Polish Premier fires coalition partner's chairman

Polish Prime Minister Jaroslaw Kaczynski fired the leader of one of the coalition partners, leaving the cabinet without a majority in parliament and raising the specter of early elections. Lepper had threatened to pull his Self Defense party out of the coalition should the premier reject his demand to boost 2007 spending by 10%. „Poland needs peace and stability,” said Kaczynski in a speech on public television in Warsaw today. „Either we succeed in securing a new majority or early elections will need to be called.” Kaczynski's ruling Law & Justice has struggled to govern since it won elections a year ago. It was forced to seek a coalition in May with Self Defense and the Polish Families League, two parties that once objected to 2004 European Union entry. Leaders of the two junior partners have campaigned for more social spending as their support waned among voters, while Kaczynski is required by the EU to trim the deficit enough to adopt the euro. The Polish zloty fell for a second day, dropping 0.5% from yesterday to 3.983 per euro at 9:12 a.m. in Warsaw. The government five-year bond fell 0.04, pushing the yield up 1 basis point to 5.31%.
Kaczynski needs the approval of President Lech Kaczynski, his twin brother, for the dismissal, which he said may come today. He will try to persuade individual members of Self Defense to leave the party and support his government. Otherwise, early elections will be called, he said. Lepper opposed Finance Minister Stanislaw Kluza's plan to cap the fiscal shortfall at 30 billion zloty ($9.7 billion). Law & Justice officials called on individual Self Defense lawmakers to break from the party and back the coalition as independents. Jan Cepil, a Self Defense lawmaker, said in an interview today on private television station TVN24 that 15 of his parliamentary colleagues have already decided to leave and set up a separate parliamentary group that will support the Law & Justice-led government. That is still not enough to secure a majority for Law & Justice. (Bloomberg)