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INTERVIEW-Polish leftists back 2012 euro plan, doubt doable

Published 01/14/2009, 04:18 AM
Updated 01/14/2009, 04:24 AM
TGT
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By Karolina Slowikowska and Pawel Florkiewicz

WARSAW, Jan 14 (Reuters) - Poland's opposition leftists back a government plan to adopt the euro in 2012 but believe it will be delayed by conservative resistance to required constitutional changes, a senior leftist lawmaker said on Wednesday.

Poland must amend its constitution before it can replace the zloty with the euro but needs opposition backing to do so. The eurosceptic right-leaning main opposition Law and Justice (PiS) party has refused to back the 2012 target date, saying it is too early.

Wojciech Olejniczak, leader of the leftists' parliamentary group, told Reuters in an interview Poland should only initiate the lengthy process of adopting the euro after the next parliamentary election, due in 2011.

"We agree to 2012 (for euro adoption). This is a good moment and a great chance for Poland. Just like joining the European Union was a great chance for us, euro zone membership would be a civilisational leap for us," Olejniczak said.

"There is no doubt that the euro would be very beneficial. There would be more investment, it would make life easier for exporters as well as importers who must battle currency volatility now.

"It would also mean bigger access to capital, which would be very positive for consumers."

But given the PiS opposition to amending the constitution, he added, "this conflict will only be decided with the next parliamentary elections in 2011".

Prime Minister Donald Tusk's centre-right coalition has signalled it is ready to take Poland into the European Exchange Rate mechanism (ERM-2), the waiting room for euro adoption, in the first half of 2009 even without a constitutional amendment.

RISK

But Olejniczak said such a course was risky, adding that he thought Tusk had not yet reached a final decision on the issue.

Some economists have cautioned that the zloty might come under attack from speculators exploiting the political uncertainty if it enters ERM-2 -- where it trades in a fixed range against the euro -- before the constitutional change.

"Considering that a change in the constitution takes several weeks or even several months ... the (government's euro) timetable is pretty much already outdated," Olejniczak said.

In the official timetable for euro adoption, Warsaw plans to enter ERM 2 in the first half of 2009.

Poland's constitution currently stipulates that it is the sole right of the National Bank of Poland to issue money and conduct monetary policy. Once in the euro area, the European Central Bank would take over such responsibilities.

"We are waiting for a meeting with the prime minister (on ERM-2 and euro), we are waiting for his decision and a specific plan," Olejniczak said.

"Entering ERM-2 without a clear situation, that is without clearing the constitutional issue, is too risky," he added.

Olejniczak's leftists in parliament command 42 votes in the 460-seat lower house, not sufficient to help the government secure the two thirds majority required to amend the constitution. PiS has 156 seats.

Olejniczak said his party stood ready to help the government steer legislation through parliament, provided it listened more to the leftists' concerns.

With leftist support, the government can overcome vetos from President Lech Kaczynski, a political rival of Tusk who is also twin brother of PiS leader Jaroslaw Kaczynski.

"We want to work with the government ... I am a supporter of cooperation," said Olejniczak.

Poland's leftists lost power in 2005 amid corruption scandals and they have been dogged by internal divisions since last year's parliamentary election, leaving politics dominated by the right-of-centre parties of Tusk and Kaczynski. (Writing by Karolina Slowikowska; editing by Gareth Jones and Andrew Roche)

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