An ungainly coalition

By bne IntelliNews October 26, 2006

Jan Cienski in Warsaw -

The reheated coalition in Poland is ungainly and the chances of it carrying out any meaningful economic reform is very low.

Poland's politics have easily matched the turbulence of its Central European neighbours, and the last month has been particularly eventful, with a 24-day invective-filled crisis that ended up with same coalition of the conservative Law and Justice party and two smaller populist allies in charge.

However, the coalition remains ungainly and the chances of it undertaking any significant economic reforms – besides hanging on to its signature policy of keeping the budget deficit fixed at PLN30bn (€7.8bn), which is about 2.8% of gross domestic product – are very low.

The crisis began September 21 when Jaroslaw Kaczynski, the prime minister, threw Andrzej Lepper, leader of the left-wing populist Self-Defence party, out of the governing coalition for trying to undermine the budget and questioning the government's decision to send 1,000 troops to Afghanistan. It was the sixth serious political crisis since parliamentary elections last year produced no clear winner.

The parting was sudden and very bitter. Kaczynski denounced his former partner, calling his behaviour "loutish". A wounded Lepper fired back accusing the prime minister of "boorish, boorish, and again boorish" behaviour.

Kaczynski has the reputation of being Poland's political master tactician – a Machiavelli on the Vistula – and the surmise is that he decided to toss Lepper overboard in the hopes of splitting Self-Defence. The plan was to use refugee Self-Defence MPs to build a broad populist nationalist party that would dominate the right of Polish politics – a Polish version of Germany's Christian Democrats.

That plan came to an embarrassing end when one of Lepper's lieutenants, Renata Beger, taped two government ministers holding secret talks trying to entice her to switch parties in return for a government post. Even more awkward for the government, Beger was convicted of falsifying signatures on her election petition, but because Polish law does not forbid MPs with criminal records, she continues to sit in parliament.

Video killed the probity star

The broadcast of the tapes was a body blow for Law and Justice, a party which built its image around the call to cleanse Polish public life of the criminal pathologies it says are a result of the original compromise with Poland's communist rulers in 1989. In that deal the communists handed over power to the creators of the Solidarity labour union, but many party apparatchiks turned their connections and access to cash into capitalist fortunes. Poland's new democracy didn't prosecute old communists, who were allowed back into politics after mutating into social democrats.

In the world view of Kaczynski and his twin brother Lech, Poland's president, this original sin at the birth of Polish democracy was supplemented by unreformed secret police agencies allied to criminal groups forming what the Kaczynskis call a "network" or a "grey web" that permeates every aspect of Polish life.

As a result, according to the twins, today's Poland is not a true democracy, but a mutant that requires deep reforms. In a recent interview, Jaroslaw Kaczynski called Poland "Ubekistan" – a play on the Polish slang term for a communist secret policeman, an ubek , and the notoriously corrupt central Asian republic of Uzbekistan.

Brothers Grimm

The Kaczynski's programme of rooting out corruption is so important that their party held its nose this spring and formed that first coalition with Lepper and the smaller nationalist League of Polish Families.

The coalition was always unstable, because the leaders of the smaller parties saw that Kaczynski's long-term goal was to absorb their parties, and when Kaczynski thought he saw the chance to finish off Self-Defence he leapt.

After the fall-out with Lepper, the prime minister announced he would no longer conduct negotiations with "people of low reputation". But following the failure to split Self-Defence, Law and Justice lurched downwards in opinion polls. Kaczynski backed away from his earlier threat to dissolve parliament and hold pre-term elections. Instead, Lepper was invited back into the government and given back his old posts – deputy prime minister and minister of agriculture. He was sworn in October 16 during a late-night ceremony at the presidential palace to which reporters were not invited.

Opposition hopes of holding early elections were dashed and its leaders were scathing in their criticism of the new-old coalition. Jerzy Szmajdzinski of the ex-communist Democratic Left Alliance, called it a coalition of "shame before Poles and fear of the polls."

However, Marek Kuchcinski, the Law and Justice parliamentary leader, argued that rebuilding the coalition with Law and Justice's dubious allies was necessary because, "the government has started to repair the country."

"What price is worth paying? In our view a very high one, so that a possible government of the left would not be able to stop the process of reform," Kuchcinski said.

Political reverberations

The crisis set off by Lepper's ouster and return is still echoing around Poland. Kaczynski has come through it with his reputation for political perspicacity dented, his government is weaker than it was before, the coalition has slumped in the polls, and the country's political class is consumed by battles over mysterious secret police files from the early 1990s.

The political warfare has soured the public on politics. A recent survey by the CBOS polling organisation found that 72% of Poles feel the country is headed in the wrong direction. Another survey by the OBOP organisation found that three-quarters of Poles have a negative assessment of the government, 69% feel Jaroslaw Kaczynski is doing a bad job as prime minister, and 66% feel the same about his brother Lech, the president.

Disarray at home is not helping repair Poland's battered image abroad. Relations with Germany are frosty and even worse with Russia; ties with Brussels, where the post of Poland's ambassador to the EU remains vacant, are frayed; and there is rising dissatisfaction in Warsaw with what many Poles see as a one-sided relationship with the US.

"Poland is losing a great moment, a great chance two years after entering the EU as a large country with strong economic growth," says Pawel Swieboda, head of the Demos policy think-tank and a former senior foreign ministry official.

Economists are similarly scathing about the government's lack of economic policy. So far, Law and Justice's main achievement has been to rein in Self-Defence's plans to destroy the budget by dramatically ramping up spending. But there remain problems with absorbing EU funds, promises to cut taxes have fallen by the wayside, social spending remains unreformed and only 6 kilometres of new highway will be completed in a country with some of the worst roads in Europe.

Fixating only on the deficit is an unambitious agenda during a time of strong economic growth, says Ryszard Petru, chief economist for BPH bank. This year growth is expected to clock in at about 5.5%, unemployment is slowly drifting down to 15.3% (still the highest in the EU) and foreign investment is expected to top $10bn, up from $7.7 bn a year earlier.

"No government does create a danger – it's a nightmare to waste years like this," says Petru, noting that if Poland was in Latin America instead of the EU, it would have already suffered an economic meltdown.

Despite promises that the coalition partners would work smoothly together, strains began appearing in the same week that the alliance was re-formed. Lepper wants to spend up to PLN20bn on more generous unemployment benefits, a scheme Law and Justice has no plans to adopt.

Many economists see parallels between Poland and Italy – both countries with high levels of corruption, enormous amounts of red tape and dysfunctional politics.

"The government isn't doing much, but at least they aren't doing much harm," says Katarzyna Zajdel-Kurowska, chief economist for Citibank Handlowy.

Send comments to: Jan Cienski

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