The
Corbynization of Polish politics
Poland’s
central banker issues dire warning as the country prepares to vote.
By JAN CIENSKI
10/14/15, 5:30 AM CET
WARSAW — Poland
has never been wealthier, income inequality is falling and local
businesses are robust — but dissatisfied voters are still preparing
to kick out the party that has governed the country for the past
eight years.
Just why people are
so unhappy puzzles Marek Belka, the governor of Poland’s central
bank, who was prime minister from 2004-2005 and twice served as
finance minister.
“Certainly, I am
with those that describe the last 25 years as Poland’s golden age.
That’s beyond any doubt,” Belka, 63, who is much less shy about
giving his political views than the average central banker, told
POLITICO. “What we observe in Poland goes beyond the failures or
successes of any political party. But as an economist I must admit
that I have very few answers.”
Belka broke with the
normal etiquette of central bankers to speak openly about his fears
that the increasingly lavish promises being made in the final days of
Poland’s parliamentary election campaign could be so costly and
ill-thought-out that they could derail a quarter century of startling
economic progress.
Opinion polls put
the nationalist opposition Law and Justice party far ahead of the
ruling Civic Platform ahead of the October 25 vote. The latest survey
by TNS had Law and Justice (PiS) on 36 percent and Civic Platform
trailing at 24 percent.
“GDP
growth is only on paper, Poles are getting poorer, the middle class
is disappearing” — President Andrzej Duda.
If that trend holds,
PiS would to return to power for the first time since a brief stint
in government from 2005-2007.
Law and Justice
first broke through this spring, when its candidate Andrzej Duda
unexpectedly won the Polish presidency. Duda’s core message is that
something has gone wrong in Poland, and that its economic success is
much more apparent than real.
“If I was to
encourage you to return to the country, I’d be lying,” Duda told
Polish emigrants in London last month. “GDP growth is only on
paper, Poles are getting poorer, the middle class is disappearing.”
It’s a powerful
idea that has allowed PiS to break out of its usual core electorate
of right-wing, older people from smaller towns in eastern Poland, and
make sizeable inroads across the country.
The problem is that
the economic numbers don’t bear out the PiS narrative. Looking at
growth of GDP per capita, Poland is by far the most successful
European country over the last quarter century. The economy is
expected to grow 3.3 percent this year, which would be the second
highest in the EU.
Inequality measures
show Poland isn’t far off the European norm, Polish farmers are
much better off thanks to a shower of cash from EU agricultural
supports and unemployment, at 7.2 percent according to Eurostat, is
drifting lower. Belka said 45 percent of Poland’s exports come from
Polish companies in volume terms, rising to 60 percent of exports by
value.
Billions of zlotys
But there is a sense
among many Poles that they haven’t seen the benefits.
The average monthly
salary after taxes is only about 2,800 zlotys (€662), while in
neighboring Germany it is more than three times higher. About two
million Poles have left the country since it joined the EU in 2004,
seeking a better life in Western Europe.
That has set off a
bidding war on the part of both Law and Justice and Civic Platform as
they offer increasingly expensive promises that Belka worries will
have long-term negative consequences.
Ewa Kopacz, the
prime minister, promises to increase the minimum wage if her party
hangs on to power this month. Her party, Civic Platform, is also
pledging deep tax reforms that will cost about €2.5 billion a year
by ending separate social security taxes.
Law and Justice is
promising at least four times more, pledging to reverse a rise in the
retirement age, increase the minimum wage, spend more on families,
and cut taxes on small businesses. That will be paid for with a new
banking tax, a special tax on big (and largely foreign owned) shops,
and a tightening of the VAT system.
“This will cost
tens of billions of zlotys a year,” party leader Jarosław
Kaczyński admitted earlier this month. “Where will we get the
money? I’ll only say that we just have to improve tax collections.”
Both parties are
also promising to help more than half a million borrowers holding
mortgages denominated in Swiss francs, which have soared in value
since the global economic crisis as the zloty has lost ground against
the franc.
“The stakes in
politics are not as low as people think” — Marek Belka, Polish
central bank chief.
Belka is looking on
aghast.
“Reason goes to
sleep” during election campaigns, he said. “Sometimes it is said
elections are like the fiesta of democracy, which is true, but
electoral campaigns are like bachelor parties which culminate in huge
hangovers and sometimes culminate in disasters.”
His worry is that
the promises being made in frantic weeks before the election haven’t
been carefully thought through.
There is a theory
that once a country is well-off and generally comfortable, then
people feel that they have little to risk by choosing radical
politicians, something Belka compared to the U.K. Labour Party’s
choice of the far-left Jeremy Corbyn as its new leader.
“You can sway the
bridge because the bridge seems to be completely detached from our
possibility of crossing the river, which of course is something I
disagree with and deplore,” Belka said. “The stakes in politics
are not as low as people think.”
Comments like that
win the caustic economist few friends in the camp of the president,
who has to nominate a central bank governor when Belka’s first term
expires next year.
Belka’s political
roots are in the ex-communist left, he has little common ground with
Duda, and has probably ensured he has no chance of another six-year
term by saying he was “shocked by the results of the recent
presidential election.”
“We boast
frequently that Poland has a very stable financial system, which is
true, a stable currency, and people think it cannot be damaged. It
can,” Belka said, ending the interview with yet another warning
that politics could end up destabilizing the economy.
“If we try to play
with the banking system too much we can do serious damage. It’s
when the damage is done, when we learn to appreciate what we had.”
Authors:
Jan Cienski
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