By Marcin Goclowski and Pawel Florkiewicz
ARLAMOW, Poland (Reuters) - Poland's ruling conservatives are undoing the progress the country has made during more than 25 years of democracy but they will be swept from power once they run out of cash to fund their welfare programs, Lech Walesa said in an interview.
Walesa, who led the Solidarity trade union that overthrew communism in 1989 and became Poland's first freely elected president since World War Two, also urged critics of the government to support a new grassroots pro-democracy movement.
"There isn't much that can be done while populism is working," said Walesa, now 73. "We need to wait until ... they run out of money to spend. Then the masses will return to support those who oppose what is going on in Poland right now."
"Poland used to have a bad reputation. We fixed it and things became fine and now they are taking us back again," said Walesa, speaking in a mountain resort in southeastern Poland where he was once imprisoned by the communist authorities.
The right-wing, eurosceptic Law and Justice party (PiS) won a landslide victory in last year's election on a platform of increased social spending, Catholic family values and nationalism.
The government remains popular but the economy is slowing and its efforts to reform the constitutional court and assert control over state media have drawn criticism from the European Union and rights groups.
"TOO FAR RIGHT"
PiS leader Jaroslaw Kaczynski once worked with Walesa in the Solidarity movement but they later fell out. Kaczynski accuses Walesa of collaborating with the communist regime and then of presiding over a sharp rise in economic inequality after 1989.
Walesa, a Nobel peace laureate, has retired from active politics but remains an outspoken and divisive figure in Poland.
He told Reuters opponents of the PiS government should support the Committee for the Defence of Democracy (KOD), which has organized anti-government protests this year.
Walesa also criticized the government's recent costly decision to cut Poland's retirement age - to 60 for women and to 65 for men, reversing a phased move under the previous government towards 67 for all Poles. [nL8N1DH59U]
"They (PiS) are giving everything away. When the whole world is working more, we are working less," Walesa said. "We are going be uncompetitive."
Economists say PiS has the financing for its welfare plans, including a near-universal child subsidy, in the near term, but slowing growth could threaten their sustainability.
The Polish economy slowed to 2.5 percent year-on-year in the third quarter of this year from 4 percent in the last three months of 2015. Economists polled by Reuters expect the economy to expand by 3.1 percent in 2016 and 3.4 percent in 2017.
Walesa said Poland's issues with democratic standards were part of a broader populist revolt that included Donald Trump's election as U.S. president and the growing popularity of French far-right leader Marine Le Pen.
"We have forgotten what democracy is and we seem to have lost faith in it," he said. "The world keeps searching now and in this search Poland has gone too far right ..."
Asked about Russia, Poland's historic foe, Walesa said he expected President Vladimir Putin to hold back on further military action in eastern Europe after the 2014 annexation of Crimea from Ukraine.
"Putin has experienced such losses that he is now thinking how to extricate himself," Walesa said, adding that the cost of Moscow's conflict with the West was becoming too heavy to bear.
(Editing by Justyna Pawlak and Gareth Jones)