- The Washington Times - Sunday, October 16, 2005

The Oct. 9 presidential election was narrowly won by Donald Tusk of the Civic Platform (PO) beating Lech Kaczynski, Law and Justice Party (PiS) leader, giving him 36.3 percent of the vote versus Mr. Kaczynski’s 33.1 percent. As outright victory requires 50 percent, a runoff election will now take place on Oct. 23.

When Poland elects a new president, it will have a clear mandate to implement free-market reform and a remit to dispel the country’s past socialist-led economic model. But the nation will have to wait two weeks.

Last month (Sept. 25), Poles voted out the Democratic Left Alliance Party (SLD), led by Alexander Kwasniewski. Two centre-right parties — the PiS, led by Jaroslaw Kaczynski and his identical twin Lech Kaczynski, and the PO, led by Jan Rokita and Mr. Tusk, gained more than 50 percent of the popular vote and 288 seats in Poland’s 460-seat parliament (Sejm). Both parties formed a center-right coalition now set to govern with a decisive majority.

Tomuchsurprise, Jaroslaw Kaczynski ruled himself out as prime minister, nominating PiS economicsguruKazimierz Marcinkiewicz. Mr. Kaczynski revealed he felt that Poland was not ready for the ‘doppelganger effect’ of twins elected as prime minister and president. Meanwhile his twin, Lech, promised Poles a moral and economically conservative government if elected president. His opponent Mr. Tusk campaigned on a pro-European Union and pro-business ticket.

Although the post of president remains undecided for the next two weeks, the position is certain to be filled by a center-right candidate.

Mr. Marcinkiewicz is now preparing reformist policies with an assertively Christian Democrat-style flavor. These will seek to lower taxes and unemployment, boost economic competitiveness and strengthen Poland’s position in regional and foreign affairs.

The program, to be launched on Oct. 24, may include a 15 percent flat-tax system — a single tax paid by all except the lowest-wage earners and much in vogue among center-right thinkers in Europe. If Poland implements a flat tax, a successful experience could convince other countries of its merits.

Other measures aim to cut Poland’s budget deficit, slash corporate regulation and kick-start employment. Polish unemployment is worrying — at 18 percent it is the highest in the European Union; it is 40 percent for those under 25. Many young Poles say they see their future in Britain, France and the United States. The new government has promised to take steps to tackle this but the road will be a long one.

And Polish competitiveness in the face of China is declining. Poland’s low-wage economy — at $757 per month, workers earn one-fifth the EU average — used to be an advantage. But production costs in China are now 20 percent to 30 percent lower than in Poland and historical advantages are fast eroding. One Polish company, metal-furniture manufacturer Gamet SA, recently split production between Poland and China — something previously unheard of. EU membership can only worsen this situation as Polish wage levels rise.

The program will also tackle corporate sleaze, revamp welfare and lift Poland’s economic growth rate. This will be challenging, as Poland’s wealth lies 50 percent below the EU average and growth slows to 3.3 percent by the end of 2005.

Poland, which joined the EU in May 2004, also anticipates an EU “membership dividend” and expects to prosper in the EU, without the euro for now. It looks to Ireland’s experience in the 1990s and hopes for the same.

In foreign affairs, Poland will seek to convince other EU states to take a intelligent yet robust stance toward its eastern neighbors: Belarus, Ukraine and Russia. Managing historically cool relations with Russia will be the toughest test.

Many Poles suspect growing authoritarianism from Russian President Vladimir Putin, who, they claim, views them with distaste, the product of his KGB past and of Poland’s elephant memory of the ravages inflicted on it by the Soviets.

Some Polish policy-makers also view Russia’s increasing diplomatic leverage, gained from meeting more of Western Europe’s energy needs, as nefarious. The new Polish government will thus need to balance EU membership while asserting itself as a regional actor in Eastern Europe. Finally, a decision must be taken about Polish troops still committed to Iraq.

Poland is now at a crossroads. As it consigns socialist-led economics to the past and embraces EU membership, new opportunities of globalization beckon, not all of which will be positive. Nevertheless, Poland’s voters can feel that the center-right has a clear run to introduce badly needed reforms. Whoever becomes president on Oct. 23 — Mr. Tusk or Mr. Kaczynski — Poles will expect the new economic model to deliver.

Ronan Thomas is a British journalist covering the Polish election.

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