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