Poland: Resignations and Reshuffles

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Poland: Resignations and Reshuffles

Poland’s political scene was rocked by last
week’s resignation of the country’s finance minister and a surprise
cabinet reshuffle three days later.

The Polish government was shaken last week by
the sudden resignation of Finance Minister Marek Belka and a
surprise cabinet reshuffle involving two other ministers. The
abrupt departure of Belka, who said he was leaving because he felt
“burnt out,” sent jitters through the markets, as the zloty slumped
against the dollar and the euro, and stock and bond prices

Three days after Belka’s resignation on 2 July,
Prime Minister Leszek Miller called a press conference to announce
that he was appointing former Finance Minister Grzegorz Kolodko to
replace Belka, and added that he was replacing two other ministers
in the cabinet.

He said Culture Minister Andrzej Celinski had
resigned and would be replaced by Waldemar Dabrowski. The prime
minister also said he had asked Justice Minister Barbara Piwnik to
resign, and said he would replace her with Grzegorz Kurczuk. Miller
gave few details on the reasons behind the changes, but they come
at a time when the government is grappling with a slowing economy
and sagging popularity. The current governing coalition, led by
Miller’s Democratic Left Alliance (SLD), came to power after last
September’s elections.

Asked whether he viewed the changes as a setback
for his government, Miller said: “I can only consider this question
to be a joke.” He declined to say why he had fired Piwnik, saying
only that there was a “need” for the change. Piwnik declined to
comment until she returned from a holiday on 8 July. Miller added
that Celinski had quit because he wanted to “concentrate on other

While Belka, who had also served as deputy prime
minister, insisted he was quitting after just eight months in his
post due to exhaustion, his resignation came just as the government
was about to table the 2003 state budget with a larger deficit than
he had recommended. Belka had been pushing for a deficit of no more
than 40 billion zlotys ($9.6 billion), or 5.2 percent of GDP, but
he had come under pressure from other members of the cabinet who
wanted a wider gap. A few days before his resignation, the cabinet
had approved a larger budget gap of 43 billion zlotys.

While Belka denied on 2 July that the lost
battle over the budget was behind his decision to quit, he had said
in an interview with the daily Rzeczpospolita before his
resignation that he would leave when he felt he would no longer be
able to implement his economic policies.

Speculation also surfaced in the Polish press
that Belka’s resignation may have been related to an alleged
attempt to screen his past to see if he had collaborated with the
former communist secret police. Belka’s spokesman described those
allegations as “absurd.”

Analysts cited by the Financial Times said the
departure of Belka, who was viewed as the most market-friendly
minister in Miller’s cabinet, was a blow to the government. While
there was no overwhelmingly negative reaction to Kolodko’s
appointment, observers cited by the paper said the markets would be
wary of the new minister. Kolodko, who served as finance minister
and deputy prime minister from 1994 to 1997, had advocated greater
fiscal spending in his previous term in office.

Kolodko has said in the past that he would
recommend a 15 percent devaluation of the zloty and that he would
peg the Polish currency to the euro. He has also said that he
thinks Poland can achieve 7 percent GDP growth in 2004 and 2005. At
the moment the economy is growing at a snail’s pace of just 1
percent annually. Belka had set his sights on achieving 5 percent
growth by 2004.

Kolodko has also weathered various controversies
in the past. He was involved in the so-called Eko-Sekoci n housing
estate scandal involving the construction of luxurious houses for
various state officials using public funds.

He is also thought to be a fierce opponent of
Leszek Balcerowicz, Poland’s central bank governor. Miller’s
government has been feuding with the central bank over economic
policies for some time, and some observers expect the conflict to
worsen under Kolodko.

Politicians in the governing coalition, which
includes the SLD and the Polish Peasant’s Party, have been
enthusiastic in their support for the appointment of Kolodko. They
attribute the spectacular economic growth Poland experienced in the
mid-1990s to Koldoko’s earlier term in office.

But the opposition was markedly less
enthusiastic. “Kolodko is a colorful and controversial figure. We
cannot forget Eko-Sekocin, though, because honesty is very
important in politics. As for his economic views, he’s too social
democratic for us–too willing to increase the budget deficit,”
Maciej Plazynski of the opposition Civic Platform was quoted as
saying in Gazeta Wyborcza on 5 July.

The Polish Press Agency (PAP) speculated that
the unexpected cabinet reshuffle had resulted from a “deal” between
Miller and President Aleksander Kwasniewski. Belka had previously
worked as an adviser to Kwasniewski, and the president was
reportedly unhappy that he would be replaced with Kolodko and
demanded changes in other ministries as well. “It was a compromise.
The president wasn’t a fan of Kolodko and he indicated ministries
that required improvement,” an official who refused to give his
name was quoted as saying by PAP.

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