Polish politics and economy

[Bonobo]

Poland pays off once massive communist-era debt
Polish Market
2009-04-01

Almost 20 years following the collapse of communism, Poland has paid back the last instalment of USD 886 million to the Paris Club of creditor countries.

According to the Polish Ministry of Finance, Poland has to-date paid back 99.3% of its once massive debt. The outstanding minor part of the debt owed to Japan – approximately USD 118 million – is to be paid according to schedule till 2014, in addition to PLN 340 million worth of Brady bonds to be settled with commercial banks.

The once crippling debt was accumulated by Poland's communist leader Edward Gierek in the 1970s in what economists describe as a misguided attempt to modernise Polish industry. Polish Market chief analyst Jan Sosna says that the repayment of Poland's communist-era debt marks a symbolic closure of an era that coincides with the twentieth anniversary of the restoration of a market economy. Social tension caused by erratic attempts to pay off the debt at the expense of living standards and economic growth in the late 1970s contributed to the rise of workers protests that led to the collapse of communism in CEE – Sosna says.

[Bonobo]

Piotr Farfal's Poland
A controversial, and powerful, broadcaster riles a nation.
By Jan Cienski - GlobalPost
April 7, 2009

WARSAW, Poland — Piotr Farfal, the controversial head of Polish public television, didn’t come to the job lacking a background in the media.

As a young man he was the publisher of a tiny newsletter called “Front.” His editorial line? “We don’t tolerate cowards, snitches and Jews.” The newsletter was aimed at local skinheads, nationalists and neofascists.

That sort of past — which Farfal has tried to explain away as a youthful indiscretion — has not been enough to prevent him from becoming one of the most powerful men in Polish broadcasting.

His presence is an increasing embarrassment to the government of Donald Tusk, the prime minister and leader of the centrist Civic Platform party, and to the country. Recently the Franco-German cultural television channel broke off cooperation with Polish state television over Farfal’s presence, saying “he does not share our values.”

Open Republic, an organization aimed at stamping out xenophobia and anti-Semitism issued a letter calling it “a shameful and highly damaging thing that a former neofascist is at the head of [public television].”

Farfal got the top job in a rather unexpected fashion. He was plucked from obscurity in 2006 as a 28-year-old activist linked with the nationalist League of Polish Families, and was named deputy director of public television by the previous government of the right-wing Law and Justice party, which had formed a coalition with the League.

At the time, Law and Justice had just taken power and was purging public television of leftists and anyone opposed to their moral revolution, which aimed to stamp out corruption and people tainted by ties to communism from public life.

Farfal’s unorthodox past was revealed almost immediately after he was named. He put up a bit of a fuss, but essentially retreated from the public eye for almost two years. After Law and Justice’s defeat in 2007 parliamentary elections, the governing board of public television the party's officials had named remained in place despite the change of government — a break in Polish tradition where the new government tends to immediately move to gain control of the public broadcaster.

Farfal’s time in the background came to an abrupt end in December, when — together with board members from Law and Justice’s previous coalition allies, which were eliminated from parliament after the 2007 elections — he staged an unexpected coup against the head of public television, and took his job.

Farfal immediately began to impose his will on state television, steadily purging the network of journalists and officials opposed to him and his nationalist line, and replacing them with cronies from the nearly defunct League of Polish Families.

“The atmosphere is really terrible. We’re just keeping our heads down,” says a journalist with TVP Polonia, one of the national channels.

He has also given prominence to eurosceptic views challenging the European Union, forcing a break in programming to broadcast an interview with Declan Ganley, an Irish millionaire who was a key actor in persuading the Irish to vote against the Lisbon treaty reforming the functioning of the EU. Ganley’s allies are now setting up a Polish wing of his Libertas organization for the upcoming elections to the European parliament.

While Farfal’s activism may not be much help for Libertas, which is unlikely to win any seats in the European elections, it may have been some help to his friends in the League of Polish Families. For the first time in years a recent opinion poll found that the League had nudged above the 5 percent threshold needed to win seats in national elections.

Farfal, meanwhile, has been unable to break free from his tainted past. He took one of Poland’s largest dailies to court for calling him a “former neo-nazi." A couple of weeks ago the court ruled against him, with the judge saying that Farfal was a public person, “who should not be one because of the views he once expressed.”

Despite the awkwardness caused by his presence, the odds are that Farfal will remain in place at least until the autumn, when the government hopes to pass a law revamping Poland’s media law.




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Kaczynski endorses Rasmussen, annoys government
thenews.pl
06.04.2009

President Kaczyñski went against government strategy at the Nato summit last weekend and gave a premature endorsement of Anders Fogh Rasmussen as the next secretary-general, government sources say.

Gazeta Wyborcza reports that President Kaczynski endorsed the Danish candidate at the NATO dinner on Friday, much to the annoyance of Foreign Minister Radek Sikorski, who was also present.

Apparently, a plan had been agreed beforehand not to endorse the Dane until Poland had negotiated some concessions to its benefit from Nato leaders. But President Kaczynski ignored the agreement made with Prime Minister Tusk last week and went ahead and gave his blessing.

President Kaczynski claims that Rasmussen, Denmark's prime minister, would have got the job anyway, so the whole matter was a forgone conclusion.

At the weekend, Prime Minister Tusk had told parliament that Minister Sikorski, speculated to in the running for the post of secretary-general, which will become vacant in July, would not be the Polish government's candidate.

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Polish Wrangle over Nato Head
Dominika Pszczolkowska in Strasburg, Renata Grochal
Gazeta Wyborcza
2009-04-06

The President offered his support to a different candidate for the position of the head of Nato than the government had planned, says prime minister Donald Tusk. According to president Lech Kaczyński, the matter was a foregone conclusion anyway.

As early as on Friday, during the dinner inaugurating the Nato summit in Strasbourg and Kehl, President Lech Kaczyński supported the candidature of the Danish prime minister, Anders Fogh Rasmussen, for the position of the Nato's new secretary general. According to Gazeta's sources, he spoke even before Turkey, which was expected to protest Rasmussen's candidature, and some of the other allies.

On Saturday, Defence Minister Bogdan Klich said Mr Kaczyński had violated the government's instructions. And Prime Minister Donald Tusk said at a meeting of the Civic Platform's National Board Saturday that the president had offered his support to a different candidate than the government had planned.

'We are not strong enough, we are not a power yet, to afford such mistakes', Mr Tusk said.

A fuss was kicked up over who had a better negotiating strategy, and whether the president had received instructions from the cabinet or not.

