Saturday, 26 February 2011

Austerity Through Local Government

I noted in a previous post how the health service in Poland is being further financially squeezed due to new laws that seek to reduce local governments' budget deficit and debt. This has led to local governments cutting the amount of funds that they invest in their local health systems' property and infrastructure.

From 1st January 2011 all local governments must balance their income and current expenditures. In this way the PO central government is attempting to pass the responsibility of cutting its budget deficit and debt onto local governments. Despite the fact that the local government debt has more than doubled over the past 5 years (to ZŁ55bn) its deficit makes up about 1% out of the overall 8% of GDP.

The effects of these new restrictions on local government is endangering other public services and the country's positive economic growth. Local governments have been at the forefront of gaining access to EU funds, leading investment projects in the country's infrastructure and carrying through the preparations for the EURO 2012 football championships. These investments have been crucial for maintaining Poland's economic growth over the past few years and their winding back would seriously hamper the country's development.

Education - alongside health care - is one of the public services that will be most affected by these new regulations. Many local schools are now threatened with closure - in particular primary schools in small towns and villages. The Ministry of Education has informed that local governments are presently planning to close 335 schools. These are particularly concentrated in the poorer rural areas of the country - such as in Podkarpacka or the Bieszczady. One such case in the Bieszczady concerns a school in the town of Łodyna. This was built in the 1990s largely thanks to money raised by local residents. The local head of the Bieszczady Association for Cultural Space states that 'this is one place where the community can integrate outside of Church. It is the one place where residents can meet each other - not just the children'.

Austerity is coming through the backdoor, with the PO government hoping to remain politically unscathed as it seeks to return to office. Yet, by pushing through cuts in this way it is cynically ensuring that they will most negatively affect the poorer rural regions of the country. Residents in such places tend to rely on public services which are often the least profitable and which are funded by local governments that have the least funds.

Friday, 25 February 2011

Europe's East-West Divide

Eurostat has recently published statistics that show the richest and poorest regions inside the European Union (thanks to Greig Aitken for pointing this out.) These are based upon the GDP per inhabitant, expressed in terms of purchasing power standards, taken from the end of 2008. They show clearly how the major developmental divide inside the EU continues is between the Western and Eastern regions.

The richest regions of the EU tend to be situated in the centers of Western capital cities – with London leading the way. Of the 40 regions exceeding the 125% level only 2 were found in Central-Eastern European countries – in the Czech Republic and Slovakia. Prague is the only region in the whole of CEE that is situated in the 20 richest regions.

In contrast, all of the poorest regions inside the EU are located in CEE states. 11 of the most impoverished 20 regions are from Bulgaria or Romania. The remaining 9 are divided between Poland (5) and Hungary (4). The poorest region (Severozapaden in Bulgaria) has a GDP per inhabitant level that is just 28% of the European average.

As these statistics are from the end of 2008 and therefore they do not show the extent to which this situation has been worsened by the economic crisis.

Negotiations are set to start around the next EU budget – which comes into force from 2014. There is a need to increase the level of cohesion funds to the poorest regions of the EU in order to close the huge gap in living-standards inside the Union. With Romania and Bulgaria having joined the EU in 2007, they have yet to receive any significant funds. However, with many of the richer states looking to reduce their contributions then the poorer regions situated in CEE could find that the developmental gap between themselves and the rich regions in the West will grow.

Wednesday, 23 February 2011

Health Reforms - Morally Wrong and Constitutionally Inconsistent

It's there in black and white and noone can dispute it. In Article 68 of the Polish constitution it is written that "equal access to health care services, financed from public funds, shall be ensured by public authorities to citizens, irrespective of their material situation."

The PO government is embarking on a series of health care reforms that directly conflict with the Polish constitution. These will open the way for the privatisation of hospitals and unequal access to health care. The PO government is continuing to run down the Polish health service and is putting forward a series of measures that will further starve it of funds .

Everyone who uses the Polish health care system will understand the state that it is in. Access is often difficult, hospitals run down and people regularly have to pay for private consultations and treatment. Research has found that 44% of society make additional payments out of their own pockets for their health care (only 7% rely entirely on private health care and 36% solely on public health care.) Yet despite these difficulties the inheritance of a comprehensive health system from Communism - with all its deficiencies - is a great social and human asset. It provides care and treatment for millions of people and without it the standard of living in Poland would be drastically reduced.

