Brussels backs rescue of historic Polish shipyard

In its long-awaited decision, the European commission, the EU's key regulator, gave its consent to various rescue measures worth €251 million, paid out by the Polish authorities since 2004 and also extending into the future in favour of the Gdansk shipyard, the birthplace of the Solidarity anti-communist movement.

The commission ruled last November that Poland had been artificially keeping the three historic shipyards at Gdansk, Gdynia and Szeczin alive by handing out illegal state aid. In May, Warsaw announced it had sold the two former shipyards to an offshore-registered company.

The best-known Gdansk yard was already sold in 2007 to ISD, a Ukrainian investor, but still received some state aid, prompting the probe by Brussels.

The commission is now satisfied with a new restructuring plan filed by ISD, as "the distortions of competition, caused by years of subsidised operations, will be adequately reduced by production capacity closures," the EU executive said on Wednesday.

The decision means that the state aid does not have to be paid back.

According to the approved restructuring plan, the firm will close two out of the three existing slipways.

Both the Polish government and workers at the iconic shipyard had protested Brussels' request that the yard's shipbuilding capacity be reduced substantially.

But the 27-strong bloc's regulator argues that the reduction was necessary. "We have made a tremendous effort to make sure that the yard will be viable for many years to come. Genuine restructuring is the only way to secure stable jobs for the yard's workers," Commissioner Kroes said.

Warsaw has welcomed the commission's move. "I'm very happy with this decision," treasury minister Aleksander Grad said, according to AFP.