Thursday, December 20, 2012

BBC News: Romania's Ponta unveils cabinet, vowing to end feud

Romania's Prime Minister-designate Victor Ponta has unveiled his new government and pledged to end a bitter feud with President Traian Basescu.

The cabinet would have 27 ministers, Mr Ponta said, adding that MPs would vote on the proposal on Friday.

He also said he and the president had agreed to set aside their rivalry, which had caused political turmoil.

Mr Basescu had previously hinted he might refuse to reappoint Mr Ponta, whose coalition won recent elections.

Mr Ponta's centre-left Social Liberal Union (USL) swept to victory in the 9 December poll, with the Right Romania Alliance (ARD) of the centre-right president coming a second distant.

Mr Ponta will have to share power with Mr Basescu, whose term runs until 2014.'Pig v scorpion'

On Wednesday, Mr Ponta announced that he intended to retain some key figures in his new-look cabinet, including Foreign Minister Tritus Corlatean and Justice Minister Mona Pivniceru.

He said that the government's first moves would be to postpone the privatisation of several big state companies.

Mr Ponta also said that his long-running feud with President Basescu was now officially over.

He added that the two men had agreed not to "call each other names", including using "comparisons to the animal kingdom", according to Romania's Mediafax news agency.

Mr Ponta has referred to the president as a "venomous scorpion", while Mr Basescu has branded the premier a "pig".

Their antagonism has meant political decision-making has at times been paralysed.

But, says the BBC's correspondent in the region Nick Thorpe, the political feud often seems to have more to do with the vanity of the main players than with genuine differences in policy.

In July, Mr Ponta suspended Mr Basescu and tried to impeach him. But a referendum failed to meet the required turnout.

Romania is the second poorest member of the European Union, which it joined in 2007 with Bulgaria.

The country, together with neighbour Bulgaria, are under special EU monitoring because of concerns about judicial independence, corruption and political influence in state institutions.

Romania is trying to negotiate a new loan from the International Monetary Fund (IMF) to replace the existing one which expires early next year.

IMF deals in doubt after Romania slows state sell-off

By Radu Marinas

BUCHAREST, Dec 19 (Reuters) - Romania's new government delayed sales of state assets on Wednesday, going against an agreement with the International Monetary Fund and raising doubts over its commitment to a new pact.

Leftist Prime Minister Victor Ponta, who won a Dec. 9 election, had reassured investors by saying he would replace a 5 billion euro IMF deal expiring in early 2013 but the proposals of his new administration could be an obstacle.

President Traian Basescu has eased concerns over a fresh political crisis by re-appointing his rival Ponta as premier, but markets remain on edge given the row between the two men that has delayed policy and sparked European Union criticism.

Ponta also proposed splitting the country's finance ministry in two, naming a budget and a finance minister in a division of responsibilities that could complicate talks with the IMF.

The leu slipped 0.2 percent against the euro on Wednesday to move away from a three-month high. Other regional currencies were also slightly weaker.

"This is a very bad signal for investors, who had expected marked progress in reforming of the state sector this year, especially privatisations," said Raiffeisen economist Ionut Dumitru.

The IMF has regularly criticised the EU's second-poorest member for failing to sell and reform its inefficient and oversized state sector, which is seen as holding back an economy that is only slowly emerging from a deep recession.

Minority listings in big energy firms like Hidroelectrica, nuclear powerproducer Nuclearelectrica, gas producer Romgaz and energy group Petrom would generate about 1 billion euros, according to Fondul Proprietatea, a fund set up to compensate Romanian victims of communism.

EXPANDING GOVERNMENT

The leu is the worst-performing currency in the emerging EU this year due to Romania's volatile politics, in particular Ponta's failed attempt to removePresident Basescu from office in July that prompted charges of undermining the rule of law.

Ponta's government still needs parliamentary approval, which it will almost certainly win on Friday thanks to its overwhelming majority, but it will then be stuck working with the rightist Basescu again.

Romania has trimmed its budget deficit, which will probably fall below 3 percent of gross domestic product this year, but the IMF has become more critical of its failure to make longer-term reforms and make better use of EU cash.