Ministers Klich and Sikorski met members of the Polish press in Strasbourg early on Saturday afternoon. They explained that the government's strategy was to delay offering Poland's support for Mr Rasmussen in order to bargain something extra.

'Had we not prematurely offered our support, consultations would be carried out with two countries today, not just one', stressed Mr Sikorski, referring to Turkey.

According to government sources, the instructions were for the president to stall for time so that Mr Rasmussen's candidature would not be agreed upon on the first day. Mr Kaczyński was not to adopt any clear stance on the Turkish opposition. If Turkey's veto were sustained, Poland was to propose Mr Sikorski as candidate and even if the candidature were rejected, there were good chances Poland would be offered something in return. At stake were reportedly a Nato communications battalion in Poland and a high-ranking position for a Pole in the secretary general's secretariat.

The government also wanted to show that it did not like the way the whole issue had been handled - Warsaw had not been consulted and it learned about US and other large countries' support for Mr Rasmussen from the media.

After the summit the president defended himself by saying that the matter had been a foregone conclusion anyway.

'Poland achieved a success, because it came out from friends with a man who, it was obvious, would become the Nato secretary general', Mr Kaczyński said.

Another controversy is whether the president had received instructions from the cabinet.

Minister Sikorski says he handed them to the president on the plane to Strasbourg, but Mr Kaczyński maintains those were 'two sentences thrown in between jokes'. And besides, the cabinet has no right to instruct the president anyway.

On Sunday the dustup continued.

The Foreign Ministry revealed the negotiating instructions sent to the Presidential Chancellery. It said the government did not want to block Mr Rasmussen's candidature altogether, but wanted to 'demonstrate discontent, play for time (though not for long) and create a situation where they would have to talk to us and we could receive some compensation' .

The President denied receiving the instruction.

'Blaming me is just the other side's propaganda. The idea was such: if the president stalls for time, he will turn out a brake-puller again, and if Mr Rasmussen's candidature goes through, it will be the president's fault, because he didn't play for time', argued Lech Kaczyński.

'If Mr Sikorski's candidature had been officially submitted, if Mr Sikorski had not denied so stubbornly that he was or had been a candidate for the Nato post, if the emotions had not dominated here, perhaps there would have been a chance', he added.

'The problem is that this cabinet does not fight for Poland to be in the decision-making group'.

Zbigniew Chlebowski, leader of the PO caucus, said Sunday on Radio ZET: 'What the President did at the summit is enough to take him to the State Tribunal. It was a devastating blow to the cabinet's foreign policy'.

The president was defended by his brother, Jarosław Kaczyński, the opposition leader: 'What we are seeing here is a nasty example of taking domestic disputes to the international level', he said, demanding that Mr Chlebowski take back the words about the State Tribunal.

According to Aleksander Szczygł o, head of the president's National Security Council (BBN), Mr Kaczyński tried to call the prime minister on Friday at 1.00, but Mr Tusk did not answer the phone.

Mr Tusk admits there was a phone call to the head of his chancellery. 'At 1 a.m. I sleep. I went to sleep with a clear conscience, because I knew at what time the negotiations were, at what time the meeting, at what time the summit'.

He added that if the president needed his help, he should have called him before the meeting, not afterwards.

Piotr Kownacki, head of the Presidential Chancellery, told Gazeta that the president had hoped to meet the prime minister before the summit.

The prime minister, in turn, stresses that the president 'was absolutely clear about the government's strategy'.

'Late on Friday afternoon I was told by Mr Sikorski that he was in constant touch with the president and that there was no doubt that the president knew what we were about', said Mr Tusk.

[Bonobo]

Polish MP leaves opposition party
By Jan Cienski in Warsaw
The Financial Times
April 22 2009

The departure of yet another MP from the ranks of right-wing opposition Law and Justice party on Tuesday could ease the government's task of amending the constitution prior to joining the euro.

The decision by Wojciech Mojzesowicz, a former agriculture minister, to quit the party due to a spat over the upcoming European Parliament elections, drops Law and Justice (PiS), to 153 seats in the 460-member parliament.

Theoretically, that would give the coalition government led by the pro-business Civic Platform party the possibility of getting the two-thirds vote needed to change the constitution, necessary if Poland is to adopt the euro by 2012 as the government hopes.

Pawel Gras, the government's spokesman, said the government was not planning a vote on the constitution because PiS can still count on the support of several independent MPs.

Although some of the independents hew to a eurosceptic line, in the past Poland's unaffiliated MPs have proven to be quite malleable.

PiS's leader, Jaroslaw Kaczynski, a former prime minister and the twin brother of Poland's president Lech, is opposed to Poland joining the euro quickly, fearing price rises which could affect his mainly poorer and more rural electorate, as well as a loss of competitiveness if Poland is unable to devalue its currency.

To join the euro, Poland would have to modify parts of the constitution which give the central bank the power to set monetary policy. Mr Kaczynski's opposition has made that prospect quite remote.

Problems with amending the constitution are also dogging shorter term plans to join the ERM II exchange rate mechanism, the precursor to adopting the euro. Although formally not needed, leaving the constitutional issue hanging while entering the mechanism creates worries as to whether Poland would have everything in order by mid-2011 to formally apply to join the common currency.

Donald Tusk, the prime minister, would like to join ERM this year, but political worries over the constitution have been one of the impediments to doing so. Other problems include a widely gyrating currency, which has been hit hard by investor's aversion to emerging markets, and worries about the budget deficit, which could reach as much a 5 per cent this year, far above the 3 per cent set out by the Maastricht criteria for joining the euro.

"The legal-political aspect has changed a bit, but it would not be recommend to enter the ERM II without a realistic plan to meet the criteria," said Stanislaw Gomulka, a former deputy finance minister.



Poland's industrial production volume positively surprises experts
Polish Market
2009-04-24

Industrial production rose in March by 15.5% in comparison to February and fell by 2% on a year on year basis, the Central Statistical Office (GUS) informs.

March saw an increase by 15.1% in the construction sector when compared to February and a 1.2% growth on a year on year basis. In February 2009 the sector experienced a 1.9% growth y-o-y.

All the results are better-than- expected, economists say. A survey conducted by ISB among leading economists foresaw industrial production for March 2009 to fall by 4.8% y-o-y. yet the experts expectations varied substantially and ranged from -9.9% to +0.6%, the average was -4.82%.

