Kaczynski's 47% Support in Polish Election May Mean Slower Deficit Cuts

Jaroslaw Kaczynski’s stronger-than- expected performance in losing the July 4 presidential election may revitalize the opposition, damping optimism for government plans to reduce the budget deficit, political scientists said.

Bronislaw Komorowski of the ruling Civic Platform party won the election with 53 percent of the vote to Kaczynski’s 47 percent. While support for Komorowski, 58, was unchanged from the start of the campaign, backing for opposition leader Kaczynski, 61, almost doubled from opinion polls in April.

Kaczynski’s showing strengthens the position of his Law & Justice Party going into local balloting later this year and parliamentary elections that must be held in 2011. That may slow the government’s drive to pass needed spending cuts as voters around Europe elect new leaders following the worst global economic crisis since the 1930s.

“The local or even general election campaigns have started and this could be a serious challenge for the Platform,” said Anna Sosnowska-Materska, a political scientist at Warsaw University. “The presidential race proved there is a deep division within Polish society, which makes it a Pyrrhic victory Civic Platform.”

Komorowski’s win gives Civic Platform control of the presidency and cabinet, ending divisions that arose under the late President Lech Kaczynski, who died in an April 10 plane crash. The zloty gained 1.4 percent against the euro the past two days on speculation that cooperation between the two highest offices would make it easier for the government to cut a deficit that widened to 7.1 percent of gross domestic product last year.

‘Maintaining Support’

Poland’s political realities may damp that optimism, said Ernest Pytlarczyk an economist at BRE Bank in Warsaw.

“The risk of growing support for Law & Justice is, for the ruling party, an argument against quick spending cuts,” Pytlarczyk said. “The new president will probably cooperate with the government, but his support in the case of unpopular fiscal cuts won’t solve the problem of maintaining support for the ruling party.”

Civic Platform has 206 deputies in the 460-seat lower house or parliament and relied on the 31 votes of the Peasants Party to form a coalition government.

Prime Minister Donald 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 European Union limit of 3 percent of GDP within three years, the government estimates.

Coalition Partner

“Some of the changes we plan will still require support of our coalition partner,” Tusk said after the presidential vote. The government is counting on a period of calm “during which the cabinet will be able to focus on its work in peace.”

The Peasants Party didn’t support Civic Platform’s nomination of Marek Belka for central bank governor last month, and party Chairman Waldemar Pawlak, who is also economy minister, refused to back Komorowski. Sixty percent of Peasants Party supporters voted for Kaczynski, exit polls showed.

Kaczynski campaigned to raise benefits for older people and increase the minimum salary, saying “Poland has to be fair to every Pole.”

The Law & Justice leader is strongest in rural areas, where unemployment rates are higher than the national average of 11.9 percent and many people say they haven’t benefited from joining the EU. Kaczynski won 59 percent of the rural vote, while Komorowski took 64 percent in metropolitan areas with more than 500,000 inhabitants, according the State Election Commission.

‘Enormous Power’

“The next elections are ahead of us, and our goal is to use that huge number of supporters,” Kaczynski said after the election results were announced. “We have to remain on guard, we have to win.”

Civic Platform and Law & Justice have clashed since Lech Kaczynski unexpectedly beat Tusk for the presidency in 2005. Two years later, Tusk’s party took control of parliament after Law & Justice lost its mandate. Since then, Civic Platform has said its efforts to modernize Poland were blocked by Lech Kaczynski.

Poland’s president has a legislative veto that requires of three-fifths majority in parliament to override.

“Kaczynski’s showing made me afraid of him,” Grzegorz Schetyna, chairman of Civic Platform’s parliamentary group, said today on Radio TOK FM. “He’s won huge support, and we will have to really struggle to win next elections.”

Economy Slows

Poland’s economy expanded 1.7 percent last year, the slowest pace in almost a decade. Unemployment peaked at 13 percent in February, compared with 8.8 percent in October 2008.

The U.K., Hungary, the Czech Republic and Slovakia have elected new governments in the past six months. German Chancellor Angela Merkel’s party suffered its worst result since World War II in regional elections in North Rhine-Westphalia, costing her control of the upper house of parliament.

“The winner of the vote is Kaczynski and his party,” said Wojciech Jablonski, a political scientist at Warsaw University. “Kaczynski won enormous power, strengthening his leadership of Law & Justice and boosting the position of the party” to lead a coalition government after the next election, he said.

To contact the reporters on this story: Dorota Bartyzel in Warsaw at dbartyzel@bloomberg.net Monika Rozlal in Warsaw at mrozlal@bloomberg.net

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