European issues high on the political agenda

by Aleks Szczerbiak

Although February was a busy month on the Polish political scene – that included a small government re-shuffle, continuing divisions within the ruling party over same-sex civil partnerships, and turmoil on the Polish left culminating in the launch of ‘Europa plus’, a new formation spearheaded by former President Aleksander Kwaśniewski to contest the 2014 European Parliament elections – the main developments involved debates regarding the country’s relations with the EU.

Government claims credit for EU budget success

At the beginning of the month, negotiations on the 2014-20 EU budget were concluded and Poland once again emerged as the largest recipient of EU funds. In spite of the fact that the new budget saw the first ever overall spending reduction in the EU’s history, Poland managed to secure an overall increase in funding for the next seven years to nearly 106 million euros, compared to the 102 billion that it received in the 2007-13 budget. Perhaps most significantly, the amount of money that the country would receive from so-called ‘cohesion funds’, which are distributed among the EU’s poorer members for infrastructure and other projects, increased from 69 million to just under 73 billion euros. At current exchange rates, this translated into 303 billion złoties, which was of huge symbolic importance because it fulfilled the 300 million złoties target that the centrist Civic Platform (PO), the main governing party, had pledged to secure for Poland in the 2011 parliamentary election campaign. This was probably the party’s most high profile and specific election promise.

The Civic Platform-led government argued that this outcome was a triumph for the Polish negotiators, particularly at a time of economic crisis which inevitably limited the willingness of wealthier states to finance EU projects. Prime minister and Civic Platform leader Donald Tusk called it ‘one of the happiest days of my life’ and the positive media coverage of the EU summit provided welcome respite for a government that had been under considerable pressure following sharp divisions within the ruling party over moral-cultural issues, notably the divisive question of same-sex civil partnerships. A series of opinion polls showed a narrowing of Civic Platform’s opinion poll leader over the right-wing Law and Justice (PiS) party, the main parliamentary opposition grouping, to less than 5%.

For its part, Law and Justice argued that, as a large poor country with a sizeable agricultural sector, Poland only got what was its due according the EU’s resource allocation model. It claimed that the country received less per head of the population than a number of neighbouring post-communist states and that the government could have secured a better deal if had negotiated more effectively. It also accused the Tusk administration of sacrificing rural communities so that it could fulfill Civic Platform’s election pledge on cohesion funding pointing out that, while the level of direct subsidies to Polish farmers was set to increase, the funds allocated for development in rural areas was cut from 13.5 billion to just under 10 billion euros. The government argued that this could be offset by directing some of the extra cohesion fund money to rural projects.

Europe as a ‘valence’ issue

In the past, the two main parties have treated Poland-EU relations as a so-called ‘valence’ issue, one where parties compete over which of them is the most competent to pursue a shared objective; in this case, representing and advancing Polish national interests within the EU. This could be also seen in the debate on the EU budget, with both parties claiming that the outcome vindicated their different strategies and approaches. Civic Platform argued that its apparent success was a vindication of the government’s broader strategy of adopting a positive and constructive approach with Warsaw’s main EU allies and locating Poland within the so-called ‘European mainstream’ as a reliable and stable member state.

Law and Justice, on the other hand, argued that Mr Tusk’s government could have extracted more concessions if it had adopted a tougher negotiating stance. Party leader Jarosław Kaczyński said that Mr Tusk should have taken advantage of the fact that EU budgets require unanimity and threatened a Polish veto. The government’s negotiating strategy, the party argued, exemplified its lack of robustness in being willing to stand up to the major EU states, particularly Germany, in defence of Polish national interests.

Parliament approves European fiscal treaty

Later in the month, the Sejm, the more powerful lower house of the Polish parliament, passed a bill allowing Polish President Bronisław Komorowski to ratify the European fiscal treaty aimed at strengthening budget discipline through European-level oversight of euro zone members’ national finances. With the smaller left-wing opposition parties, the anti-clerical liberal Palikot Movement (RP) and communist successor Democratic Left Alliance (SLD), joining the government in supporting ratification – and only Mr Kaczyński’s party and Solidaristic Poland (SP), a small Law and Justice breakaway grouping, voting against – the treaty was approved by 282 votes to 155.

The government argued that adopting the fiscal treaty would strengthen Poland’s position within the EU by allowing it to participate in summits which would decide on the future of the euro zone at a time when the Union’s decision making processes were being re-configured and the single currency area was becoming the core of the European integration project. It also pointed out that, even if Poland adopted the fiscal treaty, this did not place any additional obligations upon it and would only be bound by its provisions when it adopted the euro or if it agreed to observe them voluntarily. The main objective of the Civic Platform-led government’s European policy in recent months has been to prevent the EU from breaking up into the euro zone and ‘other’ second tier members and it has used this argument to justify its participation in initiatives aimed at salvaging the single currency like the fiscal treaty.