Economists assess the results to be good, especially against the backdrop of the region's economic performance e.g. Ukraine suffered a 30% and Russia a 14% fall y-o-y in industrial production.

[valpomike]

What does this do for the average Polish person?

Mike

[Bonobo]

Apr 25, 2009 2:13:23 GMT 1 valpomike said:

What does this do for the average Polish person?

Mike

Let me reply to your post with an article.



Poles count benefits after 5 years in EU
DPA
2009-04-24

Warsaw - Joining the European Union boosted Poland's economy and sped up development, said a government report Friday as Poland neared five years of membership. The Polish economy reaped the most benefits from joining the union, according to the report from the Office of the Committee for European Integration, which measures how well Poland meets EU commitments.

Average Poles have also grown more pro-EU and say it's now easier to work and travel abroad, according to the Polish Press Agency PAP. Poles list benefits like an improved job market, a better farming industry and their country's growing role in international affairs.

Sectors like health, culture and education have also improved because of EU funds, the report said.

The report also claims Poland has a chance to avoid recession thanks to EU membership and is considered one of the most competitive markets in the EU, reported PAP.

[Bonobo]

Poland – heaven for investors?
thenews.pl
30.04.2009

Poland is fifth most attractive country in the world for foreign investment, according PricewaterhouseCoop ers.

Its advantages are a large and educated labour market, relatively stable political and economic situation and has the advantage of EU membership.

PricewaterhouseCoop ers' rates only four countries – Chile, Bulgaria, Malaysia and China – as being a more attractive place to invest, a remarkable improvement on last year when Poland was in 15th position.

In 2008, over 800 managers from 43 countries, researched by Ernst & Young, said Poland is the best place for new investment in Europe.

[Bonobo]

Poles want Tusk for president
thenews.pl
14.04.2009

If presidential elections took place in April, the winner would be Prime Minister Donald Tusk, says an opinion poll conducted by the Institute Homo Homini.

According to the poll, 26 percent would support Tusk and 16 percent would vote for President Lech Kaczynski. The third most wanted for the post of the head of state would be Wlodzimierz Cimoszewicz, the former PM and Foreign Minister, with 11 percent of votes.

Tomasz Lis, a popular journalist and TV presenter, would gain 9 percent and Radoslaw Sikorski, the Foreign Minister – 8 percent.

Both Bronislaw Komorowski, the Parliament speaker, and Rafal Dutkiewicz, the mayor of Wroclaw, would take the sixth position in the presidential race, with the support of 6 percent of Poles.

The numbers show that former president Lech Walesa would not have a chance to become the head of state again, being supported by only 2 percent of respondents. Similarly, Kazimierz Marcinkiewicz, the former PM and a very popular politician, with only 1 percent of votes would certainly lose the race.

PM Donald Tusk has not announced yet if he will take part in presidential elections in 2010. Neither has Lech Kaczynski decided whether he will strive for re-election.

Yet it seems inevitable that the Polish voters will have to choose between Donald Tusk and Lech Kaczynski in the coming presidential elections, claim political scientists.

The poll was conducted on 6 April among on a sample of 1,000

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Prime minister ahead of president in election survey
Polish Radio
14.04.2009

Prime Minister Donald Tusk and President Lech Kaczyñski will be top rivals at the 2010 presidential elections according to a survey carried out by the Homo Homini Institute, published in the Rzeczpospolita daily.

Neither of the officials has so far confirmed their candidacy, yet if Poles were to vote today, Donald Tusk would secure 26 percent of votes, whereas Lech Kaczyñski 16 percent.

Meanwhile, former foreign minister W³odzimierz Cimoszewicz, would most likely be included in the second round of the elections, with 11 percent, followed by TV presenter Tomasz Lis with nine percent. Yet they have no intention of running for president as Cimoszewicz is a candidate for the top post at the Council of Europe and Lis is simply not interested in the position. The survey was carried out on a sample of 1,000 adults on 6 April.

[Bonobo]

It pays to build factories in Poland
Polish Market
2009-05-11

Poland went up 10 positions and ranks 5th in the PricewaterhouseCoop ers' (PwC) investment attractiveness ranking in the category of industrial facility destination.

The ranking covered 20 countries. Poland came 5th and was only preceded by Chile, Bulgaria, Malesia and China. Poland's neighbour - Slovakia ranked 7th. Experts attribute the change to the trust foreign investors developed towards Poland. - Against the backdrop of an economic slowdown observed in other countries, the Polish economy is stable. - Adam ¯o³nowski from PwC told the "Rzeczpospolita" daily. In the category assessing investments, Poland classified on the 3rd position behind Slovakia and Chile. Slovakia owes its position to the adoption of euro and Chile due to strong economic relations with the US.

PwC experts claim that Poland has an edge over other countries competing for investments thanks to a big labour market, stable political situation and relatively low labour costs. EU membership also constitutes one of the country's major advantages. Foreign investors gradually become aware of the fact that the Polish economy is in a far better condition than the economic systems e.g. in Ukraine or Hungary and see that the region of Central and Eastern Europe should no longer be perceived as a homogenous zone in economic terms – Rzeczpospolita points out.

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Poland: Focus changes with rapid shift in fortunes
By Jan Cienski in Warsaw
The Financial Times
May 12 2009
Ayear ago, enormous advertisements hung out by Polish banks tried to lure clients to take out foreign currency mortgages on easy terms – now the ads try to persuade customers to deposit money, as banks attempt to shore up their bottom lines.
The change in focus underlines the rapid shift in fortunes in the Polish banking sector as it moves from rapid expansion to trying to minimise losses in a turbulent economy.
The economic crisis hit Poland in the last quarter of last year following the collapse of Lehman Brothers – and bursting what was rapidly becoming a banking bubble. In response, banks sharply reined in lending, tightened up income and loan-to-value requirements, increased margins and shifted out of foreign currency lending, which had been the most popular form of mortgages, accounting for almost 70 per cent of housing loans.

The grim conclusion to 2008 was not enough to prevent a record-breaking year for the sector, which rang up a profit of 14bn zlotys ($4.3bn, €3.2bn), but the outlook for 2009 is a lot bleaker.

"The results and growth dynamics of Polish financial institutions are going to be significantly lower than last year," says Irakli Pipia, an analyst with Moody's, the rating agency.

"Our view of the Polish banking sector remains negative."

