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Right Man, Wrong Time

4 minute read
ANDREW PURVIS

Worried about your job? Be thankful you’re not a Polish Finance Minister. Since the end of communism, Warsaw has seen no fewer than nine people in the post (two even served twice) and four in the past two years. The latest quit last week after just eight months in office. Marek Belka says he plans to return to academic life. Speaking to reporters, the 50-year-old University of Chicago-trained economist — whose appointment last October was hailed as a victory for professionalism over politics — pleaded intellectual exhaustion: “My energetic potential has burned out,” he said.

His departure is a blow for Poland. Since Belka joined social democratic Prime Minister Leszek Miller’s team, his fiscal discipline and so called Belka plan, a modulated program to return the economy to 5% growth by 2004, had won praise from investors abroad and at home. “No one else has his ability,” said Krzysztof Rybinski, analyst at BPH-PBK Bank in Warsaw. Jitters following the announcement caused the Polish zloty to drop 2% in value. Nor did the naming of his successor help. Grzegorz Kolodko, a close ally of the Prime Minister and head of a local think tank, is known in financial circles for deficit spending and for his high-profile rows with the Polish central bank when he last held the job in the mid-1990s. Already suffering from negligible growth and 19% unemployment, Poland can ill afford another economic jolt if it is to weather negotiations to enter the European Union by 2004.

Belka announced his decision shortly after a cabinet meeting to approve next year’s budget. A projected deficit of $11 billion was more than the Finance Minister wanted, but not by much, and analysts say his departure was likely due more to fundamental disagreements over long-term financial policy. “He was under a lot of pressure,” said one. The day before he quit, Belka used a third-person locution to tell the daily newspaper Rzeczpospolita: “If Belka finds that the government doesn’t want to realize his economic strategy, he won’t wait 10 minutes to resign.” Belka has refused to elaborate on his reasons for leaving, though he was known to differ sharply with his boss, Leszek Miller, over the question of political interference in monetary policy.

Whatever the reasons behind the shake-up, analysts now fear a return to the bad old days of free spending and a bigger state role in the economy. The Prime Minister is believed to be seeking a quick fix to repair his fading popularity in advance of local elections this fall. The most pressing concern, says analyst Rybinski, “is open conflict with the central bank that could harm our relations with the E.U.” Ironically, the same day Belka resigned, William McDonough, head of the Federal Reserve Bank of New York, was in Warsaw making the case for central bank independence across Eastern Europe. Further political meddling in the central banks’ affairs could tarnish the region’s image abroad, as well as its ability to compete after joining the E.U., he said.

Yes, being Finance Minister in Poland can’t be easy. While most Poles support the principle of market reforms, they also expect state subsidies like those received under communism to continue. Labor unions in the birthplace of Solidarity are still a political force, frequently demonstrating against the sad state of the economy. Another reason for the ministry’s revolving door is that the post has in the past been held not by politicians but, for the most part, by “experts” like Belka who do not have the political networks to protect them in confrontational times. From the beginning Belka made clear that he had little taste for political infighting.

In this respect, Kolodko may be the exception. When he was last Finance Minister, under the previous social democratic administration, he famously and publicly faced off with the central bank governor over monetary policy. His tenacity resulted in a nearly unprecedented 33 months in office under three separate Prime Ministers. Good for Kolodko — though not, perhaps, for Poland.

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