Poland – COVID-19 Creates Election Controversy
The conservative-nationalist PiS won a second term in office at parliamentary elections held in October 2019, but the government headed by Prime Minister Mateusz Morawiecki depends on the support of two conservative parties—Agreement and United Poland—for its majority in the 460-member Sejm and requires the additional backing of independent senators to ensure a bare majority in the 100-seat upper house. The handicap created by the PiS’ loss of its outright majority has become evident in recent weeks, as Agreement has taken steps to block the government’s attempt to proceed with a presidential election scheduled for May 10, despite the health risks related to COVID-19 pandemic.
Although the powers of the presidency are limited, recent history provides ample evidence that a president can hamstring a government if he or she is inclined to do so. Polling data indicates that Duda will win easily if the election is held in May, but PiS leaders are understandably concerned that the heavy economic damage from the pandemic that is already becoming evident will dim the incumbent’s prospects if the vote is delayed for any significant amount of time.
Agreement leader Jaroslow Gowin resigned as deputy prime minister in early April to protest parliamentary passage of a vote-by-mail measure. Although Gowin has stated that Agreement will continue to support Morawiecki’s government, his departure from the Cabinet is a clear warning to Jaroslaw Kaczynski, the leader of the PiS and the de facto head of government. As an alternative, the Agreement leader has proposed a constitutional amendment that would extend Duda’s current term for a period of two years. However, the success of such a plan hinges on buy-in from the main opposition PO, whose price for its support will likely far exceed what Kaczynski is willing to pay.
Despite its troubles at home, the government is showing no sign of retreat in its ongoing battle with the EU. Indeed, the Warsaw government has already exploited fears of a surge in euroskeptic sentiment generated by the severe negative economic fallout from the pandemic to obtain a larger share of emergency funding than countries that have been hammered by COVID-19, such as Italy and Spain. Poland has also suggested that the EU finance a proposed $540 billion fund for combating the imminent bloc-wide recession by introducing a digital tax on foreign companies such as Google and Amazon, a proposal that seems intended to aggravate tensions between the EU and the US.
The economic damage from the health crisis was already evident in March, with industrial production shrinking by 2.3% compared to March 2019, and retail sales registering a year-on-year contraction of 7.1%, following growth of 9.8% in February. Although Poland posted positive real growth for the January–March quarter, the economy is poised to register a large contraction in the April-June period. The outlook for the second half of the year is clouded by the uncertainty regarding how quickly the social restrictions that have brought domestic economic activity to a halt and disrupted global supply chains can be safely lifted.
Since 1979, The PRS Group Inc., has been a global leader in quant-based political and country risk ratings and forecasts. This commentary represents a sneak peek from our upcoming political risk reports. For more information please contact us at (315) 431-0511 and email@example.com, or explore a subscription to PRS Online and/or ICRG Online today to receive political risk updates.Back to Insights