WARSAW, Poland, July 1 (UPI) -- Do Poland's Prime Minister Leszek Miller and head of Polish Central Bank Leszek Balcerowicz have anything in common, except for the first name?
There was a time in Miller's life when he probably was one of the most disliked political players in Poland -- whenever he spoke in the Parliament, the opposition would leave. It was the price Miller paid in early 1990s when he and his party -- Social Democracy of the Republic of Poland -- were seen exclusively through their communist past.
Today Miller is Poland's prime minister and his party, renamed Social Democratic Left Alliance, known by its Polish-language initials of SLD, co-rules the country in coalition with the agrarian Polish Peasants' Party and leftist Labor Union, after a convincing victory in parliamentary elections of September 2001.
The central bank's Balcerowicz, in turn, has had a hard time recently.
Balcerowicz, after whom the 1990 plan of resetting the ailing Polish economy to market principles was named, has become one of the most hated figures in the country. "Balcerowicz must go" is one of the most popular slogans populists use, blaming him for Poland's recent poor economic performance.
Even less pleasant statements flew in Parliament in May, during the debate on the Monetary Policy Board, over which Balcerowicz presides and which is responsible for the Polish zloty exchange rate as well as interest rates, and for setting the so-called inflation goal, in other words keeping inflation at bay. Balcerowicz opponents accuse him of sole responsibility for the slackening growth, caused by his restrictive policy on interest rates, and for a slowdown in exports, due to the Polish zloty's too strong position against the dollar and the euro.
His opponents charge that Balcerowicz "performs the economic Holocaust on the Polish nation."
The government of Leszek Miller seems to be targeting Balcerowicz and his policies as if they were a chief, if not the sole, cause of Poland's economic woes.
Now the government has started to consider changing the Central Bank Act in order to have more influence on its monetary policy and on setting the inflation goal. The influence will be exerted by enlarging the Monetary Policy Board with new members so that the government has the advantage in the board's internal voting.
This in turn is aimed to secure faster and more radical cuts in interest rates, something about which Balcerowicz and the current members of the board have nearly always been rather unenthusiastic. The board has explained its so-far-cautious cuts by citing the board's ultimate task -- keeping inflation low, even at the cost of a slowdown in economic growth.
Balcerowicz opponents from the government and coalition parties assert quite the opposite: If there is growth, inflation should be allowed to increase.
The government's attempts to limit the central bank's and the Monetary Policy Board's independence have drawn criticism from the liberal opposition at home and from the European Union and European Central Bank. The ECB's Ernst Welteke even remarked during his visit to Poland that endangering the Polish Central Bank position may threaten the country's entry to the European Union.
Miller, in an interview with the Financial Times, responded to Welteke that his government only wanted to re-awaken economic growth: "From Western Europe's point of view, which Poland is better? The one with gross domestic product growth of 7 percent annually or the one with (gross domestic product) growth of just 1 percent?" he asked.
However, Miller's political camp does not seem to be of unanimous opinion on Balcerowicz, the central bank and the Monetary Policy Board. While Miller announced June 19 that the government will vote for the SLD-proposed changes in the Central Bank Act, Marek Belka, the deputy prime minister and finance minister, said in an interview for Kracow-based radio RMF-FM that he had "doubts so as to the practical results of changing the Central Bank Act. Besides, the new act may never take effect."
Belka referred to the possibility that the new act may be considered unconstitutional and thus halted from being put to use. He also added that Miller's statement would hinder cooperation between the Finance Ministry and the board.
President Aleksander Kwasniewski attempted to mediate between the two sides, saying at the same time that he would defend the constitutional independence of the Monetary Policy Board. The president met with representatives of the board, a session that was officially considered successful especially when soon afterward a special commission of experts from the Finance Ministry and the board was formed in order to facilitate cooperation.
Miller, however, said the president's mediation was ineffectual and that the only remaining way of influencing Balcerowicz's policies lay in Parliament. In an interview for the influential daily Gazeta Wyborcza, he remarked, however, that it is the co-ruling Peasants' Party and labor union that pushed for the changes in the Central Bank Act and that the changes are very likely to be supported by his SLD. "Changes are unavoidable now," he said.
Unsurprisingly, Balcerowicz has been calm amidst the storm concerning himself as well as the institution over which he presides. He determinedly repeats that the government's recent activities target not him personally but the independence of the Polish Central Bank and, consequently, Poland's credibility in the financial world.
Miller has responded that the government has been successfully continuing the privatization processes as well as cutting tax rates for companies and the only element of the economic mechanism that is beyond his influence consists of interest rates and currency policy.
The most likely scenario will be that the government gets what it wants in the Central Bank Act only to see it either vetoed by the president or rendered null and void on the grounds of being unconstitutional.
Balcerowicz's fate is even more certain: More "Balcerowicz must go" slogans on the streets and in Parliament.