However, most prognoses still forsee the sector ending 2009 in the black, no mean accomplishment at a time when banks in many other European countries are turning to the state for help.
"If the worst is over in terms of the economic slowdown, then banks have a chance to make a profit," says Krzysztof Rybinski, a partner at Ernst & Young's Polish branch and a former deputy governor of Poland's central bank.
He adds that the uncertain position of many of the foreign parents of the country's banks is likely to mean ownership changes in the coming year.
One of the main factors insulating Polish banks is that they climbed on the easy lending bandwagon relatively late.
The scale of the banking sector is also smaller than in many more developed countries. In Poland, bank lending as a percentage of gross domestic product is 47 per cent, while in Britain it is 288 per cent.
One of the first steps taken by banks in the final months of last year was to increase their deposit base.
Some smaller banks, which had specialised in Swiss franc mortgages funded on the wholesale market, even offered interest rates of 9 per cent in order to strengthen their balance sheets. Last year's "deposit war" increased household deposits by 26 per cent to 330bn zlotys, and in the first three months of this year they have increased by an additional 35bn zlotys.
Despite the increase, the banking sector's capital adequacy ratio declined from 12.1 per cent at the end of 2007 to 10.8 per cent at the end of last year.
Although that remains comfortably above the minimum of 8 per cent, the Financial Supervision Authority, Poland's banking regulator, has called on banks to strengthen their capital bases.
Sucking in deposits is likely to result in sharply lower profits this year. Mateusz Morawiecki, the chief executive of Bank Zachodni WBK, an affiliate of Allied Irish Banks, has warned that offering "deposits at insane prices" will hammer banks' bottom lines.
The outlook also worsened because of the steep depreciation of the zloty in the first months of this year, as investors fled emerging markets for the safety of the dollar and the euro.
The zloty's decline is making it more difficult for customers to service Swiss franc-denominated mortgages. Currency fluctuations have also affected companies that invested in ill-timed currency hedges last summer, when the zloty was strengthening against the euro.
owever, its subsequent fall left those companies facing enormous potential losses.
The banking regulator estimates that the exposure of Polish companies to such currency options amounts to 4.5bn zlotys and when the problem first surfaced this year, it raised fears about the stability of the banking system and sent the zloty spiralling even lower against the euro.
As the downturn begins to cause problems in the real economy banks are again expected to be negatively affected.
Predictions for growth his year have shrunk in the past six months from a projected increase of 3.4 per cent to a 1.4 per cent contraction in a recent forecast by the European Commission.
That is likely to increase the number of problem loans. Non-performing loans for the non-financial sector were 5.3 per cent in March, up from 4.75 per cent in February, says Krzysztof Pietraszkiewicz, head of the Polish Banking Association.
Problem corporate loans make up 7.9 per cent of the overall portfolio.
"We can see the first problems with corporate and consumer credits," says Mr Rybinski.
Spooked banks are reining in their lending, but the government is worried that the outcome could be an even sharper slowdown in the economy. The national bank is mulling the possibility of lowering reserve requirements, which would free more capital for lending.
Jerzy Pruski, the chief executive of PKO BP, one of Poland's two largest banks and which is still controlled by the government, insists that his bank will increase lending this year.
"I do not foresee any limitation on the part of our bank that will negatively impact corporate lending," he says. "All creditworthy businesses will certainly be served by PKO BP."
The willingness of a state-owned bank to step in and support the government, is in marked contrast to foreign-owned banks, which control about 80 per cent of the Polish market and which are likely to be reluctant to increase their exposure.
"Generally state ownership is bad, but there are some advantages," says Mr Rybinski. "It shows that domination by foreign banks carries a risk in difficult times."

[Bonobo]

Outsourcers flee Poland
Polish radio
20.05.2009

Poland plummets in a ranking of most favourable locations for outsourcing.

According to AT Kearney's Global Services Location Index (GSLI) Poland has gone from 5th most attractive site for outsourcing companies, such as call center companies and IT service providers, to just number 38th. Last year the same report Poland in 18th spot.

The ranking – based on financial attractiveness, labour skills availability and business environment – shows that Asia, Middle East and Africa become more attractive for investors than Central and Eastern Europe countries.

Global international companies are fleeing Poland due to sharp rising costs, exchange rate instability and the finance crisis in general. American companies have returned to open call centers in small American cities, or to the Middle East and Asia, instead of Poland and Central and Eastern Europe.

[Bonobo]

Likeable PM stands strong
Tusk seems to have convinced voters he is not to blame for the economic crisis.
By Jan Cienski
GlobalPost
June 15, 2009

WARSAW — The recent elections to the European Parliament have left Poland's ruling Civic Platform party strengthened while throwing the opposition into disarray, a result that is likely to fortify the position of Prime Minister Donald Tusk.

Civic Platform scooped up 25 of Poland's 50 seats with 44 percent of the vote, showing that the party has cemented its hold on about half the electorate despite the crisis that has slowed economic growth to close to zero this year.

"It's a great thing to get a better result than we scored in the parliamentary elections one-and-a-half years ago, while being in power during such a difficult conditions," Tusk told his supporters on the night of the vote.

As in almost every other European country, European themes didn't play much of a role in the campaign. The workings of the parliament are too obscure for most people to work out what the well paid MPs do in Brussels and Strasbourg, and the vote was really treated as a referendum on Tusk's government.

Tusk has managed to persuade people that the economic crisis is not his fault and is rather a result of a global problem that cannot be solved in Poland alone.

That didn't help the main opposition party, the right-wing Law and Justice party (PiS). It won 15 seats and got 27 percent of the vote, much better than its outcome in European elections five years ago, but a bit less than it got in national elections in 2007.

Although Jaroslaw Kaczynski, the party's leader and a former prime minister, tried to put a positive spin on the vote, calling it "not bad," the outcome still smarts. It shows that the party has essentially been spinning its wheels, unable to gain much traction against the likeable Tusk.

One reason has been Kaczynski's irascibility. In the increasingly bitter atmosphere after the election, he turned on reporters during a news conference, denouncing one popular radio station and comparing it to Poland's German occupiers during the war.

Another has been dissension within party. Anyone who is seen as disloyal to Kaczynski quickly gets the boot — one of Civic Platform's most successful candidates, Pawel Zalewski, used to be a deputy leader of PiS before being ejected for crossing Kaczynski. Not long after the vote, Kaczynski attacked his biggest vote-winner in the election, Zbigniew Ziobro, a former justice minister, who had dared to suggest that there had been some flaws in the way the party had conducted its campaign.

