September 24, 2005

Polish election to decide pace of economic reform

By Tomasz Janowski

WARSAW (Reuters) - Poles vote on Sunday in a parliamentary
election expected to move the European Union's biggest newcomer
to the right and set the pace of economic reform.

Opinion polls show voters will punish the left for its
four-year rule marred by corruption scandals and high
unemployment and back two center-right parties rooted in the
anti-communist Solidarity movement.

The surveys point to a joint landslide for the Civic
Platform and Law and Justice with about 60 percent support. The
two parties plan to rule together, but have fought bitterly for
victory and the dominant role in the next coalition.

As in neighboring Germany, the top contenders are divided
over how far to go in embracing the free market and how much
welfare the former communist country can afford.

The Civic Platform, favored by most business leaders and
financial markets, promises a bold 15 percent flat rate tax and
wants to move faster with deregulation, privatization and
budget cuts needed for quick euro adoption.

The Law and Justice conservatives, led jointly by twin
brothers Jaroslaw and Lech Kaczynski, talk tough on crime and
corruption and pledge to uphold traditional family and
Christian values with promises of better welfare protection.

The final opinion polls suggested the conservatives will
draw with, or finish just ahead of, the Civic Platform.


Political analysts say the result will decide how
aggressively the new government will tackle economic challenges
and bring Poland into the euro area, which markets expect in
2010 or later.

Poland has a vibrant and highly competitive private sector
and its exports are booming. However, only about half of those
of working age are in work and unemployment is the highest in
the EU with 18 percent of the workforce without jobs.

Economists say firms find it too expensive to hire workers
and Poland must overhaul its costly welfare system, where
benefits are low but spread thinly among a record number of
pensioners and those on disability pensions.

Markets hope the Platform would finish social security
reform abandoned by the leftists and are concerned a
conservative-led coalition would move more cautiously.

However, economists also take heart from surveys that show
anti-Western populists weakened by Poland's first successful
year in the EU, although pollsters warn they may do better than
a combined 15-20 percent suggested by polls.

About 30 million Poles are eligible to vote on Sunday in
the EU's sixth biggest nation with a population of 38 million.
Polls opened on Sunday at 6 a.m (0400 GMT) and close at 8 p.m.
with exit polls due shortly after voting ends and first partial
results expected late on Sunday.

Since the fall of communism in 1989, no Polish government
has won re-election and the first vote since EU accession is no
exception. The ruling ex-communists, who won in 2001 by a
landslide, took Poland into the EU last year and presided over
an economic upturn, are trailing in the polls.

The center right has also dominated a parallel campaign for
the presidential election on October 9, with the Platform's
Donald Tusk leading Lech Kaczynski.