Rebel Poland Is Set to Ratify EU’s Pandemic Spending Package

(Bloomberg) -- Poland is set to ratify the European Union’s pandemic stimulus plan as the threat of losing billions of euros of aid galvanizes support in parliament to stop a rift within the government from torpedoing the deal.

The bloc’s largest eastern member had loomed as a potential spoiler for the 800 billion-euro ($966 billion) package after teaming up with Hungary to protest efforts by Brussels to attach strings to the money based on adherence to democratic rule of law. The two countries backtracked at the 11th hour of talks in December, but in Poland the U-turn exposed divisions within the three-party coalition over whether to approve it.

That left the Law & Justice Party weakened, and its leader Jaroslaw Kaczynski without enough support among government ranks. Lawmakers from opposition parties said in conversations with Bloomberg, though, that the deal will pass because -- as of now -- they can ensure the necessary numbers.

“The fund needs to go ahead,” Piotr Zgorzelski, deputy speaker of the lower house of parliament and a member of the opposition Peasants’ Party, said in an interview. “There’s no other way.”

Poland is the biggest net recipient of EU aid since it joined in 2004, yet it has emerged as one of the bloc’s biggest rebels in recent years, clashing with the European Commission over everything from the independence of courts and media to gay rights.

While Polish approval of the post-Covid aid package would be a critical step for Europe, it also raises questions over the stability of the Law & Justice-led government after almost six years in power.

The country is among eight members that haven’t signed off, a process that’s supposed to happen by June. Among those, Poland stood out as the wildcard after Hungary already indicated in December it would fall into line.

Bloomberg spoke with nine Polish opposition lawmakers, including members of the Civic Platform, the Peasant Party and the Left, and all said the package would ultimately be approved. Most of them asked not to be named while discussions continued.

Yet they also said they’ll demand concessions to support the EU stimulus and they stopped short of saying it was a done deal. They want local and municipal authorities, where their parties are stronger, to get more oversight of the funds to make sure the money will be spent fairly. They’re also loath to give the government full control over the cash with general elections due in 2023.

“The opposition must not only approve the fund, but also ensure that no money is redirected to strengthening the interests of the ruling coalition,” said Bartosz Arlukowicz, deputy chairman of the opposition-leading Civic Coalition party.

The row within the coalition has already delayed some of the government’s legislative agenda. But the prospect of a fresh financial impetus from the EU could hand Law & Justice a war chest to back its drive to address a decline in support during the pandemic.

Delay or rejection by just one of the bloc’s 27 members would hold back the spending plan aimed at rebuilding after the virus and a botched vaccine drive plunged most of their economies into recession. Italy, which will get the most from the recovery plan, is already outlining how it plans to spend the money.

In Poland, which in recent weeks has been one of the continent’s virus hotspots, the dispute within the coalition goes back to new rules agreed in December. They would allow the EU to withhold money from the relief fund and the bloc’s seven-year budget to countries that flaunt democratic norms.

Justice Minister Zbigniew Ziobro’s United Poland party has openly attacked Kaczynski’s protege, Prime Minister Mateusz Morawiecki. He argues the plan would leave the country of 38 million, the EU’s sixth-poorest in terms of purchasing power per capita, on the hook for the debts of other member states and expose it to “blackmail” over democratic standards.

United Poland has threatened to veto the ratification, leaving the coalition 14 votes short of majority in the 460-member lower house.

Morawiecki said earlier this month that Law & Justice is consulting widely with the opposition and he wasn’t worried about country’s ability to eventually approve the package. Waldemar Buda, deputy minister in charge of EU funds, said on Monday he was optimistic the opposition would agree, saying “there should be no doubt about the ratification.”

The Law & Justice leadership knows the fund is critical for Poland and the party’s fortunes, said Ewa Marciniak, political scientist at the Warsaw University. The country is emerging from the pandemic indebted and support for the ruling coalition is shrinking even if it still tops popularity surveys.

“Kaczynski needs EU money to cement the support of Poles by offering new incentives,” she said. “That would be costly any time, but considering the depressed mood caused by the pandemic, even more money could be needed.”

©2021 Bloomberg L.P.