LESS REFORM, PLEASE, WE'RE CONTINENTAL:

In Polish coalition, an uneasy partnership (Graham Bowley, 9/26/05, International Herald Tribune)

The unexpected ascendancy of Law and Justice - after the liberal Civic Platform was well ahead in opinion polls until last week - means the pace of economic change in Poland will be slower than Civic Platform promised.

Law and Justice drew support from the demise of the Democratic Left Alliance after its candidate for president withdrew amid corruption allegations, and Kaczynski won over left-leaning voters with bitter attacks on his would-be partners' program for a flat 15 percent rate for personal, corporate and consumption taxes.

On Monday, Kaczynski promised "lower taxes and pro-investment policies to stimulate the economy." But he ruled out the flat tax, and the divergence in approach to the economy appeared already to be causing friction between the prospective partners.

Law and Justice, which favors a far more interventionist approach to the economy than Civic Platform, says it will seek to scale back the independence of the central bank because it believes interest rates are too high, and wants to slow the privatization of state assets.

Hanna Gronkiewicz-Waltz, a former central bank governor and one of Civic Platform's candidates for finance minister, said Law and Justice's victory "is worrying news for investors," according to Bloomberg.

The news agency quoted her as telling Polish public radio: "This will mean a slower decline in unemployment and less foreign investment. This will make our fight for the flat tax and fast euro-adoption pretty hopeless."

Mateusz Szczurek, an economist at ING Bank in Warsaw, said he thought the two parties were still capable together of pushing through significant economic change despite their differences.

"I can still see very positive developments being done by the new government," he said, adding that Polish zloty had initially weakened on financial markets Monday after Civic Platform's weaker-than-expected showing but had later recovered. "I believe that change is going to happen," he said.

Krzysztof Bobinski of the Unia and Polska Foundation said there could be tensions on European policy because Law and Justice was more skeptical about Poland's role in the European Union.

"This will make Poland's Europe policy more difficult," he said.

There could be further divergences on attitudes toward Germany and Russia, with Kaczynski, and his brother Lech Kaczynski, who is standing for president, urging a more muscular, confrontational approach to Poland's neighbors.

The most interesting dynamic that this series of Western elections brings into play is the possibility that the Tory path back to power lies in running openly to the Left of Blair/Brown Labour.

Posted by Orrin Judd at September 27, 2005 11:55 AM