September 26, 2005

Polish center-right vows prompt talks, calms markets

By Pawel Sobczak

WARSAW (Reuters) - Poland's center-right parties,
celebrating a crushing victory over the ruling left, promised
on Monday to start talks quickly to bridge divisions over the
scope of market reforms and to form a coalition.

The victorious conservative Law and Justice party and its
likely junior partner, the pro-business Civic Platform fought
bitterly over the economy in the run-up to Sunday's general
elections and markets braced for tough, drawn-out negotiations.

Party leaders sought to soothe the concerns by saying talks
could start late on Tuesday, when the final results may be
announced, and that there was scope for compromise.

"Immediately after the official results, we are ready to
start talks with the Platform about economic policy. We are
deeply convinced that they can be effective," said conservative
leader Jaroslaw Kaczynski.

Donald Tusk, the Platform's leader and frontrunner for the
October 9 presidential election when he will face Jaroslaw's
twin brother Lech, agreed.

"We are ready for immediate talks with no initial
conditions," he told a separate news conference.


Investors sold the Polish zloty early on Monday after
results showed long-time poll leader Civic Platform finished
second. The currency later recouped most losses as Fitch
Ratings agency said the broad outlook for reform remained good.

"The big picture is that this is a good result for Poland.
Overall we will have a center-right government with a clear
majority, committed to reducing the budget deficit," Fitch
analyst Edward Parker told Reuters.

Results from 90 percent of voting districts showed the two
center-right parties with 285 seats in the 460-member lower
house, the biggest triumph for the heirs of the pro-democracy
Solidarity movement since it toppled communism in 1989.

The outgoing leftists suffered their worst defeat since
1990 capturing 56 seats, down from 217 four years ago.

In principle, the two center-right parties have more in
common than just their Solidarity roots.

Both promise to slash unemployment, which at 18 percent is
the highest in the EU, cut taxes and weed out corruption that
tainted the left's four year rule.

But they differ on economic policy.

The Civic Platform campaigned on a pledge to speed up
market reforms and slash taxes while the conservatives vowed to
protect a "social market economy," reflecting an EU-wide debate
on how much welfare the bloc needs and can afford.

The Platform favored possibly quick euro adoption, while
the conservatives want to keep the zloty at least until the end
of this decade. The conservatives also ruled out adopting the
Platform's 15 percent flat tax scheme, which they attacked in
the campaign as a gift for the rich at the expense of the poor.

Jaroslaw Kaczynski, 56, a tough-talking former
anti-communist dissident is expected to become prime minister,
but refuses to confirm he will head the government as long as
his brother Lech has a shot at the presidency.

The brothers say Poles are not ready for identical twins in
the top jobs, but Tusk pressured Jaroslaw to make a commitment.

"We want Jaroslaw Kaczynski to take responsibility for this
government regardless of what happens in the presidential
election," he said.

Critics say Jaroslaw lacks international experience and his
combative style could make him ineffective at home and isolated

"Neither Jaroslaw or Lech Kaczynski nor their party are up
to the challenges they face," Poland's former president and
Solidarity icon Lech Walesa told Reuters. The brothers once
worked for Walesa but fell out with him in the mid-1990s.

"The Platform would have had a better chance, because they
are more sensible people. I hope I'm wrong."