Monday, December 7, 2009

Romania's Basescu Set For Knife - Edge Poll Win

December 7, 2009

Filed at 2:43 a.m. ET

BUCHAREST (Reuters) - Romania's anti-graft fighting President Traian Basescu looked to have won re-election on Monday, narrowly defeating a leftist challenger for the job of leading the EU newcomer out of political and economic crises.

Results with 95 percent of ballots counted showed Basescu had won 50.43 percent, versus 49.57 for Social Democrat leader Mircea Geoana, the Central Election Bureau said.

The vote is one of the most important for the Balkan state since it executed Stalinist dictator Nicolae Ceausescu 20 years ago, as the victor must name a new government that can restart talks over a stalled 20-billion-euro (18 billion pound) rescue loan deal.

The victory is a surprise comeback for Basescu, who trailed Geoana by eight percentage points in the last two opinion polls before the vote after the leftist forged a pact with the third largest party, the Liberals, to rule together if he won.

Analysts said once confirmed, Basescu, an abrasive campaigner against corruption, could struggle to form a government with the other major parties with whom he has repeatedly clashed during his five year term.

"Theoretically, President Basescu cannot lose these election given the current figures," said Adrian Basaraba, head of the department of political science at the University of Timisoara.

"It will be much harder for Basescu to form a government."

Late on Sunday, most exit polls showed Geoana winning.

But Basescu appeared to win most of around 150,000 ballots cast among the more than 2 million Romanians living abroad in countries like Spain, Italy and Moldova and the United States, who backed him heavily in a November 22 first round that he won.


Last month, the International Monetary Fund suspended review of the aid deal propping up the EU's second poorest economy, after opposition parties toppled a Basescu-allied cabinet that has stayed in place as an interim administration.

It has said it will hold back a 1.5 billion euro aid tranche -- originally planned for December -- until a new government and a cost-cutting budget are in place, raising concern among markets about Bucharest's finances.

That could be a stretch for Basescu, who already saw two new governments torpedoed by Geoana's ex-communist Social Democrats and other opposition parties after the leftists walked out of a unity government in September.

The folksy 58-year-old former Bucharest mayor has endorsed IMF recommendations to freeze state wages, reduce some pensions, and cut as many as 150,000 jobs in the sprawling public sector, which analysts say hinders Romania's long term growth prospects.

Geoana, a 51-year-old former ambassador to Washington, has said he would resist the job cuts, which would hurt his base of unions and state workers. He campaigned on a pledge of stability and less pain for Romanians hit by an expected 8 percent economic contraction this year.

Markets had expressed concern that an ex-communist Social Democrats would go soft on economic reforms and measures to fight endemic graft that has kept the country of 22 million ranked the most corrupt country in the EU, according to Transparency International.

Analysts said Basescu may now seek a government backed by his centre-right Democrat Liberal allies, a minority ethnic-Hungarian party, and potential defectors from the Liberals, Basescu's preferred ruling partner.

Alternatively, the Democrat Liberals could mend ties with Geoana's group to put the IMF deal back on track.

"It's more likely we will have a government at the beginning of next year than before Christmas, and the best case scenario and the most likely one would be a national unity government," said Sergiu Miscoiu, head of the CESPRI think tank. "If that happens, it would be okay for the IMF deal."

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