Poland faces political upheaval with finance minister dismissal

Zyta Gilowska

Poland saw political upheaval this week with the departure from the government of Finance Minister and Deputy Prime Minister Zyta Gilowska. She was dismissed over allegations that she failed to reveal her ties with communist era secret services. Opinion polls indicate almost 50% of Poles are unhappy with the finance minister's sacking. Zyta Gilowska's departure is a blow to the ruling conservative Law and Justice Party and has given financial markets cause for concern. More from Agnieszka Bielawska:

The dismissal of the charismatic finance minister continues to be the major topic on the political agenda in Poland. Zyta Gilowska has denied the accusations and is ready to fight and clear her name, saying she had been subjected to political blackmail aimed at forcing her resignation. She added that she is shocked by the charges:

"The drama of my situation is such that in a democratic state the finance minister has no rights. I am treated worse than a pedophile or murderer. They have to be presented with documents supporting the accusations while I know nothing, having been denied access to any documents."

The dismissal came as a shock to the political and economic scene in Poland. It was thought that Mrs Gilowska would be far more likely to leave the government over rows on budget spending, but not in connection with the communist past. Politicians of the ruling coalition and the opposition have expressed their doubts. Even Prime Minister Kazimierz Marcinkiewicz admits the timing is bad:

"We have just adopted seven tax laws, are finishing works on public finances, and getting closer to discussions on the 2007 budget. One could not find a worse moment to change the finance minister and the question remains: 'why now'?"

The question hangs in the air and even the prime minister admits that there are many aspects which remain unclear and need full explanation. But the departure of Zyta Gilowska raises the question of how stable the ruling conservative government will continue to be and has the change of finance minister weakened the prime minister's position? Christopher Bobinski from the Polska and Unia magazine:

"The prime minister had no choice but to dismiss her because of these accusations. He's chosen as the new finance minister someone who' s been working very closely with him as an advisor on financial matters. He now takes personal responsibility for macroeconomic and economic policy which means that he alone will have to resist all the pressure from inside his government for inflationary policies, which weakens his position. It is not a good thing but this prime minister has shown himself surprisingly resilient and I think he will succeed."

Zyta Gilowska was seen by markets as a guardian of budget discipline. Her tough stand on reforms and public spending has often been controversial but her professionalism has never been questioned. The new finance minister, Pawel Wojciechowski, promised to continue Zyta Gilowska's policy directions. But the change of the financial minister, though not dramatically received by markets, may weigh on them in the long run, says independent commentator, Andrzej Krajewski:

"For the good or bad state of the Polish economic market not only internal reasons are important. We can definitely say it will not help the Polish economy, that's for sure. How much it will damage the Polish economy - that remains to be seen."

The new minister is an economics expert, but his political abilities are unknown. Zyta Gilowska's position in the government was very strong. She has been more than often praised by the prime minister as one of the best members of his Cabinet. Therefore fears for the future are inevitable, says economics professor Witold Orlowski:

"There are fears that short term political considerations may cause the government to leave the path of relative fiscal prudence. I wouldn't say the risk is very big but it is bigger than it was with Gilowska as finance minister."

In the latest development in Mrs Gilowska's case, the vetting court has refused to probe the accusations because she is no longer a public official. The prime minister criticized the ruling and, in a somewhat bizarre gesture, offered her a new cabinet post, which she is unlikely to accept.