In comparison to other industrialised countries the Polish health care system fares badly. A recent report carried out by Health Consumer Powerhouse shows that Poland's health service occupied 7th from bottom place out of 26 countries under study. This is reflected in the very low level of financing for the public health system. Out of all the OECD countries Poland remains virtually at the bottom with regards public funding for health. Public spending on health equals only 7% of GDP in Poland, while the OECD average is 9%. This is not only far below the most advanced industrial countries in the world but also far behind neighbouring states such as Hungary and the Czech Republic. There are only 2.2 doctors per 1000 persons in Poland (OECD average 3.2) and 5.2 nurses (OECD average 9.0). The low pay and poor conditions for health workers in Poland acts as a disincentive for people to work for the public health system and has also enticed many health workers abroad .

The low level of public funding for health is set to get worse. Since 1999 local governments have spent a total of ZŁ15bn on investments in health care institutions - around two times the amount spent by central government. This allowed for many local hospitals and surgeries to be improved and buy new equipment. Increasingly central government has delegated fewer funds for investment into the health system's infrastructure. However, the slowdown in economic growth and decreasing tax revenues (due to lower rates of income tax and corporation tax) have meant that local governments have had less available money to fund these investments. Local government debt has accordingly risen - growing from around ZŁ21bn in 2005 to 55bn in 2010. The reality for local governments has been that it has received less funds from central government while more demands have been placed upon it. Also, much of the public investment projects - partly funded by the EU - have come through local governments. It is such investments that have in fact kept the Polish economy afloat in recent years.

The PO government is now seeking to limit the levels of local government debt, which will lead to a drastic slowdown in investments including in the health system. For example in the city of Łódż the local government invested ZŁ13.4bn in 2009 and ZŁ10bn in 2010 on buildings and property connected to the health service. In 2011 this will be further reduced to just ZŁ6bn, while the local government estimates that there is a need to invest around ZŁ162bn in health service institutions. The majority of these investments are needed to bring its institutions into line with the safety recommendations made by inspectors from the Health Department.

As the public health service is being run-down and underfunded the government is planning new legislation whose logic is towards privatisation. Now we should be careful here – after all Komorowski took Kaczyński to court, during the Presidential elections, when he dared suggest that PO wanted to privatise the health service. However, it is better to call things what they actually are:
- The government plans to transform indebted public hospitals into commercial companies. In exchange the government will pay part of these hospitals’ debts, after which the hospitals will have to remain profitable and therefore focused upon the pursuit of profits rather than serving patients. If these hospitals fail then they can go bankrupt. They also will be able to decide from which contractors they will buy services - which will further increase the influence of private companies in the health service and undermine the public health system.

- PO also wants to strengthen the role of commercial health insurance. It plans to allow private health insurance companies to compete with the public health service for the mandatory health contributions made by individuals.

- Finally the government is proposing to introduce an extra insurance payment that would allow those paying into it to have quicker access to doctors and operations.

The first proposal of PO to privati.. (sorry) commericalise hospitals was vetoed by Lech Kaczyński when he was President. Whatever the reasons for him doing so it can be stated that this was absolutely the correct decision and was in line with the Polish constitution. Now that PO have their own man as President they should not face such obstacles. However, perhaps the constitutional court should look at the proposals of the government. Firstly, by allowing people to transfer their payments away from the public health care system and into private insurance undermines the principle of a comprehensive universal health service into which all are obliged to contribute. Secondly, setting up an additional payment that allows privileged access to health services seems to contradict entirely the constitutionally defined right to have equal access to health care. People are of course free to buy their own private health insurance if they wish - but they should not be entitled to buy themselves privilleged access to public services nor transfer their obligatory payments away from the public health service.

Some actions have been taken against the government's health plans. However, these have tended to be isolated campaigns with no common focus. A broad national campaign to defend and build the public health system would be politically important, morally correct and constitutionally consistent.

Saturday, 19 February 2011

Protests against Polish-Israeli meeting in Jerusalem

The Palestinian Solidarity organisation in Poland has initiated an international campaign against a high level governmental meeting between Poland and Israel to be held in Jerusalem. The meeting is planned to upgrade the countries' defence and economic relations, with the respective Prime Ministers, Foreign Ministers, Ministers of Culture and the Economy taking part.

It is common practice for such meetings to take place in Tel Aviv. By meeting with Israel in Jerusalem the Polish government is giving its de-facto support to the Israeli violations of international law and human rights.

