/ 5 July 2010

Komorowski wins Polish election, reforms in focus

Moderate conservative Bronislaw Komorowski has narrowly won Poland’s presidency, setting the stage for a political alliance with Prime Minister Donald Tusk that will be expected to deliver promised economic reforms.

Komorowski, a member of Tusk’s Civic Platform party, won 52,6% of votes in Sunday’s poll, according to results based on 95% of the ballots, after a cliff-hanger vote that saw his right-wing rival Jaroslaw Kaczynski perform much better than expected.

But political analysts said the unexpected tightness of the presidential race, the prospect of looming local elections and a parliamentary vote due in 2011 could lead Tusk to take a cautious approach in introducing potentially unpopular reforms.

“[Komorowski’s win is] market positive,” Goldman Sachs said in a note to clients. “However, these reforms look increasingly unlikely to happen quickly as local and parliamentary elections are approaching.”

In Poland, the government sets policies and the ruling Civic Platform faces an elevated budget deficit, high public debt, a public health system in disarray and an inefficient pension system. Changes in the pension system could hit farmers, miners and teachers, among others.

The president can propose and veto laws, has a say in foreign and policy issues and appoints key state officials.

Kaczynski, who heads the main right-wing opposition party and was vying to succeed his twin brother Lech whose death in a plane crash in April precipitated the vote, scored 47,4%. Lech Kaczynski vetoed some of Tusk’s reforms in the past.

“You have all the power now. Show us what you can do,” Poland’s top-selling daily Fakt said on its front page, referring to Tusk’s PO.

Other newspapers urged the PO to deliver on promised reforms, with the Gazeta Wyborcza daily saying Tusk would lose next year’s parliamentary election if he failed to do so.

Despite these concerns, markets welcomed Komorowski’s victory and the Polish zloty strengthened slightly against the euro and the dollar in early Monday trade.

“The election result was not clear and this was weighing on the zloty. Now, that we see Komorowski has won, the zloty has gained and returned to the usual correlation with global markets,” said a Warsaw-based FX dealer.

Cautious budget
On Sunday night Tusk vowed to push ahead with his plans to introduce an anchor on public spending. His finance minister, Jacek Rostowski, said a cautious 2011 budget was now crucial.

“We want to spend money in a reasonable way and this will require the support of politicians and citizens. I will ask my political partners and the parliament to help impose some discipline in our public finances,” Tusk told reporters.

The European Union’s largest ex-communist member was the only economy in the 27-nation bloc to avoid recession last year, but a sharp slowdown has hammered tax revenues and driven up the budget deficit to 7% of gross domestic product (GDP).

Public debt, though low by West European standards, is creeping towards the 55% of GDP threshold which, if breached, would by law trigger painful spending cuts.

Despite overcoming the risk of a presidential veto, PO faces other hurdles in the way of reforms. It is locked in a coalition with the small Peasants’ Party which is opposed to any attack on the pension privileges of farmers and other groups.

Komorowski, a gently-spoken father of five grown-up children, will be Poland’s fourth democratically elected president since the fall of communism in 1989.

His election to a five-year term will be welcomed in other EU capitals and in Moscow because Komorowski backs Tusk’s efforts to improve foreign ties that came under strain during Jaroslaw Kaczynski’s short stint as prime minister in 2006-7.

“Komorowski’s win bodes well for Poland in Europe. His presidency will enable Poland to integrate with the European Union,” said Kazimierz Kik of Kielce University.

Conceding defeat on Sunday, Kaczynski told supporters his good result in the election also boded well for local elections in the autumn and next year’s parliamentary poll, which Poland will hold during its rotating European Union presidency.

“We have to win them and we will,” he said. – Reuters