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Europe Braces for More Prickly Poland of Maverick President

For the past decade, Poland has been a model European Union member. Its economy has thrived, it has allied itself with Germany and taken a lead in pushing back against Russia. It has even pondered a switch to the euro currency.

But last month’s election of Andrzej Duda as president may signal an end to much of that. Widely seen as a Tea Party-like victory for those left behind, Duda’s election was a slap at the political elite who, in the European way, have struck compromises over climate change and budget deficits.

“It was a protest against the establishment,” is how Piotr Buras, head of the Warsaw office of the European Council on Foreign Relations, put it. “These guys don’t have much experience with Europe,” he added of Duda’s Law and Justice Party. “And they don’t have much interest in Europe.”

He and other analysts noted that whether Duda owes his 51.5 percent majority to a euroskeptic groundswell, or just to the unpopularity of the incumbent, Bronislaw Komorowski, won’t be clear until parliamentary elections due by November. Until then, the debate will center on whether Poland is straying from its pro-European agenda.

“It may be bumpy for a little, while they work out who’s going to win the next election,” said Charles Crawford, a former British ambassador to Poland.

Poland became the European Union’s eastern anchor when it joined in 2004, and the upheaval in Warsaw comes at a sensitive time for the 28-nation bloc. Greece is battling to stay in the euro, Britain is heading for a referendum that could take it out of the EU, and nationalist movements are upending politics across the continent.

Tusk Legacy

For close to a decade, Poland’s agenda was set by Donald Tusk, a two-term prime minister who steered the economy clear of the global financial crisis and reconciled Poland to the give-and-take that defines the EU. Poland’s status was burnished by close contact with German Chancellor Angela Merkel, Europe’s dominant figure.

Tusk was selected as the EU’s second full-time president, making him the most powerful eastern European in EU history. After that vote last August, the bloc’s first president, Herman Van Rompuy of Belgium, said Tusk took Poland “to the very heart of Europe, where today, 10 years after joining the union, Poland proudly stands.”

Now the forces Tusk appeared to banish are back. In an interview during the campaign, Duda mocked Tusk’s mantra that Poland is “swimming in the mainstream.” Echoing Europe’s new breed of populists, Duda vowed to put Polish interests first.

‘Own Path’

“We no longer count on the world stage,” Duda said on May 6. “We need to create our own path in European and global politics.”

Duda, 43, got his political education as an aide to late President Lech Kaczynski, who liked to defy the EU. Kaczynski vetoed EU-Russia trade talks in 2006, shunning the EU consensus at the time, only to relent later; similar moves held up a new EU governing treaty, which Kaczynski became the second-to-last leader to sign, in 2009.

Kaczynski died in a plane crash in 2010, leaving his twin brother Jaroslaw to carry on the legacy. Jaroslaw was prime minister in 2006 and 2007 and has become Duda’s political stepfather. Now 66, Kaczynski will head Law and Justice’s campaign.

Poland’s constitution limits the president’s domestic powers, requiring Law and Justice to win control of parliament to enact Duda’s economic program. The new president will shut down the flickering debate over joining the euro, the biggest leap Poland could make into a united Europe.

Zloty, Bonds

Concern that the next government will spend too much and make up the difference by heaping taxes on banks have weighed on Polish markets since Duda’s election. The zloty fell last week 0.4 percent to 4.1539 per euro, 10-year bond yields rose to 2.94 percent from 2.81 percent, and the benchmark WIG20 stock index dropped 2.9 percent to 2444.85.

The currency was weakened 0.2 percent to 4.1334 per euro at 3:17 p.m. in Warsaw after the central bank left its benchmark interest rate at a record-low 1.5 percent for a third month. The stock index fell 0.4 percent to 2,400.33.

While Poland was the only EU country to avoid recession during the financial crisis, its main stock index, the WIG20, handed investors a 3.6 percent loss, including dividends, since November 2007, when Civic Platform took power. The country’s zloty bonds have returned 63 percent in that period, the eighth-best performance among 20 sovereigns tracked by Bloomberg and the European Federation of Financial Analyst Societies.

In Charge?

Duda’s first weeks in office after the Aug. 6 inauguration will be marked by an uneasy cohabitation with Prime Minister Ewa Kopacz of the Civic Platform party, who took over when Tusk moved to Brussels. A feud is shaping up over who will represent Poland at EU summits.

Duda accused the current government of getting too cozy with Germany. By embracing Berlin, Poland gained a voice in shaping Europe’s response to Russia’s annexation of Crimea and backing for the rebellion in eastern Ukraine.

“There is a lot of skepticism in Law and Justice over Germany and Europe, but the president-elect is from the party’s centrist wing, he’s not suffering from Germanophobia,” said Marcin Zaborowski, head of the Polish Institute of International Affairs in Warsaw. “The question is whether the party will try to make the show of it after the election.”

Duda balks at any EU climate-change initiatives that would lessen Poland’s reliance on coal, which generates 90 percent of its electricity and sustains 100,000 jobs.

U.K. Clash

A Polish collision with Britain looms as Prime Minister David Cameron lobbies for exemptions from EU policies deemed harmful to the U.K. While Duda is sympathetic to British calls for a reduction in EU powers, he will, if anything, amplify Poland’s opposition to limits on immigration within the EU, Britain’s top priority.

A foretaste of that conflict came on May 29, when the freshly re-elected Cameron stopped in Warsaw to make his case for EU reform. Not yet in office, Duda let the current government do the talking, on behalf of the 726,000 Poles who have taken advantage of EU-wide labor rights to live in the U.K.

A “definite no” is Poland’s answer to British plans to curb benefits for foreign workers, Janusz Lewandowski, a government economic adviser, told TOK FM radio.

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