Polish PM's party expected to win election

WARSAW (Reuters) - Poland's centre-right Civic Platform is likely to win four more years in power in a parliamentary election Sunday and press on with gradual economic reforms and closer ties with the European Union.

Prime Minister Donald Tusk's Civic Platform led the final opinion polls but outspoken former premier Jaroslaw Kaczynski's conservative-nationalist Law and Justice party narrowed the gap in some polls at the end of campaigning.

No party is expected to be able to rule alone and Tusk is likely to turn to his current coalition partners, the Peasants' Party, if he wins. But opinion polls show Palikot's Movement, a new party which supports gay rights, abortion and legalisation of soft drugs, could emerge as a potential partner.

Tusk, who steered the country of more than 38 million people

safely through the 2008-09 global financial crisis, has portrayed himself as a guardian of stability and said he will continue his cautious approach to economic reforms if he wins.

"At stake in this election are security and the stable development of our country. In my view, only PO (Civic Platform) guarantees that," Tusk said Friday.

Law and Justice leaders have promised more state involvement in the economy, including a bank tax and higher taxes for the rich, and vowed to wind down large-scale privatisation carried out since Civic Platform took power in late 2007.

"If Poland becomes a strong, developed country, we won't have to privatise Polish companies, sell state firms for peanuts or privatise hospitals," Kaczynski told the Fakt tabloid.

Even if Law and Justice wins the most votes, it would be likely to struggle to put together a coalition.

More than 30 million people are eligible to vote. They will elect 460 lawmakers in the lower house, the Sejm, and 100 to the upper chamber, the Senate.

Voting starts at 0700 (0500 GMT) and ends at 2100 (1900 GMT), when the first exit polls will be released. The official result will take several hours to come in.

ECONOMIC CHALLENGES

Poland's main immediate challenge is to curb the public debt and deficit, which ballooned during the financial crisis.

Ratings agencies have said they could downgrade Poland if it

does not swiftly act to reduce the budget deficit, expected to reach 5.6 percent of gross domestic product this year, and the public debt, expected to reach 53.8 percent of GDP this year.

Economists doubt Law and Justice would be able to meet the challenge and a short-term sell-off would be likely on Polish financial markets if it won.

The current coalition, however, has failed to deliver on the far-reaching liberal market reforms Tusk originally promised.

Civic Platform is likely to woo the Peasants' Party again, and Tusk has said he would not want to rule in a tri-party coalition. Sources in his party have said it might try to win over individual leftist lawmakers if it is close to a majority.

But the new libertarian party led by Janusz Palikot, a wealthy businessman and former Civil Platform lawmaker, has emerged as a potential partner after a late surge in opinion polls. It has criticised Poland's powerful Catholic Church.

The outcome could depend heavily on how many people vote as a low turnout is likely to favour Law and Justice, whose core electorate is traditionally loyal.

Any prolonged uncertainty over the shape of the coalition could unsettle financial markets in Poland, which holds the EU presidency until the end of this year, a largely formal role.

FOREIGN POLICY AGENDA

At stake is also Poland's international agenda. Tusk, who is strongly pro-EU despite the euro zone debt crisis, differs on foreign policy to Kaczynski, who deeply distrusts Poland's largest neighbors, Germany and Russia.

Tusk made improving ties with Germany, which occupied Poland during World War Two, a priority after relations sank under Poland's previous government, led by Kaczynski. Kaczynski raised eyebrows in Germany again this week by repeating in a new book his view that Berlin is trying to subdue Poland.

Tusk has also embarked on a cautious rapprochement with Moscow, which held sway in Poland for decades until the collapse of communist rule in Poland in 1989.

This policy, however, has suffered following a plane crash in Smolensk in western Russia which killed then President Lech Kaczynski, Jaroslaw Kaczynski's twin, and all 95 others on board

Moscow says mistakes by Polish pilots were the sole cause of the crash in April 2010. Warsaw says it believes Russian ground controllers also played a role in the tragedy.

Kaczynski accuses Tusk of betraying Poland's national interest in Warsaw's dealings both with Berlin and Moscow and believes Tusk and Russian Prime Minister Vladimir Putin bore some responsibility for his brother's death.

Kaczynski's combative rhetoric on that issue has enabled Civi Platform to highlight the risks it says would stem from any return to power of Law and Justice by deepening social divisions and antagonising Poland's allies.

(Writing by Gabriela Baczynska)

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