SLD meets parties to hammer out new government

SLD’s leaders now have to decide whether to form a coalition with another party, or lead a minority government and hope to find support through shifting alliances to the left and right.
By : Jeffrey Sparshott

   The Democratic Left Alliance’s (SLD) failure to win an outright majority in the Sept. 23 parliamentary elections has cast the party’s pre-election economic and political promises in doubt, and worried markets that the incoming government will have difficulty coping with an unfolding budget crisis and forging ahead with European Union (EU) negotiations.

   SLD received 41% of the vote, giving it 216 seats in the 460-member Sejm, according to official results released Sept. 26. SLD’s leaders now have to decide whether to form a coalition with another party, or lead a minority government and hope to find support through shifting alliances to the left and right.

   “Politically speaking, there are a number of scenarios we can consider,” said Edmund Wnuk-Lipiński, professor of sociology at the Polish Academy of Sciences’ Institute of Political Studies. “The most likely is a minority government. Less likely is a coalition with the Peasants Party (PSL). And then who knows.”

   SLD will need the steady support of at least one party or a stalemate could ensue, forcing new elections, he said.

   The second-largest party in the new Sejm, Civic Platform (PO), said it will not join SLD; the third largest party, populist Self-Defense (SO) is anti-European Union; and one notch down is Law and Justice (PiS), an offshoot of the Solidarity bloc which SLD has long opposed. Fifth-place PSL joined SLD in a coalition during the party’s last go-round in power. But PSL’s platform does not completely align with SLD’s.

   “Much depends on the negotiations that will take place, and the party that would support this minority government,” Wnuk-Lipiński said. “If it’s PO, then the liberal tendencies in SLD will be reinforced. If they will ask for help from the PSL, then we may expect a little bit of a slowdown in privatization and liberalization of economic rules, and probably a bigger presence of the state in the economy.”

   EU negotiations are also a major concern, with SO and sixth-place League of Polish Families (LPR) both opposed to Poland’s integration with the Western political and economic bloc. Poland is already lagging in negotiations compared with other candidate countries, and as the largest potential new member, it’s the most difficult and complicated path to accession.

   Markets immediately felt the uncertainty. The Warsaw Stock Exchange’s (WSE) blue chip index Sept. 24 fell below 1,000 for the first time since Oct. 9, 1998, as investors were spooked by domestic uncertainty loaded on top of an already shaky international economic situation. The sharp fall priced in the uncertainty and later in the week the market calmed. The złoty closed at 3.88 to the euro last Friday.

   The markets clearly have a preference.

   “If there’s a formal agreement with PO, that will be good for markets,” said Mateusz Szczurek, an economist with ING Bank. “If there’s a formal agreement with PSL, that’s not good. If there’s a minority government, there’s uncertainty. Right now we’re waiting for hints.”

   In the meantime, the outcome is guesswork.

   “It’s not only that we don’t know about policies, but we also don’t know the shape of the new government,” Szczurek said, adding that in a coalition the SLD’s pre-election cabinet outline would have to be reworked. “And even the things we learned (before the election) were sketchy.”

   The outgoing Solidarity Election Action (AWS) government presented a state budget plan but SLD and its Sejm allies will have the final say. Without major spending cuts and new revenue, the budget deficit could reach zł. 88 billion ($21 billion), or 11% of gross domestic product. Politicians and economists agree that Poland could not finance that deficit.

   The deadline for presenting a budget was Sept. 30, and the constitutional deadline for implementing a new spending plan is Dec. 30.

   SLD started meeting with all political parties last week to talk about political programs and vision for the new government, said Michał Tober, SLD spokesman. Party leader Leszek Miller, economic expert Marek Borowski and Marek Pol led the talks and outlined SLD’s priorities, which include EU integration, taming the budget deficit, administrative reform and financial reform, he said. The meetings were expected to conclude Oct. 1, although Tober would not indicate any party preferences for forming a coalition vs. a minority government.

   President Aleksander Kwaœniewski is pushing to nominate Miller as the new prime minister. Kwaœniewski also called for the Sejm to convene Oct. 19. The president should swear in Miller, as well as a new cabinet of ministers, within two weeks of that date.

   Miller has the same period of time to submit a program of activity for the council of ministers to the Sejm, together with a motion requiring a vote of confidence. The Sejm must approve the motion by an absolute majority. If, after three tries, no government can be formed with Sejm approval, new elections would have to be called.

   PO, a party formed earlier this year that is generally viewed as pro-market and pro-EU, could be a useful, informal ally in pushing through strict budget measures and forging a consensus on EU negotiations, observers said. But PO said prior to the elections that it would not join a coalition with SLD.

   Other parties include SO, also new, led by sometimes-militant populist Andrzej Lepper; PiS grew out of the ashes of the now-displaced AWS bloc; PSL is a descendant of the communist United Peasants Party, renamed to reflect pre-communist roots; and the LPR is an ultra-conservative group.

   AWS and its former coalition partner Freedom Union (UW), voted into office in 1997, won no seats in the new Parliament.