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Posts tagged ‘Donald Tusk’

Analysis: Fading growth miracle pressures Polish fiscal rigor.


WARSAW (Reuters) – Stung by the end of an economic miraclewhich let him sell Poland as a green island of growth in a barren continent, Prime Minister Donald Tusk is under increasing pressure to give a little ground on his tough line on budgets.

A stream of indicators show the only country in Europe to avoid recession throughout four years of financial turmoil is finally succumbing, helped by the end of the huge cash injections for the Euro 2012 football tournament.

For a nation conditioned by 20 years of almost uninterrupted growth since the overthrow of the Communist system, it is coming as something of a shock.

Tusk has said he will announce a contingency plan next month to be launched if the outlook worsens for the EU’s biggest eastern economy. There are signs that could yet include easing back on deficit targets for later years which seem excessive to some at a time when the euro zone is slipping into recession.

But similarly to the UK, where thousands of Poles earn their daily bread, both Tusk and Finance Minister Jacek Rostowski are reluctant to give much ground for fear of undermining their credit rating and appeal to financial investors.

“The pace of the reduction could be slower,” Rostowski said on Friday, giving the first cautious official hint that he could tweak plans to reduce the deficit to 2.2 percent of national output next year and below 1 percent in 2015.

Two government officials have told Reuters that the cabinet could consider instead keeping the deficit stable at 2.9 percent of GDP next year.

But the worry among economists is that backing off the previous targets, among the most rigorous anywhere in Europe, will be too little too late.


There are signs everywhere that what some people dubbed Poland’s “economic miracle” is losing its magic.

To the south of Warsaw, office blocks and shopping malls that sprung up in what, until just months ago, were farmers’ fields now signs on them which read: “Do Wynajecia” – To Let – a good indicator that demand is lagging behind supply.

Where ministers would previously hold news conferences in front of a map that showed Poland in green and the rest of the world in red, the “green island” phrase has now been dropped from officials’ vocabulary.

But Tusk and his economic team have made getting the deficit below the European Union’s 3 percent of gross domestic product (GDP) ceiling by the end of this year a cornerstone of policy and he and Rostowski have staked their reputations on the idea.

“The government’s in a tight spot,” said Janusz Jankowiak, a former advisor to the government. “On the one hand it must find ways to help growth, on the other, it cannot afford to drop its debt and deficit plans as that would scare off markets and ratings agencies.”

At least as long as the economy was generating growth, responsible fiscal policy kept the zloty currency healthy, and borrowing costs for Polish companies, consumers and government relatively low for a still developing economy.

But cutting another two percentage points off the deficit over the next two years would seem a step too far if, as some analysts say, the economy is slowly in danger of contracting.

The central bank predicts growth will slow to 2.9 percent this year and 2.1 percent next, from 4.3 percent in 2011. A majority of analysts polled by Reuters predict higher growth next year, at 2.6 percent, but others are more pessimistic.

A source close to the government told Reuters on condition of anonymity that the government forecasts were too optimistic and that growth in the first few months of next year may fall below 1 percent year-on-year.

Michal Dybula, an economist at BNP Paribas, went further. “There is a growing risk that we will soon have a technical recession,” he said.


Poland’s approach has looked increasingly rigid at a time when leaders in other parts of Europe, particularly French President Francois Hollande and Italian Prime Minister Mario Monti, have been questioning if fiscal discipline is still the right response to the slowdown.

But Tusk and Rostowski both come from a neo-liberal tradition that has its roots in the Polish economists, led by Leszek Balcerowicz, who designed the shock therapy transition from communism.

Rostowski, born in London to a family of Polish exiles, has been in his job since 2007 and is the combative architect of the policy of fiscal discipline.

When EU commissioner Olli Rehn expressed concern about whether Poland and some other EU states about were on track to cut their deficits, Rostowski wrote a blistering reply saying Poland was doing better on deficit reduction than most other members of the bloc.

After expending so much capital championing his policy of fiscal discipline, departing from it now would mean an embarrassing loss of political face.

