US embassy cable - 05WARSAW1395

UNCLAS  WARSAW 001395 
 
SIPDIS 
 
 
SENSITIVE 
 
STATE FOR EUR/NCE TARA ERATH AND MICHAEL SESSUMS 
TREASURY FOR OASIA MATTHEW GAERTNER 
FRANKFURT FOR TREASURY JIM WALLAR 
 
E.O. 12958:  N/A 
TAGS: EFIN, PREL, PL, Poland-France 
SUBJECT:  Polish Finance Minister Requests Formal Agreement 
for Paris Club Debt Repayment 
 
Ref: (A) Warsaw 742 (B) State 16349 
 
1. (SBU) On March 10, the Embassy received a letter from 
Finance Minister Gronicki (dated March 1) expressing 
appreciation for U.S. acceptance in principle of Poland's 
offer to repay its outstanding Paris Club debt early.  Per 
the Paris Club Secretariat's instructions to Poland to seek 
formal agreement bilaterally with individual creditors, 
Gronicki requested written confirmation of U.S. willingness 
to participate in the early repayment.  The letter also 
expresses an interest in concluding a bilateral agreement by 
March 31.  On March 9, Ministry of Finance staff told 
Econoff they would send a draft agreement they have prepared 
for the USG's review.  As of COB March 10, we have not 
received this agreement, but will forward it for 
Washington's review as soon as we receive it. 
 
2. (SBU) Begin text of letter from Finance Minister Gronicki 
to Treasury Secretary Snow: 
 
Warsaw, March 1, 2005 
 
Dear Mr. Snow, 
 
In a letter dated February 18, 2005 the Chairman of the 
Paris Club Mr. Jean-Pierre Jouyet informed me that the Paris 
Club creditors accepted the Polish proposal to repay ahead 
of schedule all remaining obligations resulting from the 
1991 Agreed Minutes.  Through this letter I also was 
reminded that each creditor country is free to decide 
whether to participate in this operation, and I was advised 
that the practical, terms regarding the proposed prepayment 
should be set on a bilateral basis. 
 
It is in this context that I am writing to you to officially 
propose the early repayment of Poland's obligations to the 
United States resulting from the bilateral agreements of 
July 17, 1991 that implemented the 1991 Paris Club Agreed 
Minutes.  Poland is interested in the prepayment of all 
obligations covered by these agreement and we would aim at 
concluding this transaction, if only feasible, on March 31, 
2005.  I was very pleased to learn that Vice President Dick 
Cheny had already informed us during his recent visit to 
Poland that the United States authorities are willing to 
accept our prepayment offer on the terms proposed by the 
Paris Club Secretariat and endorsed by all creditor 
countries. 
 
I would appreciate if you could confirm this consent by 
responding to this letter.  I would also be grateful if you 
could suggest the most expeditious way for agreeing on the 
detailed terms of the proposed transaction and concluding a 
formal agreement on the final settlement of Poland's 
official obligations to the United States.  If requested, we 
would be happy to provide you with a preliminary draft of 
such an agreement.  I believe that the acceptance of our 
proposal would provide yet another proof of the excellent 
political and economic relations between our countries and 
would contribute to a further strengthening of these mutual 
ties.  Based on some preliminary indications we expect that 
the majority of our Paris Club creditors will accept our 
offer and I certainly hope that your country will also join 
this group. 
 
Poland attaches great importance to the successful 
completion of the proposed prepayment of our obligations to 
the Paris Club creditors.  For our country, the significance 
of this transaction goes far beyond the simple debt 
management objectives.  Poland is currently the only EUI and 
OECD member country that has outstanding debts covered by a 
Paris Club agreement.  We believe that by eliminating these 
debts we will not only remove this rather unwelcome 
distinction and legacy of the previous regime, but also 
contribute to improving our current standing in the markets. 
In this process, we should also be able to demonstrate that 
we currently enjoy a very broad access to financing from 
private capital markets.  Al of this could be expected to 
influence, at least indirectly, the assessment of our 
creditworthiness thus contributing to a possible lowering of 
our borrowing costs. 
 
We certainly believe that the decision of your country, and 
of other Paris Club creditors, to accept our offer could and 
should be motivated not only by such broader political 
considerations and the prospect of an earlier reimbursement 
of substantial financial resources, but also by the overall 
 
 
fairness of the proposed financial terms.  It is our 
understanding that when suggesting these terms the 
Secretariat of the Paris Club was guided by the objective of 
 
SIPDIS 
ensuring the equal treatment of all creditor countries, 
while also taking into account the creditors' initial 
commitment to offer Poland the agreed level of debt relief. 
From that point of view, the acceptance of the Polish 
prepayment offer can thus be seen as a final step in the 
implementation of the important political commitment and 
financial support offered to our country at the onset of our 
transition to market economy.  I believe I do not need to 
assure you that we are very grateful for this support that 
played a vital role in ensuring the successful 
transformation of our economy. 
 
Given their interest in this matter I am sending copies of 
this letter to the US Eximbank, the Commodity Credit 
Corporation, the Agency for International Development and to 
the US Ambassador to Poland. 
 
Please accept, Mr. Minister, the assurances of my highest 
consideration. 
 
End text of Gronicki letter. 
 
Munter 
 
 
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 2005WARSAW01395 - Classification: UNCLASSIFIED