VISEGRAD: Poles tire of Civic Platform rule

VISEGRAD: Poles tire of Civic Platform rule
By Wojciech Kość October 20, 2015

Since Poland’s opposition Law and Justice (PiS) won the presidential election in May, it has been gradually moving towards taking over full control of domestic politics. Polish voters have often been fickle, but the apparently consistent shift in preferences is still puzzling, given the outgoing Civic Platform (PO) government’s successful record in office.

The rightwing populist PiS now looks as if will probably maintain the 10-12 point lead it has been given by most polls in the past several months. The party pledges to lift Poland from what it calls the crisis it has been thrown into as a result of eight years of centre-right Civic Platform (PO) rule.

The puzzle stems from the fact that PO is leaving the Polish economy in pretty good shape. Comparison of major indicators from 2007, when PO took over after PiS’ two-year stint in power, with those from 2014/2015, suggests PO should win by a landslide.

GDP per capita rose from the level of about 54% of the European Union average in 2007 to 70% at the end of 2014. Gross minimum wage nearly doubled from PLN936 (€221) eight years ago to PLN1,750 currently, exports grew their value 76% to PLN682bn, and unemployment is currently at its lowest in nearly seven years. Some indicators of the social policy also improved, such as the number of kindergartens or nurseries or the employment rate of people aged 55-64.

Despite these successes, PiS is taking advantage of what appears to be voters’ fatigue with PO, whose eight years in power remains an exception in Polish politics. No other party has formed two subsequent governments in Poland since 1989. Cabinets would more often crumble mid-term, forcing early elections – as happened to PiS in 2007, when it lost power to PO.

“It’s about perception,” Morgan Stanley wrote in recent analysis. “In recent months, voters have seen PO as increasingly detached and there is a belief among ordinary Poles that the fruits of economic growth have not been distributed fairly among the broader population,” the bank noted on October 8.

The belief is actually well rooted in reality. There are regions in Poland where the unemployment stands at twice the countrywide rate. The median wage in Poland is about half the average wage, blocking hundreds of thousands of Poles from participating in economic growth.

Corruption scandals, notably the “Waitergate” scandal where top politicians and businessmen were taped discussing deals, have also added to public distrust.

Other parties are also trying to take advantage of perceived PO’s failures: newcomers from Nowoczesna Polska criticise the changes to private pension schemes, which alienated liberal voters in 2013. The leftist groups Zjednoczona Lewica (United Left) or Syriza-styled Razem (Together) are hammering PO for being too neo-liberal.

But PiS has been most skilful at capitalising on the disillusionment with some of PO’s decisions, such as the increase in the retirement age, which was passed in 2012. In short, the biggest opposition party has successfully built a narrative based on the idea of a Poland in crisis after PO’s eight-year rule that needs fixing.

Looming hangover

This, PiS leaders claim, will be achieved with measures ranging from a tax on banks and large retail chains to a law allowing conversion of FX mortgages to the Polish zloty at historical rates. On the social policy side, the party is certain to deep-freeze proposals on civil partnerships or liberalisation of abortion law.

A revision of the official view of the Smolensk plane crash that killed the then president Lech Kaczynski also looms, as PiS leaders – more or less openly - consider the accident to have been a plot to kill the PiS co-founder.

PiS also proposes some large expenditure plans, in line with its July pledge to increase public spending by more than 2% of GDP to finance the party’s flagship promises of lowering the retirement age or instituting a PLN500 child benefit. Other than those, the opposition party wants to provide free medicines for people over 75 years of age and to lower the tax rate for small companies to 15%, from the current 19%.

“Reason goes to sleep” during election campaigns, the central bank’s governor Marek Belka commented to Politico recently. “Sometimes it is said elections are like the fiesta of democracy, which is true, but electoral campaigns are like bachelor parties which culminate in huge hangovers and sometimes culminate in disasters,” Belka said.

Even PO’s core electorate, business, has plenty of negatives to say about the ruling party, and appears to be reconciled to the inevitability of a PiS-led government.

"PO failed to move forward with vital reform," Henryka Bochniarz, head of business lobby Lewiatan, admits to bne IntelliNews. She points at what business circles claim are important let-downs, such as the government's failure to take the coal industry's deep seated problems by the horns and the slow movement on privatisation of Poland's state-controlled giants. The rollback of pension reform is another issue, she adds.

Ominuously for PO, Bochniarz also suggests she is not overly concerned by the prospect of a PiS government. "The last PiS administration proved quite good for Polish business," she says. "It lowered taxes and cracked down on the oligarchs. Companies were doing well."

Bochniarz’s view is echoed by some analysts. “It seems [PiS] has moderated since it was in power in 2005-07 – notably, Jaroslaw Kaczynski, the party’s divisive leader, has stepped out of the spotlight,” William Jackson of Capital Economics noted on October 16.

“Moreover, Poland’s economy is in a stronger position than it has been for many years. The current account and fiscal deficits have both narrowed sharply, so we don’t see much downside risk to the zloty, and bond yields should remain low,” he added.

Business has even attempted to present itself as more pro-PiS as well, just in case. The “person of the year” award by the Krynica Economic Forum went to the party’s chairman and former premier, Jaroslaw Kaczynski in September.

It was also a telling sign of who really is pulling the strings in PiS, as Kaczynski has remained largely in the background during the campaign and the party instead fielded Beata Szydlo, the party’s vice-chair, as a candidate for the next prime minister. An ethnographer by education, Szydlo, 52, comes from a miner's family. She was a mayor of Brzeszcze, a small town, between 1998-2005 until she joined PiS in 2005 to become an MP.

While PiS’ victory appears nearly certain, the next big question is the size of its mandate, which will determine to what extent PiS will be free to execute its programme. Polls are not giving a definite answer to that, but most are forecasting PiS will have to form a coalition. Likely coalition partners include PO’s current partner, the Polish Peasants Party (PSL) or wildcard group Kukiz’15, although they are uncertain to pass the 5% vote threshold needed to win seats in the parliament.

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