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EU may give thumbs down for Polish shipyards plan

BRUSSELS (Reuters) — Poland's historic shipyards faced a risk of bankruptcy after emergency talks between the European Commission and Warsaw failed to resolve doubts over massive state aid they had received.

Polish Treasury Minister Aleksander Grad voiced doubts that EU Competition chief Neelie Kroes would accept restructuring programmes for the shipyards in Gdynia and Szczecin, where anti-communist movement Solidarity was born in 1980.

"We did not find understanding on the part of Commissioner Kroes," Grad told reporters after talks with Kroes in Brussels.

Under EU rules, governments can give financial help to ailing companies only if the cash is accompanied by plans that would make the firms viable in the long term.

If the Commission, the European Union's executive body, rejects the plans, the three yards will have to repay state aid totalling more than 2.3 billion euros ($3.29 billion), forcing them into bankruptcy.

The yards' bankruptcy would deal a serious blow to centre-right, pro-EU government of Prime Minister Donald Tusk.

The Commission is investigating the latest plans on Szczecin and Gdynia, submitted to Brussels on September 12 after Warsaw's plea for a last chance, and is expected to deliver its official verdict within the next few weeks.

A separate probe is carried out into Gdansk, already privatised.

An adviser to the Polish government who took part in the meeting told reporters that Kroes had said she would recommend to the whole 27-member Commission to take a negative stand on the restructuring plans.

The Commission's spokesman, Jonathan Todd, said no decision on the issue had yet been taken.

State-owned Gdynia and Szczecin and the privatised Gdansk yards employ about 15,000 workers but Polish officials say as many as 60,000 jobs could be at risk if suppliers and related sectors are taken into account.

Commission officials have said privately the Polish plans looked doubtful because they involved extra state aid of 835 million zlotys ($352 million) for Gdansk and Gdynia and 400 million zlotys for Szczecin.

Investors have pledged about 1 billion zlotys for Gdansk and Gdynia and 242 million zlotys for Szczecin.

Ukraine's Industrial Union of Donbass, which owns the Gdansk yard, is interested in buying Gdynia while private Polish firm Mostostal Chojnice and a Norwegian investor wants to buy Szczecin.

Polish trade unionists warn bankruptcy would probably lead to massive protests at the yards, but industry experts say the companies could still operate under bankruptcy provisions and be later sold off.

Successive governments have failed to deal with the problem since Poland joined the EU in 2004.

The yards have not made profit on a single ship built since at least 2004 and would not have survived without subsidies, but analysts say that, properly managed, they could still flourish.