Below I publish in full a letter written by an Israeli peace activist to the Polish President, government and parliament protesting against the planned meeting. The letter expresses an understanding of the specific historical sensitivities facing the Polish government in its relations with Israel. However, it also refers to how Poland's experience of having being occupied and having fought for freedom and independence should mean that it supports those in similar situations today.

To President Komorowski, Prime Minister Tusk, members of the Polish government and members of Parliament:

As an veteran Israeli peace and human rights organization dedicated to achieving a just peace between Israelis and Palestinians, the Israeli Committee Against House Demolitions (ICAHD) wishes to raise its concern over your planned meeting with Israeli government officials in Jerusalem.

Poland, for understandable historical reasons, has been prominent among the EU members in its uncritical support for Israeli policies towards the Palestinians, which only serve to perpetuate the 44-year Occupation and place the lives and well-being of both Israelis and Palestinians in jeopardy. Your past, we believe, makes it incumbent upon you to promote the security of Jews in Israel and not confuse this with support for policies that security. As you well know from Polish history, wars, violence, occupation and oppression never lead to peace and security, and yet these are precisely the policies your visit appears to be supporting.

Your history, we also believe, also teaches that only respect for the human rights of all people will prevent more occurrences of the violence and suffering you have endured over the centuries. The Polish people’s struggle for self-determination and freedom inspires us all; it requires you, however, to stand by the side of the Palestinian people in their struggle for the same rights, even if that means opposing Israeli policies. In fact, we suggest that you explain to the Israeli government that your government stands solidly against the occupation and all policies that perpetuate it (such as the demolition of Palestinian homes, 25,000 so far) because of the lessons learned from your own history, because of your commitment to human rights as the only way to build a better world and because of your deeply-felt obligations to both the Israeli and Palestinian peoples.

Poland occupies a special place in the world due to both its suffering and its resistance to oppression. It is that moral voice we desperately need to have heard in the corridors of the Israeli government
In Peace,

Jeff Halper
Director, ICAHD

Wednesday, 16 February 2011

Bauman on Egypt

The Polish sociologist – Zygmunt Bauman – has written an interesting text on the recent events in Egypt.

While much of the commentary in Poland has depicted the uprising in simplistic terms as a struggle for democracy – whilst worrying of a possible ‘Islamist’ takeover – Bauman provides a more nuanced approach.

What sets Bauman apart from the mainstream analysis in Poland is that he recognises how this unfolding revolution in Egypt has largely been fought against the wishes of the West. Despite their claims to support human rights and democracy in Egypt, the leaders of the major Western countries had long supported the Mubarak dictatorship. The West is now attempting to work out how it can control the movement in Egypt and best benefit from these events.

Bauman points out how the USA and Europe have a terrible record when it comes to ‘promoting democracy’ outside of their own borders. From training future Taliban fighters in Afghanistan, to backing dictators in the Middle East and Latin America, the North has a long list of impeding freedom and human rights around the globe.

Zygmunt Bauman has seen many upheavals and transformations in his life. Brought up in pre-war Poland he observed the large poverty and social and ethnic divisions that blighted a young country trying to emerge from centuries of division. He then lived through the Nazi occupation of the country and became a devotee of Communism through the experience of both defeating Fascism and rebuilding his devastated country. However, Bauman became disillusioned with the course of this new Poland and became a vocal left critic of the regime. He was expelled from the country during the Anti-Semitic purges in Poland in 1968. After initially moving to Israel – being forced to give up his Polish citizenship – Bauman moved to the UK, as he did not feel comfortable there due to his anti-Zionism. Bauman has since moved away from Marxism and long renounced his Communist past. However, he has retained an ability to radically criticise the status-quo and is still one of the most innovative and creative social scientists – even in his 90s – in the contemporary world.

Monday, 14 February 2011

Poland's Nick Clegg?

During last year’s UK parliamentary elections a favoured slogan became ‘I agree with Nick’. This arose during the televised debates between the leaders of the three major political parties in Britain, when both the Tory and Labour leaders were keen to win the favour of the Liberal-Democrat Nick Clegg. Clegg promised to bring a freshness to British politics and won favour from the electorate by positioning his party as the only alternative to the two parties that had dominated British politics for the past few decades. In particular, Clegg stressed how the Liberal-Democrats had been less stained by the corruption scandals that had inflicted British parliamentary politics and at how his party was opposed to many of the budget cuts being proposed by the Tories and Labour.

