Thursday, October 1, 2009

Romania govt at an impasse over interior min job

By Radu Marinas

BUCHAREST, Sept 30 (Reuters) - Romania's Social Democrats rejected a proposal to appoint an interior minister from outside coalition ranks on Wednesday, extending a standoff with their centrist ruling partners that could bring down the government.

Bucharest's centre-left coalition plunged into crisis this week after centrist Prime Minister Emil Boc suddenly sacked a Social Democrat interior minister and proposed a replacement from his own party, just weeks before a November election.

In response, the Social Democrats (PSD) have threatened to quit the government if the dismissal is endorsed by President Traian Basescu, raising the spectre of a policy stalemate that could hamper Romania's ability to meet conditions for International Monetary Fund aid.
Boc's Democrat-Liberals (PD-L) and their Social Democrat partners have ruled in an uneasy coalition since they took power nine months ago, sparring over cost-cutting reforms vital for Romania to continue receiving aid from the IMF.

Observers say the clash is a result of tactical manoeuvring between the two ruling parties, and not caused by policy differences, as their politicians vie for public support ahead of a Nov. 22 presidential election.

Seeking to defuse the crisis, Basescu, who has links to Boc's centrist Democrat-Liberals, suggested an opposition politician or an independent candidate should replace Boc's interim nominee, the centrist Vasile Blaga.

But the leftists refused to attend an emergency coalition meeting on Wednesday morning and reiterated calls for the sacked Dan Nica to be reinstated.

"Thirty minutes after (my dismissal) is endorsed, (PSD) ministers will hand in their resignations. We cannot participate in anything that will destabilise Romania," Nica told reporters.
Basescu's spokesman said no time had yet been set for the president to decide on the interior ministry job.

Both parties have traded accusations of improper behaviour ahead of the presidential election which pits incumbent Basescu against PSD leader Mircea Geoana, and blame each other for stalling anti-crisis measures to offset a painful recession.

Economists say reliable policy-making will be crucial to ensure the IMF/EU lenders continue to disburse funds.

Last week, the IMF approved the second loan tranche of $2.72 billion and endorsed fiscal reforms implemented by the government so far as part of the aid deal.

But economists say there are risks ahead.

"The last thing that Romania needs at this stage is political noise, especially since it is pretty much depending on IMF/EU financing," said Simon Quijano-Evans, economist and strategist at Cheuvreux.

In response to political uncertainty, the Romanian leu fell 0.7 percent against the euro on Wednesday but analysts said the decline was tempered by covert central bank intervention earlier this week. The central bank has declined to comment.

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