Komorowski, Kaczynski Face Polish Runoff, Tight Race

Bronislaw Komorowski received fewer votes than expected in Poland’s presidential elections, setting up a runoff with Jaroslaw Kaczynski that may determine the pace of euro adoption and deficit reduction.

Komorowski, the acting president and candidate of Prime Minister Donald Tusk’s Civic Platform, got 41.2 percent of the vote and Kaczynski 36.7 percent, with 94 percent of voting districts reporting. The mean of 17 opinion polls conducted in June showed Komorowski winning by 11 percentage points.

A Komorowski victory in the July 4 runoff would give Civic Platform control of the presidency and cabinet, ending divisions that arose under the late President Lech Kaczynski, Jaroslaw’s twin, who died in an April 10 plane crash. Komorowski backs a timetable for euro membership and spending limits. Kaczynski opposes a euro deadline and has called for increased spending.

“Civic Platform underestimated their opponent and now they have a serious problem,” said Slawomir Sowinski, a political scientist at Cardinal Stefan Wyszynski University in Warsaw. “The chances are 50-50 now, and unless the ruling party shows the will to win the next president may be another Kaczynski.”

Five years ago, Tusk lost a runoff to Lech Kaczynski after leading by 3 percentage points after the first round of voting. Kaczynski won by 8 percentage points in the final ballot. The Election Commission plans to release final first-round results by tonight.

‘Main Risk’

The zloty gained 0.3 percent against the euro to 4.0368 as of 3:30 p.m. in Warsaw, after trading as much as 0.8 percent stronger following the decision of China’s central bank to relax the yuan’s two-year peg against the dollar.

“The outcome of the elections is the main risk for the currency,” BNP Paribas said in a research note today, advising clients that political concerns may cause the zloty rally to “fade” once the 4 per euro level is breached. “Kaczynski could actually win the second round, thus hitting a big blow on the government and its ability to start fiscal reforms.”

Grzegorz Napieralski, chairman of the Democratic Left Alliance, is in third place, with 13.7 percent of the vote.

Those votes will be crucial because Komorowski, 58, may draw more votes from the Left Democrats than Kaczynski, said Beata Laciak, a sociology professor at Warsaw University. Sixty- six percent of Napieralski voters listed the acting president as their preferred alternative in a June 10-13 survey by researcher CBOS, while Kaczynski was named by 11 percent.

‘Keys to Vault’

“Napieralski holds the keys to the vault and he’ll be wooed intensively,” Laciak, who studies voter attitudes, said by telephone late yesterday.

Komorowski’s lead over his main rival has narrowed from almost 24 percentage points at the end of April, based on the average result of six polls that month.

Kaczynski, chairman of the largest opposition party, Law & Justice, can make a serious challenge because Civic Platform failed in its effort to cast him as hostile to the EU and free- market policies, said Andrzej Olszewski of pollster TNS OBOP.

“Law & Justice is going into the second round in the glow of victory and can feel the wind in its sails, which will definitely result in good ideas for the campaign,” Olszewski said today in a phone interview from Warsaw. “Meanwhile, Civic Platform is in a panic, which doesn’t help when you’re trying to come up with a new campaign that cannot be allowed to fail.”

The president represents Poland abroad, is head of the army and can veto legislation. His veto can be overturned by a three- fifths majority in parliament.

“To the extent that we have a runoff, it’s not a huge game changer,” saidManik Narain, an emerging market strategist at UBS AG in London. “I don’t think at this stage anybody is really going to change their bets to a Kaczynski victory.”

Civic Platform Policies

Komorowski said last week that Poland needs to establish a timeline for adopting the euro to ensure responsible economic policies.

Tusk’s government has proposed limiting increases in discretionary spending to no more than 1 percent above inflation, saving an estimated 9 billion zloty ($2.7 billion) a year by 2013. That will help narrow the deficit to less than the EU limit of 3 percent of gross domestic product within three years, Finance Minister Jacek Rostowski said June 11.

Law & Justice

Jaroslaw Kaczynski, 61, has said he would continue his brother’s policy of opposing setting a date for euro entry. The late president was the last EU leader before Czech President Vaclav Klaus to sign the Lisbon Treaty, intended to streamline EU institutions and prepared for the bloc’s enlargement.

Law & Justice last year called for an increase in spending to offset the impact of the first global recession since the 1930s. Poland is the only EU member to have avoided an economic contraction since the credit crisis started.

Even with a cooperative head of state, Tusk may be reluctant to make large changes in public policy as he seeks to consolidate support in two elections over the next 12 months, said Elisabeth Andreew, an economist at Nordea Bank AB in Copenhagen, said in a note to clients.

“We do not expect any massive reform packages in the near- term perspective, as it may affect the outcome of the November local elections and the parliamentary elections in 2011,” Andreew said before the exit polls were released.

To contact the reporter on this story: Dorota Bartyzel in Warsaw at dbartyzel@bloomberg.net;

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