Much of the celebratory banter marking the two-year anniversary of Donald Tusk's government focused on its ability to successfully steer Poland through the worst economic storm in decades. Unlike other economies in Europe (both emerging and developed) Poland's exports didn't decline dramatically, internal consumption increased and GDP growth remained positive throughout all four quarters of 2009. Even the once-depreciating złoty has made a recovery and continues to gain strength. Many analysts expect the Polish economy to grow as much as three percent in 2010, a far better performance than anywhere else on the continent.

Although the Tusk government, in particular its Finance Minister Jacek Rostowski, should be applauded for promoting fiscal restraint and reassuring global investors against panic and a premature market sell-off, much of Poland's success rests on the strength of its internal consumer market. Specifically, when the złoty declined (and the euro became more expensive) Poles stayed and spent money in Poland. As the global economy recovers, Poland will have to do much more than rest on its laurels, especially as it seeks to attract future investment, grow its economy and gain membership into the euro zone.

As we head into the 2010 election season, reform fatigue and the lack of a concrete reform agenda may tarnish the Tusk candidacy. Despite the government's laudable response to the financial crisis, it could have done more to improve Poland's business and investment climate – notably by enacting simpler business rules, easier tax-filing procedures, investments in e-government solutions and introducing radical steps to cut red tape.

In this respect Poland still has a long way to go. For instance, Poland's ranking in the World Bank's “Doing Business 2010” report were little improved on the previous year. Overall, Poland's ease of doing business ranking was 72 (out of 183 countries surveyed), behind most Central European countries and many Eastern European countries.

Although some factors, such as the ease of starting a business and access to credit have improved, others such as employing workers, paying taxes and contract enforcement have all declined. In a country where high unemployment and significant underemployment are all too familiar, the Tusk team should take notice and put structural economic reform high on their campaign agenda.

Otherwise, voters may have the final word.

Contrary to what some believe, Poland's returning migrants are not finding it easy to integrate back into the local labor market. Although domestic wages and labor demand have increased in the past five years, there is still a major talent and wage gap. Many Poles, despite having gained new language and job skills abroad, were employed in low-skill sectors. Polish waiters, cleaners, nannies and construction workers were a common sight throughout the UK, Ireland and Scandinavia.

This labor force included both unskilled and educated Poles who wanted to take advantage of their higher earning potential abroad. Others, including nurses and IT specialists, were able to work in their chosen professions, though mostly on a contractual basis.

Many workers with university or advanced degrees are now finding it difficult to translate work experiences garnered outside Poland into well-paid or highly-skilled jobs at home. Those with management or executive-level experience overseas may demand compensation packages on a par with those in developed markets.

Without a deep restructuring of Poland's education, transportation and pension systems, all of which would encourage development of higher value-added jobs, Poles will most likely leave again as the global economy picks up. According to a survey by the Organisation for Economic Co-operation and Development (OECD), more than a third of Polish migrants who worked in the UK plan to live outside Poland again. Their numbers will probably increase as other countries in Western Europe ease immigration restrictions on EU-8 nationals in the near future. As a result, we may be witnessing the creation of a permanently mobile Polish labor force. 

During yesterday’s commemoration of the fall of the Berlin Wall as well as the fall communism throughout the Eastern bloc, Poland’s role and impact was prominently displayed.

The last two decades have resulted in sweeping political and economic transformations, culminating in NATO and EU membership. However, once the euphoria and self-congratulatory back-patting subside, what will be the next chapter in Poland’s modern history? How will Poland’s geopolitical role evolve over the coming decades? What are the key challenges facing Poland, both domestically and within a maturing European Union?

According to many leading experts, Poland is in its best geopolitical position in 300 or even 400 years, but simply does not know how to take advantage of it. Three key issues will test Poland in the near-term: energy security, economic sustainability and relations with its eastern neighbors. How it chooses to address these challenges will determine whether Poland lives up to its potential as an emerging mid-size European power or instead follows the path of some older and stagnant EU members.

Regarding energy security, Poland needs to maintain diversity of energy options, both in its sources and suppliers. It also needs to ensure that its energy sector maintains fair competition as well as free and open markets. By encouraging the EU to develop a southern energy corridor (beyond Nabucco), Poland and the rest of Central Europe will be able to simultaneously address fallout from the global economic crisis and impeding climate change.

Economically, Poland’s greatest hindrance is its low labor participation, due to high levels of early retirement. This will not only threaten future competitiveness, but will create enormous strains on the social welfare system. Poland needs to build off of the legacy of Solidarity and the success of previous market reforms by reinvesting in building a viable civil society and strong social (entrepreneurial) capital. This will not only deepen economic convergence within the EU, but create a set of best practices for other aspiring EU accession countries.

Finally, Poland’s relations with its eastern frontier (Belarus, Georgia, Ukraine, etc.) will play an increasingly critical role in Europe’s future common foreign and security policy. While the Eastern Partnership (EP), is neither a substitute for nor a guarantee of EU membership, the EU, and especially Poland, should play a bigger role in encouraging EP countries to speed up the pace of reform and meet EU laws and standards. By acting as a bridge between the Western EU members and the EP, Poland can not only share its own accession best practices, but enable EP countries to fortify their domestic security through greater political and economic cooperation with Europe.

From the looks of it, one would think that Polish officials have embarked on a US publicity tour. Fresh on the heels of Vice President Biden’s trip to Poland (one of several Central European stops), the future of US-Polish relations has once again re-emerged onto the Washington policy agenda.  This is happening, amidst the multitude of 20 year post-communist transition commemorations taking place throughout Washington DC’s embassies, think tanks and universities.

In addition to a high-level visit by Foreign Minister Radek Sikorski, Washington is hosting three separate conferences on the EU Eastern Partnership, lessons from post-communist economic transitions and future of US-Central European relations. In all three, from economics to energy and military security, Poland will be a prominent case study and its current and former government officials will be major participants.

These upcoming gatherings of key US, EU and Polish policymakers can set a major tone, affecting the future of US-Polish, US-EU, and international relations for years to come. A gathering of this magnitude at this point in world history is of great consequence, and an opportunity that should not be wasted.

Today, US Vice President Joe Biden arrives in Poland to reiterate America’s commitment to Eastern Europe’s peace and security. Critics have called the trip more of a public diplomacy tour to amend relations “reset” by last month’s missile-defense withdrawal. Meanwhile politicians in Poland continue to point fingers to determine who – if anybody – dropped the ball. As the political blame game bounces between Warsaw and Washington, Poland should instead take the Vice President’s visit as an opportunity to highlight its own laudable contributions to global security as key members of the NATO-led International Security Assistance Force (ISAF).

To date Poland has deployed 2,000 troops to Afghanistan, with most stationed in the increasingly hostile eastern Ghazni province. Out of the 42 nations contributing military personnel, Poland has the sixth largest contingent – the highest for any non-G8 country. It even has more troops on the ground than Australia or the Netherlands.

As the US looks for additional troop reinforcements (the French have already declined) in response to the escalating Taliban insurgency, officials in Poland should make certain that existing Polish troops have the necessary equipment, training and backing – both from the US as well as other NATO allies – to successfully carry out their mission. Such an assessment is vital before making any additional troop commitments. To date 15 Polish soldiers have died, the two most recent on October 10th. More troops would also require additional funding, which is all the more challenging given Poland’s widening budget deficit.

While in Central Europe, the Vice President is sure to encounter additional questions and concerns regarding US commitment levels towards eastern Europe’s defense. If anything, Polish leaders should be sure to re-emphasize that Article 5 works both ways.