The other classic response to a slowdown is to cut interest rates. The central bank is likely to do that, but only modestly. It raised rates only 3 months ago, and may not want to be seen performing a dramatic U-turn now.

Ultimately, compromising on its cherished deficit target may be the price Poland’s government has to pay for keeping the economy out of recession.

“Growth is something that must be cared for,” said Dybula, the economist at BNP Paribas. “After all, the economy is about people, not targets.”

(Additional reporting by Marcin Goclowski; Editing by Christian Lowe and Patrick Graham)


By Karolina Slowikowska | Reuters

Polish Solidarity distances self from Romney visit.

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GDANSK, Poland (Reuters) – Solidarity, the trade union movement which led the Polish struggle against Communist rule, distanced itself on Monday from a visit to Poland by U.S. presidential candidate Mitt Romney, saying he supported attacks on unions in his own country.

              Romney was in Poland on the third and final leg of a foreign tour aimed at burnishing his foreign policy credentials and demonstrating that he would be a viable alternative to U.S. President Barack Obama on the world stage.

              Romney visited the Baltic port of Gdansk, cradle of Solidarity which toppled Poland’s Communist government in the late 1980s, where he met Lech Walesa, the shipyard electrician who led the union movement during that struggle.

              “Regretfully, we were informed by our friends from the American headquarters of (trade union federation) AFL-CIO, which represents more than 12 million employees … that Mitt Romney supported attacks on trade unions and employees’ rights,” Solidarity said in a statement.

              “Solidarity was not involved in organizing Romney’s meeting with Walesa and did not invite him to visit Poland.”

Romney is trying to avoid any further missteps after gaffes during the first leg of his tour, in Britain, generated negative newspaper headlines and criticism even from some of his own supporters. He came to Poland from Israel, his second stop.

In Gdansk, Romney, who has called Poland’s neighbor Russia the top “geopolitical foe” of the United States, tried to show that if elected president he would be a stronger ally to Moscow-wary Poland than Obama.

Hundreds of people were on hand to watch Romney and his wife, Ann, arrive at the Gdansk Old Town Hall for a meeting with Prime Minister Donald Tusk.

Romney and Tusk and their delegations talked for about 45 minutes, then Romney went to the building next door and met Walesa.

Walesa, who was Polish president for five years from 1990, effectively endorsed Romney in their meeting.

              “I wish you to be successful because this success is needed for the United States of course, but for Europe and the rest of the world too. Governor Romney, get your success. Be successful,” he said.

              Romney, a former governor of the U.S. state of Massachusetts, laughed heartily and thanked Walesa for inviting him.

Romney is to give a speech in the Polish capital, Warsaw, on Tuesday to conclude his week-long foreign tour.

“The relationship that our countries have is very important and it would be a high priority in a Romney administration,” said a senior Romney campaign adviser.

              However, it may prove difficult in Poland for Romney to draw a sharp contrast with his Democratic rival in the presidential election because Polish leaders enjoy fairly strong ties with the Obama White House.

              Walesa ended his association with the Solidarity movement several years ago following disputes over policy.

              Solidarity is still known abroad because of its historic role in the collapse of Communism and the fall of the Berlin Wall. At home, it is now closely linked with Poland’s biggest opposition party, which promotes conservative social values.

              (Additional reporting by Chris Borowski in Gdansk; Writing by Christian Lowe and Steve Holland; Editing by Tim Pearce)


ReutersBy Steve Holland | Reuters 

Monday in politics: Romney in Poland, Obama in NYC, and more.

Mitt Romney arrives in Poland on Monday, the last leg of an overseas tour that has included a rocky stop in England and a smoother visit to Israel. Romney raised more than $1 million at a fundraiser just before leaving Israel.

Romney’s Monday agenda includes meetings with Prime Minister Donald Tusk and former President Lech Walesa. On Tuesday, Romney will meet with Foreign Minister Radoslaw Sikorski and President Bronislaw Komorowski and make a speech.

[Get updates on Romney’s trip by following Yahoo’s Holly Bailey @hollybdc]

President Barack Obama will hold an Ambassador Credentialing Ceremony at the White House on Monday, and then head to New York City where he will speak at a fundraiser.

