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Lech Kaczynski – as a ‘brake’ on the economy or a sensitive social democrat?

Published on November 10, 2010 by: in: Politics

Late president Lech Kaczynski, during his nearly five-year term, has undergone a significant evolution. The initial years of his presidency occurred during a governing time of political environment he was strongly related to. It was also the time when he did not interfere with the government. When in 2007 the people’s right wing coalition came to power, situation has radically changed. Moderately liberal government of Donald Tusk repeatedly argued with Lech Kaczynski on ideological grounds, which resulted in a failure of few reforms and suspending others, sometimes ambitious and necessary legislation plans.  However in retrospect, recognition of Lech Kaczynski as a ‘brake’ on the economy does not appear to be right. And that is how he was described in one of the interviews by Leszek Balcerowicz – a former president of the NBP (the National Bank of Poland) and remarkable Minister of Finance.  Unfortunately, there was a few times Lech Kaczynski made decisions in the name of social solidarity, which were definitely not in favour of  the economy.

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President and economy

The specificity of presidency in Poland lies in fact that president is not responsible for governing as it is a role of Prime Minister and the Council of Ministers.  Traditionally, president mainly focuses on foreign policy and representational functions, occasionally using the legislative initiative. Therefore it is not possible to take Lech Kaczynski into account for landmark reforms, which should be proposed by the government and the parliament. In terms of economy, Lech Kaczynski can be rated for his cooperation with government, opinions he expressed or whether he supported or criticized ideas of certain economic reforms. Moreover, he can be judged for methods and frequency of using his power, mainly presidential veto, which dependently on actual partition of parliament seats, can become a very strong tool to influence governed people, thus it can also affect the economy.

Hard veto

From the beginning of his presidency there were many times when Lech Kaczynski used his prerogative to veto.  Two of his decisions, however, aroused the biggest controversy and emotions among Polish people.  On the 27th of November 2008 president vetoed the Bill in regards to Health Service Institutions and on the 15th of December 2008 he vetoed the Bill of bridging pensions. Both of these Bills had a significant impact on the economy. The first Bill was limiting the possibility of indebtedness of hospitals transformed into co-partnerships and the second Bill was limiting the number of people who benefit form a privilege of retirement.  Both vetoes then should be evaluated negatively.

In regards to the Bill of bridging pensions , with the help from the Left Wing, the government managed to reject the presidential veto. The reform finally solved the problem of early retirement of the professional groups, who have been granted these privileges in times of the People’s Republic of Poland, in many cases regardless of health criteria.

The next governing groups held off finding the solution to this politically risky problem as long as possible, which as a result result cost the national budget several billions of zloty each year, which are  needed now in time of crisis, as the country is under threat of overrunning the constitutional threshold of next public debt to GDP (50%, 55% and 60% GDP). The reform was good (though not perfect) and necessary, as it has been also noticed in a recent report of the Organization for Economic Cooperation and Development (OECD) in regards to Poland (Economic survey of Poland 2010).

Decisions made by the president were surprising not only because the bridging pensions problem was very serious, but also because Poland could not afford another year of delay.  According to Ludwik Dorn, formerly associated with Kaczynski brothers, a draft of the Bill made by the Civic Platform and the Polish People’s Party was in 90% comparable with the previous Bill, the draft of which was made by the party of the president – the Law and Justice and debated in vain for two years of its governing. In spite of that, president Lech Kaczynski vetoed the Bill saying it was unjust, unconstitutional and was prepared in contravention of the principles of social dialogue. The last argument could especially surprise because social dialogue in this case has been continuous since 1998. More importantly however, during governing of Donald Tusk there was the highest number of Trilateral Commission meetings held in regards to this reform (between June and September 2008 there was 26 meetings).

He did not veto everything

Lech Kaczynski certainly was not an easy co-worker for Donald Tusk’s government. During his presidency he vetoed 18 bills and 19 were referred to the Constitutional Tribunal. In times of the government of the coalition of the Law and Justice, the Self-Defense and the League of Polish Families he vetoed  one bill only (on July 13, 2006 about amending the act on the Civil Code).

