Warsaw: Moderate conservative Bronislaw Komorowski won Poland’s presidential election on Monday after a cliffhanger vote that saw his right-wing rival Jaroslaw Kaczynski perform much better than expected.

Komorowski’s narrow victory, which must be confirmed by final results later on Monday, will bring relief to investors who feared Kaczynski, leader of the main opposition party, would veto reforms needed to repair Poland’s battered public finances.

Komorowski, who hails from Prime Minister Donald Tusk’s ruling market-oriented, pro-euro Civic Platform (PO), won 52.6% of the vote in Sunday’s election, based on 95% of the ballots cast, the election commission said.

Kaczynski, the identical twin brother of President Lech Kaczynski whose death in a plane crash in Russia in April precipitated the election, received 47.4% of the vote, the commission said. Final results are due on Monday afternoon.

Kaczynski, head of the Law and Justice party (PiS), briefly nudged ahead of Komorowski during the vote counting, hours after he had conceded defeat. But as results rolled in from bigger cities, mostly PO strongholds, Komorowski regained his lead.

In Poland, the government led by the prime minister sets policy, but the president can propose and veto laws, appoints many key officials and has a say in foreign and security policy. Lech Kaczynski vetoed several government bills before his death.

Komorowski’s victory could boost the zloty currency on Monday, but economists caution that Tusk’s government is unlikely to risk radical fiscal steps before next year’s parliamentary election, especially after Kaczynski’s strong election showing.

Spending cuts mooted

“The positive reaction on the financial markets (to a Komorowski victory) could be short-lived," said Maciej Reluga, chief economist at Bank Zachodni WBK in Warsaw.

“It is clear, however, that the government will not be able to blame the president’s potential veto from now on for preventing it from passing important legislation."

Tusk signalled late on Sunday that some public spending cuts may now be in the pipeline.

“From Monday we need to start working harder than in the past," Tusk told reporters after Komorowski claimed victory.

“We want to spend money in a reasonable way and this will require the support of politicians and citizens. I will ask my political partners and the parliament to help impose some discipline in our public finances," Tusk said.

The European Union’s largest ex-communist member is the only economy in the 27-strong bloc to have avoided recession last year, but a sharp slowdown has hammered tax revenues and driven up the budget deficit to 7% of gross domestic product.

Public debt, though low by west European standards, is creeping towards the 55% of GDP threshold which, if breached, would by law trigger painful spending cuts.

Despite overcoming the risk of a presidential veto, PO faces other hurdles in the way of reforms. It is locked in a coalition with the small Peasants’ Party which is opposed to any attack on the pension privileges of farmers and other occupational groups.

Diplomatic relations

Komorowski, a gently-spoken father of five grown-up children, will be Poland’s fourth democratically elected president since the fall of communism 1989. Two predecessors, Lech Walesa and Aleksander Kwasniewski, had both backed his bid.

As speaker of Poland’s lower house of parliament and second ranking official in the state hierarchy, he automatically became acting president on Lech Kaczynski’s death in the plane crash.

His election to a five-year term will be welcomed in other EU capitals and in Moscow because Komorowski backs Tusk’s efforts to improve foreign ties that came under strain during Jaroslaw Kaczynski’s short stint as prime minister in 2006-7.

“Komorowski’s win bodes well for Poland in Europe. His presidency will enable Poland to integrate with the European Union," said Kazimierz Kik of Kielce University.

“I think there is a high possibility for Poland to cooperate with Germany and to adopt Berlin’s viewpoint on some important issues, for example concerning more open ties with Russia."

Tusk, who has fostered strong ties with German Chancellor Angela Merkel, also wants to take Poland into the euro zone as soon as possible, though given the bloc’s woes that is now unlikely to happen before 2015 at the earliest.

Conceding defeat on Sunday evening, Kaczynski told supporters his good result in the election boded well for local elections in the autumn and next year’s parliamentary poll.

“We have to win them and we will," he said.

Kaczynski’s blend of Catholic piety, opposition to some free market reforms and distrust of big business, EU bureaucrats and Poland’s historic foe Russia strike a deep chord, especially among older, poorer and provincial voters.