Civic Platform holds all the right cards, but is unlikely to make full use of them Agencja Gazeta

The recent inauguration of Bronisław Komorowski as president of Poland leaves Civic Platform (PO) with an effective monopoly on political power. For just the third time in the post-communist era, the president, prime minister and the speaker of the Sejm – the three most powerful positions in the executive and legislative branches – all hail from the same party. And, unlike the previous two occasions, the ruling party has little to fear from its coalition partner.

The chances are remote that the Polish People’s Party (PSL), the junior party in the coalition, will stir up trouble. The party currently commands just two to three percent support in the polls, dangerously below the five-percent threshold for entry to the Sejm. A snap election would therefore be very risky.

As a result, PSL is in no position to dictate terms to Mr Tusk, whose party is supported by over 46 percent of the electorate, according to the latest figure from Homo Homini.

Meanwhile, Mr Komorowski, a longstanding ally of Donald Tusk, will remain in the Presidential Palace at least until 2015. And former Deputy Prime Minister and Interior Minister Grzegorz Schetyna will head the Sejm for as long as Mr Tusk sees fit.

PO’s strength is a direct consequence of the weakness of its foes. Law and Justice (PiS), the main opposition party, has lately been consumed by a conflict over the wooden cross in front of the Presidential Palace. Its other primary occupation involves stoking conspiracy theories regarding the tragic death of President Lech Kaczyński, twin of PiS leader Jarosław Kaczyński.

The party’s aggressive, confrontational stance has likely been the catalyst for a recent drop in public support. Homo Homini’s poll put it at 28.3 percent, a significant drop from the party’s post-Smolensk tragedy highs. Meanwhile, the fourth party in the Sejm, the Democratic Left Alliance (SLD), remains on the sidelines with just over 10 percent in most polls.

Thus, barring a major scandal or act of God, there presently exists no threat to Civic Platform’s hegemony. That leaves the prime minister in the perfect situation to enact the crucial reforms which his ostensibly pro-business party has been discussing for years.

Right?

Afflicted with caution

Unfortunately for the private sector, elections are forthcoming in 2010 (local government) and 2011 (parliamentary). For this reason Prime Minister Tusk is loath to annoy voters; indeed, he recently said as much himself.

With Mr Komorowski as president, PO now has full control over Poland's executive and legislative branches

Such rhetoric, in addition to evincing a worrying shortsightedness, means that significant reforms are completely off the table. And even though PO has announced a legislative onslaught in the autumn, none of the changes proposed really touch on the major issues which need to be addressed. Experts thus generally agree that the government will limit itself to minor spending cuts.

“I don’t expect reforms or even significant cuts in spending before the elections. However, there is hope that more actions could be taken by the government after the elections, not because it wants to but because it could soon approach the [constitutionally entrenched] 55 percent deficit threshold and thus be forced to implement changes,” said Grzegorz Maliszewski, chief economist at Bank Millennium.

Economic pressure may be the only alternative, as there’s little evidence that a political impetus could turn up.

A long and urgent list

That’s not to suggest that reforms can wait. In the view of many prominent economists and business leaders, they can’t. The list of necessary reforms is long and has been long-neglected.

The president and PM appear to see eye to eye on most issues Courtesy of KPRM

"The retirement age in Poland needs to be increased. It is one of the lowest in Europe and this is not good for the competitiveness of our economy,” Mr Maliszewski commented.

He added, “Also, social spending needs to be reduced. One way is to change the criteria in the rules for those who receive social benefits, as they often go to people who don’t need it but get it by simply hiding their income. We need better solutions.”

Mr Maliszewski also pointed out the need to overhaul the Agricultural Social Insurance Fund (better known as KRUS), Poland’s much-criticized special pension and social security system for farmers. KRUS costs taxpayers roughly zł.16 billion every year, four times the national budget for R&D.

Business Center Club (BCC) chief economist Stanisław Gomułka, a former professor at the London School of Economics and deputy minister of finance, held a slightly different view.

“I would divide the necessary reforms into two groups. The first would be those with long-term effects, such as a raising of the retirement age, which would increase labor participation, thus automatically reducing expenditure while increasing revenue,” he stated. “The second group would be actions needed to address the immediate problem of the growing budget deficit, which is currently at 7.1 percent of GDP.”

Mr Gomułka stressed that fiscal relaxation by the present and former governments, not the financial crisis of 2008-2009, had led to the current size of the deficit. Public spending has grown significantly while government revenue has dropped, with the latter largely due to tax cuts enacted by the previous government under former Prime Minister Jarosław Kaczyński.

“Increasing spending while at the same time experiencing a drop in revenue is not the way to achieve a financial equilibrium. I anticipate that, apart from the [recently proposed] VAT increase, further moves will be made this year to reduce zł.5-10 billion in government expenditure. The composition of these measures is being discussed at the moment,” said Mr Gomułka.

When strength is weakness

PO’s strength today may prove its Achilles’ heel in the future. Lack of competition in politics, as in business, is likely to encourage laziness and possibly even corruption.

“The problem with PO is that there is a lack of political pressure on them as the opposition is very weak. PO won’t make major reforms because they simply don’t have to. Politically, they can lose more on reforms than they can gain, so why bother?” said Sergiusz Trzeciak, a political expert and lecturer at Collegium Civitas.

“The strongest interest groups in Poland are ones that are uninterested in reforms. They represent a large part of the electorate and much more votes than employers’ associations, for example,” he noted.

Mr Trzeciak also said that PO won’t lose its pro-business electorate as those voters simply have no alternative. “There is no way they are going to vote for PiS or SLD, and PO knows this,” he stated flatly.

Perhaps it’s time, then, to start praying for an act of God? Or at least for the economy to remain healthy until enough public support erodes that Civic Platform has to act on its own.