So far, it has only made a secondary listing of shares in electricity grid company Transelectrica, which raised 38 million euros ($50 million).

The new government postponed the deadline for selling minority stakes in state controlled companies -- including Romgaz and Nuclearelectrica, as well as freight railway firm CFR Marfa and airline Tarom -- until the end of 2013.

The sale of a minority stake in gas pipeline operator Transgaz is also delayed.

"I think the IMF will find a way to give them a programme. But I wonder how committed they are," said Barclays Capital economist Daniel Hewitt.

Ponta said the finance ministry split was part of a cabinet expansion to from 19 to 27 ministers, which will include members of all three wings of his Social Liberal Union (USL) alliance.

The two men nominated to oversee the budget and finance - Liviu Voinea and Daniel Chitoiu - were in the previous cabinet. Ponta did not specify how the previous finance ministry's responsibilities would be split between them.

"I'm not sure how this structure will be beneficial for Romania," Raiffeisen's Dumitru said.

Wednesday, December 19, 2012

Financial Times: Power play keeps Romania in spotlight

By Neil Buckley
Prime minister’s re-election marks turning point in country
He has called him a “compulsive liar” and said he would never back him as premier. Yet Traian Basescu, Romania’s president, finally reappointed his bitter political foe as prime minister this week, bowing to the inevitable after Victor Ponta’s liberal-socialist alliance won a landslide in elections on December 9.

The decision has averted the short-term danger of a constitutional crisis in the Balkan nation of 19m. But it could lead to renewed political conflict in the EU’s second-poorest member – where alarm bells rang after the prime minister’s camp tried to impeach the president in July.

Though probably without the same flurry of arrests, Romania could see a new power struggle similar to that between Georgia’s new premier, Bidzina Ivanishvili, and its incumbent president, Mikheil Saakashvili, said to be a friend of Mr Basescu.

However that struggle plays out, the two-thirds majority won by Mr Ponta’s alliance is a turning point for Romania. With only one-sixth of voters backing the centre-right alliance aligned with Mr Basescu, it represented a decisive protest vote against the president and the austerity measures he championed.

These, imposed after Romania won a €20bn IMF and EU bailout in 2009, were among Europe’s toughest: 25 per cent cuts in public sector wages and a 5 percentage-point rise in value added tax.

Coupled with perceived government cronyism, they brought Romanians on to the streets in minus 25C temperatures in January, where they toppled two centre-right governments within months, bringing Mr Ponta’s alliance to power in May.

Although the premier has said he does not plan a new impeachment, he is likely to attempt to resolve his feud with Mr Basescu once and for all. The avenue this time will be constitutional change to reduce the president’s powers and make Romania more of a parliamentary republic – similar to what Georgia’s new government is attempting with Mr Saakashvili.

In itself, that may be no bad thing. The current “semi-presidential” system is increasingly rickety.

But the governing alliance has hinted it wants to give parliament the right to override rulings by the constitutional court – a right it tried to assert during the summer’s impeachment crisis, fuelling international criticisms.

If the president refuses to accept reduced powers before his term ends in 2014, analysts speculate that Mr Basescu could see renewed efforts to impeach him. This time, they would probably succeed.

A second election consequence feared by both Mr Basescu’s supporters and many independent corruption monitors is government attempts to put its own people in charge of anti-graft bodies, such as the national anti-corruption directorate.

Mr Ponta’s group say such bodies, set up at the EU’s urging, have been misused by the Basescu camp to target them; Adrian Nastase, the former premier and Mr Ponta’s political mentor – and another Basescu foe – was imprisoned for two years in June.

Supporters of the anti-graft bodies say they have begun functioning effectively and have acted against members of all main political camps, including the president’s.

The third likely election outcome – a turn against austerity – may be less of a concern for the international community than it first appears.

Both main political groups have pledged to follow responsible budgetary policies. Both are also committed to renewing a €5bn IMF credit line, to which the lender is likely to attach rigorous conditions.

While Mr Ponta’s alliance campaigned on reversing austerity, it said this would take time and only if economic conditions allowed, notes Vlad Muscalu, a senior economist at ING Bank Romania. That may be one reason why markets have reacted calmly.

