Thursday, October 15, 2009

Romania’s Basescu May Back Independent for Premier

By Irina Savu

Oct. 14 (Bloomberg) -- Romanian President Traian Basescu said he may back an independent candidate for the premiership provided he leads a national union government.

The comments come after the opposition bloc proposed independent Klaus Johannis, 50, to replace Prime Minister Emil Boc after yesterday trying to remove his ruling Liberal Democrats from office through a vote of no confidence. The Liberals, Social Democrats and Ethnic Hungarians, who hold 65 percent of the seats in parliament, need Basescu’s backing to see their candidate assume the premiership.

Romania, the European Union’s second-poorest member, is relying on a 20 billion-euro ($29.8 billion) bailout to cover its budget and current-account gaps. The political chaos since Boc lost his majority has raised the risk of credit-rating downgrades, Fitch Ratings and Standard & Poor’s said on Oct. 2.

“I’m leaning toward a person with experience in dealing with banks and international economic and financial institutions,” Basescu said today in a televised press conference. “We need to address the economic crisis the country is going through.”

The leu was little changed against the euro and was trading at 4.2975 at 8:19 p.m. local time.

Pension Reform

The Balkan country is trying to cut spending to meet a budget deficit target of 7.3 percent of gross domestic product this year. Measures will include sending all state workers on 10 days’ unpaid leave and firing some employees next year.

The country must also pass a pension reform bill mandated by the International Monetary Fund, which leads the country’s bailout. The proposal aims to save an annual 0.5 percent of GDP in 2010 and as much as 2.1 percent in 2020.

Boc, who will stay in office with limited powers for 45 days, had sought to push through wage and pension cuts to comply with the terms of the country’s bailout.

The government last month approved a wage bill, called for by the IMF, which led to protests from about 750,000 state workers. Trade unions have also threatened to start an open- ended strike from November and boycott elections if their demands for higher pay aren’t met.

Parliament yesterday voted for a motion of no confidence in the ruling Liberal Democrats, who were thrown into a minority on Oct. 1 after the Social Democrats quit the Cabinet. The government’s collapse comes a month before Romanians elect a president.

‘Rig the Elections’

Johannis, who is mayor of the Transylvanian city of Sibiu, can only take on the premiership if backed by Basescu. Should Basescu back Johannis, who heads Romania’s German Democratic Forum, the new premier would have 10 days to form a government before seeking a confidence vote in Parliament. The president today urged lawmakers to agree to a multi-party coalition.

“Any party that is left out of the government will think the other party is trying to rig the elections,” Basescu said.

Basescu asked parties to continue negotiations until noon tomorrow after the Liberal Democrats withdrew Boc’s nomination for the prime ministerial post, he said.

If the president, who’s running for the post again next month, names a prime minister who twice fails to win a confidence vote in parliament, the winner of the presidential vote will call elections in December at the earliest. By law, the president can’t dissolve parliament or call early elections in the last six months of his term.

‘Nobody Wants’

“Probably nobody wants early elections -- to get there, parliament has to reject a new Cabinet twice within 60 days -- so the president could force his favorite candidate as prime minister,” Nicolaie Alexandru-Chidesciuc, chief economist at ING Bank Romania SA, wrote in a note to investors today.

The likelihood of early elections increases “sharply” after the second round of presidential elections on Dec. 6, Alexandru- Chidesciuc said.

The Social Democrats and the Liberal Democrats formed a governing coalition with a two-thirds parliamentary majority on Dec. 14, after a tie in Nov. 30 elections. The parties will compete again in the November vote, as they must each nominate their own candidate for a five-year presidential term.

President Basescu is backed by the Liberal Democrats in the race for a new term, while the Social Democrats nominated party leader Mircea Geoana to run. The Liberals support party leader Crin Antonescu for the presidency and Sorin Oprescu, the mayor of Bucharest, said he intends to run as an independent.

Basescu leads polls ahead of the election. The latest survey shows he would win 37 percent of the votes. Geoana would get 24 percent, Antonescu 13 percent and Oprescu 10 percent, according to a poll conducted Sept. 17 to Oct. 7 by the CSOP.

To contact the reporter on this story: Irina Savu in Bucharestisavu@bloomberg.net.

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