Wednesday, October 14, 2009

NYT: No-Confidence Vote Topples Romanian Government

PRAGUE — The Romanian government collapsed after a vote of no confidence Tuesday, further undermining the economy of a country already severely buffeted by the global financial crisis.

The toppling of Prime Minister Emil Boc’s centrist government — the first time a government in Romania has been dismissed since the fall of Communism in 1989 — reinforced the sense of political upheaval in Eastern and Central Europe. A succession of countries in the region, including Hungary, the Czech Republic and Latvia, have seen their governments collapse in recent months amid economic hard times.

Mr. Boc said his government “has lost a battle and not the war,” after legislators voted 254 to 176 in support of the motion.

Under the Constitution, Mr. Boc’s government can remain in office until a new prime minister is appointed by the president. The new prime minister would then have 10 days to form a cabinet subject to parliamentary approval.

Economists said the political instability threatened Romania’s already struggling economy and would make it more difficult for Romania to meet the terms of a €20 billion, or $29.7 billion, aid package it received from the International Monetary Fund and European Union this year to help finance its current-account and budget deficits and pay state sector salaries.

Radu Soviani, a leading economist, said the crisis threatened to increase the cost for Romania to secure outside financing, to undermine currency stability and to scare off foreign investors.

“This is bad news for the economy and more proof that the political class in this country has refused to recognize that we are in the middle of an economic crisis and has failed to do what is necessary to turn things around,” Mr. Soviani said.

The weakening economy threatens to fan social unrest. In recent weeks there have been protests and strikes by railroad and other public sector workers.

While opposition parliamentarians tried to characterize the vote as a punishment for Mr. Boc’s poor stewardship of the economy, analysts said it had been at least partially motivated by the desire to dent the prospects of President Traian Basescu, a close political ally of Mr. Boc, who is favored to win a second term in the presidential election on Nov. 22.

Romania, a poor country of 22 million people, has been desperately trying to overcome a reputation for lawlessness and corruption. Once a magnet for investment among former communist countries, it has fallen into deep recession and has a budget deficit of about €5.3 billion. Unemployment is about 7 percent, compared with 4 percent last year, while economists predict that the economy will contract 8 percent this year after growing 8 percent last year.

“All of this political instability is bad for the country’s image,” said Cosmin Stan, a leading Romanian commentator and documentary filmmaker. “It could not have come at a worse time.”

An earlier version of this article gave an incorrect figure for the size of the aid package Romania received from the International Monetary Fund and European Union this year. It was €20 billion, or $29.7 billion, not €20 million.

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