World Economy

Poland Warned of Economic Trouble

Poland Warned of Economic TroublePoland Warned of Economic Trouble

The Polish government’s anti-democratic actions risk weakening the nation’s economy, according to the European Union official who’s overseeing an unprecedented probe that could strip Warsaw of its voting rights in the bloc.

Frans Timmermans, principal vice president of the European Commission, said the ruling Law & Justice party’s attack on judicial independence has given foreign investors jitters about the credibility of the Polish legal system.

“You would be surprised how many international investors are quietly—they are not public about this—asking ‘is this going to be fixed because we are worried about the security of our investment?’” Timmermans said in an interview with Bloomberg News in Brussels. “This is also a business issue.”

The alert highlights the range of economic threats to Poland stemming from the EU’s first-ever investigation of a member’s respect for the rule of law. In addition to threatening a suspension of Poland’s EU voting rights, the probe that Timmermans opened in early 2016 has sparked a parallel debate in Europe about whether the country should be denied billions of euros in European regional-development funds after 2020.

Poland, one of the EU’s fastest-expanding economies with growth last year of 2.7%, has moved to the top of the European political agenda by provoking fears of a shift toward authoritarian rule that communism’s collapse in eastern Europe more than a quarter century ago was deemed to have ended.

The spotlight is currently on how Law & Justice, which is led by Jaroslaw Kaczynski, opts to reconfigure two pieces of legislation on the judiciary that Polish President Andrzej Duda vetoed in July after sharp criticism by the Brussels-based commission, the EU’s executive arm. The legislation would have dismissed the entire supreme court and revamped the judicial council, which makes key personnel decisions.

“Especially the issue of firing supreme court justices would be an extremely grave situation,” Timmermans said. “We are now waiting for the Polish president to make the amendments” and “we will study them once they are put on the table.”

In a recommendation to the Polish government in late July, the commission signaled that this matter would be a red line for recommending that EU governments trigger the European treaty’s Article 7, which foresees the option of depriving a member country of its voting rights in the bloc.

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