Polish Political Dispute Shakes Fledgling Market

POLITICAL feuding between Polish President Lech Walesa and Prime Minister Waldemar Pawlak's left-wing government is causing the country's fledgling financial market to lose some of its momentum.

Wrangling over the appointment of a new finance minister has contributed to a 30 percent plunge in share value on the Warsaw Stock Exchange since late March, some financial analysts say. The political row has particularly unsettled foreign investors, who are wary of any sign of instability in emerging markets, experts add.

In late March the Pawlak government nominated Dariusz Rosati as finance minister - an economist who has spent the last three years in Geneva working for the United Nations. But President Walesa has refused to confirm Mr. Rosati, complaining that he was not properly consulted about the nomination.

Despite the stock market's recent slide, many market analysts remain optimistic about Polish efforts at economic transformation. The governing coalition, even though it traces its roots back to the former Communist Party, remains committed to market reforms, says Maria Goc, a top official at Amerbank in Warsaw.

``It's a bump in the road,'' Ms. Goc says of the dispute over the finance minister. ``No one in the business community is pessimistic. Whatever the political leanings of the government leaders, they realize there is little room for maneuver. There are certain things [reforms] that must be done.''

US praises reforms

United States Deputy Secretary of State Strobe Talbot praised reforms on April 11 during his three-day visit to Warsaw.

Goc and other observers say Walesa is refusing to ratify Rosati's appointment partly for political reasons. The president - who as the former leader of the Solidarity movement played an important role in toppling the Communist regime - has coexisted uneasily with the Pawlak government since the leftist election triumph last September.

By rejecting Rosati's nomination, Goc says, Walesa is hoping to exacerbate tension within the governing alliance that has simmered since the previous finance minister, Marek Borowski, resigned in February.

The governing coalition comprises the Democratic Left Alliance, of which Mr. Borowski was a leader, and Pawlak's Polish Peasant's Party. The two parties have often been at odds over economic policy, with the alliance favoring a stricter fiscal policy. Rosati's apparent failure to win confirmation leaves open the possibility for more bickering.

With a presidential election looming in 1995, conflict within the governing coalition could hinder the ability of Poland's left-wing parties to put forward a presidential candidate who could challenge Walesa.

The president could be politically vulnerable, as his popularity has been declining in recent months. One recent poll, for example, showed Gen. Wojciech Jaruzelski, the Communist strongman who imposed martial law on Poland in 1981, to be more popular than Walesa.

Walesa asserts coercion

In rejecting Rosati's nomination, Walesa accused the coalition of employing communist tactics to coerce presidential compliance.

``The coalition demands absolute agreement from me and it is just like the Central Committee used to demand,'' Walesa told the PAP news agency earlier this month. ``I was not included in the process, and now they are demanding my signature while holding a pistol to my head.''

Market analysts, meanwhile, say they look for the Warsaw Stock Exchange to rebound slightly in the coming days. But they add that the political dispute, along with a drop in foreign capital being pumped into the market, has shaken confidence to the point that the 1993 boom will not be repeated.

Last year the exchange was the top performer in the world, with share prices jumping an average of 700 percent.

In the government, officials continue to push ahead with their effort to anchor Poland among Western Europe's market democracies. On April 8, Foreign Minister Andrzej Olechowski submitted Poland's formal application for European Union membership.

Full membership within the next decade is a top priority for the government. This means efforts to modernize the Polish economy will have to be intensified, Cabinet ministers say. A draft government plan on economic policy through 1997 projects an annual growth rate of 5 percent.