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Polish Daily Questions Winning Party Ability to Form Coalition

Posted on: Thursday, 29 September 2005, 12:00 CDT

Excerpt from an article by Witold Gadomski: "Can PiS be governed with?" published by Polish newspaper Gazeta Wyborcza website on 29 September

Jaroslaw Kaczynski has repeatedly made surprising turns in his career. His government's only chance of success is to forget about the PiS [Law and Justice] campaign promises and to agree upon a completely new programme with the PO [Civic Platform].

No one has any doubts that following the PiS victory, the government will be headed by Jaroslaw Kaczynski. Even if a different PiS politician is prime minister, the real power will be in Kaczynski's hands.

[Passage omitted].

In the past term of the Sejm [lower house of parliament], PiS deputies voted on economic issues most frequently like those of Self- defence. Was this because their programme is closest to that of Self- defence, or in order to underscore that they were the staunchest opposition to the SLD? We will find out the answer to this question in the coming months.

Programme or marketing?

Sixteen years after the overthrow of Communism, the eternal opposition member has now been given a mandate to form a government. Now he will have to not just explain what he doesn't like in Poland, but also, for the first time in his life, present a positive programme for which he will take full responsibility.

A few months ago the PiS prepared a programme brochure, which it used in the campaign chiefly against the PO. This document is identically reminiscent of the SLD's programme in 2001.

It contains a lot of promises that appeal to voters: longer child benefits, state subsidies for building housing for less wealthy citizens, reducing the debt of the PKP [Polish State Railways], developing science, education and new technologies, a special programme for Poland's eastern areas, a full retreat from health care reform, social guarantees for the poor, and stimulating the economy by lowering interest rates. All told, a general improvement in all areas of social life. The PiS programme, after the model of the SLD's four years ago, does not shun details. It promises mass access to broadband Internet, support for school field trips to cities, increased significance for student internships, developing the agricultural energy sector and even promoting young talented sportsmen.

It also includes many pleasant things for business people: greater access to credit, faster debt enforcement, tax breaks. It does not contain, however, any information about the costs of the programme or the sources for financing it - aside from insisting that PiS will do everything better and more cheaply than its predecessors, thanks to which savings will be generated.

The PiS politicians are not now answering an important question: was their programme chiefly a campaign tool, or will Kaczynski's government attempt to implement it?

Certain signals seem to indicate that the programme is not something sacred for the PiS. Let's bear in mind: one year ago the parliamentary deputies of this party voted in favour of raising the tax rate for the highest bracket to 50 per cent, and in their programme they are promising to reduce it to 32 per cent. Voting in favour of higher taxes allowed PiS parliamentary deputies to appear in the role of the defenders of poor Poles. The promise to reduce taxes is a gesture to the business community and highly qualified specialists, who pay the highest taxes.

Narrow path

Unlike his brother, Lech Kaczynski has certain experience in directing large institutions. For three years he has been Mayor of Warsaw, and during this time he has been unable to boast any great successes. Investments are delayed, overhauls of major transport routes are dragging on endlessly, many tenders have been made null and void, and the city is making poor use of EU funding. Lech Kaczynski came up against two barriers in Warsaw: budgetary limits and the inertia of administrative institutions. The government that Jaroslaw will probably set up will face similar barriers. The condition of public finances is difficult, although not catastrophic. The state apparatus functions ineffectively because of the personnel's somewhat low level of qualifications, and because of the low pay received by public officials, and because of the purges that are carried out among such officials in the wake of every election.

The PiS programme promises to maintain the budget deficit on the level of 30bn zlotys for several years, which on the one hand would mean continued growth in debt, and on the other would necessitate certain budgetary cuts. But is Jaroslaw Kaczynski ready to propose state spending reductions? Until now, being an opposition deputy, he has almost always been in favour of increased spending. Meanwhile, servicing the debt costs almost as much as the expenditure of the National Health Fund. The increased spending promised in the PiS programme could cause rapid growth in the debt and the costs of paying it off.

The winning party's programme will have its first confrontation with reality almost the very day after the government is formed. It will have to either adopt the draft budget presented by Marek Belka's government as its own, or modify this draft via extraordinary procedures. If the new prime minister decides upon the first scenario, he will be attacked by the competition for continuing the policy of his predecessors. If he makes modifications to the draft that financial markets consider dangerous, he will have to spend an additional several billion zlotys in higher debt servicing costs.

