National Agenda : Taking Stock in Warsaw : Investors are jittery over the rising political capital of ex-Communists and their allies.

There is perhaps no better symbol of Poland’s rush to capitalism than the Warsaw Stock Exchange, the top-floor tenant in a downtown financial center that was once home to the Communist Party.

Where ruling apparatchiks earlier plotted the course of Poland’s centralized command economy, aggressive investors now dream of striking it big in Eastern Europe’s fastest-growing and most-talked-about market economy.

So it is with understandable trepidation that many brokers and investors view Poland’s future in the wake of stunning parliamentary election victories by two parties with strong ties to the building’s ousted tenant.

Finishing first was the Democratic Left Alliance, led by members of the former Communist Party; close behind was the Polish Peasant Party, successors to the old regime’s stalwart rural allies. The two parties are trying to form a coalition government--the first left-wing administration in post-Communist Poland.

“It is the uncertainty,” mused a troubled Piotr Szeliga, director of the exchange’s quotations department from his remodeled office near the trading floor. “It is very difficult to know what is happening. The stock market in Poland has no experience in reacting to changes in the political environment.”

For starters, stocks immediately dropped--some the 10% daily maximum permitted under exchange rules--with the Warsaw index losing nearly 13% in the two trading days following the election. By contrast, the market soared for weeks before the vote, with the index rising a whopping 50% in August alone.

Although the 2-year-old market is notoriously volatile, the swift response to the political turnabout mirrors a muted yet widespread unease in financial circles about Poland’s economic well-being.

There has been no panic, but what has been seen for many months as the virtually unqualified good-news story of Poland’s economic transition is going through a thorough re-evaluation from Washington to London to the New World Street brokerage houses here in Warsaw.

“This is going to scare some people away,” said Tomasz Telma, a Polish economist for Washington-based PlanEcon Inc., an investment consulting firm specializing in Eastern Europe and the former Soviet Union. “The election results sent some shivers through Western executives that were about to sign agreements or considering investing in the country.”

Andrzej Krzysztof Wroblewski, a prominent Polish commentator and editor of the financial weekly Gazeta Bankowa, predicted that the “common sense” of the former Communists will ultimately keep them from undoing the economic reforms. Nonetheless, he said, his advice to cautious foreign investors would be to wait and see.

“If they reach for the lock on the treasury, it is bad,” said Wroblewski. “It would mean they are leaning toward the left and would confirm their reputation as post-Communists, who as we know, consume first and worry about tomorrow later.”

The biggest problem for investors is not knowing who will be in charge of the new government and what business and economic policies it will pursue.

In the highly competitive international market, such uncertainty translates into higher risk; that in turn makes Poland less attractive to investors, some of whom might look elsewhere in Eastern Europe, or as some analysts predict, in South America or Asia.

On the key issue of privatization of state-run enterprises, for example, the Democratic Left provided the crucial votes needed to pass a far-reaching law last spring. But some party members vehemently opposed the law, as did the Peasant Party, which complains that most privatization amounts to a squandering of state assets.

Where a new government will ultimately stand on the issue is anybody’s guess.

After the last parliamentary elections in 1991, it took two months before a governing coalition could be agreed upon.

“Foreign investors are watching the situation carefully,” said Damion Damianos, head of the Warsaw office of the International Finance Corp., which funds 27 private projects in Poland. “I suspect they will not make any new commitments or put on hold any previous engagements until a government is formed and its program is known.”

Aware of nervousness in the financial community, Democratic Left leaders are going to great pains to assure investors that they are committed to democracy and a market economy. Self-described social democrats, they even issued an appeal to foreign journalists to stop labeling them as Communists, former Communists or post-Communists.

At the same time, however, the strong showing of the Democratic Left and the Peasant Party has been widely attributed to their campaign promises to ease the pain of capitalism for old-age pensioners, the working poor, farmers and employees of state-run enterprises.

In shorthand, that means turning the clock back and dipping deeper into the state budget to increase salaries, stipends and benefits. The outgoing government of Prime Minister Hanna Suchocka found that to be impossible without adding to the budget deficit, which has been painstakingly controlled under constraints imposed by the World Bank and International Monetary Fund, two of the country’s biggest financial backers.

Democratic Left Alliance leaders have been reluctant to say exactly how or when they will fulfill their campaign promises, but they have hinted it may take longer than some of their constituents had hoped. Those hints have raised hopes in financial circles that pragmatism will prevail over dogmatism.

“Objectively, the economy does not provide a lot of room for maneuver,” said Damianos. “If you are not prepared to go down the path of hyperinflation, you need to control the budget deficit and your monetary policy, whether you are a Communist, a socialist or a capitalist.”

Party leaders, nonetheless, have helped fuel some of the unease by making conflicting statements about issues of key importance to investors, from capital gains taxes to the independence of the National Bank of Poland. One official, for example, implied that the new government would consider ousting the president of the National Bank, who has been praised internationally for her monetary constraint. The statement was later denied.

Even with the uncertainty, official prognoses from the World Bank, the International Monetary Fund and the European Bank of Reconstruction and Development remain optimistic. Leaders of all three institutions predicted that the new government would not dramatically shift economic policy.

The forecast was also upbeat from the deputy director of the Bank of Slaski S.A., a state-owned bank scheduled to be privatized next month. Justyn Konieczny said that inquiries from around the world for the bank’s prospectus have continued.

Konieczny said he fears that Poland’s reputation among international investors has been tarnished, but speaking as a seasoned capitalist, he predicted that the market “will adjust to the new conditions.”

Besides, he said, many leaders of the Democratic Left cashed in their Communist connections for lucrative business deals, giving them a big stake in the current reforms. “They have all become businessmen themselves,” he said.