Poland: centre-right re-elected after avoiding recession

Photo by Platforma Obywatelska
Donald Tusk

By David Brown

While governing parties throughout Europe are losing elections, Citizens’ Platform (PO) has been re-elected as the largest party in Poland and will again form a coalition government with the Peasants’ Party (PSL).

The major reason for its victory is that the Polish economy has continued to grow throughout its term in office, with Poland being the only EU country to have avoided a recession since the outbreak of the global economic crisis.

Despite the fact that PM Donald Tusk and PO are from a strong neo-liberal ideological background, once in power they have adopted a pragmatic approach to the economy. This has been possible primarily due to the huge inflow of funds from the EU, with Poland liable to receive up to €67bn in structural and cohesion funds from the EU’s 2007-13 budget. In preparation for next year’s Euro football championships, the government has used these funds to help instigate a large government investment programme in the country’s infrastructure.

Therefore while private investment fell, public investment grew, helping to keep the country on a course of positive economic growth. Simultaneously, the government has not embarked on any radical programme of austerity and has used its budget deficit to maintain social spending.

This does not mean that there are not serious socio-economic problems in the country. The 20-year transition to capitalism has left an economy with high structural unemployment, large social inequalities, disintegrating public services, low wages and poor working conditions and labour rights. Also, slowing wage growth and rising inflation are eating into people’s living standards. Nevertheless, the very fact that the economy has continued to grow over the past few years has meant that the effects of the global economic downturn have been felt less than in most other European countries.

In these conditions, the centre-right PO has been able to see off the challenge of the conservative-nationalist Law and Justice Party (PiS), in contrast to the many other European countries where the conservative right has been growing in strength.

The signs are, however, that things will not be so easy for PO during its second term in office. The growing crisis within the eurozone and general economic downturn within Europe are beginning to be felt in the Polish economy. Also, the government has committed itself – in agreement with the European Commission – to bring down its budget deficit from nearly 8% to below 3% of GDP by the end of next year. Also, if public debt exceeds 55% then, in line with the country’s public finance law, the government would need to reduce its debt to GDP ratio, which would involve a new round of austerity. With public debt currently standing at more than 53% of GDP then the room for further government spending is limited. Furthermore, with negotiations due to begin over the content of the next EU budget (for the years 2014-20) it is unclear whether Poland (and other poorer countries) will continue to receive significant funds from the EU.

In such conditions, the course of economic development, through combined public investment and deficit spending, is under threat. Although PiS has been defeated in these elections, it still won around 30% of the vote and would be in a strong position to capitalise on any possible economic downturn.

These elections were also marked by the incongruity that while there was a general turn to the left in the country, the main representative of the left (the Democratic Left Alliance – SLD) did particularly badly. Only winning 8% of the vote, the SLD suffered for not reaching out to other currents on the left; not articulating a clear progressive economic programme (instead preferring to sign an agreement with the Business Centre Club); and for failing to lead the progressive social movements such as the women’s and lesbian and gay movements.

This allowed the new liberal populist Palikot Movement (RP) to overtake the SLD and gain 10% of the vote. RP was created by the millionaire businessman and former PO MP, Janusz Palikot. Palikot has built his new movement through vocally supporting a number of left social and cultural policies against the conservative reforms that have been introduced over the past two decades. These include removing compulsory religious education from schools, making priests pay taxes, supporting the state-funding of in-vitro treatment, supporting same-sex legal partnerships and liberalising the abortion law. The first openly gay and transsexual MPs, alongside a leading representative of the women’s movement, have been elected to parliament as part of RP’s slate.

Despite these progressive developments, Palikot also advocates a clear right-wing economic programme. He supports the introduction of flat tax rates (18% for VAT and income and business tax), believes that humanities students should pay for their studies because they will be unemployed after graduating and  promotes a vague policy of removing government bureaucracy as a way of instigating economic growth. It is probable that Palikot will try to position his new party as the leading advocates of neo-liberal reform in parliament, though whether he can retain unity within his own parliamentary group (which includes some genuine left-wingers) on such matters is questionable.

The main issue facing the left today is how it can re-assert its independence and promote a hegemonic programme that can unite diverse social groups. Primarily, it should urge the government to continue its programme of public investment and not to take the path of many other European governments of introducing austerity and cuts. Such an approach would make it easier for the left to win a political majority for its progressive social policies. If however the left is represented by liberal populists such as the Palikot Movement then support for the left will be confined to a minority of society. This would then allow for a resurgence of the conservative right in the event of an economic downturn.