However, despite the lackluster results for PiS, the election has confirmed that Poland has essentially evolved into a two-party system. Unlike in the United States or in most European countries, the division is not between left and right — both Civic Platform and Law and Justice spring from the Solidarity movement that helped overthrow communism. They both call themselves center-right, although PiS's economic policies are more populist. Their big difference is over foreign policy — PiS is prickly, nationalistic and hostile toward Russia, Germany and suspicious of the European Union arrogating too much power to itself.

"We loudly say what we don't like in the EU," said Adam Bielan, a leading PiS political strategist. "We want more economic freedom in the EU and less emphasis on political integration. "

To that end, PiS is hoping to create a new eurosceptical grouping in the European Parliament with Britain's Conservatives and the Czech Republic's Civic Democrats.

The other two smaller parties that won seats were the ex-communist Democratic Left Alliance, which won seven seats, and the agrarian Polish People's Party, a member of the governing coalition, with three seats.

No other parties made it past the 5 percent threshold to win places in the parliament, a marked contrast to five years ago, when two populist eurosceptical parties won almost a third of Poland's seats. Unlike in other European countries, all of Poland's seats were won by mainstream parties with a presence in the national parliament.

In 2004, many Poles, especially farmers, were very nervous about joining the EU. However, over the last five years a flood of money from Brussels for infrastructure and farms has made Poland one of the most pro-EU countries in the union.

That positive attitude may be one of the reasons for a slightly higher voter turnout. This year, as many as 24.5 percent of Poles may have taken part, more than the 20.9 percent who took part in 2004, but still less than the European average.

[Bonobo]

Poland launches $12 billion privatisation drive
By Adrian Krajewski

WARSAW, July 22 (Reuters) - Poland started to ramp up its stalled privatisation program to bring some 36.7 billion zlotys ($12 billion) into depleted state coffers by the end of 2010, making the surprise announcement that it could sell the rest of copper miner KGHM (KGHM.WA: Quote, Profile, Research, Stock Buzz).

The treasury ministry said on Wednesday that it expected the lion's share of the proceeds next year, in large part from the sale of power groups Enea, (ENAE.WA: Quote, Profile, Research, Stock Buzz) Tauron, PGE and PAK. It also wants to sell several chemicals companies.

"This would be pretty much the end of the privatisation process in Poland," said Michal Dybula, economist at BNP Paribas in Warsaw.

"About 30 billion zlotys in 2009 and 2010 appears realistic, not to mention badly needed to reduce the risk of public debt exceeding 55 percent of gross domestic product next year."

With its economy slowing sharply, Poland's debt is expected to breach the 50 percent level this year. A government whose debt surpasses 55 percent faces painful fiscal adjustments under the Polish constitution.

The ministry said it planned to unload as much as its entire 41 percent stake in Europe's No.2 copper producer KGHM, worth some $2.1 billion.

Treasury Minister Aleksander Grad told a news conference that the ministry had put forward a proposed list of privatisations and this did not mean all sales would take place. He declined to elaborate on KGHM.

The news surprised investors and sent KGHM shares down more than 6 percent.

The stock, whose 185 percent surge this year was linked to the rollercoaster ride of copper prices, was down 4.2 percent to 76.65 zlotys by 1313 GMT.

"In the case of KGHM, the most important thing now is to find out how the ministry envisages the sale, whether the idea is to sell the stake to a strategic investor, through the bourse or in a combined way," said Marek Juras, head of research at BZ WBK brokerage in Warsaw.

KGHM UNIONS REACT

KGHM's powerful unions threatened a strike and other measures to prevent the sale.

"It's unbelievable, especially since the prime minister guaranteed there wouldn't be (further) privatisation of KGHM," Jozef Czyczerski of the Solidarity union told Reuters. "We're willing to do anything that the law allows and beyond."

Poland will also revive its efforts to unload small stakes it still holds in previously privatised companies, including France Telecom's (FTE.PA: Quote, Profile, Research, Stock Buzz) phone operator TPSA (TPSA.WA: Quote, Profile, Research, Stock Buzz) and UniCredit's (CRDI.MI: Quote, Profile, Research, Stock Buzz) lender Pekao. (BAPE.WA: Quote, Profile, Research, Stock Buzz)

However, some analysts fear that for foreseeable future, investor appetite may be tempered by lingering market weakness.

The centre-right government had promised to revive the privatisation put on hold by its right-wing predecessors, but managed to raise only 2.4 billion zlotys from selling stakes in state companies.

Last week, deputies approved a budget amendment that envisages a 27 billion zloty deficit this year. The figure is 50 percent more than originally planned, despite deep spending cuts, and is forcing the cabinet to seek other sources of income.

Privatisation income does not directly reduce the deficit, but provides a cushion of additional funding that helps avoid further increases in state debt.

The zloty and bonds showed little immediate reaction to the government's announcement. ($1=3.002 Zloty)

[Bonobo]

Euro not coming to Poland any time soon

Currently, Poland fulfills only one of the five most important Maastricht Treaty criteria

The Warsaw Business Jornal
5th August 2009

The Office of the Governmental Plenipotentiary for introducing the euro has prepared a report on the current state of fulfillment of the Maastricht Treaty criteria by Poland as well as other EU member states.

Such a document will be updated on a monthly basis and made available on the website of the Finance Ministry.

The current report suggests that euro could be adopted by Poland within 10 years, but does not state a precise date. "I think that the government will not give us any other detailed date of entering the eurozone, but will try to accomplish this in 2013," said Jakub Borowski of Invest Bank.

Currently, Poland fulfills only one of the five most important criteria.

************ ********* ********* ********* ******

Poland to get euro by 2013?
thenews.pl
05.08.2009

The latest report by Poland’s Finance Ministry shows that this country’s economy will be ready to join the euro zone in a few years.

Experts from the Ministry admit in the document describing the country’s preparations to do so that currently Poland is fulfilling only the criterion concerning interest rates.

Among the problematic areas mentioned in the report is the procedure of excessive budget deficit imposed on Poland by the European Commission which should be lifted in 2013 the latest. This country does not meet the criteria of prices stability which, according to forecasts of the EC, can be achieved in the second quarter of 2009, it also fails to meet the requirements concerning the stability of its currency – the zloty.

According to the Ministry, the situation of the zloty is slowly improving, following a period of financial turmoil. Reports on Poland’s progress in preparing to join the euro zone are to be published by the Ministry at the beginning of each month.

[valpomike]

Keep the Zloty, it is still Polish, and Poland has lost so many things over the years, make it be if, only Poland, does not want to change to the Euro.

