FT interview transcript: Donald Tusk

Stefan Wagstyl, the FT’s east Europe editor, interviewed Donald Tusk, Poland’s prime minister on Wednesday, January 27. Here is an edited transcript of the interview, for which you can also watch the video on FT.com.

Financial Times: We understand you are planning another round of reforms, why are they important for Poland?

Donald Tusk: Alone in Europe, Poland succeeded in avoiding recession. But Poland is affected by the problem, as are most other European countries, of rising debt and a serious budget deficit. It is not as dramatic as what is being faced by many other European countries, but we want to anticipate events. This is why I am proposing a so-called spending rule, in that the growth in discretionary spending not increase by more than 1 per cent a year. With the predicted increase in economic growth, it should lead to the debt not increasing, or increasing minimally, and the relation of debt to GDP should shrink and not reach the thresholds, at which Polish law requires drastic spending cuts, and thirdly limit the deficit. That should lead that within a few years – I hope three years will be enough – for Poland again to meet the level set out in the Maastricht criteria, that is having a deficit below 3 per cent of GDP. In addition to the spending rule, further support will come from further pension reforms. We have already done a lot in this sphere over the last two years. The reforms we have undertaken so far have affected 6 million people and will raise the average retirement age in Poland from 57 to 62.5 years over the next few years. We were able to achieve that without particular social tensions. But we want to do more to broaden the pension system by limiting pension privileges in certain professions, as well as an evolutionary but resolute inclusion of farmers into the overall pension and taxation system. Privatisation is also an important part of the plan. Not only because it will bring in revenues – we expect that more than 20bn zlotys ($7bn), or about €6bn ($8bn) to €7bn in 2010 will come from privatisation – but also because I am convinced there should be as little government as possible in the economy. We also want to continue the process of deregulation. In Poland we still believe – and this certainly applies to my government – that greater competitiveness, and greater growth and savings are possible in an economy which is as sparely regulated as possible, where freedom, competition and private ownership are key values. I am convinced we will gain acceptance for our programme, it will not be easy. Our most difficult partner, besides the opposition, will be the labour unions, but I hope we will manage. Reforms must be effective, and a key to that is achieving the acceptance of at least a part of those affected.

FT: But why are these reforms important for Poland?

DT: We have built a high level of credibility due to our policies during the crisis. Comparisons with other European Union members show that Poland is a country which can serve as an example. The map showing Poland as a green island of economic growth during the crisis may even be the largest success in Polish history. Who would have thought we would see the day when the Polish economy is talked about with greater respect than the German economy. We don’t want to tell anyone how to act, but we want to use our own example to show that the path of savings, rather than living on credit makes sense. Also, that European civilisation should be built on the fundamental values of freedom, private property, competitiveness, limiting the role of the state, and EU integration. This is the way of fulfilling Poland and Europe’s aspirations – it is the only way. Any other paths, such as having more state in the economy or protectionism are, in our view, false promises. As a government we are determined not to follow such paths. We are able to restrict our deficit and debt, undertaking far reaching reforms which not everyone in today’s world could do.

FT: When do you foresee Poland’s entry into the euro?

DT: We will return in a responsible way to a date when we are certain we are able to fulfil those criteria which are a prerequisite of membership in the euro zone. We can see that from the point of view of Poland’s economy, joining is not a matter of being or not being. Having our own currency has some advantages as well as serious disadvantages. We want to enter the euro zone, but we want to do it responsibly, fulfilling all the criteria and not subjecting our economy to unnecessary shocks.

FT: Should the European Union have a strict interpretation of the criteria when it comes to Greece?

DT: In no case would I want to lecture anyone. The criteria make sense when they are followed as rigorously as possible by everyone. Greece, which is a fairly drastic example, is not unique. There would be quite a long list of EU countries which do not fulfill the criteria at the moment. The Greek problem is compounded by the fact that Greece has very high public debt. This is because the criterion has not been treated as seriously as should be in the UE. Also the Greek issue is two-sided: Greece has to respect the criteria and the European Union has to prove to itself that these criteria are treated seriously.

FT: During the current harsh winter, do you feel there is enough European solidarity in the area of energy?

DT: I can speak as the leader of the Polish government, a government which does not have problems with gas deliveries either now or a year ago, during the Russian-Ukrainian gas dispute. While we say there is a need for maximum European solidarity in the area of energy security, we do not have any particular problems ourselves. Relations with Russia and with Gazprom are very correct. We have never had any problems with gas deliveries, however the previous crises showed black on white that although many European countries were affected and that it was a fundamental problem for them, it failed to provoke any kind of automatic response mechanism. What we had agreed earlier in Europe as a way of dealing with such a situation proved to be useless. That is why we should prepare the European Union as quickly as possible from a technical and logistical point of view, so that in the event of a crisis the reaction would be rapid and adequate. Secondly, we should be able to talk to energy suppliers, including Russia and as the European Union, as a whole, so that national and corporate egoisms do not win out over the need for European energy solidarity. Poland certainly does not understand the Nordstream project. What is the economic rationale for a decision whose outcome is a much more expensive transit of gas than by the traditional land route? For me, Nordstream is an example of a lack of energy solidarity.

FT: There will be presidential elections in Poland later this year; do you intend to run?

DT: Many of my countrymen ask me about this as the election nears, but I have a serious dilemma. On the one hand presidential elections are the highest profile political race, with the highest turnout, but on the other hand they lead to the election of a president who has little power besides a legislative veto. I do not like such negative powers because I am positively inclined, and I prefer to do good not bad things. On the one hand there is a public expectation that I should be a candidate, also so as complete the victory of 2007. What we have to do is to definitively remove the last vestiges of power from those who treat terms such as liberal democracy, free markets and Europe with suspicion. People expect me to accomplish this, but it also means a change of Prime Minister and the threat of a possible decomposition of the political system. On the other hand I would very much like to continue to work in the government and Civic Platform, because that seems to me to be the key element in ensuring success in the civilisational race in which we are engaged. There is also the option of putting forward a different member of Civic Platform in this battle, and ensuring that the government and ruling party remain in the best possible shape, and stable. I am not concealing that this is a serious dilemma, and one way or another, I will have to resolve it this winter. There will be an answer by March, but a lot depends on how our partners, the opposition and the president react to our reform proposals.

FT: How do you see relations with Russia, Germany and the European Union?

DT: My government is in no sense anti-Russian. Today, relations with Germany are better than ever. This is a good moment to talk with the Germans about issues that still need to be resolved. We have learned that the European Union is marked by quickly changing alliances of different countries around different issues. I feel that the era of the division into old and new members is ending. When some ideas linked to the climate change package unfairly affected the foundations of economies more reliant on coal, we had to organise – protecting the climate but also protecting the fundamental interests of these more energy-intensive economies. To this end we built an alliance of new member states on this issue. However, Poland certainly does not aspire to being the leader of the new [EU members] against the old. In fact, we want to end the division into new and old members as soon as possible. That is because, no matter how you look at it, the European Union is the best place in the world.

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