* City gardeners say under siege from property developers
* Legal ruling could clear way for gardens to be built on
* Poland needs developers' investment to sustain economy
* Row mirrors tension between capitalism and old customs
By Christian Lowe and Anna Wirowska
WARSAW, Aug 3 (Reuters) - Krystyna Pakulska walks down a dirt track lined with silver birch trees and stops for a moment to breathe in the air.
"Look at the beauty around you, the flowers and the trees," says the 59-year old, a retired employee of Polish state television. "Why destroy this beautiful land?"
This is an allotment garden, one of dozens carved out of the Polish capital by the country's previous rulers so that workers could relax in their spare time by tending flowers and shrubs on their personal plots.
Two decades after Poland threw off Communist rule, this relic of a more sedate past is colliding with a modern reality: the appetite of the market for space to build new apartment blocks, offices and retail parks.
This rural idyll is right in the centre of Warsaw and that makes it a prime real estate spot.
A calculation based on market data from real estate firm Colliers International shows that if a garden in central Warsaw were available for residential development, the smallest plot could sell for 165,000 euros, and probably several times more depending on the number of floors in the planned building.
For now that price exists in theory only. Developers cannot touch the allotments, also known as community gardens, because they have special protected status under Polish law.
But the country's constitutional court ruled in early July that this status had to change, a decision the gardening fraternity says will be exploited by property developers to pick them off one by one, buy up their plots and build on them.
Silver-haired members of the Polish Association of Allotment Holders protested outside the court, and gardeners vowed they would not surrender their plots without a fight.
The row resonates with ordinary Poles too, most of whom can remember summer afternoons from their childhood spent pottering around in a relative's allotment while the grown-ups enjoyed a beer or vodka. Newspapers ran front-page stories on the court ruling and politicians debated it on television talk shows.
The fight over the garden plots has become a proxy for a bigger conflict being played out in Poland, between the desire for modernity and living standards on a par with the rest of Europe on one hand, and on the other an attachment to older values of family and community.
In the years since the Berlin Wall fell, Poland has embraced the market so enthusiastically that it is now more capitalist than some countries in western Europe.
It worked. Poland's economy has grown uninterrupted since 1992, and last year was still growing at 4.3 percent, even while growth slumped in the rest of the European Union.
Yet the outpouring of feeling over the allotments has revealed a side of Poland which - possibly influenced by the financial crash on Wall Street and the tribulations of the euro zone - has a more nuanced view about the value of wealth.
"There are people for whom money is not the most important thing," said Emilia Borkowska, 60, deputy head of the Rakowiec allotment collective just south of Warsaw's city centre.
The community garden she helps run is divided into about 520 fenced-off plots, each slightly bigger than a tennis court.
Most are like the one owned by Krysztof Borkowski, a 49-year-old policeman. In one corner sits a tiny Alpine-style chalet, where he can shelter from the rain.
The rest of the space is taken up with a manicured lawn, a bush which he has clipped and trained so the foliage is formed into a geometrically perfect spiral, wisteria, a peach tree, an apricot tree, and a grape vine.
Asked what he makes with the grapes, the bare-chested Borkowski, standing next to his elderly mother, laughed: "Only red wine. I'm sorry, I don't have any today."
Founded in 1927 during a brief period of Polish independence, the history of the Rakowiec garden traces the jagged arc of Poland over the past 85 years.
When Nazi Germany invaded in 1939, resistance fighters used the garden as a hiding place; its archives record 12 Mauser rifles, 9 pistols and 200 grenades stored in one allotment.
Communists installed by Moscow took over after the war, and the allotments were re-named "Workers' Gardens". Owners grew vegetables to make up for the shortages of food in the shops.
Poland was convulsed again when Lech Walesa, a shipyard worker from the port of Gdansk, led the Solidarity protests that toppled Communist rule. Investors arrived, followed by construction cranes. Warsaw became a bustling financial hub.
Yet inside the shrub-lined fences of the Rakowiec garden, little changed. The families who had owned the plots for generations kept them, for the most part, and the gentle rhythm of planting and weeding and watering carried on as before.
PRIME REAL ESTATE
Lately though it has grown harder to resist the intrusion of the outside world. Twenty years of economic growth have left real estate developers with a dwindling supply of prime sites where they can profitably build.
Poland needs the developers' investment. The European Union money that has so far buoyed Poland's economy will flow less freely in the next few years. Economic growth next year is forecast to slow to 2.1 percent, half the figure for 2011.
There is still a lot of building to do to make up for the stagnation during Communist rule. Warsaw has 2 square metres of office space per capita, while the European average is 5 square metres per head.
"We need to catch up," said Marta Sikora-Drozda, senior consultant with real estate firm Jones Lang LaSalle. "These (gardens) are very attractive places for residential development, green and situated in prestigious districts with convenient communications from the centre."
She said that some developers had, a few years ago, looked into acquiring community gardens and then walked away when they came up against laws which protected the allotments.
The ruling on July 11 by the constitutional court may change that. The court decided that the law on the gardens' status was unconstitutional because it gave the Polish Association of Allotment Holders monopoly control over the gardens.
Tomasz Terlecki, lawyer for the allotment holders' association, says the law must now be re-drafted, giving developers an opportunity to lobby for the changes they want.
"The regulations ... will be more liberal in the future, which of course will be more beneficial for the developers," said Terlecki.
Back in Rakowiec, the allotment holders are preparing to fight off approaches from developers.
If the garden is put up for sale, the allotment holders might get some kind of pay-off but not enough to buy anything comparable. The state owns the land under the plots, so it would receive the bulk of any compensation from the developer.
Pakulska, the former Polish television employee, has had an allotment in her family since 1971. She does not know what she would do if it was taken away.
"They (businessmen) want to build supermarkets and malls here. It is about money and nothing else. I understand it because it's about the market," she said.
"But why here?"
($1 = 3.4693 Polish zlotys) (Additional reporting by Marcin Goettig; Writing by Christian Lowe; Editing by Patrick Graham and Ralph Boulton)
Warsaw's Garden Oases Collide With Economic Realities