Mike

[Bonobo]

Poland's economy grows, bucking EU trend
(AFP)
8/28/09

Poland's relatively low dependence on foreign markets make it less vulnerable to diving exports, experts say

WARSAW — Poland's economy grew 0.5 percent in the second quarter of 2009, making it the only European Union member state to buck the global slump, official data showed on Friday.

"In the second quarter... seasonally adjusted GDP grew by 0.5 percent compared to the previous quarter and was 1.4 percent higher than a year ago," the Central Statistics Bureau said.

A European Union member since 2004, Poland has avoided sinking into recession as the global economic crisis torpedoed the economies of its smaller EU neighbours.

"The second quarter GDP result means Poland is the only EU state that will record growth on an annual basis," said Tomasz Bonek, editor-in-chief of Poland's money.pl, a leading economic web portal.

Poland recorded first quarter gross domestic product (GDP) growth of 0.3 percent and was the only member of the 27-state EU to have enjoyed an expansion in that period.

With a population of 38 million, analysts say that Poland has escaped the boom-bust cycle that drove once flourishing neighbours like Latvia and Hungary to the brink of default as the global crisis burst credit bubbles.

Foreign investment, steady demand on Poland's large domestic market and its relatively low dependence on foreign markets also make it less vulnerable to diving exports, experts say.

[Bonobo]

'Polish plumber' should no longer be feared, says Italian dailyThe Warsaw Business Journal
1st September 2009

The Polish plumber should no longer be feared around Europe. Italian daily Il Giornale published an article declaring that the 'Polish plumber' – a stereotypical cheap Eastern-European laborer entering the EU's borders for work – is "laughing at Europe, and Warsaw is not feeling the recession."

According to the daily, the Europe-wide joke is no longer relevant because Poland is benefiting from the fact that its exports only account for 40 percent of its GDP, thus avoiding a heavy hit from the global financial crisis.

"When the global economy melted into a great crisis, Polish weakness matured into strength, protecting the country from a big hit," reported Il Giornale.

The article underlines the majority of European nations' envy toward Poland's fortunes during the economic slowdown.

"We are a little surprised that Poland has fared so well during the crisis," Lars Rasmussen, an analyst at Danske Bank in Copenhagen told Forbes.

At the end of August, Poland's Central Statistical Office (GUS) released second quarter 2009 statistics that showed a GDP growth of 1.1 percent.

[valpomike]

And going up and up more.

Mike

[locopolaco]

yet poles are leaving in droves again.. something here doesn't add up.

[tufta]

Loco!

For those who left it sometimes seems that 'everybody is leaving'. But for those who stayed home to do the job it now seems Poles are coming home in droves.

[tufta]

At the end of August, Poland's Central Statistical Office (GUS) released second quarter 2009 statistics that showed a GDP growth of 1.1 percent.

[/i]
[/quote]



For the first time in history - Polish economy the best in Europe. We are the only ones in European Union who have GDP growth.


Bo!, stop spending so much time at your PC, you have to work more. The young generation is waiting for your education to make it rise frther!! ;D ;D ;D

[locopolaco]

Sept 17, 2009 8:26:30 GMT 1 tufta said:

Loco!

For those who left it sometimes seems that 'everybody is leaving'. But for those who stayed home to do the job it now seems Poles are coming home in droves.

that is not what i am hearing.. everybody was coming home last fall and maybe even early this spring but now everyone is going back to UK or other places because there are no good jobs in PL.. believe you me.. i have looked.

[Bonobo]

Sept 17, 2009 20:36:29 GMT 1 locopolaco said:

that is not what i am hearing.. everybody was coming home last fall and maybe even early this spring but now everyone is going back to UK or other places because there are no good jobs in PL.. believe you me.. i have looked.

I listened to a radio program while driving. There are no new emigrants. All those who are coming back and going again are the same 2 million people who started leaving Poland in 2004. Their number is more or less stable.

[Bonobo]

Kaczynski asked Tusk to cancel Putin visit
thenews.pl
09.09.2009

So exasperated was President Kaczynski with Russian accusations that Poland was collaborating with Nazi Germany, that he asked PM Tusk to call off Vladimir Putin's visit to Poland last week.

An anonymous source close to the prime minister has told Polska (the Times) that Kaczynski asked Tusk to cancel the invitation to the WW II anniversary ceremony in Gdansk on September 1 with just 24 hours to go before Putin's arrival in Poland.

"I expect you to cancel the meeting with Putin," Lech Kaczynski is supposed to have said to Donald Tusk.

Kaczynski and Tusk had previously agreed a line to take on the basic issues connected with the visit, but the president suddenly changed his mind, due to anti-Polish propaganda in the Russian media. The last straw were statements made on the Russian intelligence service web site that Poland's pre-war foreign minister Jozef Beck was a "German spy and drunkard".

"Kaczynski was angry and he insisted that Poland should react to the provocation and cancel Vladimir Putin's visit. Tusk was puzzled and angry too [with Kaczynski] as he had totally changed his mind about the visit and their views weren't convergent anymore," says the anonymous source , quoted in Polska.

Aleksander Szczyglo, the head of National Security Bureau - a position close to President Kaczynski – has refused to confirm the claim.

However, Wladyslaw Stasiak, head of the Chancellery of The Prime Minister, appeared to know about the conversation between Kaczynski and Tusk but refused to comment further.

[valpomike]

If Putin can't come how will the Polish people kiss his ass for his oil. We here in the USA now know how to kiss ass, to get things, and we do.

Mike

[Bonobo]

Luck of the Polish
Jan Cienski in Warsaw
business new europe
September 15, 2009

Poland's economy grew at an annual rate of 1.1% in the second quarter, and although that number is far from the growth rates being enjoyed in rapidly rebounding Asia, it makes Poland the fastest growing economy in the EU. The government now reckons the economy will grow by 0.9% this year, while the European Commission on September 14 revised up its forecast for 2009 growth to 1.0%.

Poland ended up with Europe's strongest economy through a series of unrelated coincidences, not because of a particularly skilled crisis strategy. "In many ways, we were simply lucky," says Witold Orlowski, an economist with PricewaterhouseCoop ers, the consultancy.

The first piece of luck was the structure of Poland's economy. While other Central European countries like the Czech Republic and Slovakia are enormously export dependant – with exports accounting for almost 80% of GDP - Poland, with 38m people, has a much larger domestic market, and exports account for less than 40% of GDP. While the rest of Central Europe was pummelled when the German economy fell into recession, Poland's economy was less affected.

