According to the Warsaw city council, as many as 100,000 citizens marched through the streets Sept. 14 to demand a higher minimum wage, better working conditions and the annulment of a law that raised the retirement age to 67. The protests were organized by two trade unions — Solidarity and the All-Poland Alliance of Trade Unions — and were markedly anti-government. Some protesters even held banners demanding the resignation of Prime Minister Donald Tusk, who had been re-elected only two years earlier.
A similar protest took place in September 2012, but since then Poland's political and economic environment has worsened. The European crisis has taken a toll on the Polish economy, and now Tusk's government must manage the situation effectively if it wants to remain in power.
Indeed, before the European crisis, Poland boasted one of the fastest growing economies in Europe. Between 2003 and 2007, its economy grew at an average of 5.2 percent annually. Even in the early stages of the crisis, it managed to grow, expanding by 1.9 percent in 2012 — one of the highest rates in the European Union.
However, several factors have stunted its economic growth. The economy of Germany, Poland's main trade partner, has slowed. Warsaw has implemented several spending cuts and tax hikes, and it has already spent most of the EU funds allocated for the 2007-2013 period. The Polish economy is expected to grow this year, but only at a rate of 1 percent, its worst performance since joining the European Union.
Political disenchantment with Tusk's Civic Platform, the main party in Poland's coalition government, has led to growing support for Law and Justice, a nationalist opposition party headed by former Prime Minister Jaroslaw Kaczynski. As Polish economic growth has slowed, Law and Justice has increased its nationalist rhetoric, defending a larger presence of the Polish state and Polish investors in the economy and proposing to cut taxes and raise the minimum wage. Kaczynski has also praised Hungarian Prime Minister Viktor Orban, whose government has intervened more in the economy since 2010.
Kaczynski, who like Tusk believes Poland should not join the eurozone in the short term, led a fragile coalition government that held power for a year and a half in the late 2000s. Tusk has warned voters that a new Law and Justice party-led government would be as politically unstable as the previous one. While his warnings may convince some voters to reconsider their support eventually, the party is likely to remain popular as the Polish economy worsens. Moreover, the Civic Platform has been dealing with internal conflicts, and former Justice Minister Jaroslaw Gowin abandoned the party — likely to form his own party eventually — leaving the ruling coalition with only a one-seat majority in the parliament.
A Troubled Region
Poland joined the European Union in 2004, and in the first few years of its membership it enjoyed a great deal of political stability. During this time, Warsaw substantially liberalized the Polish economy to attract foreign investment and was seen as a success story by other former Communist satellite states in Central and Eastern Europe. But because of the European crisis, a combination of economic deceleration and internal political issues has created instability that threatens the livelihoods of the pro-European elites — as it has elsewhere in the region.
In the Czech Republic, for example, the government of Prime Minister Petr Necas fell in June after several corruption scandals and slowed economic growth. In Bulgaria, the poorest country in the European Union, a fragile coalition was formed after early elections held in May, but protests against the government have been ongoing since the beginning of the year. The Orban government is more stable than most of its regional counterparts, but Hungary has nonetheless been affected by the crisis, and he has applied controversial economic measures, including "crisis taxes" on some business activities, accordingly. (These measures were criticized by the European Union and by foreign investors.) And Romania only recently emerged from the deep political crisis that marked 2012 and led to the fall of two governments in one year.
As the European crisis presses on, it has clearly affected non-eurozone economies that until recently were relatively protected from events in the currency area. These countries have felt relatively excluded from the decision-making in Brussels, which since the beginning of the eurozone crisis has been focusing on the events in the currency area. At the same time, remaining outside the eurozone has enabled these countries to manipulate their currencies to deal with the crisis.
The European crisis is thus putting Poland and its regional neighbors in a foreign policy dilemma. On one hand, they oriented their policies toward the European Union and NATO after the end of the Cold War as a safeguard against Russia. On the other, the economic crisis has undermined Western Europe's political and economic appeal as the European Union diverges on conflicting national agendas. In this context, some countries in the region, such as Hungary and Romania, are open to the possibility of balancing their EU and NATO membership with relatively closer economic ties with Russia. Such a balance between Europe and Russia has been historically more difficult for Poland to maintain and will be even more difficult if nationalist forces, which will resist closer collaboration with Moscow, continue gaining strength. At the same time, Poland will seek to preserve its strategic ties with the United States to secure some degree of military protection.
In the coming years, Poland probably will try to devise a more independent foreign policy. The country is unlikely to join the eurozone in the foreseeable future, and more policies designed to strengthen Warsaw's fiscal situation, such as the recent moves in the pension sector — where Warsaw transferred some $37 billion of sovereign debt held by the private pension sector to the state's social security board — can be expected as the Polish economy slows. Poland is also likely to try to diversify away from Russian energy and rely more on liquefied natural gas and shale gas — a strategy that is not without substantial risks and constraints.
Despite a slowing economy and growing political turmoil, Tusk will not resign in the short term. In the coming months he will reshuffle his Cabinet in a bid to regain popular support, and the ruling coalition will probably soften its push for fiscal consolidation measures. The government will also search for new alliances with smaller parties and independent lawmakers to gain more seats in the parliament. But Tusk's government will be under increasing domestic pressure, both from voters and the nationalist opposition, so he will remain in a politically fragile position.
