Polish PM rules out radical reforms after poll win

Reuters News
Posted: Oct 11, 2011 11:00 AM
Polish PM rules out radical reforms after poll win

By Gabriela Baczynska

WARSAW (Reuters) - Poland's new government will avoid "costly" reforms at a time of global crisis, Prime Minister Donald Tusk was quoted as saying on Tuesday, in comments that may disappoint investors two days after his Civic Platform (PO) party won an election.

Tusk's center-right PO won 39 percent of the vote, becoming the first party to win a second consecutive term since Poland overthrew communism in 1989. Its main rival, the conservative-nationalist Law and Justice (PiS), won 30 percent.

Tusk is now in talks with his current junior coalition partner, the Peasants' Party (PSL), on renewing their alliance. Together they would have 235 seats in the 460-member lower chamber or Sejm, according to final results published on Tuesday.

"It is not true that during the crisis, one of an unknown magnitude and effects, we can afford to undertake too costly reforms that only bear fruit in the distant future," he told the Polityka weekly according to published interview excerpts.

"When a storm is coming, we need to seek solutions that would safeguard our boat from strong turbulence. This is our most important goal," he said.

Rating agencies have warned Poland it could face a downgrade if it fails to cut its public debt and budget deficit, which Warsaw expects to hit 53.8 percent and 5.6 percent of gross domestic product respectively this year.

Tusk and Finance Minister Jacek Rostowski have repeatedly ruled out any far-reaching "big bang" of reforms after the election.

Economists say Poland must overhaul its costly welfare system, eliminate pension privileges for some occupational groups, cut red tape for business and raise the retirement age.


In his interview, Tusk signaled that key ministers such as Rostowski and Foreign Minister Radoslaw Sikorski were likely to keep their jobs in the new government.

Tusk, 54, a pragmatic liberal conservative from near Gdansk on the Baltic coast, also said he wanted to avoid changing any ministers until the end of Poland's six-month presidency of the European Union on December 31.

"On the eve of the new year, I will propose a big reconstruction of the government with (PSL leader) Deputy Prime Minister Pawlak," he said.

Liberal economists accuse Pawlak's rural-based PSL of blocking some reforms during the coalition's last four years.

But Tusk says their cautious approach to economic reform helped Poland to weather the 2008-09 global financial crisis without slipping into recession unlike all other EU members.

Tusk said he may also seek support from the third biggest party in the new parliament, the ultra-liberal Palikot's Movement, on some issues such as deregulation of the economy.

The party's founder, Janusz Palikot, is a former PO lawmaker who wants to end the Catholic Church's privileges and backs liberal social causes such as gay rights and abortion.

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Tusk's arch-rival, PiS leader Jaroslaw Kaczynski, said on Tuesday he would not resign over his party's election defeat.

"We intend to be a tough opposition which focuses on the most important issues, that is the economy and public finances," Mariusz Blaszczak, a senior PiS lawmaker, told Reuters.

PiS wants more state involvement in the economy, an end to large-scale privatizations and a more combative stance toward Poland's neighbors Germany and Russia and to the EU.

Financial markets reacted positively on Monday to Tusk's re-election as a sign of stability and continuity at a time of European economic crisis, but also expect Poland to take swift action to repair its public finances.

On Monday, Poland's President Bronislaw Komorowski also urged the new government to tackle the deficit, reform the pension system and work closely with the rest of the EU.

Komorowski is expected to start consultations with party leaders on Wednesday on forming a new government. He hopes to name a new prime minister next week.

(Additional reporting by Patryk Wasilewski, writing by Gabriela Baczynska, editing by Gareth Jones)