Poland’s Populist Turn

By | Updated Sep 14, 2016 1:01 PM UTC

If Poland had a tumultuous 20th century, the 21st started off pretty well. The country cemented the transition to capitalism, joined the European Union and enjoyed unrivaled economic growth. Then in a 2015 election, the people turned to a party that promised a shakeup in the name of ordinary Poles. They had grown discontented over the country’s wealth disparities and the impression that political elites had benefited most. In its initial months in power, the government’s moves sparked public protests and put it on a collision course with EU lawmakers concerned that it was flouting the rule of law. Former Prime Minister Donald Tusk, whose Civic Platform party was defeated in the election, warned that Poland could be returning to the “dark side” of political life. Is eastern Europe’s biggest economy risking the gains it made in the quarter-century since escaping communism?

The Situation

It was a surprise when the Law & Justice Party won a parliamentary majority in October 2015, the first since Poland became a democracy in 1989. The party triumphed by calling for the country to assert its national identity, control its borders and permanently station NATO troops on Polish soil as a buffer against Russia. It promised a Poland for people left behind by the economic transformation, and a nation upholding Catholic values such as opposition to gay marriage. It pledged to reduce the tax burden on the poor, lower the retirement age and increase payments to families with children. Party officials were parachuted into top posts at the public broadcaster and state-owned companies. The country’s highest court was overhauled, making it harder for judges to block new laws. Draft legislation to forcibly convert $42 billion in foreign-currency mortgages into Polish zloty was characterized by outgoing Central Bank Governor Marek Belka as a “recipe for a banking crisis.” Concerned about these developments, S&P Global Ratings cut its grade on the country's debt in January for the first time.

The Background

Polish history has been defined by division, usually provoked by the powers that lie to the east and west. There were three partitions in the 18th century, and a fourth with World War II. As the Nazis were pushed out by the Russians, destroying Warsaw in their wake, Poland fell to the communists. The Solidarity trade union movement toppled the regime in 1989.  Poland’s rehabilitation began and free-market capitalism took hold. The EU began to pour money into the country when Poland joined in 2004, building roads and schools as part of a 20-year, 229 billion-euro ($250 billion) aid package. What’s lingered is a legacy of mistrust and conspiracy theories not uncommon in post-communist Europe. Two decades of uninterrupted economic growth have brought Poland’s per-capita economic output to about two-thirds of the EU average. Yet unemployment has remained stubbornly high, only dropping into single digits in 2015. At least 2.5 million Poles left the country over the past decade in search of jobs and prosperity, 6 percent of a population of 39 million. Poland’s eastern provinces, hotbeds of support for Law & Justice, are some of the poorest areas in the EU. The party was founded by former child actor twins Lech and Jaroslaw Kaczynski. Its only previous time in government was from 2005 to 2007. The government is reopening an investigation into the plane crash that killed Lech Kaczynski when he was president in 2010.

The Argument

The EU has stepped up its probe into whether Poland’s new laws affecting the constitutional court and the media give the ruling party too much power, a move toward disciplining the country. The European Parliament has passed two resolutions calling on the government to back down in its clash over democratic standards. Beata Szydlo, the defiant prime minister, says that her government upholds the rule of law and that history shows Poland suffers when outsiders interfere in its politics. She has repeatedly told EU officials to focus on their own problems, such as the refugee crisis that's straining the bloc’s unity. The standoff is raising questions among investors, including foreign banks and retailers that have been criticized by Poland’s new leadership for not sharing enough of their profit. The new government has prompted comparisons with Hungarian Prime Minister Viktor Orban’s challenge to the European mainstream. After decades of adopting Western institutions and social norms, Szydlo’s party is putting Poland on a different path.

The Reference Shelf

  • Profiles of the new government’s ministers from Bloomberg News.
  • Polish politics blog by Aleks Szczerbiak, professor of politics and contemporary European studies at the University of Sussex.
  • A 2015 Brookings Institution report on “How Poland Became Europe’s Growth Champion.”
  • Former Polish Prime Minister Donald Tusk, who is now president of the European Council, remarked on Jan. 18 that Poland could be returning to the “dark side” of political life.
  • Central Statistical Office of Poland’s website of emigration statistics.
  • QuickTake on Europe’s refugee crisis.

First published Feb. 2, 2016

To contact the writers of this QuickTake:
Rodney Jefferson in Edinburgh at r.jefferson@bloomberg.net
Wojciech Moskwa in Warsaw at wmoskwa@bloomberg.net

To contact the editor responsible for this QuickTake:
Leah Harrison at lharrison@bloomberg.net