It also means concerns expressed particularly in the German press that Romania was about to join Greece as an “acute problem” for the EU may be premature.

But from the EU and the US – whose secretary of state, Hillary Clinton, this month mentioned Romania alongside former Soviet republics as facing democratic challenges – the spotlight on Romania is unlikely to dim.


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Tuesday, December 18, 2012

Romania President Nominates Ponta for Second Term as Premier

By Irina Savu & Andra Timu - Dec 17, 2012

Romanian President Traian Basescu nominated Victor Ponta as prime minister for the second time this year after the ruling coalition won a Dec. 9 election.

Basescu, who has been embroiled in a power struggle with Ponta since June, made the announcement in a statement published on the presidential website today. The 40-year-old Ponta, who has been premier since May, will control more than two-thirds of Parliament’s seats and must seek a vote of confidence within 10 days.

“We have entered a period of normality,” Ponta told reporters in Bucharest today. “I will have my Cabinet and the governing program ready by Dec. 20, so that the Parliament can hold the confidence vote on Dec. 21.”

The election win strengthened Ponta’s hand in his political feud with Basescu. The premier-designate plans to bolster the ruling coalition’s 67 percent majority in the legislature to about 75 percent with the help of the ethnic Hungarians’ party, in a bid to change the constitution.

The Liberals, part of Ponta’s coalition, opposed a plan to include the ethnic Hungarians in a new government and prompted Ponta to announce today that they won’t be part of his future cabinet, while continuing talks on constitutional changes.
‘Sigh of Relief’

The power struggle between the Ponta and Basescu, which led to a 52-day suspension of the president and a failed impeachment referendum earlier this year, pushed the country’s currency, the leu, to a record low of 4.6520 per euro on Aug. 3 and boosted borrowing costs.

The leu appreciated to the strongest in almost four months to 4.4652 by 11 a.m. in Bucharest and declined 0.05 percent to 4.4716 per euro at 5 p.m. on bets that Ponta’s nomination will ease political uncertainty.

“There’s a general sigh of relief as Basescu nominates incumbent Premier Ponta to go to Parliament for a confidence vote,” Simon Quijano-Evans, ING Groep NV’s London-based head of emerging-market research for Europe, the Middle East and Africa, said in e-mailed comments. “Ponta should have absolutely no problem in winning the vote, given the coalition supports him.”
International Guidance

After winning a confidence vote in Parliament, the new Cabinet must prepare the 2013 budget under the guidance of the International Monetary Fund and the European Union, which will probably start a review of the Balkan nation’s loan in early January, Ponta said on Dec. 10.

The country plans to start talks on a new agreement with the lenders as the current 5 billion-euro ($6.6 billion) precautionary accord expires at the end of March.

“A swift solution to the political uncertainty could support Romanian markets in the short term,” analysts at Vienna-based Erste Group Bank AG (EBS) wrote in a note today. “We continue to see the euro at 4.52 lei in June 2013 and 4.5 in December 2013 and see risks coming from a heavy repayment calendar to the IMF.”

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net; Andra Timu in Bucharest at atimu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net.

Amnesty International: Romania: The Roma who were evicted to live by a landfill site

Two years ago the local authorities of Cluj-Napoca forcibly evicted around 300 people – mostly Roma – from Coastei Street in the centre of the Romanian city.

Since then, most of them have been living close to the landfill and a chemical waste dump in an area on the outskirts known as Pata Rât, where they were moved by the municipality.

Soon after their eviction, Romani people started a long struggle for justice. One of them is Ernest Creta who now lives in an improvised home in Pata Rât.

“It is a sad anniversary for us. On 17 December 2010, early in the morning, an impressive number of police forces arrived on Coastei Street, joined by the local authorities. We were overwhelmed and terrified by the number of police officers. Following pressure and verbal threats from the local authorities, we accepted the housing they proposed without knowing the exact location and the condition it was in,” said Creta.

And it turned out the new conditions were grim.

Around 36 out of the 76 evicted families were not offered any alternative accommodation and were effectively left homeless.

