22 October 2015

Law and Justice in the lead – but will smaller parties trip it up on the final straight?

Law and Justice (PiS) and its allies look set to win this week’s Polish parliamentary elections having built up a substantial poll lead over the governing Civic Platform (PO) since May, when the PiS candidate Andrzej Duda won the Presidential elections. Despite presiding over a period of stable economic growth and falling unemployment, many Poles are still not satisfied with their living standards and young people are still moving abroad in large numbers, while after two terms in office PO appears to have run out of steam and it has failed to shake off the reputational damage from the so-called ‘Waitergate’ scandal. Like in many European countries, the election campaign has been characterised by strongly anti-establishment sentiments.

However, it is not certain that PiS will win enough seats to enjoy an absolute majority – no party has managed this in post-Communist Poland – so it may have to find a coalition partner or seek an informal supply and confidence arrangement. The crucial variable is how many other parties cross the 5% electoral threshold; the more parties in parliament, the harder it will be for PiS to govern independently (although much will depend on how votes stack up in individual constituencies). Currently, there are five other parties jostling for seats – the United Left (which as a coalition needs to get over 8%), the economically liberal Nowoczesna party, the agrarian Polish People’s Party (PSL), as well as the nationalist-populist Kukiz Movement and the libertarian-populist KORWiN party.

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What are the main post-election scenarios?

There are only two headline outcomes – a PiS-led government or a PO-led government. The most likely outcome in my view is that PiS will fall just short, in which case it could either turn to PSL – currently PO’s junior coalition partner – or the Kukiz Movement and/or KORWiN. The former would make for a more stable government, whereas the latter would be an unstable arrangement held together by mutual dislike of PO and the wider Polish establishment, and reliant on PiS making some concessions which could negatively impact its own power base.

Alternatively, depending on the parliamentary arithmetic, there could be a PO-led government with the participation and/or support of PSL, the United Left and Nowoczesna. However, such an ‘anti-PiS coalition’ would have a weak mandate and questionable legitimacy, and it would have to balance the competing interests of all its constituent parts. Such a government would likely have to focus on day-to-day self-preservation at the expense of investing political capital in any significant reforms. It would also have to contend with President Andrzej Duda who would likely push his own agenda backed up by his presidential veto.

Whoever wins, question of euro membership will be kicked into the long grass

Public opinion in Poland remains strongly against euro membership – a GfK Polonia poll last month found that Poles oppose joining the Eurozone by 81% to 16%. Having originally pressed for swift euro adoption, in the wake of the Eurozone crisis, even pro-euro parties like the United Left are now arguing Poland should not rush to join immediately. PO has said that it wants to “keep the door open” to euro membership but stressed that “we will only adopt the single currency when this will be beneficial for our country, society and economy”. Meanwhile, PiS has said Poland should only join when living standards have caught up with those in the West. Given that GDP per capita in Poland is 68% of the EU average– compared to 107% for the Eurozone as a whole – this could well be a matter of decades. The party has also pledged that if it forms the next government it will abolish the office charged with preparing the ground for euro membership – a largely symbolic move.

Even if a PO government backed by the pro-euro parties such as the United Left wanted to introduce the euro in the next parliament, it would need a 2/3 majority in order to change the constitution, and PiS have said that in order to support such a move it would first have to be validated via a referendum, which currently looks unwinnable. Therefore, Poland will be part of a larger group of countries likely to stay outside the Eurozone for some time to come:

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Will Poland become more assertive on EU issues?

The current PO-PSL coalition has governed Poland for 8 out of the 11 years it has been an EU member and in that time Poland has become an influential player within the bloc, developing a close relationship both with the EU institutions and leading member states, above all Germany. However, Poland has only been partially effective at shaping the EU response towards Russia and Ukraine, while the refugee crisis has significantly complicated Polish-EU relations; the government has been caught between its traditional pro-Berlin and Brussels policies and a sceptical public. PiS has strongly opposed taking in refugees under the EU scheme, and the issue has triggered a broader debate about migration which on occasion crossed the line into outright racism and islamophobia.

Although the PO government voted for the proposal to relocate 160,000 refugees around the EU last month, it mainly did so in order not to be seen to have been on the losing side, and the party continues to oppose a permanent binding mechanism. PiS has suggested it could try to unpick the decision, and it remains to be seen how it would react if it ended up in government and had to proactively take in the Poland’s share of the total. Given the sensitivity around the migration/asylum debate, if the Commission and Berlin continue to push for greater burden sharing, it risks provoking a strong backlash – this could have profound long-term consequences with some voters potentially reconsidering their support for membership on the grounds of national sovereignty.