Crucially, Polish consumers did not slam their wallets shut when the crisis hit the region a year ago. Poles have become significantly richer over the last two decades of economic transformation; GDP per capita came to about $6,000 in 1989 and now is above $17,000, and Poles enjoyed double-digit wage increases during the final years of the boom. That made them flush enough to continue spending. Retail spending is showing continued signs of improvement, with sales in July showing a 5.7% annual increase.

Spending and investment were also maintained thanks to continued inflows of EU funds into Poland, particularly for infrastructure projects like highway construction.

Another factor helping the economy was the steep depreciation of the zloty earlier this year. The Polish currency lost almost a third of its value to the euro and the dollar as risk-averse investors fled the region. While the zloty's fall may have caused palpitations for the many Poles who have home mortgages denominated in foreign currencies, the weaker zloty proved to be a boon to exporters. Furthermore, by making imports more expensive, Poland's balance of payments improved rapidly. "The fall in the value of the zloty acted as a shock absorber for our economy," says Waldemar Pawlak, Poland's deputy prime minister and economy minister.

Tax break

The government also got lucky in that the tax reductions passed by the previous government came into force just as the crisis hit. The former right-wing Law and Justice government lowered Poland's income tax rate from three bands with a top rate of 40% to two bands with a maximum rate of 32%. That did cause problems with the budget deficit, but ensured that Poles got an extra dose of cash to spend.

Poland has also seen a milder dose of economic malaise than Western Europe because of the relative unsophistication of its economy and financial institutions. Poland's banks, 70% of which are foreign owned, did not really dabble in exotic US mortgage-backed securities, sticking instead to taking deposits and making loans. That has left banks able to ride out the global crisis. In addition, the size of the banking sector is smaller than in more developed economies. Total borrowing comes to less than half of GDP, a third of the level seen in Western Europe.

Although the wider economy has avoided falling into a technical recession this year, the dramatic slowdown in economic growth is wreaking havoc with the country's current account and public finances.

On September 11, Poland published its balance of payments data for July, which showed the current account situation fell into to a deficit of €565m, a turnaround from than the surplus of €459m posted in June and much worse than the consensus expectation of a surplus of €215m. The deterioration in the current account was driven by both weaker-than- expected exports and stronger-than- anticipated import growth. In addition, the data showed that net foreign direct investment (FDI) posted an outflow of $197m in July, which compares with the $900m net inflow in July 2008. "It affirms the view that FDI inflows overall to the region are running significantly lower year-on-year as foreign investors react to a more difficult funding environment, but also obviously a less robust outlook for growth," says Tim Ash of Royal Bank of Scotland.

The public finances have been helped by a determined effort by the state treasury to extract as much in dividend payments as possible from companies in which the state has a large stake, like PKO BP, the country's largest bank, and PZU, its leading insurer. That was possible because of the profits raked in by those companies in 2008, the last year of the boom. That will change next year, leaving the government strapped for cash.

With tax revenues falling and spending increasing due to rising unemployment, the government is predicting that the budget deficit for next year will almost double from this year to PLN52.2bn (€12.5bn).

The key issue for the government is to avoid public debt from breaching 55% of GDP – it is currently just below 50%. At that level, Polish law mandates painful steps to but the budget back in balance, steps which would be unlikely to enhance the electoral prospects of Donald Tusk, the prime minister, in next year's presidential elections.

In order to keep the deficit at even those levels, the government is planning an ambitious, but politically controversial, mass privatisation programme that could raise PLN25bn next year.

Poland may have skirted a recession, but the economy still has a difficult year ahead.

[Bonobo]

Kompania Piwowarska closes Kielce breweryPolish Market
9/15/09

Kompania Piwowarska (KP), the largest beer producer in Poland, is planning to close a brewery in Kielce which manufactures the Zubr, Debowe and Wojak beer brands. The company intends to lay off 110 people in addition to one in three employees at the Kielce distribution centre. In total around 130 people will lose their jobs in Kielce, and another 60 around the country. In March 2009 the group had already let 70 employees go and closed two of the three production lines at the Kielce brewery.

The KP management claims that its capacity exceeds demand by 3 million hl. Demand for beer has declined drastically over the last few months because of the recession and the 13% rise in excise duty in March 2009. KP insists also that production in Kielce costs more than that of any of its other facilities.

[valpomike]

People of Poland start drinking more good Polish beer, and help this man stay open. The hell with the others, Polish beer is good.

Mike

[valpomike]

Are things in Poland, as bad as they are here? Several people without work, and tax payers money being wasted, and money given to those because of the color of there skin. Any yet, we send foreign aid, to places, who turn on us.

Mike

[Bonobo]

Oct 3, 2009 20:00:16 GMT 1 valpomike said:

Are things in Poland, as bad as they are here? Several people without work, and tax payers money being wasted, and money given to those because of the color of there skin. Any yet, we send foreign aid, to places, who turn on us.
Mike

So when are you moving to Poland?

[valpomike]

I would love to, if not for my family, children, and most of all the grandchildren. Do you have a job for me, and a place to live, in what city?

Mike

[Bonobo]

Polish Premier Purges Three Officials in Scandal
By NICHOLAS KULISH
The New York Times
10/8/09

BERLIN — Prime Minister Donald Tusk of Poland cleaned house Wednesday in an effort to move past a political scandal over influence peddling and gambling legislation. Mr. Tusk accepted the resignations of three high-ranking government officials while also moving to dismiss the head of the anticorruption agency that has pursued the case.

The anticorruption investigation, codenamed Operation Blackjack, has captured headlines across Poland. The allegations by the Central Anti-Corruption Bureau that public officials used their influence to reduce the burden of new gambling taxes on the casino industry in Poland have damaged the reputation of the government of Mr. Tusk's center-right Civic Platform party.

The lobbying scandal also represents a setback for Mr. Tusk in his efforts to run for president next year against incumbent Lech Kaczynski. Several local polls have shown a decline in support for Mr. Tusk's Civic Platform party since the scandal broke into the open last week.

Andrzej Czuma, the justice minister, and Grzegorz Schetyna, who is both interior minister and deputy prime minister, as well as a third official, a deputy in the ministry of economy, offered their resignations, which Mr. Tusk accepted, he said at a news conference Wednesday. The announcement came two days after the sports minister had stepped down as part of the same affair.

