Poland PM rides out scandal; alludes to Russian involvement

By bne IntelliNews June 27, 2014

Jan Cienski in Warsaw -


Donald Tusk, Poland's prime minister, is hoping that he has managed to head off a bugging scandal that has embarrassed key ministers, shaken domestic politics and endangered Warsaw's key foreign relationships, by blaming the mess on “criminal groups” and making allusions to Russian involvement.

The scandal has consumed Poland since mid-June after the Wprost news weekly started to publish transcripts of illegally obtained private conversations of senior ministers, Poland's central bank chief and other top level officials who had been caught on tape while tucking in at some of the capital's best restaurants.

The initial reaction to the leaks was that Tusk's government could collapse, forcing early elections and the likely exit from power of an administration that has governed since 2007. But in the last few days of June, Tusk seemed to have regained control of the narrative. He pushed through a vote of confidence in parliament on June 25. To no surprise, considering he heads a coalition with a majority support in the legislature, he easily won, which dispelled the notion that his government was about to crumble.

The prime minister also unleashed the full force of Polish law enforcement on finding the leakers, and some early arrests have been made.

But Tusk's recovery is still fragile. His Civic Platform party is losing ground in opinion polls to the opposition Law and Justice party, and there is the danger that Wprost may have still more damaging transcripts in its quiver, ready to publish over coming weeks.

Unpleasant reading

The leaks so far have not made for very pleasant reading for Tusk. The most significant international splash came from a conversation between Foreign Minister Radek Sikorski and former finance minister Jacek Rostowski. The two were dining in the Amber Room, a supposedly discreet restaurant located in a neo-Italianate palace which houses the country's most exclusive business club.

In a widely ranging conversation salted with racy jokes and lots of crude language, the two gossiped about personalities, talked of their personal ambitions, and then Sikorski laid into Poland's relationship with the US and lambasted UK Prime Minister David Cameron.

Sikorski, once seen as a stout pro-American, ridiculed Poland's alliance with the US as “worthless”. He continued, “Complete bullshit. We'll get into a conflict with the Germans and the Russians and we'll think that everything is super because we gave the Americans a blowjob.”

Sikorski and Rostowski, both educated in England and Poland's most Anglophile politicians, then ridiculed Cameron, denouncing his attempts at buying off his Eurosceptic back-benchers with “stupid manipulations” that would end up backfiring and driving the UK out of the EU. “As I predicted, it's all turning against him,” said Sikorski, who was a member of same rowdy upper class Bullingdon drinking club at Oxford University as Cameron. “He should have told them, 'fuck off', to convince people and isolate the others. But now he's given them room and they will humiliate him.”

The brutal language from a man who had been seen as Cameron's personal friend was sprayed over the front pages of British newspapers. It was an unexpected and unwanted blow to Cameron, who is already facing a losing battle in his attempt to prevent Luxembourg's Jean-Claude Juncker from becoming the next head of the European Commission.

Sikorski's assessment of Poland's relationship with the US was less surprising, given that the comments were made in January. At the time, Poland's top diplomat had shifted Poland's foreign priorities to a closer relationship with Germany and the EU. He had been dismayed at the US backing away from plans to build a missile defence shield partly based in Poland and more broadly over the Obama administration’s pivot away from Europe towards Asia.

The US raced to dispel notions that the relationship with Poland was in trouble, refusing to comment on the particulars of Sikorski's private conversation, but saying that ties with Warsaw were “very good”.

There is also a recognition that events have moved on since January thanks to Russia's annexation of Crimea and its apparent support for an armed insurgency in eastern Ukraine. Since then Poland has made a point of re-emphasising the closeness of its security ties with the US, and has been very upset at western European, and particularly German, reluctance to shift Nato forces to Central Europe.

Breaking the bank

The other recorded conversation that caused a stir, this time in financial markets, was one between Bartlomiej Sienkiewicz, the interior minister, and Marek Belka, the governor of Poland's central bank.

Although at times crude as well as wide-ranging and interesting, the most controversial segment had Sienkiewicz spinning a hypothetical scenario of an economic crisis that could see Law and Justice take power. Asked if the central bank could use unorthodox instruments to prop up the economy, Belka agreed, although he named a price. “My condition is, excuse me, the dismissal of the finance minister,” Belka said, referring to the minister as “Count von Rostowski”.

Rostowski was removed as minister in a cabinet reshuffle last November, although both he and Tusk insist it was of his own volition. Another of Belka's conditions, a change in regulations governing the National Bank of Poland, is working its way through parliament.

Financial markets were shaken when the revelations came out on June 16. There were fears that Belka had lost all credibility and would have to be replaced. But Belka has decided to hang on, and markets quickly rebounded. “Most people would accept that Belka has done a good job heading the NBP,” said Tim Ash of Standard Bank. “Ultimately the question is: has the public's faith and trust in the institution of the NBP been damaged by this somewhat unsavoury saga, and does Tusk think that hanging on to Belka damages his own position as elections approach?”

Other than those two conversations, there has been little repercussion from other published recordings from ministers, executives and other officials, all of whom were bugged while eating at a handful of Warsaw's most exclusive restaurants.

The public response “has been more one of amusement than anything else, and commentators wonder whether or not their release means that more significantly damaging material simply does not exist,” said Simon Quijano-Evans of Commerzbank. That is certainly Tusk's hope.

Authorities have arrested two waiters who worked at the restaurants, as well as two businessmen, reportedly for supplying Wprost with the recordings. One, Marek Falenta, had invested in Sklady Wegla, a coal distribution company which imported cheap Russian coal for retail sale in Poland. He denies any wrongdoing. The company had recently been the subject of a police probe, and several executives had been arrested on money-laundering and tax fraud charges.

Tusk made as much as possible of the Russian connection, even though it is still very far from being proven. “I don't know in which alphabet this scenario was written, but I know very well who could be the beneficiary of political chaos or the lowering of the reputation of the Polish state,” he told parliament, adding that people mixed up in the Russian coal trade and in building gas connectors to help speed Russian gas to Europe without transiting across Ukraine may have been involved.

If true, Tusk would be able to shift public scrutiny from the failings of his ministers and security services on to Russia, Poland's ancient foe. The prime minister’s hope is that this narrative holds for long enough for his government to regain popularity before next year's scheduled elections.


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