Aside from the refugee question, a PiS-led government would also be more assertive across a number of EU issues ranging from energy and climate change – PiS leader Jarosław Kaczyński has called for the EU’s energy and climate package to be renegotiated – to the EU’s position on Russia and Ukraine. It will also be a more awkward partner for Berlin especially on the question of whether to base NATO troops in Central and Eastern Europe although it has moderated its criticism of the current government’s foreign policy, calling for a “correction” as opposed to a “revolution”.

What are the implications for the UK and Cameron’s renegotiation?

Both PiS and PO are keen to keep the UK inside the EU for a number of reasons – the UK is Poland’s second largest trading partner, it offers the EU geopolitical credibility and it acts as a counterbalance to France and Germany. PO’s election manifesto even states that “we consider Britain’s continued membership of the EU to be of great value… we will support any proposals which aim to improve the functioning of the community”. Nonetheless, purely from the perspective of Cameron’s renegotiation, a PiS victory would be slightly more advantageous, although each scenario comes with a range of opportunities and pitfalls.

EU migrants’ access to benefits: Whatever the makeup of the next Polish government, it will continue to publicly oppose Cameron’s push to reform the rules around EU migrants’ access to in work benefits; both PiS and PO have explicitly rejected the idea of Polish workers being treated in a different manner to UK nationals. However, the degree of opposition has been exacerbated by the election campaign in which no party has wanted to appear soft on the issue while PiS in particular has courted the many Polish voters living in the UK. Once the elections are out of the way, Warsaw could adopt a more pragmatic stance, not least since as a result of the refugee crisis Poland has experienced its own heated debate about migration which at the very least should lead to a greater understanding of the UK position. Given how central this issue is to the credibility of the renegotiation, it is not inconceivable there is some room for compromise, particularly if any restrictions are tightly defined so that they do not set an open-ended precedent.

Safeguards for non-euro member states:  As noted above, Poland is likely to remain outside of the single currency for some time and will therefore want to safeguard its position in the single market at a time when the Eurozone is likely to embark towards deeper integration. As the two largest member states outside of the euro, Poland and the UK will be natural allies on this issue. That said, they have different long-term visions – from the UK’s perspective, the emergence of formal euro and non-euro blocs within the EU is a likely consequence of deeper Eurozone integration, while Poland wants to keep its options open and avoid an entrenched divide. PO has pledged to “block any attempts to create an alternative set of European institutions reserved for Eurozone states”. PiS will also want to keep its options open but given its implicit argument that Poland should not join the Eurozone for a significant period of time it may be more open to more permanent safeguard mechanisms.

Boosting EU competitiveness: Despite their close links, PiS and the Conservatives have divergent views on economic policy – PiS has pledged higher taxes on large businesses, greater welfare spending and state support for struggling industries including coal mining. Although most of these policies only have domestic relevance, they nonetheless demonstrate that the two might not completely see eye to eye on the UK’s competitiveness agenda for the EU cutting red tape, expanding the single market and striking FTAs with other global economies. This risk would be exacerbated if PiS was reliant on the support of the interventionist Kukiz Movement, whose founder, the former rock star Paweł Kukiz, frequently rails against large businesses and banks, particularly those with foreign ownership. In contrast, a PO-led government could be a better partner in this regard – its manifesto expresses strong support for TTIP, the EU-US free trade agreement, and it also describes deepening the single market, particularly in the area of digital services, as a “priority”.

Limiting the application of ‘ever closer union’: Ideologically, PiS is sympathetic to the UK’s desire to restrict the scope for EU integration and to re-assert national sovereignty in a number of areas. As President Duda said in a recent interview with The Daily Telegraph, “the issue of sovereignty is a very basic one for us. And, in this aspect, I generally share the position of Prime Minister Cameron.” Therefore, PiS could be a strong ally in Cameron’s bid to establish a looser and more flexible EU in which not every member state has to pursue the objective of ‘ever closer union’. PO might be willing to concede more flexibility, but it has also warned it sees “no scope for Treaty Changes that would put into question the foundations of European integration”. PO’s scope for manoeuvre would also be limited if it was reliant on support from pro-integration parties like the United Left and Nowoczesna.

Empowering national parliaments: Both PiS and PO have endorsed giving national parliaments more power over the EU’s law-making process, although neither party has set out any detailed proposals, and there are indications that both have reservations that a new ‘red card’ mechanism could result in too much institutional gridlock. However, given its more sceptical perspective on the EU as a whole, it would likely be easier to win over PiS than PO.