Polish crisis won't derail EU bid - PM

Polish Prime Minister Leszek Miller vowed yesterday not to let his decision to fire his coalition partner derail Poland's historic accession to the European Union.

Miller sacked the Peasants Party on Saturday after it revolted over a road tax bill, leaving his Democratic Left Alliance (SLD) 19 seats short of a parliamentary majority ahead of an EU referendum due on June 8.

Poland is the largest of 10, mainly eastern European countries which have won an offer to join the rich Western bloc in May 2004.

Another EU candidate, the Czech Republic, was hit yesterday by instability when Premier Vladimir Spidla called a confidence vote after the defeat of the coalition's presidential candidate. Spidla has a one-seat majority.

"Even though the ministers change, the goals of this government do not: The first is to join the European Union," Miller told reporters. He ruled out seeking new coalition allies, saying majorities could be built to pass key measures.

Shaking up his cabinet for the third time this year, Miller nominated Adam Tanski to the key farm portfolio, replacing Peasants Party leader Jaroslaw Kalinowski. He promoted Czeslaw Sledziak to the post of environment minister.

Tanski was long-time head of the state farm property agency and also served as a deputy farm minister in the early 1990s.

Kalinowski set a high price for keeping his party in the pro-EU camp after helping Poland win a better deal last year for its farmers than most other candidate states.

"The outcome of the referendum will depend on restoring farmers' confidence," he told reporters before listing a string of demands, including government top-ups for EU farm subsidies.

While around 70 percent of voters in this country of 38 million support EU accession, the countryside is sceptical and a 'yes' vote could be at risk if the Peasants swing into Poland's small but noisy eurosceptic camp.

Not only does Miller need a majority for the referendum result to be valid, but also turnout of at least 50 percent. Failure to achieve that would require both houses of parliament to ratify EU entry with a two-thirds majority.

"Everything depends on the Peasants: If they start a real war with the prime minister there may be trouble," said Andrzej Olszewski, of polling group TNS-OBOP. "I don't think it would affect public opinion. But it can affect turnout."

The collapse of the 16-month-old coalition came a day after Finance Minister Grzegorz Kolodko unveiled a long-term strategy to enable Poland to shoulder the costs of EU entry, and boost growth to fight unemployment, now at a record 18.7 percent rate.

The zloty hit a three-year low to the euro and bonds fell on fears that the government may fall if it fails to pass next year's budget, triggering elections not normally due until 2005.

But analysts said the sell-off might prove short-lived on a view that Miller may now be able to take a more pro-reform course without having to pander to the Peasants' rural voters.

"The market seems to be convinced that this crisis will be relatively short-lived. Some even believe that removing the Peasants would make the decisionmaking process easier," said Arkadiusz Krzesniak, economist at Deutsche Bank.