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Right wingers take poland and consider euro Original Source Link: (May no longer be active)
http://today.reuters.co.uk/news/newsArticle.aspx?type=worldNews&storyID=2005-09-26T095205Z_01_EIC445322_RTRUKOC_0_UK-POLAND.xmlhttp://today.reuters.co.uk/news/newsArticle.aspx?type=worldNews&storyID=2005-09-26T095205Z_01_EIC445322_RTRUKOC_0_UK-POLAND.xml
Polish centre-right faces tough task, markets fall
Mon Sep 26, 2005 12:48 PM BST
By Pawel Sobczak
WARSAW (Reuters) - Poland's centre-right parties, celebrating a crushing victory on Monday over the ruling left, faced tough talks on forming a coalition amid divisions over the scope of market reforms.
The Polish zloty fell as partial results showed the pro-business Civic Platform, the markets' favourite, was likely to play the junior role in the government led by conservative Law and Justice party.
The conservatives are sceptical about quick euro adoption by the European Union newcomer and investors doubt the party would have the determination to slash bloated public spending, the main obstacle to euro zone entry.
"Law and Justice is fearful of the public reaction to painful spending cuts and sceptical on adopting the euro before 2010," said Tania Kotsos, currency strategist with Royal Bank of Canada in London.
She added the bank's advice on Monday was to sell the zloty.
Latest partial results showed the two centre-right parties controlling at least 274 seats in the 460-member lower house, the biggest electoral victory for the heirs of the pro-democracy Solidarity movement since it toppled communism in 1989.
The outgoing ruling left looks set to see its strength slashed from 217 to about 50 deputies, marking the lowest point since it was created in 1990 by reformed communists.
Law and Justice leaders sought to calm markets, vowing to start coalitions talks quickly and insisting the next government's programme would be a compromise.
Talks with the Platform on a joint economic programme for the new coalition were likely to start as early as Tuesday, their economic spokesman Kazimierz Marcinkiewicz told Reuters.
NEW PRIME MINISTER
The new government is likely to be headed by Law and Justice leader Jaroslaw Kaczynski, 56, a tough-talking former anti-communist dissident, whose triumph in the elections follows 16 years of failed attempts at winning power.
Critics say Kaczynski, who co-leads Law and Justice with his twin brother Lech, lacks international experience and his combative, uncompromising style could make him ineffective at home and isolated abroad.
"Neither Jaroslaw or Lech Kaczynski nor their party are up to the challenges they face," Poland's former president and Solidarity icon Lech Walesa told Reuters. The brothers once worked for Walesa but who fell out with him in the mid-1990s.
"The Platform would have had a better chance, because they are more sensible people. I hope I'm wrong," he added.
BIG DIVISIONS
In principle, the two centre-right parties have more in common than just their Solidarity roots.
Both promise to slash unemployment -- at 18 percent the highest in the EU -- cut taxes and weed out corruption that tainted the left's four year rule.
But they differ in their recipes for reviving the economy and bringing standards of living in line with richer EU members.
The Civic Platform campaigned on a promise to accelerate free market reforms while the conservatives vowed to protect a "social market economy", reflecting an EU-wide debate on how much welfare the bloc can afford.
The Platform wants to introduce a flat tax of 15 percent to make the economy more competitive, boost domestic demand and attract more foreign investment. It also backs faster fiscal reforms to cut the budget deficit from 3.5 percent of gross domestic product seen this year.
Law and Justice also vowed to cap the deficit and limit bureaucracy but oppose the flat tax and want Poland to adopt a more traditional welfare model.
Their economic expert Marcinkiewicz said the flat tax proposal was not an option and ruled out euro adoption during this term of parliament.
Another hurdle in the coalition talks is the looming presidential vote on October 9 pitching Lech Kaczynski against the Platform's Donald Tusk.
A victory by Lech could complicate Jaroslaw's bid to be prime minister because he says Poles would be reluctant to see two identical twins in two top jobs in the country.
© Reuters 2005. All Rights Reserved.
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