Moreover, Lech Kaczynski had never any doubts in regards to constitutionality of bills proposed by his brother’s political environment. A sudden remembering presidential prerogatives certainly gave Polish people an impression that Lech Kaczynski vetoes nearly every bill proposed by Donald Tusk’s government. The impression was even more intensified by politicians of the Civic Platform and the Polish People’s Party coalition for which in some cases it was a good excuse to avoid making risky decisions using a possibility to blame the head of country for a lack of reforms. Although in my opinion Lech Kaczynski used the veto several times unwisely, certainly he did not deserve to be seen as the president who vetoed everything. In comparison to Lech Kaczynski, Aleksander Kwasniewski during his first presidency vetoed 11 bills and 13 was referred to the Constitutional Tribunal and during his the second presidency,he vetoed 24 bills and 12 referred to the Constitutional Tribunal.

Even taking into account the fact of Lech Kaczynski’s incomplete presidency, it is doubtful that he would manage to beat the record of vetoed bills, established by his predecessor Aleksander Kwasniewski during his second presidency. Therefore, it can be concluded that Lech Kaczynski did not use the veto as often as it could be seen in media. The blame for this social image also lies on his side, as he vetoed crucial for government drafts of the reforms, for instance reform of financing the hospitals or the bridging pensions reform. In both cases Lech Kaczynski vetoed the government’s ideas and did not suggest his own constructive proposal, which automatically made him appear opting for status quo. As a result he became known among Polish people as the one who impeded any changes in the country.

Global Financial Crisis

Lech Kaczynski was a strict critic of anti-crisis policy of Donald Tusk’s government, which can be characterized by long delays and a low commitment (which paradoxically, in retrospect, can be assessed as the greatest advantage of this plan). Apart from anti-crisis actions, presidential criticism left much to be desired. Once for instance, on one hand he was warning the government against 40 billion-budget deficits which Poland was threatened with during the crisis. On the other hand (against an advice of Ryszard Bugaj – his economic adviser) Lech Kaczynski proposed to reduce taxes by 2-3%, what in opinion of the Polish Confederation of Private Employers (PKPP) ‘Lewiatan’ could decrease the same budget by nearly 20 billion zloty. Economist also assessed negatively a presidential support for the initiative of another day off from work on the feast of Epiphany, which according to portal www.money.pl could cost the budget about 5 billion zloty (PKPP „Lewiatan“ assessed that for even 5,75 billion zloty).  During the crisis president did not change his careful approach to privatization and together with the Law and Justice kept supporting the idea of suspending ownership transformation. That could lower the state budget revenues – depending on the effectiveness of the Minister of Treasury – by a few to several billions zloty.  If all these ideas and initiative expressed and supported by the president were adopted during the global recession, Poland would face a major crisis in public finances.

Eurosceptic

President Lech Kaczynski was also a strong opponent of Polish accession to  the eurozone. He wanted to postpone this moment as long as possible. In fact, when analyzing his attitude towards the euro, in times of governing coalition of the Law and Justice, the Self Defence and the League of Polish Families, it certainly makes us wonder if deep down Lech Kaczynski, like David Cameron and the British Conservatives, was an opponent of common currency. In my opinion his attitude was rather ideological than economic, especially since the vast majority of economists in Poland consider that the Polish accession to the eurozone would have a positive impact on the Polish economy and the macroeconomic stability in our country.

In one of the speeches, President Kaczynski said that ‘it cannot be stated that euro would protect Poland from the crisis. Our biggest trading partner – Germany, although they are in the eurozone, their economic indicators are even worse than ours. Whole eurozone is affected today by the global crisis. So if common currency did not protect the strongest economies in European Union, there is no reason to believe that it would prevent Poland from such a difficulty’.

