Polish ruling party tries to claim credit for economy ahead of polls

By bne IntelliNews September 10, 2007

Jan Cienski in Warsaw -

The economy is likely to play a pivotal role in Poland's parliamentary elections, with the conservative Law and Justice party government claiming credit for the economic boom that has seen unemployment fall, wages soar and foreign investment flood in.

"After the last two years Poland is better and no one is able to question that," Jaroslaw Kaczynski, the prime minister, told a gathering of party faithful over the weekend in the central city of Poznan. "All objective criteria indicate that Poland is developing well."

As a sign of the importance Kaczynski places on the economy, one of his party's leading candidates in the October 21 elections will be Finance Minister Zyta Gilowska, who two years ago was a leader of the pro-business opposition party Civic Platform before falling out with that party and joining the government.

The focus is a shift for the government, which over the past two years has devoted most of its energy to rooting former communists out of public life and unleashing a controversial anti-corruption campaign.

Kaczynski has said that his government's two largest successes were the dissolution of the military intelligence agency - which he claimed were stuffed with unreconstructed communists - and the formation of an elite anti-corruption office. The price for getting legislation passed for those two goals was the creation of an unstable coalition with two minor populist parties.

That coalition collapsed earlier this summer, when agents from the Anti-Corruption Bureau tried to entrap the leader of one of the populist parties, Andrzej Lepper, in a corruption sting.

Unable to recreate a stable majority, Kaczynski joined with the leading opposition parties on Friday to dissolve parliament and hold early elections, two years before the government's mandate expired.

Where the credit lies

Few of the promises made two years ago by Law and Justice - to slash bureaucracy, build millions of new homes, privatise most state controlled companies, lower taxes, build roads and to place only qualified candidates in control of state companies - have been fulfilled.

However, the economy has flourished despite - or some cynics say because - of the inattention paid to it by government.

The economy is expected to grow by about 6.5% this year, after growing at 5.3% last year. Unemployment is down to 12%, from a peak of more than 20% in 2003. Wages are rising by about 9% a year, and foreign investment will be about €11bn this year.

But for the government, hitting the economic sweet spot has been more a matter of luck than of skill. Poland is benefiting mainly from the effects of joining the EU in 2004 and a rebound in the German economy, Poland's largest trading partner.

Business groups are scathing about the government's record. "Parliament did not pass a single law which would really answer the challenges facing Poland," said an open letter by the Polish Confederation of Private Employers. "Pension reform was not completed … public spending was not limited and the public debt continues to grow. Economic freedoms were not expanded."

Opposition parties are also joining in the attack, with the Civic Platform party denouncing Kaczynski's "pseudo-achievements".

While claiming credit for a strong economy, Kaczynski gives no indication of having converted to economic liberalism. He has resurrected a slogan, "A Poland of solidarity, not a Poland of liberalism," that helped win him the last election by appealing to the millions of Poles who feel left out by the transformation from socialism to capitalism.

Law and Justice "will link a decisive free market policy with a pro-social policy of solidarity," Gilowska told the party convention.

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Polish ruling party tries to claim credit for economy ahead of polls

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