This was Nick’s five minutes. With no party able to win an outright majority, British politics entered the uncertain waters of coalition forming – with the Liberals becoming the king-maker. Courted by both parties, Clegg (who had always been on the right of party) chose to form a coalition government with the Conservatives. He then proceeded to drop many of his previous policy commitments and sign up to the Tories’ policies of austerity. Most notably, the Liberal’s reneged on their decision to oppose tuition fees for university students, supporting the decision to allow student fees to rise to up to £9,000 a year. During the election campaign Clegg had made a great play of representing the young and supporting students – which led to the Liberal’s winning a large share of the student vote. The decision to raise student fees led to a wave of student protest, with much of the anger directed at Clegg and his party. Accordingly the party has slumped in the opinion polls with Clegg turning from hero to zero in the space of a few months.

The current position of the Democratic Left Alliance (SLD) and its leader Grzegorz Napieralski is reminiscent of that of the Liberals prior to last year’s elections. At least part of the electorate is growing tired of the two party rule of PO and PiS and looking for an alternative to their domination. Napieralski emits the same youthful exuberance that can appeal to those looking for change and paradoxically the same polished blandness that avoids controversy. Whilst this won’t take the SLD into power alone – it could well be enough to take sufficient votes away from the two major parties so they must seek a partner(s) for coalition.

Yet there are also many differences between the situations in Poland and the UK. Although the electorate may be tiring of the current right-wing dichotomy – it has only been dominant for the past six years or so. It is worth remembering that it was just a decade ago that the SLD won over 40% of the vote in a general election. The party is still tainted by this time in government and although the faces may be new and fresh it is difficult for the SLD to credibly portray itself as the new and clean brand of political choice. Furthermore, while the Liberal Democrats benefited by going on the political offensive against the Labour government, and on many issues ostensibly positioned itself to the left of Labour, Napieralski and the SLD are reluctant to do the same.

For sure the SLD does have some policies in its programme that are distinct from PO. These include supporting introducing a tax on banks, rising taxes for luxury consumer items, opposing the privatisation of the health service and supporting increasing social benefits. However, the SLD has certainly not gone on the political offensive on these issues. Rather, Napieralski seems to be satisfied to maintain his personable image in the media without overly offending any future coalition partner before the next elections.

The party of choice for Napieralski would most probably be PO. They are closer on social and cultural issues and Napieralski would find a more natural partner for government in Tusk than Kaczyński. The current PO government has proved to be more pragmatic than its neo-liberal programme suggested. However, pressure is building within the business community, the media and from abroad for the government to be press ahead with a reform agenda and cut public spending. PO has answered these concerns by arguing that it is better that they win this year’s elections after which they would be able to make good their previous promises of reform.

However, while the present government may be willing to wait, others are growing increasingly impatient. The President of the Polish Business Centre Club (BCC), Marek Goliszewski, has recently stated that they may consider withdrawing their support for PO at the forthcoming elections and even backing SLD instead. The BCC had recently awarded a prize to the ex-SLD PM Leszek Miller – who they praised for having cut corporation tax and successfully reformed public finances when in government. Goliszewski explains:
‘I am not sure what the terms left and right practically mean in our country today. The left are those who cut taxes for business and the right are those who raise them. Business is pragmatic. It doesn’t make sense to choose someone due to the colour of their shirt but rather by what they actually do. If I had to decide between the left of Miller or the right of Tusk I would chose the first option.'

The building up of the SLD by the BCC has been accompanied by other commentators speculating as to whether a future PO-SLD government could become a true ‘reforming government’. The present praising of Miller is an amazing transformation for someone who had previously been considered persona non grata by much of the establishment. Miller is currently a close adviser to Napieralski and it has recently been rumoured that he will find a prominent position on the SLD’s electoral list at the next election.

In this situation Napieralski faces some tough political decisions. Will he be lured by the scent of political office and enter a coalition with PO? If he does so, will he position the party to the left of PO or will he take up the BCC’s challenge and become the leading reformer of this government? Before making this decision Napieralski should cast his own pragmatic eye on the lessons of history. The BCC may praise Miller nowadays, but his policies led to a collapse in support for the SLD that may take decades to overcome. He should also look at the experience of Nick Clegg and the Liberals in Britain and see how quickly a positive personal image can fade once one is inside an unpopular government. More importantly Napieralski should consider the responsibility that he currently shoulders as the leader of the major party in Poland that claims to be on the left. It may not survive another ‘Leszek Miller’ or indeed a new ‘Nick Clegg’

Wednesday, 9 February 2011

EU Demands Drastic Spending Cuts

The EU has called upon the Polish government to bring down its budget deficit from 7.9% of GDP to 3% within the next three years. This adds to the chorus of criticism, coming from a number of international financial institutions, complaining that Poland has not done enough to cut its public spending. If Poland were to carry out this measure it would undoubtedly lead to a very large wave of spending cuts and the raising of taxes in the country. The former Finance Minister, Mirosław Gronicki, has stated that such actions must hurt as it would be unable to carry out such measures without them being felt. He adds that these would not be possible without ‘radical reforms’.