Unfortunately there were more statements concerning the common currency during his presidency. His statements surely did not serve a reliable debate and they only showed one side of the monetary integration. That other side refers to for example a huge exchange rate fluctuations at the turn of the  year 2008 and 2009, which resulted in Polish currency losing much of its credibility. Thousands of Polish people had a problem with loans repayments denominated in foreign currencies and traders had to renegotiate their contracts with banks on currency options. Germany avoided this kind of problems. So did Slovakia, Slovenia, Malta, and Cyprus – countries, which joined the EU in 2004, same time as Poland, but accepted Euro as a common currency earlier.

What Slovakia has managed to achieve in the eurozone since 2009, Poland has failed, for which again Lech Kaczynski and his political environment can be blamedthe . When Law and Justice came to power in 2005 and Kaczynski become a president, with good economic trends it was a right time to take steps to enter ERM II and then the eurozone. However, at that time Prime Minister Marcinkiewicz, then his successor Jaroslaw Kaczynski and President Lech Kaczynski,  did not have a necessary political will to finalize this process, which in result might be postponed even until 2015.

Kaczynski throughout his presidency must have been aware that the euro is beneficial for the Polish economy. In February 2004 the Polish National Bank published a comprehensive analysis, where we could read that under the euro influence the economic growth in Poland will increase of around 0,2 percentage points a year. By 2030 this will result in a significant increase in GDP of about 6%. Taking into account also additional effects (related to upcoming foreign investments), the economic growth will be higher by about 0,4 percentage points a year. As a result by 2030 GDP will increase by approximately 12% in contrast to the scenario of remaining outside of the eurozone. As far as the president did not have to believe in NBP analysis during Leszek Balcerowicz governing, definitely he should not have had any doubts in regards to honesty of the NBP report from 2009, which was prepared under supervision of his nominee Slawomir Skrzypek, who also died in Smolensk catastrophe. The next report, which was prepared in quite controversial circumstances (it was mentioned that apparently a chairmen put a pressure on authors to produce a report which is unfavorable for the euro) was not that enthusiastic but it did not change its merits though, saying that resignation from national and weak currency will only benefit Poland. In the report we can read as well that under euro influence an average annual economic growth will be higher by 0.7% and within fist 10 years will increase by 7.5% (against the scenario of remaining outside eurozone). In spite of these facts, Lech Kaczynski, for whole time of his presidency, reminded skeptical to the euro.

The Common Agricultural Policy of the European Union

President Lech Kaczynski was a part of Polish group of politicians, who were admittedly supporting Polish accession to the UE but were against its federalization. In Europe Lech Kaczynski became famous for his cryptic behaviour regarding the Treaty of Lisbon, which he initially negotiated on behalf of Poland and then he was unwilling to sign for months. During his presidency he was repeatedly speaking out how the policy of the European Union should look like by supporting or criticizing the various ideas, which had an enormous impact on the Polish and the EU economy. On this basis it can be unfortunately said that the president kept supporting the worst sides of the European Union.

Lech Kaczynski, like the rest of the Polish political scene, frequently spoke positively about the Common Agricultural Policy (CAP), which represents 40% of the EU budget. The CAP on one hand is known for the subsidies for production of farmers in the member states, on the other side is characterized by its protectionism against international competition. The effects of the CAP are, inter alia, higher prices of agricultural products in Europe as European farmers are protected against cheap food from countries such as Ukraine. During one of the meetings with milkmen, president stated that primary task for our country is a continuation of the Common Agricultural Policy of the European Union. Later, during a harvest festival, president said that because of the difficult situation of the Polish agriculture, market rules are not enough and the CAP is a foundation of the European Union. This attitude of president, who supported the farmers lobby at the expense of millions of consumers, must be assessed clearly negative. In his defense it should be noted though that his behavior was understandable for political reasons. Consumers are not homogeneous group, in contrast to the farmers, whose votes all politicians in the country fight for. For the same reason the subsidies to agriculture were supported by politicians such as Donald Tusk, the Polish Budget Commissioner – Janusz Lewandowski or Waldemar Pawlak, who became famous for statement that better is a bread roll expensive but Polish, which perfectly reflects what the Common Agricultural Policy of the EU is and what effects it causes.

