Tuesday, December 15, 2009

Romania’s Basescu to Be Inaugurated to Second Term

Dec. 15 (Bloomberg) -- Romanian President Traian Basescu will be inaugurated to a second term tomorrow, giving him the right to form a new government after the Constitutional Court rejected charges his election victory was rigged.

The court ruled yesterday that leaderMircea Geoana failed to prove accusations that his loss in the Dec. 6 runoff against Basescu was due to massive fraud.

Basescu’s first duty will be to nominate a prime minister and garner support to form a new government after the 10-month- old Cabinet of Emil Boc collapsed on Oct. 13. Without an administration, the European Union’s second-poorest member has failed to approve spending cuts and unfreeze a $30 billion bailout loan needed to pull the economy out of recession.

“The battle for the presidency of Romania ends here,” Geoana said in a news conference, conceding the election to his opponent. “In power or in opposition, we will continue to fight for an honest, fair government. It’s time to return to the fight against the economic crisis.”

The leu strengthened as much as 0.5 percent to 4.2390 to the euro yesterday and was trading at 4.2499 against the common currency as of 11:23 a.m. in Bucharest. The currency fell to a seven-month low and bonds plunged after the Oct. 13 government collapse. The benchmark BET index fell 1 percent to 4734.52.

“The news is positive,” said Raffaella Tenconi, chief economist at Wood & Co. in Prague. “It will support a stable leu and have a small positive impact on the equity market. The key event remains the official formation of a new coalition.”

Exit Polling

Geoana, the president of the Social Democratic Party, was expected to win, according to the final pre-election opinion survey, published on Dec. 2, and topped three of four exit polls after balloting ended.

After losing by 70,000 votes of the 10.5 million cast, Geoana argued that the Liberal Democratic Party, which supports Basescu, obtained an additional 136,000 votes through fraud.

Basescu denied the allegation and the Organization for Security and Cooperation in Europe said the vote “was held generally in line with OSCE commitments.”

Basescu, who failed twice to pass a new government in November through Parliament, is seeking the support of the National Liberal Party to win a third attempt. Should that attempt also fail, he may be forced to call early elections, leaving the country without a government until as late as April.

Not Surprising

Basescu’s Liberal Democratic Party sent an invitation last week to the National Liberal Party, which allied with Geoana in the election, to discuss the formation of a government. The Liberals, who have 79 seats and could give Basescu a majority, haven’t yet accepted the offer.

“The results don’t actually surprise me,” Crin Antonescu, leader of the National Liberal Party allied to Geoana in the election, told reporters after the ruling. “The business now turns to forming a government.”

The court ruling follows a weekend recount of 140,000 ballots declared null. The recount gave Basescu 1,260 extra votes and 987 for Geoana, widening the incumbent’s lead. The International Monetary Fund suspended payments on the international bailout for Romania after infighting in Boc’s administration triggered the collapse in October.

Boc continues as interim premier, with limited powers. The Washington-based lender said yesterday that a mission “could return in January once a new Cabinet has been formed.”

To contact the reporters on this story: Adam Brown in Bucharest atabrown23@bloomberg.net; Irina Savu in Bucharest isavu@bloomberg.net.

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