"Recent events related to the gambling act raise justified doubts among Poles," Mr. Tusk said. "For the government to work in an atmosphere of trust and impartiality, my colleagues and I want to do everything to convince Poles, but also our opponents, about our impartiality. "

Mr. Tusk added, however, that he was taking steps to remove Mariusz Kaminski, who runs the anticorruption bureau and was nominated by Mr. Tusk's predecessor and the president's twin brother, Jaroslaw Kaczynski. Mr. Tusk and his supporters have argued vigorously that Mr. Kaminski was abusing his power to help the government's political rivals.

"Prime Minister Tusk understood that these steps were difficult but inevitable, regarding the political price that he will pay in the short-term, but in the longer term it was better to get it done," said Roman Kuzniar, head of the Center for Strategic Studies at the University of Warsaw. "It showed he is serious about transparency and decency in public life."

************ ********* ********* ********

Polish PM Shakes Up Government
10/7/09

WARSAW (Reuters) - Polish Prime Minister Donald Tusk ditched three ministers and sacked the head of an anti-graft body on Wednesday in an effort to draw a line under a lobbying scandal that has harmed his centre-right government's image.

Financial markets took the news calmly. Crucially for investors, the changes did not involve the finance minister.

Tusk wants to reassure voters in the European Union's largest ex-communist nation that he will not brook any hint of corruption in his two-year-old government as it fights a sharp economic slowdown and prepares for a presidential election next year in which the premier himself is likely to run.

"Trust is key... In order for the government to continue its work in an atmosphere of trust, my associates and I want to do everything to convince Poles and our political adversaries that we intend to resolve this case in an unbiased manner," Tusk told a news conference.

Tusk said the interior, justice and deputy economy ministers had resigned over the affair, which involves claims that key PO officials had contacts with businessmen seeking to water down plans to hike taxes on gambling. The officials deny wrongdoing.

Political analysts said Tusk's brisk handling of the crisis would probably help to minimise any negative political fallout.

"Tusk is now definitely on the attack and I think he's got a chance of success in turning the tables on the opposition," said Adam Jasser, progammes director at the DemosEuropa think-tank.

The zloty eased versus the euro after Tusk's announcements but dealers said the weakness was not caused by politics.

Outgoing Interior Minister Grzegorz Schetyna, who was also deputy prime minister, will now lead Tusk's Civic Platform (PO) in parliament, a post left vacant after another Tusk ally, Zbigniew Chlebowski, quit last week over the lobbying scandal.

Three other top aides will leave Tusk's office to reinforce Schetyna's work in the parliament.

Tusk said he would name new ministers to his cabinet next week. They will include a replacement for the sports minister, who has also quit over what local media dubbed "Blackjack-gate. "

ANTI-GRAFT BODY

Tusk singled out the Central Anti-Corruption Bureau (CBA) and its head, Mariusz Kaminski, for sharp criticism, saying they were using their powers for political ends. He said he expected the procedure to oust Kaminski would be completed by Friday.

The CBA was set up in 2006 by Tusk's predecessor and arch-rival Jaroslaw Kaczynski, who now heads the main opposition party Law and Justice (PiS). Kaczynski is also the twin brother of President Lech Kaczynski.

"We are going to war for truth with the PiS in parliament now," Tusk said.

Critics say the CBA is politically motivated and uses legally questionable methods such as "sting" operations.

Prosecutors filed charges on Tuesday against Kaminski accusing him of exceeding his authority in a separate case.

Tusk is keen to stamp out any whiff of corruption in his government ahead of a presidential election due in the autumn of 2010 when he is expected to challenge incumbent Lech Kaczynski.

An opinion poll published in Wednesday's Gazeta Wyborcza showed Tusk would still win more than twice as many votes as Kaczynski in the presidential election.

The survey, conducted by PBS DGA on October 2-4, after the scandal broke, also showed support for PO falling by four percentage points to 48 percent. Its nearest rival, Jaroslaw Kaczynski's right-wing, eurosceptic Law and Justice (PiS), gained four percentage points to 28 percent.

************ ********* ********* **

Polish lobbying scandal claims scalps
By Jan Cienski in Warsaw
Financial Times
October 6 2009

A growing lobbying scandal in Poland has cost the ruling Civic Platform party two of its leading figures, and on Tuesday threatened to engulf the head of the Anti-Corruption Bureau, an agency set up to root out government graft.

The scandal surrounds conversations – one of which took place in a graveyard – between a senior member of the party and the head of a casino company. The conversations, which were recorded by the Anti-Corruption Bureau (CBA) and published by a newspaper last week, involved the gambling industry’s attempts to change a new law that would impose higher gambling taxes.

Zbigniew Chlebowski, the former leader of Civic Platform’s parliamentary wing, who was recorded talking to the casino boss, denied all wrongdoing. “These were friendly conversations, it was an unfortunate choice of words, but I did not commit any forbidden act,” he said. But he was forced to step down last week as parliamentary leader and head of the finance committee by prime minister Donald Tusk.

The conversations also mentioned Miroslaw Drzewiecki, the sports minister, and appeared to refer to Grzegorz Schetyna, the interior minister and Mr Tusk’s powerful lieutenant.

On Monday, Mr Drzewiecki, also denying any misconduct, handed his resignation in to Mr Tusk, telling reporters: “I stand before you with a raised head and say farewell. With the hope .  .& #8201;.&# 8201;no the certainty, that if these matters are clarified we will be able to meet again.”

Then on Tuesday prosecutors charged Mariusz Kaminski, the head of the CBA and a political foe of Mr Tusk, over the way his agency undertook a sting operation more than two years ago against a leading minister of the previous government. Mr Kaminski said that the timing of the charges was linked to the current lobbying scandal.

“The accusations filed against me have no factual or legal basis,” he said during a press conference.

Although no charges have been made, the lobbying affair is an enormous embarrassment to Mr Tusk, who was informed about the problem in August by Mr Kaminski.

Mr Tusk’s party rose to prominence during the implosion of the ex-communist Democratic Left Alliance, which was inundated in spectacular corruption scandals before losing power in 2005.

In a reaction to those scandals, the right-wing government of the Law and Justice party, led by Jaroslaw Kaczynski, created the CBA as a special agency to hunt down political corruption. The bureau has not been blessed with many successes – one of its sting operations backfired and helped bring down Mr Kaczynski’s government in 2007.

Widespread popular disgust both at left-wing corruption and right-wing witch hunts helped bring the centrist Civic Platform party to power. The danger for Mr Tusk is that the scandal may tarnish his party’s clean image, potentially causing him problems next year, when he is seen as a likely candidate to run against the incumbent president Lech Kaczynski.