For Poland to reduce its budget deficit in line with the demands of the EU it would have to find up to ZŁ100bn in savings. According to the calculations of the Daily Rzeczpospolita, then the decision of the government to regulate the growth of expenditures to 1% above inflation would bring ZŁ17.4bn in savings. Meanwhile the policy to reduce transfers to the private pension funds would save the budget ZŁ17bn and increased income from high economic growth (if it were to occur) would increase the government’s budget by between ZŁ12.5bn and ZŁ18bn. According to these calculations the government would still have to cut its budget deficit by around ZŁ50bn by 2014.

The proposals for these further savings, by Rzeczpospolita, include introducing measures such as again raising VAT to 25%; restricting investments in roads and motorways, freezing the pay of public sector workers and reducing the amount of public sector workers on full-time contracts by 5%, abolishing tax reliefs for families and the internet, changing the valorization of social beneifits and pensions and reducing benefits for funerals and newly born children.

It does not seem to have occurred to the authors of these proposals that this would both reduce investment in the economy and squeeze demand. This would undoubtedly lead to slowing economic growth, thus reducing the government’s income and increasing its social spendings. The government should cast an eye across the continent at countries such as Britain and Ireland, where public spending cuts have repressed economic growth and increased the budget deficit. Public spending – particularly through investments in the countrys infrastructure but also through maintaining the salaries of public sector workers – are essential for maintaining the country’s present positive economic growth. If savings are to be made they should be done through reversing the regressive income tax policies introduced by the last PiS government and increasing the rate of business tax in line with the European average.

Monday, 7 February 2011

Thanking Reagan?

You know that you are living in another culture with a different historical background when people start praising Ronald Reagan. In other posts I have described the difficulty of hearing people wax lyrical about Margaret Thatcher and the historical paradoxes of the Solidarity movement. However, when celebrations are held to commemorate the memory of Ronald Reagan it all seems a step too far.

Yet this is the paradox of history. Reagan is remembered by many in the former Eastern bloc as the individual who helped to 'liberate' Poland from the oppressions of Communism. There is some truth in the assertion that the policies of Reagan - backed up by Thatcher - placed an unbearable pressure on the Eastern European governments, eventually leading to their collapse. This was achieved primarily through an unprecedented build up of nuclear weapons, which the Soviet Union was unable to compete with. While the heirs to Reagan in Poland may currently be urging fiscal restraint (and perhaps believing they stand in the tradition of 'Reaganomics') the economic policies of the Reagan governments were very different.

Pubic spending rose significantly during the term of Reagan's administrations. This was led by a huge increase in defense spending - rising from (in constant 2000 dollars) $267.1bn in 1980 (4.9% of GDP and 22.7% of public expenditure) to $393.1bn in 1988 (5.8% of GDP and 27.3% of public expenditure). All this was done while cutting the taxes for the highest earners in society - leading to public debt increasing from 33.3% of GDP to 51.9% and the budget deficit doubling from 2.7% to around 6%. Furthermore America began to shift from being an international exporter to an importer of capital - with the country's trade deficit balooning to around $148bn in 1985. Many of the current imbalances and difficulties of the American economy are rooted in this era.

Yet it may be said that all this was worth it - as Reagan helped to bring down the Evil Empire. However, firstly one has to question the moral and human cost of building up a nuclear arsenal and wasting billions of dollars on weapons capable of wiping out human civilisation. These weapons remain with us and threaten our existence every day. Furthermore, beyond Eastern Europe, lies the historical role played by Reagan in other parts of the world - not least in his own backyard of Latin America. In order to accept the image of Reagan - portrayed by the right in Poland - as the supporter of democracy and forebearer of freedom - one has to forget the historical experiences of millions of people around the globe. In a recent blogpost Michał Syska points out how the Reagan governments helped to support repressive dictatorships, torture, killings and guerilla armies throughout Latin America and beyond in the 1980s (e.g. Nicuaguara, Honduras, El Salvador, Grenada, Haiti, Philipines). We can add to this the de-facto support given by the Reagan government to the Apartheid regime in South Africa, through its reluctance to impose sanctions on, and the policy of 'constructive engagement' with, the racist government in Pretoria.

