Polish PM bets on economic revival to reverse slump in popularity

By bne IntelliNews September 17, 2013

Jan Cienski in Warsaw -

Donald Tusk's political problems are not over, despite some signs of an economic revival and recent attacks on business by his leading rival, Jaroslaw Kaczynski.

A new opinion poll, released just after as many as 100,000 union-led protesters marched through the streets of Warsaw over the weekend, showed Kaczynski's right-wing Law and Justice party (PiS) with the support of 39% of those polled, while Tusk's Civic Platform lagged far behind at only 30%.

Some analysts had felt that Kaczynski's recent denunciation of business, made at the annual gathering of Polish business at the mountain resort town of Krynica, would scare the suits back into Tusk's camp. Kaczynski said most Polish companies were not innovative and were largely penetrated by communist-era apparatchiks. He also called for companies to raise salaries for their workers or else face "punitive" taxes. He denounced business for exploiting workers in the same way that lords oppressed their serfs, called for a transaction tax on equities sales and proposed hiking taxes for the wealthiest. "Kaczynski to business: I didn't come to you, I came for you," was one tweet making the rounds at Krynica.

Kaczynski's attacks may have dismayed the business vote, which had become disenchanted with Tusk's caution over pushing through deeper economic reforms and slashing at bureaucracy and red tape. But it seems to have done him no harm with the broader electorate, particularly people who have been hurt by the economy's unexpectedly sharp slowdown at the beginning of this year. "Mr Kaczynski's party has the political wind in its sails right now and is doing what it does best: pursuing a populist and nationalist agenda," says Nicholas Spiro of Spiro Sovereign Strategy. "While this may play well with PiS's loyal voters, it's very doubtful whether there's anything to be gained from taking a stridently anti-business stance."

Kaczynski's audience were not the well-heeled business leaders and lobbyists strolling down Krynica's crowded main street. "The very cold reception to Kaczynski's appearance in the halls of Krynica show that gaining the support of entrepreneurs will be difficult," says Wojciech Szacki with Polityka Insight, a policy analysis firm.

Kaczynski's real target was the thousands of angry demonstrators who spent several days in Warsaw in mid-September protesting against Tusk and his government.

Tusk's troubles

Led by Piotr Duda, the charismatic ex-commando who now heads the Solidarity labour union, a rump of the organisation that helped bring down communism in Poland more than two decades ago, demonstrators demanded a reversal of a recent increase in the retirement age to 67, higher salaries and more job protection. "My heart is glad," Duda yelled to the throngs waving Polish flags and posters calling for Tusk's removal. "I'm a guy, but I want to cry with joy when I see that we've finally woken up as Polish workers."

Tusk's troubles stem from a combination of a sour economic mood and with exhaustion with his government - after six years in power his administration is the longest-serving in Poland's democratic history.

Poland's economy grew by only 0.5% in the first quarter of the year, accelerating to an only slightly less anaemic 0.8% in the second quarter. Unemployment is slowly drifting lower, but is still high at 13%.

Meanwhile, internal strife in Tusk's Civic Platform party has led to several MPs quitting, reducing the governing coalition to only 232 seats in the 460-member parliament. This creates a point of maximum danger for Tusk. Fortunately for him, there are unaffiliated MPs who are likely to support the government, making early elections unlikely.

The economy is also showing signs of gaining strength. Exports are up, as is industrial production and business sentiment, while still low, is also rising.

During his own appearance in Krynica, Tusk declared the crisis over and predicted that the economy would be growing by over 2% by the end of this year and by 3% by early 2014. "I have bad news for the professional pessimists. There will be no recession and no stagnation in Poland," Tusk said.

With parliamentary elections scheduled for 2015, Tusk does have some time to wait for the economy to start to gain speed in the hope that it turns around his party's lacklustre support numbers.

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