Poland's ruling twins to consolidate power

WARSAW, July 10 (Reuters) Polish conservative president Lech Kaczynski will nominate his twin brother Jaroslaw as prime minister today, cementing their grip on power and raising concerns about Poland's further tilt towards nationalism.

In a surprise decision on july 8, Jaroslaw, leader of the ruling Law and Justice party, decided to replace popular Prime Minister Kazimierz Marcinkiewicz after clashing with him over appointments to state posts.

The consolidation of power in the hands of the twins, seen as prickly traditionalists with little understanding of market economy, sent the zloty down by 1.4 percent in late trade on july 7.

In a bid to calm markets Kaczynski swiftly announced yesterday he picked as his finance minister Stanislaw Kluza, a former commercial bank economist and the deputy of respected former finance minister Zyta Gilowska.

The zloty eased a further 0.3 per cent against the euro in early trade today, but local dealers said further losses were likely to be limited.

''The zloty is already quite low, but I think investors had a whole weekend to digest what happened and, in fact this is a government of continuation,'' said Andrzej Krzeminski, chief currency dealer at Bank BPH.

''Kluza is not someone unknown, he has worked for the ministry and knows what he's doing,'' he added.

TIGHT BUDGET Kluza told Reuters in an interview yesterday that fiscal reforms and tight budget policies would be his main priority and that Poland was set to meet euro zone criteria in 2009.

Jaroslaw Kaczynski will be nominated for prime minister at the presidential palace today and parliament will confirm him and his cabinet within days, parliament speaker Marek Jurek told TOK FM radio.

EU diplomats and opposition politicians saw Marcinkiewicz, barely eight months in office, as a guarantee that Poland would remain in the European mainstream and fear Kaczynski will take a more confrontational course.

''I am afraid that with Jaroslaw Kaczynski as new prime minister Poland will become more extreme, more anti-European and more xenophobic,'' said Bronislaw Komorowski, a senior figure in the opposition Civic Platform.

The Kaczynskis see euro adoption, to which Poland is committed by the European Union accession treaty, as a move that will limit hard-won national sovereignty.

Their governing alliance with anti-Western, far-right nationalists and fringe leftists earlier this year prompted concern among Poland's Western partners and led domestic critics to accuse the Kaczynskis of pushing the biggest ex-communist EU member into isolation.

The Kaczynskis, former anti-communist activists, insist they are good Europeans, who are simply more assertive in defending national interests than their leftist and centrist predecessors who ruled since communism collapsed in 1989 until last year.

But they raised eyebrows abroad and prompted accusations of incompetence at home again this week when they demanded an official condemnation by Berlin of a satirical article in a German paper that lampooned them.

Their party was at pains yesterday to cast the reshuffle as having nothing to do with policy but as a tactical move ahead of local elections in November, freeing Marcinkiewicz to deploy his popularity in the key contest for Warsaw mayor.

REUTERS MQA PM1333