How an unholy alliance of left and right in Poland may save the EU recovery fund

By Paweł Wiejski

In a last-minute addition to the parliamentary schedule, the Sejm will meet on Tuesday to vote on whether to ratify the Polish government’s implementation of the EU’s coronavirus recovery fund. The development follows weeks of doubts after a rebellion against the plan within the ruling coalition and the formation of an unexpected alliance between the government and left-wing opposition. If the measure does not pass, it could have serious consequences both for Poland – with €57 billion of funds at stake – and for the EU itself, which needs unanimous approval of the plan by member states.

This week, The Left (Lewica), the second-largest opposition group in parliament, announced that it had reached an agreement with the government over the EU recovery fund. The Left promised to support ratification of the fund in exchange for amendments to the National Recovery Plan – a document outlining investments and reforms financed by the EU to boost the economy as it recovers from the COVID-19 pandemic.

This unusual alliance has sent shockwaves through the opposition in Poland, with some praising the Left’s move as shrewd and responsible, but others accusing it of crossing enemy lines and saving what they see as an autocratic government from the brink of collapse.

Things can change quickly in Polish politics, and it remains to be seen how the vote will proceed on Tuesday. But even if the risk of Poland derailing the EU recovery fund is averted, the impact on the Polish political scene will be felt for months, if not years.

What is at stake?

The crisis started innocently enough, with a technocratic procedure of ratification of a new EU spending mechanism. Last year, the EU leaders decided to create a recovery and resilience fund of €750 billion on top of the usual EU budget.

The money, borrowed by Brussels on the financial markets, is supposed to jump-start the European economy after the Covid-induced recession. Poland’s slice includes €23 billion of subsidies and €34 billion of cheap loans – a sum equivalent to nearly two thirds of the country’s annual budget.

In order to access the money, Poland (like all other EU countries) has to prepare a National Recovery Plan (Krajowy Plan Odbudowy, KPO, in Polish), detailing reforms and investments it intends to finance with the new fund. This plan has to be accepted by the European Commission and by the other member states in the Council of the EU.

Each country has to prove that it will use the money to actually promote economic recovery and that it will contribute to EU goals, such as fighting climate change and promoting digitalisation.

The EU has never borrowed money from the market at this scale. Sources of financing of the EU are strictly regulated and any change requires not only agreement of European governments, but also ratification by their parliaments. Poland, as well as a handful of other countries, is yet to ratify the legislation in question, called the Own Resources Decision.

If the decision is not ratified in the first half of this year, payments from the recovery fund may be delayed. If any of the countries fails to ratify the decision altogether, the whole fund of €750 billion will go out of the window and the governments will have to start painful negotiations from scratch.

A spokesperson for the European Commission told Notes from Poland that so far 19 member states have ratified the Own Resources Decision, and that the European Commission “remains optimistic” that the process will be completed by the end of the second quarter.

The process of ratification is where the leverage of The Left – and of the opposition as a whole – came from. The government needs a simple majority in the Sejm, the lower house of parliament, to push ratification through. A simple majority that it currently does not have.

United in name only

The ruling coalition – known as the United Right (Zjednoczona Prawica) and dominated by the Law and Justice (PiS) party – has been shaky in recent months, and nowhere more so than in European affairs.

PiS’s hardline junior partner, United Poland (Solidarna Polska), led by justice minister Zbigniew Ziobro, has been openly critical of the agreement reached by PiS Prime Minister Mateusz Morawiecki at the European Council meeting in December, which brought the recovery fund to life.

Ziobro argues that Morawiecki surrendered Poland’s sovereignty by allowing a new mechanism protecting the rule of law to be introduced in the EU budget. The party also sees the recovery fund as a step towards federalisation of Europe, because it is financed by common borrowing. That means that Poland could end up being responsible for debt not repaid by other countries.

As a result, United Poland announced that it will vote against ratification of the Own Resources Decision. Open dissent within the ruling coalition on such a fundamental issue would usually be enough to topple a government. Yet PiS is reluctant to break with Ziobro’s party, as that could lead to early elections.

According to most recent polls, while PiS is still ahead of the opposition parties, it would struggle to form a government, even if it could rely on the continued allegiance of its other coalition partner, Agreement (Porozumienie) – with whom it has also had difficult recent relations – and secured the support of the far-right Confederation (Konfederacja).