Also worth noting on Monday: Sen. Rob Portman, GOP senator from Ohio and a possible Romney running mate, campaigns for Romney in Pennsylvania; Tim Pawlenty, former governor of Minnesota and also mentioned as a possible running mate, campaigns in Ohio for Romney; Sen. Mike Johanns, R-Neb., also will be in Ohio stumping for Romney; and  Newt Gingrich will be in Virginia campaigning for Romney.

And then there is this: House Democrats plan to introduce legislation Monday that would extend Bush-era tax cuts for households earning under $250,000 a year. The tax cuts are scheduled to expire at the end of the year. President Obama has threatened to veto any bill that would extend the cuts for higher incomes. The House legislation is identical to a bill that passed the Senate last week.

Sources: Yahoo! News, Associated Press


By Phil Pruitt | The Ticket 

Church subsidy reform signals Polish revolution.

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A revolution is under way in Poland as the government moves to cut large subsidies for Poland’s powerful Catholic Church and give taxpayers more choice in funding it.

The rise of a new anti-clerical party is symptomatic of growing pressure to reduce the traditionally strong ties between Church and State as more liberal influences flood in from western Europe.

“Cut the umbilical cord!” shouted Polish feminists at a recent rally in the capital Warsaw, reflecting changing opinions in the homeland of the late pope John Paul II.

According to various sources, the Catholic Church receives between 300 and 350 million euros ($398-464 million) a year in state subsidies, and the move by the centrist government of Prime Minister Donald Tusk affects less than 10 percent of this sum.

It is enough however to cause alarm and indignation in the Catholic hierarchy, which fears it is the thin end of the wedge.

Tusk’s government announced last week its intention to liquidate, as part of a broader pension reform, a state fund used to finance social security contributions for priests.

Created under the former communist regime, the fund was ostensibly designed to compensate the Church for the nationalisation of its properties but other denominations and religions also benefit.

Last year, the subsidy totaled 89 million zlotys (21.5 million euros), with the Catholic Church the main beneficiary.

To replace it, the government has proposed that from 2013 taxpayers can choose to allocate 0.3% of their income tax bill to a church or religious community of their choice.

Authorities predict the new system will generate about 100 million zlotys in social insurance coverage which will apply to the minority Jewish and Islamic as well as Christian clergy in Poland.

But this is not going far enough for the new openly anti-clerical Palikot Movement, which stormed into parliament in October elections.

The party founded and led by Janusz Palikot, came from nowhere to take third spot in the polls and 40 out of the 460 seats, even though 90 percent of Poles still declare themselves to be Catholic.

“Just for catechism lessons in schools, the state spends the equivalent of 100 million euros a year. Why don’t we use that money to build pre-schools, when it’s apparent that we have the biggest nursery school shortage in Europe?” former vodka tycoon Palikot said in an interview with AFP.

Church fathers have not minced their words in slamming the pension reform, while calling for negotiations with the government.

“It was a premeditated attack against the Church. There are those who are seeking to accumulate political capital,” thundered Archbishop Jozef Michalik, chairman of the Polish bishops’ conference.

“The religious war lasted 50 years, during the time of communist Poland. We don’t want another one and we are open to dialogue, a substantive discussion,” said Leszek Slawoj Glodz, Archbishop of Gdansk.

“From a financial standpoint, this is negligible, but symbolically it is political dynamite,” said Adam Szostkiewicz, a commentator specialiSing in religious matters.

In liquidating the fund, he told AFP, the government wants to play the equality card as it imposes reforms on Polish pensions that will affect a range of social groups.

The Church, meanwhile, is afraid that the State may end all funding in the future,

“The Church is terrified that eventually it will establish the kind of tax system there is in Germany” where people are obliged to designate a specific religious institution as a beneficiary for a supplementary part of their taxes.

“The Church still wants everyone to approach it on their knees,” said Stanislaw Obirek, an anthropologist and former Jesuit.

However, he added, “Society will cease to be just a milch-cow. It will become a partner which is either willing or unwilling to give the Church money. The Church isn’t ready for this revolution.”


AFPBy Bernard Osser | AFP 

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