Tuesday, July 10, 2012

FT: Romania: leu low as tensions run high

The Romanian leu has started what could be a tense week in Bucharest by trading near the record lows it reached on Friday, when parliament voted to suspend president Traian Basescu and order a referendum on his impeachment.

The leu was at 4.52 to the euro at 13:00 Bucharest time on Monday, a slight recovery from Friday’s close of 4.53 but much weaker than its recent average of 4.46. Romanians were nervously awaiting a Constitutional Court hearing into the legality of the impeachment move.

In a matter of weeks, a country that seemed to be weathering the global economic turmoil with its political stability intact has been thrown into crisis.

Prime minister Victor Ponta and his leftist USL coalition, which took office only in May, have been accused by critics of nothing less than trampling on the constitution. His challengers draw comparisons with Viktor Orbán, the Hungarian prime minister, who has centralised power in his ruling Fidesz party.

But even Orbán did not move as fast as Ponta. As Neil Buckey writes in the FT, “events in Romanian are unfolding at dizzying speed“.

In Orbán’s case, it took months for foreign partners to raise their concerns and even then they did with the usual diplomatic caution. With Ponta, they have decided to ignore convention and speak out straight away.

The US, the EU, France, Germany, the Council of Europe and several rights groups, including Freedom House and the Helsinki Committee, have all fired off critical statements.

The European Commission said:

The rule of law, the democratic checks and balances and the independence of the judiciary are cornerstones of the European democracy and indispensable for mutual trust within the European Union.

Ponta and his allies have gone straight for the political jugular – Romania’s long-running economic difficulties. While the country has won plaudits from the EU and the IMF for sticking to an austerity plan agreed with Brussels and Washington, the centre-right governments that ruled before Ponta faced protests and widespread popular anger.

Parliament on Friday voted 256 to 114 to suspend Basescu, saying the president overstepped his duties when announcing budget cuts in 2010 (when he signed off on an austerity package) and making other economic policy decisions.

The planned referendum on his impeachment will take place on July 29, giving Basescu less than three weeks to save himself. If he is impeached, presidential elections will follow, with every possibility of victory for a Ponta-backed candidate. It could also precipitate early parliamentary elections, before their current due date in November or December, in which the left could also expect to do spectacularly well.

Ponta’s coalition won a big victory last month in local elections, when it captured nearly 50 per cent of the vote – an extraordinary figure in a proportional representation voting system – against about 16 per cent for Basescu’s Democrat-Liberal party.

The Constitutional Court will rule on key procedural changes made by the coalition to ease impeachment and limit the court’s powers to block an impeachment. The court is due to hear a Democrat-Liberal Party challenge to these changes.

Buckley writes that critics say the grounds for impeachment are flimsy; the process was launched by questionable means, and it appears part of a Ponta power grab.

Ponta himself says there’s absolutely nothing to worry about. He said in a speech:

The concerns of our European and international partners are legitimate but we want to assure them that the government will secure the country’s stability. The political conflict won’t affect the state institutions as the government will respect all the decisions of the Constitutional Court and the rule of law.

But as Romania’s EU partners know, Hungary’s Orbán has repeatedly made similar promises. Ponta has a very useful – and dangerous – precedent.

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://blogs.ft.com/beyond-brics/2012/07/09/romania-leu-low-as-tensions-run-high/#ixzz20CmjeFht

No comments: