- Associated Press - Monday, October 10, 2011

WARSAW (AP) — Polish Prime Minister Donald Tusk took his first steps toward building a new government Monday after his centrist ruling party became the country’s first ever to win re-election since the collapse of communism in 1989.

Results of Sunday’s election showed that his pro-European party can maintain a narrow majority in parliament with its small coalition partner — a sign of deepening stability in this nation of 38 million.

As well as being the first time in 22 years of Poland‘s post-communist history that a ruling party has won a second consecutive term, Mr. Tusk’s re-election stopped a string of defeats for incumbent governments in Europe. Over the past year or so, a swath of governments from Ireland to Latvia have been kicked out as they bore the cost of the economic turmoil.

In another first, Palikot's Movement, a new left-wing party that opposes the church’s influence in political life in this conservative and mainly Catholic country, entered parliament as the third-largest force. It seems to be benefiting from the country’s growing secularism and disenchantment with the established parties. Thanks to its strong showing, a transsexual and an openly gay activist are now poised to take seats in parliament, also unprecedented.

Mr. Tusk took his initial steps toward creating a new government on Monday after the state electoral commission issued a near-final vote count that left no doubt that he is the winner.

Polish Prime Minister Donald Tusk (center) celebrates in Warsaw with Health Minister Ewa Kopacz (right) and Foreign Minister Radek Sikorski (background left) as the first exit poll is published following parliamentary elections on Sunday, Oct. 9, 2011. (AP Photo/Alik Keplicz)
Polish Prime Minister Donald Tusk (center) celebrates in Warsaw with Health Minister ... more >

He met with President Bronislaw Komorowski, who said all logic indicates that Mr. Tusk will remain as prime minister. Under Polish law it is the president who charges the victor with forming a government.

Mr. Tusk also consulted with his party leaders and was then to meet with Waldemar Pawlak, the head of his coalition partner, the Polish People's Party.

Analysts said the election results suggest the government will continue with the broad thrust of its policies, which have been marked by close cooperation with the European Union and the use of EU funds to modernize a country still struggling to catch up economically with Western Europe.

The government also has tried to modernize the country and jolt the economy by privatizing state-run enterprises. Economic development on its watch has been impressive. The economy is growing at 4 percent this year, though it is expected to slow to around 3 percent next year in the wake of the broader slowdown across Europe.

Critics, however, fault it for not going further in reducing regulations and otherwise reforming a country still trying to overcome the economic legacy of communism. Unemployment is nearly 12 percent, and wages are still relatively low — problems that have pushed hundreds of thousands of Poles in recent years to migrate to Britain and elsewhere.

The budget deficit also has been growing, and the ratings agency Fitch urged the new government on Monday to implement more “drastic” fiscal measures.

“The slowdown in Poland and the wider euro area crisis could knock Poland off course unless further, more structural action is taken,” Fitch said.

Poland has been shielded from some of the turmoil by not being part of the eurozone. It also has benefited from an influx of EU subsidies that have stimulated development, while its large internal market maintained an appetite for consumption even during the global slowdown.

Markets reacted positively to the news, with Poland‘s main stock index, the WIG-20, rising 1.4 percent by the early afternoon and outperforming its European counterparts.

“Overall, the outcome of the elections is good news for investors as pro-market policies are likely to be continued and there should be a solid parliamentary majority for fiscal reforms,” Danske Bank said.

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