The current events in Egypt and Tunisia show us that freedom and democracy are universal concepts. Because freedom was ostensibly espoused in one part of the world, it does not excuse oppressions committed in others.

Saturday, 5 February 2011

Less Flats Built than During Communism

There has never been much nostalgia for the housing of the Communist period. Functional rather than aesthetic and sometimes built with poor quality materials, people had to wait in line to receive accomodation that was often too small for a family to live comfortably in.

Yet, despite the shortcomings of the housing provided during Communism, a significant jump forward was made in providing accomodation for the vast majority of the population. In Poland, where the legacy of occupation, division and war had left millions living in conditions of severe poverty, over 8m homes (on average 170,000 a year) were built. Facilities such as central-heating, hot-running water and electricity were made available to large swathes of the population. There was a continuous pressure to speed up the building of flats, which was partly met during the 1970s when an annual average of 270,000 flats were completed every year.

After the fall of Communism, some were able to move away from their publicly built flats and into new more spacious private accomodation. This was often situated behind walls and protected by security guards and cameras. It is a sad indictment of contemporary life in Poland that so many people now live in these gated communities. By 2008 there were over 400 gated communities in Warsaw alone.

Despite this trend another section of society has found it difficult to meet their basic housing needs. Some of the poorest in society live in run down flats built before the war. These tended to be neglected during communism and thereafter tenents of these flats have been threatened with eviction after their ownership was returned to the original owners and/or sold on to new ones.

Also a large and growing section of society - particularly young people seeking their first flat - have been pushed out of the housing market.This has partly been caused by a slowdown in the number of flats built over the past couple of decades. By 2006, only 13% of the flats and houses in Poland had been built after 1989, whilst 28.7% was constructed between 1945 and 1970 and 30.2% between 1971 and 1988. The number of flats built between 1971 and 1978 is comparable to the total amount built between 1989 and 2010. Furthermore, while the post-communist dream may have been to move into larger flats and houses, most people are seeking to buy smaller flats than those available on the market. In 2010, flats sized at 51.5 square meters were in the highest demand, while the average size of flat being offered by developers was 66.3 square meters. The difference in price is sigificant. For example, buying a flat in Warsaw with an extra bedroom adds an additional cost of around 40,000 euro - which is about 3 times the average annual salary.

Wednesday, 2 February 2011

Financial Institutions Threaten Poland

'The Polish government does not have a credible plan to solve Poland's public finances'

These were the words of the economist responsible for developing markets from Barclays Bank last week. As when any such statement is made the words were deliberate and meant to place external pressure upon the Polish government to enact policies in line with the wishes of the financial markets. Barclays Bank has recommended that its clients buy Polish Credit Default Swaps (CDS). These instruments tend to rise in value when investors suspect that a government may face public finance problems.

Barclays has not been alone in warning of impending financial problems in Poland. Earlier the senior director from the emerging Europe team from the Fitch Ratings agency had warned that if Poland does not reduce its public deficit then it would not maintain its current ratings position.

The question is why are such institutions targetting Poland? The country currently is enjoying one of the highest growth rates in Europe. Its budget deficit is high (7.2%), but far below many other European countries (including healthy economies such as Norway) and only 0.4% above the EU average. Furthermore its level of public debt (53%) is over 20 pecentage points below the European average.

The answer to this question is that the financial markets - backed up by the usual suspects in Poland - are opposed to the government's recent decision to reduce the payments going to the private pension schemes. It is estimated that this will save the government Zł24bn this year and Zł26bn in 2012. This has meant that the PO government has delayed the spending cuts that the international markets are demanding until after the parliamentary elections later this year.

The irresponsibilty of these external advisors is breathtaking when it is considered that public spending combined with EU funds has been responsible for keeping the Polish economy growing over the past couple of years. The recent figures released by the Polish Statistics Agency for 2010 have shown that private investment has remained stagnant throughout the year. In order for Poland to retain its positive economic growth then it is imperitive that it maintains its public spending, particularly as it needs to absorb as much of its allocated funds from the present EU budget that runs out in 2013.