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Polish political environment |
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Poles voted for a new government on 25 September 2005. The result was a crushing rejection of the Democratic Left Alliance (SLD) that had governed Poland since late-2001 and a big question mark as to long-term stability.
BPCC
Law and Justice (PiS) and Civic Platform (PO) topped the polls with 26.8% and 24.2% of the vote respectively - PiS, with 155 MPs will have the upper hand in parliament; PO having 133 MPs. The former party decided to form a minority government after talks to create a coalition failed. The new government was given a parliamentary vote of confidence on 10 November.
PiS candidate Lech Kaczyński won the presidential race four weeks later, beating PO's Donald Tusk by 54% to 46% in the second round, thus consolidating PiS's hold on power.
PiS have cleverly seized the middle ground between the populist parties (Samoobrona and LPR) and the pro-business liberals of Platforma Obywatelska (Civic Platform). With strong support in the polls and only 10% of the electorate professing to 'dislike' it, PiS is threatening the populists with forming a coalition with the liberals and threatening the liberals with forming a coalition with the populists. This balancing act can only go on for some time; in the meanwhile, important government work - especially in the area of economic reform - has ground to a halt.
The winning party, Law and Justice (PiS) has formed a minority government from the outset, supported (though not as a formal opposition) by populist parties of the left (Self-defence - Samoobrona) and right (League of Polish Families, LPR). The outcome, from the point of view of business, that had been expecting a coalition between PiS and pro-business Civic Platform (PO), is disappointing. The key issues for business during this administration will be:
Taxes: PiS intend generally to lower taxes (but not by much) and cut cost of government administration. There will be no rush to join the Euro; the budget deficit is likely to increase.
Central Bank independence: PiS have stated their desire to curtail the sovreignty of the Monetary Policy Committee to set interest rates. There is a threat of political intervention.
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Privatisation: PiS are generally suspicious of privatisation, seeing much potential for corruption without seeing the benefits for the economy. Yet choice of Andrzej Mikosz, former Lovells lawyer (head of capital markets department) and member of Warsaw Stock Exchange Commission, a man with an instinctive appreciation of the why's and how's of privatisation, suggests there is some hope that the process will continue.
Public finances: Part of PiS's success in both parliamentary and presidential elections was its appeal to voters of more extreme populist parties, making promises that would be hard to finance from the state budget (such as building three million flats), tax breaks for families with several children and increased social security payments. If realised, these election promises would make it hard for a PiS-led coalition to bring the public spending deficit to within limits defined in the Maastricht treaty; in any event, PiS does not seem in any great hurry to join the Euro (which Poland is obliged to do under the terms of its EU Accession Treaty).
Less red tape and corruption: There is no doubt that PiS is sincere in wanting to tackle corruption, which according to Transparency International has got steadily worse over the past decade. The fear is that anti-corruption measures will result in more red tape (planning permissions, public tenders...)
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