Wrong man out
It doesn't look good. We are now in an interregnum period with a Solidarity Election Action (AWS) minority administration predicted to come apart before parliamentary elections late next year. More importantly to foreign investors, the Freedom Union's (UW) decision to exit the 30-month coalition means the absence of Leszek Balcerowicz as finance minister.
Had those demanding Prime Minister Jerzy Buzek's scalp succeeded, it is doubtful many would have cared. Polish governments are traditionally unpopular and Buzek is the eighth prime minister in little over 10 years, heading the most unpopular post-communist administration so far. But many saw Balcerowicz as the one member the government could not afford to lose. Why? Not an enormous number vote for UW; the party has 59 seats in the Sejm as compared to AWS' 186 and the Democratic Left Alliance's (SLD) 161. Moreover, the market did not spiral out of control last week and the zloty hardly moved. But it is a fact that foreign investors saw Balcerowicz as a byword for fiscal discipline, despite the deep current account deficit. And his influence has extended beyond his party, as seen in the talk earlier this year of his potential chairmanship of the International Monetary Fund (IMF).
Into his former boss' shoes steps Jaroslaw Bauc, a respected economist in a similar mold, trained abroad and with a reputation for financial austerity. But although Bauc is a smart choice for a safe pair of hands, the irony is that his credibility matters much less, because it is assumed he will fill the post for nine months at most. While the IMF and the National Bank of Poland (NBP) are expected to make the usual noises about controlling public spending and keeping down inflation, these will be aimed as much at a future SLD government as at a new-look AWS one.
Most commentators predict the government will topple over the 2001 budget. Although AWS wants to recoup support by doling out cash to disaffected voters, it risks sending inflation back up and interest rates higher while deepening the current account deficit. To this end it is likely to turn in a more UW-friendly proposal at the end of September. But many feel it still won't have the muscle to push the bill through the Sejm and expect months of backbiting until Parliament is dissolved for fresh elections in the spring. Polls suggest SLD will win by a landslide and in the meantime it will try to derail the government at every turn through votes of no-confidence in individual ministers.
UW can support the budget and look stupid for having walked out of the government, or vote it down and help SLD back into power. If the UW quit on point of principle it should employ the same rationale to guide it outside government. But if Balcerowicz hoped to scare AWS into backing his policies, this will be harder now than ever.
