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If they prove successful, the newly appointed prime minister’s plans could bring PiS the popularity boost it needs to cement its rule.by Martin Ehl 13 December 2017
The most recent change in the makeup of the Polish government is the most interesting piece of news coming from Warsaw in the two years since the conservative Law and Justice (PiS) party took power. Some people have interpreted the change of prime minister, and the expected reshuffle of other governmental posts, as cosmetic changes meant to improve the image of PiS at home and abroad. That might be, but the new prime minister, Mateusz Morawiecki, and his economic plans could signal something more profound.
A former banker, Morawiecki comes from an anti-communist family; his father, Kornel, was a leading dissident under the former regime and is now a member of parliament elected on the party list of the nationalist and populist movement Kukiz 15 (he has since left and has his own fraction). The younger Morawiecki was involved in planning economic reforms under the previous governments of Donald Tusk, and then switched allegiances to PiS and its leader Jaroslaw Kaczynski. He favors stronger involvement of the state in the economy, more investment (both from the state and private Polish capital), and more locally driven innovation.
For Kaczynski, Morawiecki was heaven sent. PiS is modelled around ideology and history, so there are very few financial experts who have been able to formulate any kind of viable economic program. Kaczynski himself does not even pretend to know anything about the economy, so having Morawiecki’s energy, solid reputation, and lack of political background was ideal for the PiS leader.
The first half of PiS’s four-year term was about changing the political and institutional landscape, and fulfilling many social promises, like the 500+ program, a generous welfare system to support families with many children, considered “victims" of the post-communist transition. The face of PiS was Prime Minister Beata Szydlo, who resigned under pressure from Kaczynski – apparently indicating that PiS felt that it had already fulfilled the first part of its program.
The party is already today starting to prepare for the 2019 parliamentary elections. The economy is doing well and billions are flowing in from EU funds that need to be managed. Unemployment is decreasing. The budget, even taking into account the lavish social spending, is doing rather well. And tax collection has even improved since Morawiecki added finance to the development portfolio that he was already handling as deputy prime minister. The income derived from VAT collection, for example, has increased by 23 percent under PiS. Foreign investors have also cashed in on the recent economic success (though they might have a harder time once the new law on company income taxes comes into effect next year).
Morawiecki also has the most ambitious development plan of anyone, comparable to the shock therapy of former Finance Minister Leszek Balcerowicz from the early 1990s. Of course, one can doubt the viability of his modernization and innovation plans, but the aim to create an industry that can provide more value-added in the production process, to increase the global competitiveness of the Polish economy, and to slash the levels of outflowing capital is reasonable from any point of view.
A new way of thinking is needed. Central Europe’s development model, which is based on cheap labor and the German market’s proximity, will exhaust itself quite soon, especially with the growth of automation compounded by the unfolding demographic crisis.
Morawiecki seems to be the right choice at this point in time. The new prime minister’s biggest weakness – as well as strength, ironically enough – is his total political dependence on Kaczynski. Morawiecki can only hope to build his own political force inside an already fragmented government camp slowly and gradually. And, in Brussels, he faces the unpleasant task of standing up for changes that have not been welcomed in most quarters of the EU, such as the overhaul of the justice system. That might, however, be easier for him than it was for Szydlo, who did not have any international experience before being appointed head of the government, while Morawiecki worked on Poland’s EU accession, and in international banking for more than a decade.
If Morawiecki delivers continuing economic success, and thus a victory for his party in 2019, PiS and other Central European conservative nationalists will have a strong argument against liberals. A basic prerequisite is that Kaczynski will support Morawiecki as long as possible.
If Morawiecki fails, Polish conservatives could at least say that they attempted to forge a different path to prosperity. As one pro-governmental banker recently told me, “We have to try it, now or never."
In short, the choice of Morawiecki as prime minister could carry more meaning for Poland and Central Europe than anybody imagines now.
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