Polish Politics Keeps Market Off Balance
POLISH stock prices have shown signs of stabilizing, but the uncertainty created by a bitter political dispute continues to trouble the country's fledgling market.
Overall, the value of stocks listed on the Warsaw Stock Exchange has plunged more than 50 percent since March 8. Last year, the Polish market was the world's best performer, jumping more than 700 percent in dollar terms.
The market began to drop rapidly on April 10, when the Warsaw stock index fell 10.7 percent, followed by a 10.5 percent drop a day later. The decline prompted market regulators to suspend a rule for the following three sessions that limited price movement on shares to 10 percent.
On April 15 - the first trading session conducted without the 10 percent rule - stocks fell another 6.7 percent. That elicited sighs of relief from many market watchers who were worried that the decline might accelerate.
The ongoing power struggle between President Lech Walesa and the left-wing government of Prime Minister Waldemar Pawlak has been a contributing factor to the market crash.
The power struggle revolves around the appointment of a new finance minister to replace Marek Borowski, who resigned in February. President Walesa is refusing to confirm the Pawlak government's nominee for the post, Dariusz Rosati, an economist who has worked for the last three years for the United Nations in Geneva. The Pawlak government refuses to put forward another candidate for confirmation.
Over the weekend, Aleksander Kwasniewski - the leader of the Democratic Left Alliance, the largest party in the governing coalition - called for talks with Walesa after the president threatened to disband the parliament and call new elections.
Walesa's threat followed a call by several leftist parliamentary deputies for a constitutional amendment allowing the legislature to override a presidential veto of a Cabinet appointment. However, experts say Poland's Basic Law does not give Walesa the power to dissolve parliament in the present situation.