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Financial Times: Could you sum up your first year in power?

Donald Tusk: Poland finds itself today in a breakthrough moment. After two years of government by PiS [the opposition Law and Justice party] which created a lot of negative emotions and the elections won by Civic Platform I am convinced that Poland is ready for a civilisational acceleration, although the world is being shaken by the economic crisis. A key element in the actions of my government’s first year was the removal of many barriers blocking development. Poland is a country where taxes are really being lowered and simplified. My government has in recent months successfully waged a battle against excessive bureaucracy in the government and in the economy. Over 100 legislative projects which were submitted to parliament this autumn dealt with excessive regulation. … We are freeing people from the power of bureaucrats … We have radically reduced the number of controls to which companies are subjected. This has been a year of preparing the ground for the next leap forward in Poland’s economic development. We have to remember that our country, probably as the only one in the Union, is starting the new year with lower and simpler personal income taxes – we are dropping to rates of 18 and 32 per cent, and that despite the financial crisis in the world.

FT: Last year you talked about taking a “machete” to red tape, have you had success in battling bureaucracy?

DT: If problems arise with the speed of our actions, that is mostly because of the antagonism of the opposition and the president to the reforms being proposed by the government. Today, the most important political instrument in the hands of the opposition is the presidential veto. A brake on change is also administrative routine. What occupies most of our energy is breaking the resistance of the bureaucracy. The process which I really began together with my government relies on taking power away from the administration and giving it back to the citizens. It is obvious that the bureaucracy defends itself against this. I am not 100 per cent satisfied with the effects of our actions, but please note that we are the first government to undertake the key task … of pension reform. We are fighting a political battle out of care for future generations and decent pensions, which means moving away from unjustified early benefits, that is early retirement. We are the first government in Poland which said it will not bend before labour unions, and we did not bend. A second important thing is the reform of hospitals. … These two battles are being conducted simultaneously and really can’t be done in a month. The same applies to big infrastructure projects. Here we also had to devote a lot of time to remove the administrative blockades dealing with highway construction, electricity generation, and rail lines. We simplified land expropriation procedures, and unified environmental procedures so that Poland follows the ecological regulations rigorously enforced by the European Union.

FT: What have been your biggest failures?

DT: I don’t feel a sense of failure in any area, because we are only a quarter way through our term … For me a personal disappointment has been the flagrant presidential vetoes in key areas of reform for this coalition. We have not been able to work out a good formula for cooperating with the opposition and the president. Those political, rather than substantive vetoes in large measure limit the possibility the chance for fast reforms. A second area is the constant negotiations over the climate change proposal … My predecessors were not careful and accepted a framework which does not recognise the specifics of the Polish economy. Repairing the mistakes of the previous coalition will still take some time. I am also disheartened by problems in the process of improving Polish-Russian ties, mainly because of the conflict in the Caucasus. We showed a lot of good will and Russia also appeared interested in improving ties with Poland, which means with the whole Union. My meetings with Putin and Medvedev showed a good direction. However, the crisis in the Caucasus definitively showed that this process will not be easy.

FT: Does Russia pose a danger to Poland?

DT: I try to think of Russia as a potentially positive partner for Poland and the EU. However, is Russia ready for such a positive symbiosis? Sometimes I think there is an improvement and sometimes we see a worse side of Russia.

FT: How are Poland’s ideas for Russia received in Brussels?

DT: I get the impression from European capitals that there is a clear expectation that Poland play the role of a leader in the positive change of European-Russian relations, and that is the policy we are trying to follow. We don’t have any particular illusions about Russia and I think we see her rationally. I am one of the politicians who does not have an anti-Russian obsession. In Brussels and in many European capitals this change in Warsaw’s approach was treated very well, even with relief.

FT: How do you see the prospect of Poland adopting the euro by 2012?

DT: In contrast with my opponents, I think that adopting the euro by 2012 is realistic and we will be able to prepare our country for its adoption. I am not dogmatic. If circumstances arise which will dictate a correction of the agenda I am ready for serious talks. It is worth noting that today Poland is in many respects more stable than some member of the euro zone. What gives me particular satisfaction is the level of unemployment. According to Eurostat it is lower than in Ireland; according to various criteria it is between 6.5 and 8 per cent. Three years ago it was 18 per cent. Not long ago we were very worried about the scale of migration, especially of young people, however today many more people are returning to Poland than are leaving.

FT: A key issue for adopting the euro is an agreement with the opposition…

DT: When I talked to the leaders of the European Central Bank, I found out that in their view a political and social consensus is one of the key conditions in every country which aspires to the euro. Today in the Polish parliament we have four parties – two in government and two in opposition. One of the opposition parties, the left, supports our project. The second, that is PiS, is sceptical. We have created a multi-party team of experts, I am meeting with opposition leaders, we are working closely with the Monetary Policy Council, the NBP [National Bank of Poland]. We are hoping to use persuasion and argument to build a consensus around this matter which is so important for Poland. As prime minister, I am going to look for a bridge, a way that will allow the opposition to accept this project.

FT: And will a referendum be necessary?

DT: That is a major misunderstanding. Poland has already had a referendum, which decided whether we would be members of the EU, so the decision as to whether we would potentially be in the euro zone has already been taken. PiS is suggesting that there could be a referendum as to the date of entry. I am trying to explain that such a referendum makes no sense. I am going try to find a different way than a referendum to persuade the opposition.

FT: Is Poland ready for the economic crisis? What will be its effects?

DT: The effects of this crisis are not particularly visible in Poland. That stems from the fact that our banking system is quite stable, compared to banks in other countries there are almost no toxic assets. If there are any negative effects, that is mainly because things are not always that good with our neighbours. Poland’s position in the region is fairly unique, but we do realise we will also be affected by the crisis with a recession in Germany, Ukraine or Russia. In Poland we do not have an excessive enthusiasm for anti-crisis regulations, the time of etatism has not returned. … the answer to the crisis cannot be a return to socialism. The government has taken steps which give security and will retain a high level of confidence in the government and financial institutions. We have increased the guarantee on bank deposits to €50,000. … For my government the most important thing is to retain the foundations of a healthy economy, which allow to look to the future with optimism. We will not increase the deficit, instead we will cut spending. That is the best test of our country’s credibility. When I talk to European politicians, who boldly tell me how much money they are going to pump into the economy, I pose the question, `Where do you have the money for that?’. We aren’t saying that because we don’t have gigantic sums of money. I don’t think that borrowing money on a huge scale is a good method of resolving the crisis.

FT: How about the missile defence shield and relations with the United States?

DT: For Poland the United States is the most important ally. We have to build our security based on strong and loyal friends. After accepting several key Polish conditions, the missile defence shield gained our acceptance, if the new administration continues with the project of installing it in Poland. Thanks to the agreement with the Americans, American help has increased in the area of modernising our defence potential. We are taking part in peacekeeping missions in a more thought out and active way. We do that when, in our view, it is important for the security of the world and of Poland. We are present in Afghanistan on a really large scale, and at the same time we have ended the Polish mission in Iraq. We are autonomous of the United States, which does not change our conviction that it is Poland’s strategic ally.