The volatility of the coalition has forced the government to postpone important votes, including on controversial pension reform. As a consequence, the work of the parliament has slowed down almost to a halt. Since the beginning of 2021, the Sejm has only been in session for ten days, fewer than in the same period in 2020, which included a few weeks of the most strict lockdown being in place.

How did The Left strike a deal with the government?

Lacking support from its coalition partner, the government had to look for help elsewhere – including among the opposition. From the outset, the centrist and left-wing parties were divided on how to approach this situation.

On the one hand, it appeared an opportunity to topple the United Right and trigger early elections. In early April, PiS chairman Jarosław Kaczyński said that, if the government loses the Own Resources Decision vote, the coalition may collapse.

On the other hand, if the opposition refused to find a compromise with the government and voted against ratification, Poland risked losing or delaying EU funds – something that could harm the country economically and the pro-EU opposition parties politically.

Aside from the anti-EU Confederation, all opposition parties have presented demands to the government at some point in the last few months, but it was The Left that ended up striking a deal. PiS accepted The Left’s demands after a few weeks of secretive negotiations. In exchange for supporting ratification, the government agreed to include in the KPO six demands made by The Left.

These include additional spending on housing, healthcare and support for companies struggling due to pandemic restrictions. Moreover, 30% of spending will be channelled through local authorities and the government will form a special committee, consisting of representatives of municipalities, unions, NGOs and employers’ associations, to oversee implementation of the plan.

In a draft KPO seen by Notes from Poland, most of the demands of The Left have indeed been included, while others (including the oversight committee) are supposed to be added later on in separate legislation.

Was it worth it and what next?

The KPO was supposed to be sent to the European Commission last Friday, but the government only sent a draft version, and will send the final version in a few weeks. The Own Resources Recision is expected to be ratified by the Sejm on 4 May, and it will subsequently be voted on in the Senate.

Even if the opposition-controlled upper house rejects the legislation, this can be overturned by a majority in the more powerful lower house.  Poland’s National Recovery Plan will still be subject to approval by the European Commission and the Council of the EU.

PiS has plenty of reasons to celebrate. The deal with The Left gave a lifeline to the government and will also secure access to billions of euros for investments, which without a doubt the ruling party will try to use to improve its standing in the opinion polls. A day before announcing the deal with The Left, the government launched a campaign hailing the 770 billion zloty of EU funds it would bring to Poland.

The EU recovery fund will also be a cornerstone of Morawiecki’s “Polish New Deal”, a national investment plan that, after several delays, is set to be unveiled this month. Given ongoing tensions within the United Right, early elections still remain a possibility, but they will be a less risky prospect for PiS with EU recovery funds secured.

But perhaps the largest source of satisfaction for PiS is the state of opposition. The parties critical of the government failed to present a unified front and find common demands in exchange for support for the KPO. While the opposition has squabbled before, in recent days this has been more bitter than ever.

In the aftermath of the deal, Borys Budka, leader of Civic Coalition (KO), the largest opposition grouping in the Sejm, referred to The Left, as “red extremists”. KO figures have condemned The Left for propping up the government rather than letting it collapse.

The Left was also criticised by smaller opposition parties. Dariusz Klimczak, an MP from the agrarian Polish People’s Party (PSL), accused it of breaking ranks with the rest of the opposition and of missing a chance to impose more significant changes to the KPO.

Hanna Gill-Piątek from the centrist Poland 2050 lamented the lack of transparency of the talks, saying that they should have taken place in the plenary session of the Sejm, instead of behind closed doors.

From its perspective, The Left hopes that, by forming an alliance with the government, it can prove that it is independent of other opposition parties and is not afraid to take a constructive approach when there are important issues at stake.

At the same time, The Left has burnt bridges with other opposition groups, with whom it would need to form a ruling coalition if they ever hoped to keep PiS out of power. Some commentators have also expressed scepticism over whether, once the Own Resources Decision has been ratified, PiS will stick to the terms of its agreement with The Left.

Whether the trade-off was worth it for The Left will become clearer when the next elections are held – be that a snap poll this year or as scheduled in 2023.

Main image credit: Kancelaria Sejmu/Rafał Zambrzycki (under CC BY 2.0)

Paweł Wiejski is a freelance journalist and analyst, specialising in European affairs and climate policy. He previously worked as a European affairs analyst for Polityka Insight.