Final results from Poland’s presidential run-off on Monday confirmed the victory of conservative leader Lech Kaczynski over pro-business rival Donald Tusk.
The state electoral commission said Kaczynski captured 54.04 percent of the vote. Turnout stood at 51 percent.
Kaczynski's victory tightens the grip on power by his Law and Justice party, which won general elections four weeks ago promising to shore up the welfare state and weed out corruption. Immediately, the conservatives headed by Kaczynski set a Saturday target for forging a government with their pro-business Civic Platform allies.
Kaczynski combines traditional, Catholic values with skepticisms about free-market economics.
The zloty dipped on Monday, reflecting market concern that Kaczynski's victory tips the balance in favor of a party skeptical about deep fiscal and market reforms. "The chief risk is what compromise will the two parties come to, in particular on fiscal tightening and euro entry," said Marcin Mroz, chief economist with SG Bank in Warsaw.
Kaczynski's Law and Justice party has questioned merits of euro zone membership by the end of this decade and have made numerous costly campaign promises to farmers and heavy industry workers.
Their double election victory is a sweet reward for Kaczynski and his twin brother Jaroslaw, the party's chairman, after years of never quite making it to the top in politics.
They face a formidable task trying to convince Poland’s growing middle class, which overwhelmingly backed Tusk as well as Poland’s EU partners irked by the brothers' mild nationalism and anti-gay remarks.
The zloty initially dropped by 1 percent against the euro but recovered to just a tad down from Friday levels, as investors were encouraged by signs the two parties could reach a deal.
Talks between the two parties, heirs to the pro-democracy Solidarity movement that toppled communism in 1989, have run aground during the presidential campaign but resume in earnest on Monday.
The conservative prime minister-designate Kazimierz Marcinkiewicz said he hoped to conclude the talks by Wednesday and to form the cabinet on Saturday.
Civic Platform said on Monday it wanted assurances of tax cuts and that "the public-sector deficit will consistently fall over four years" as the price for joining the conservatives.
Giving Ground?
Law and Justice lacks majority in parliament, and it promptly signaled that it was ready to give ground on economic policy to woo Civic Platform into a deal.
Signaling a U-turn from the party's campaign rhetoric that portrayed the Platform as dangerous free-market zealots, Law and Justice officials were at pains to prove on Monday the two parties were not that far apart on the economy.
"In economic policy we want to be rational and we want as much free-market as possible," Kaczynski's chief aide Michal Kaminski said. "We favor free-market and lower taxes."
Sources said Law and Justice offered a senior Civic Platform's leader Jan Rokita the post of deputy prime minister and the foreign affairs portfolio, a key post in shaping Poland’s relations with its European Union partners. Rokita heads his pro-business party's negotiating team and supports deeper European integration.
He said the party would not give up on their campaign pledge to lower taxes and cut red tape to spur growth and reduce Poland’s 18 percent unemployment, the EU's highest.
The debate between the two parties chimes with a wider EU discussion about reforming the European social model.
EU leaders meet in Britain this week to seek a compromise between those pushing the bloc towards more liberal economic policies, led by Britain, and those favoring the welfare state.
Most analysts say Kaczynski's victory is set to put Poland in the latter camp together with France; but Law and Justice's Kaminski said his party was actually closer to British Prime Minister Tony Blair's "Third Way" vision.