The Law and Justice opposition argued that signing up to a fiscal treaty which gave Brussels more control over national budgets threatened the country’s sovereignty without providing it with any compensatory gains. The party also claimed that both the content of the treaty and method by which it was being ratified were unconstitutional: as it placed the setting of the Polish budget under the control and supervision of supra-national institutions and other states; and because, under article 90 of the Polish constitution, any treaty that transferred national sovereignty to an international organisation required a two-thirds parliamentary majority. The government responded that no sovereignty would be lost because the treaty was not part of the EU’s laws and that other parts of the Polish constitution requiring balanced budgets and limiting the national debt already bound the country to the treaty’s key provisions. However, this did not stop Law and Justice promising to refer the ratification bill to the constitutional tribunal.

Euro adoption back on the agenda

Mr Tusk combined the fiscal treaty ratification debate, which was originally meant to have taken place in January, with his announcement in parliament of the EU budget negotiation outcome, in the hope that the latter would generate a more positive atmosphere in relation to Poland’s relations with the EU. Moreover, the fiscal treaty discussion inevitably turned into a more general debate about Poland’s approach towards European integration, and specifically on whether or not Poland should join the euro zone; although formally the fiscal treaty had nothing to do with any future decisions on this issue.

In spite of the turbulence in the single currency zone, the Tusk government has remained committed to Poland joining adopting the euro as a strategic goal as part of its commitment to be seen to be at the centre of the EU’s decision-making core. However, Mr Tusk appeared to back off somewhat from the issue last month, warning that, while Poland would work to fulfill the criteria needed to enter the euro zone as quickly as possible, the country would not be joining the euro zone any time in the immediate future. Arguing that Poland could be ready to start preparations for euro adoption in 2015 or 2016, thus implying an accession date of no sooner than 2017 or 2018, he also stressed that the government did not have a target date.

Law and Justice responded by repeating its call for a referendum to determine whether or not Poland should join the single currency area. Supporters of Polish euro adoption argue that the country’s Yes vote in the 2003 EU accession referendum also committed the country to join the single currency so no further plebiscites are necessary. Although, as noted above, up until now European integration has been primarily a valence issue, since the start of the euro crisis Law and Justice has been questioning not just the effectiveness of Civic Platform’s strategy for achieving shared goals, but also the latter’s more fundamental support for deeper European integration. In particular, Mr Kaczyński’s party appears to have hardened its anti-euro stance, arguing that it could not see any point in the foreseeable future when it would be advantageous for Poland to adopt the single currency.

However, Law and Justice has always had, in rhetorical terms at least, a broad commitment to an anti-federalist, sometimes verging on Eurosceptic, approach to European integration. In practice, though, this ideological inter-governmentalism has often given way to a more integrationist approach. This was particularly true when Law and Justice was in government in 2005-7 and, for example, it signed Poland up to the Lisbon treaty. Indeed, the party has never formally opposed Polish adoption of the euro, simply arguing that it should be delayed until this could be achieved without damaging the Polish economy and preceded by a referendum.

The Law and Justice position on this issue matters because Poland cannot join the euro zone without a change to its constitution which designates the National Bank of Poland as the only body that can set monetary policy and emit currency in Poland; and a two-thirds parliamentary majority is required to pass an amendment that would give that role to the European Central Bank. Even with the support of the smaller left-wing opposition parties, which support deeper European integration and rapid Polish euro zone accession, Mr Tusk’s administration lacks such a ‘constitutional’ majority.

Politicising euro adoption is a risky strategy

The first opportunity to elect a parliament that could amend the Polish constitution to facilitate euro adoption will not come until the next election, scheduled for autumn 2015. Some commentators argued that Civic Platform was considering making Poland-EU relations in general, and adoption of the euro in particular, major issues in the next parliamentary election. However, this is a risky strategy and party leaders now appear to moving away from this idea. While the vast majority of Poles continue to support EU membership, the euro zone crisis has led to a slump in public support for adoption of the single currency; with recent polls showing that around two thirds of the public are opposed and only a quarter in favour.

Moreover, experience suggests that Polish elections are always dominated by domestic rather than European or other international issues; except when the latter are framed as valence issues. Mr Tusk’s caution on setting a target date for euro adoption, and his decision to combine the fiscal treaty ratification debate with his report from the EU budget negotiations, suggest that he is fully aware of the current unpopularity of joining the euro zone among the Polish public and the risks involved in making this issue a dimension of party competition.