apart the bloc,” Duda said.

Facing Discrimination

Deputy Prime Minister Mateusz Morawiecki said that Polish businesses were being “discriminated” against in some western EU nations that he said were trying to dismantle the bloc's single market.

France's Macron campaigned last month to end “social dumping,” which he says happens when people from less-expensive EU countries travel to work in more-expensive ones for salaries closer to what they're paid at home, drawing a rebuke from Warsaw.

“When we started to succeed, our EU partners began to place curbs on the free movement of services, calling it social dumping,” Morawiecki said at the forum. “We're concerned about what these developed EU countries are doing.”

Even as Poland has fallen out with its allies in the EU over the past two years, the government says it's not interested in leaving the bloc. The country is the biggest net recipient of the bloc's budget.

‘No Justification'

Duda's actions helped prompt a probe by the EU Commission into Polish rule-of-law, after he failed to swear in three Constitutional Tribunal justices lawfully picked by the previous parliament, when his allies in the Law & Justice party were in the opposition. The government has also refused to publish, and therefore make binding, rulings by the top court that it didn't agree with.

The president vetoed part of the government's sweeping judicial reform legislation in July, after a wave of street protests. He's now working on new proposals to overhaul the judicial system.

While the EU's General Affairs Council may address affairs in Poland at its Sept. 25 meeting, there's no ground for the commission to “take any further action” as the judicial reform is still underway, Foreign Minister Witold Waszczykowski told TVN24 broadcaster on Wednesday.

--With assistance from Maciej Martewicz and Paul Abelsky

To contact the reporters on this story: Marek Strzelecki in Warsaw at mstrzelecki1@bloomberg.net, Konrad Krasuski in Warsaw at kkrasuski@bloomberg.net.

To contact the editors responsible for this story: Andrea Dudik at adudik@bloomberg.net, Celeste Perri at cperri@bloomberg.net, Wojciech Moskwa, Balazs Penz

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