The PiS programme promises rapid economic growth, due among other things to lower interest rates and greater investments. Without getting into the low credibility of such promises (growth in the GDP and investments cannot be decreed) or the internal inconsistencies in the programme (since the PiS does not plan to reduce the public debt, the state finances will depend for many years upon speculative capital, whose influx will increase, not diminish as the programme promises), attempting to pressure the NBP [Polish National Bank] to lower interest rates will spark conflict, worry financial markets and the European Commission, and ultimately prove unsuccessful.

Firstly, it is not by any means easy to subjugate the central bank, as Leszek Miller's government learned. Secondly, even if this were successful, it would not help the economy at all, but rather to the contrary, it would cause disturbances on the financial markets and increase the investment risk.

Dubious savings

The PiS is proposing - just as the PO - to abolish certain institutions, agencies and funds, maintaining that this will be favourable for state finances. The Kaczynski brothers' party is promising to abolish the Council of Monetary Policy [RPP] - something that would not necessarily amount to an attack against the NBP's independence, as long as the functions of the RPP were assumed by the governor of the bank himself. I doubt, however, if Jaroslaw Kaczynski would try to strengthen the position of [NBP President] Leszek Balcerowicz, whom he has consistently fought for 16 years. In demanding that the RPP be scrapped, he wants, in essence, for monetary policy to be hand-controlled by a confidant of the prime minister.

[Passage omitted].

The PiS is proposing to consolidate many funds and agencies - it wants to scrap some to create others. This is nothing new; Miller's government did something similar. But the state will still have to administer the duties that are now being handled by these institutions. The PiS does not intend to reduce the scope of the state's intervention in socioeconomic affair. In short, the savings will be delusory, and who knows whether the institutions proposed by Kaczynski might turn out to be more costly. At the same time, the staff at many institutions will be replaced - "poorly-qualified" officials from the previous government will be replaced by "excellent professionals" from the PiS.

PiS experts are proposing to reverse the reform of the health care system: reverting to state-budget funding. They maintain that this will generate savings by eliminating the quite costly institution of the NFZ [National Health Fund]. But who will take over the functions of the NFZ, who will perform the "reliable" assessment - as the PiS promises - of the costs of treatment, who will negotiate with pharmaceutical companies? Instead of a single institution that is already somehow functioning, the Kaczynskis' party is proposing a new, unspecified institution and insisting that it will work better.

It is quite obvious that yet another profound reform of the health care system, the third in the course of seven years, would cause a mess and would entail costs that are hard to estimate. The two previous reforms sharply undermined support for the Buzek and Miller governments. Above all, direct budgetary financing for health care would mean retreating from the process of restructuring and introducing the economic rationale to medical facilities.

[Passage omitted].

What coalition?

These latest elections were strange in one regard - the two strongest parties, without previously consulting their agendas, agreed in advance that they would form a government together, yet at the same time waged harsh campaigns against one another. PiS emerged victorious from this confrontation, although its advantage over the PO is not great. It would have been more logical to agree a programme first and then go to the elections with a ready agreement, or with a declaration that the future coalition remains an open issue.

The situation is furthermore complicated by the presidential election. It is doubtful that a governing coalition will be conclusively sealed prior to its completion. The balance of forces in the coalition will depend upon who becomes president. If Donald Tusk wins, the PO, even weaker than the PiS, will have great bargaining power. If Lech Kaczynski wins, the PO could become marginalized, and perhaps some of its parliamentary deputies, disappointed by its election outcome, might desert it for the PiS.

In such a situation the PiS could try to form a government in coalition with part of the PO, the PSL [Polish Peasant Party], and the LPR [League of Polish Families]. This would be a coalition with a coherent programme, one that is pro-social and anti-market, one that curbs privatization and attempts to achieve social and economic objectives by way of greater state involvement in the economy. I do not believe in the effectiveness of such a programme, which would also come up against harsh criticism from the EU and be disliked by foreign investors. But who knows whether such an attempt might be made?

The PO's weak position could mean that the party will be brought into a government whose policy it will not shape, but for which it will have to take responsibility. The PiS could, for example, give the PO the difficult ministries - Finance, Health, Infrastructure - and then vote together with the populists in favour of projects that run counter to the programme of these very ministries. Impossible? But that's what the AWS-UW coalition looked like.

If the PO avoids a schism and Tusk wins the presidential election, the PiS position will be much weaker. Before the PO joins the Kaczynski government, it should set programme conditions: the stabilization of the budget, cuts in social spending, enacting a package of laws that are favourable to businesses, faster privatization also including health care, and the gradual reduction and simplification of taxes. Each point on the programme would be negotiable, but the direction is clear: Less state involvement, more market, more enterprise.

Jaroslaw Kaczynski, who has repeatedly made surprising turns in his career, could agree to such conditions. That is the only chance for his government to be successful.

Source: BBC Monitoring European

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