Lepper undergoes a transformation on economics

UNCLAS WARSAW 004050 SIPDIS Sensitive STATE FOR EUR/NCE DAVID KOSTELANCIK AND MICHAEL SESSUMS USDOC FOR 4232/ITA/MAC/EUR/JBURGESS AND MWILSON TREASURY FOR OASIA MATTHEW GAERTNER FRANKFURT FOR TREASURY JIM WALLAR E.O. 12958: N/A TAGS: EFIN ECON PREL PGOV PL SUBJECT: Lepper undergoes a transformation on economics This cable is sensitive, but unclassified, and NOT for Internet distribution. ¶1. (SBU) In a recent interview for business daily "Puls Biznesu" Andrzej Lepper, the leader of Samoobrona (Self Defense) the third largest party in the Polish Parliament, presents himself as a social-liberal as opposed to his portrayal as a dedicated socialist during the election period. His views on privatization, taxes and particularly Leszek Balcerowicz'e role in Poland's transformation process, have changed a 180 degrees. Is it part of his populist game or does he really mean to support business friendly solutions proposed by the governing Law and Justice Party (PiS) in its economic program? The first opportunity to verify Lepper's revelations to Puls Biznesu will be in upcoming votes on amendments to the 2006 budget. ¶2. (U) The comparison of what Lepper said on 26 August (before the parliamentary elections) and then on 18 November (after elections) illustrates his unexpected "transformation" from a declared socialist to a social liberal: - On privatization: (Before elections) "95 percent of privatizations in Poland have been carried out by violating the law. It has to be looked into. If an investor violated the law, the plant should not stay in his hands!";(After elections) "Privatization is good provided Poles benefit from it. What is left, with the exception of a few strategic companies should be sold. This is what I have always said." - On Personal Income tax: (Before elections) "We should have a progressive tax. The highest rate should be 50 percent for incomes above 12,000 PLN per month"; (After elections) "The 50 percent rate makes no sense. No one would pay it anyway" - On socialism and his views: (Before elections) "I am a socialist. We are a leftist party of socialists. Yes we are socialists"; (After elections) "I am a capitalist. A socialist party has no chance today! I chose a social liberal direction." - On Leszek Balcerowicz: (Before elections)"He should be put before the State Tribunal! At least for privatization and for economic reforms"; (After elections) "He does not have to go, he performs well at what the law requires of him. Every economist would have done the same." - On liberal economists: (Before elections) "They have no idea how to rescue Poland, how to govern! Governments listen to advisors who support liberal policies..." (After elections) "The Adam Smith Center supports us, Mr. Robert Gwiazdowski! I've met with business, with Mr. Kulczyk Niemczycki, and Malinowski. I listen to their advice, I see some things in a different light." - On Open Pension Funds (OFEs): (Before elections) "Order must be brought to the OFEs. There should be a unit in the Social Insurance (ZUS) were the OFE funds are collected. This will guarantee that the funds belong to pensioners and grow..." (After elections) "We no longer talk about liquidation of OFEs, but there is need to modify them in such a way that not only the owners benefit." ¶3. (U) Comment: When examining the financial situation of PiS members and Self Defense members there well may be more businessmen in SO than in Law and Justice. From this point of view, Lepper and his party colleagues may now realize that they have an interest in reforms that ensure economic growth. His statements seem to indicate that he plans to become an advocate of business and employers in the new Parliament. Higher salaries for good managers, Corporate Income Tax (CIT) at 10 percent, maximum Private Income Tax at 28 percent, credits for young entrepreneurs, these are not Civic Platforms words but proposals of a "new" Lepper. Although many here are understandably skeptical, if Lepper really has changed his spots, it's good news for businesses hoping for continued economic reform. End comment. ASHE