Almost an excellent cooperation with the government

Although Kaczynski vetoed many bills proposed by the coalition of  the Civic Platform and the Polish People’s Party, big part of his cooperation with government was definitely excellent. He signed several laws which were very important for the economy. Society however usually judges the government after some landmark reforms. These were repeatedly vetoed by Kaczynski, what must have irritated Donald Tusk and voters supporting him. Until  of November 18, 2009 Kaczynski had signed 96% of  laws. directed to him.  Some of them brought about insignificant consequences for the Polish economy, including amendments to the Law on Freedom of Economic Activity (dramatically reducing the number of checks in Polish companies), the Law on Public-private partnership (through which the formulation of public investment, finally began to be used by Polish local governments), amendments to the Commercial Companies Code (which reduces the requirements for the minimum share capital for the establishment of limited companies) or the amendment to the Code of Civil Procedure (introducing electronic writ proceedings).

A ‘brake’ on the economy or a social democrat?

Many times Lech Kaczynski made decisions perceived as politically motivated because almost always they were in accordance with policy pursued by his brother Jaroslaw Kaczynski. The political calculation however is only one side of the coin. In spite of the fact that Lech Kaczynski was considered to be a right-wing politician, he had little in common with conservatives such as Ronald Regan or Margaret Thatcher. He was conservative regarding ideological issues and socialist in economic matters. He supported the activities of the trade unions (the Solidarity), vetoed the reform of the bridging pensions, which deprived thousands of Polish people of their rights to it. Nevertheless on several occasions his social solidarity turned into sheer populism. During the harvest festival president also stated that there are still large differences between the situation of rural and urban residents so Poland has to support farmers and their families. Kaczynski was keeping farmers’ side, once again showing his social sensitivity. In reality though, in comparison to the rest of the Polish society, situation of farmers was not so bad. The Central Statistical Office data shows that in 2008 self-employed households reached the highest average monthly disposable income per household – about 4439 Polish zloty. The second place belongs to farmers, whose income amounted to about 3816 polish zloty and pensioners household had the lowest disposable income –about 1545 polish zloty (source: Central Statistical Office, Household Budget for 2008). Populism was associated with Kaczynski’s support for merchants protesting in Warsaw, who were invited for a neutral meeting in the Chancellery of the President. The official message of that meeting included a presidential appeal to the authorities of the city to start talks with th merchants. President said that he could not agree to a use of force against people who defend their jobs. Kaczynski took the side of the merchants braking the law, euphemistically describing them as `the working people`. It was shocking that the president, as a professor of labor law as well as a former Minister of Justice, ignored the fact that there was an effectual court judgment on the side of the creditor and disregarded the case that the merchants have illegally occupied the hall in city centre for half a year. This way Kaczynski took the side of people at the cost of the rule of law. It quite ironically shows his sensitivity to social issues, which – as characteristic of his presidency – many times were more important for him than the interests of Polish entrepreneurs.

This social sensitivity does not justify the fact that several times he supported initiatives which were too expensive for the budget. Foreign investors saw Kaczynski the same way as he was described by Leszek Balcerowicz – `the brake` on the economic reforms. Although many of his decisions were made with good intention, they had or could have had a negative influence on the Polish economy. Therefore, in terms of economy, his presidency will be judged negatively. But it also should not be forgotten that the presidential prerogatives on economic issues are negligible.

About Witold Jarzynski:

Born in Czestochowa, he currently studies the 5th year of Law at Wroclaw University and practice at Office of Legal Advisers. He cooperates with the College of Eastern Europe in Wroclaw and writes about politics and economy for web portal mojeopinie.pl. His work is also published in daily paper -Gazeta Prawna. In 2008 he was a laureate of  “The Citizen Journalist“ prize, in a competition organized by Infotube and weekly “Wprost“.

TŁUMACZENIE: EDYTA OSTROWSKA

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About Witold Jarzynski

MA in law, entrepreneur. He publishes in Outsourcing Magazine, Facility Manager and on his own blog (jarzynski.blox.pl). He is a member Law & Economics, he used to cooperate with the College of Eastern Europe and Allerhand Institute.

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