The remaining 40 families were provided with one room per family. They each have to share communal bathrooms with three other families. The main connection with the city is a school bus that leaves at 7.15 am. The closest regular bus stop is 2.5 kilometres away across the railway.

“We were integrated in the life of the city when lived in Coastei Street. We used to have jobs, the children went to high school, we had decent living standards, we had access to the park, etc. Here, by the garbage dump, we feel like in a ghetto, we feel discriminated against from all points of view,” said Creta.

For the past two years, the Working Group of Civil Society Organizations (gLOC), Amnesty International and European Roma Rights Centre (ERRC) have been supporting people from the former Coastei Street in their struggle for justice and dignity. In their joint statement issued at the anniversary of the December 2010 eviction, the organizations appeal on the local authorities in Cluj-Napoca:

“The municipality carried out a forced eviction that violated the human rights standards applicable in Romania. Central government failed to ensure that the municipality’s actions did not lead to human rights violations. The local and central authorities have an urgent responsibility to put this violation right and to ensure that people who were forcibly evicted are relocated to adequate housing, and brought back to the city.”

People evicted from Coastei Street have been trying to meet the authorities and raise the problem of their living conditions ever since the eviction.

The municipality finally met with them earlier this year.

The authorities said they would move the Romani people away from Pata Rât in early 2014, as part of a joint project with the United Nations Development Programme. However details of the planned relocation are vague and the Romani community face another year of living in substandard accommodation that stops them from fully accessing their basic rights to education, employment and healthcare.

There are some 1,500 people living in Pata Rât area, including around 300 people from the former Coastei Street. The others reside in Cantonului Street, Dallas and a number of people live on the city’s landfill.

Iosif Adam, a resident from Cantonului Street explained:

“We just started to organize ourselves. We do not want to be forgotten. Many of us were moved here by the local authorities starting in 2002. We were told that this is going to be a temporary location for us. And here we are in 2012: struggling with the lack of identity papers, electricity, and water. It is a precarious life, life in a great insecurity.”

To mark the second anniversary of the 17 December eviction, around 200 people will surround the Cluj-Napoca’s City Hall.

The activists will be calling on the local authorities to bring the Roma back into the city.

Romania's BCR bank to cut 18 pct of workforce

Dec 17 (Reuters) - Romania's largest lender BCR, owned by Austria's Erste Group Bank, will cut 1,600 jobs, or about 18 percent of its staff, due to tough market conditions, its CEO said on Monday.

BCR plans to close more than 60 unprofitable branches and cut employee numbers to 7,500, Chief Executive Tomas Spurny told local media.

Romania has been a tough market for Erste and other banks, but provisions for bad debt there should fall significantly in 2013 when the volume of non-performing loans should peak, Erste said last month.

Erste said it would inject more money into BCR via a capital increase worth nearly 111 million euros ($146 million).

"The most important thing is how to ensure a good future for the 7,500 people who remain at the bank," Spurny said in remarks confirmed by a company spokesman. ($1 = 0.7628 euros) (Reporting by Sam Cage and Radu Marinas; Editing by David Cowell)

Friday, December 14, 2012

Romania’s election: Clear victory, uncertain future


Romania’s election
Clear victory, uncertain future
Victor Ponta wins by a landslide, but he may not make good use of his victory

The Economist
Dec 15th 2012 | from the print edition

MOST Romanians were not interested in the parliamentary election on December 9th. The result was widely predicted. Victor Ponta’s USL alliance of liberals and social democrats duly won, though by an even bigger margin than expected, with 60.1% of the total vote. The centre-right ARD took a measly 16.7%. Only 41.7% of voters bothered to go to the polls.

“Society has given up on politics,” argues Tom Gallagher, an academic who writes about Romania. People are more interested by local issues that concern them directly. Politicians in Bucharest appear to most of them to be a corrupt, squabbling and inbred class that makes little difference to anyone’s daily life.

Recent statements by Mr Ponta, the outgoing prime minister, and Traian Basescu, the president and Mr Ponta’s arch-rival, have done little to dispel voters’ disillusion. “In the period immediately after the election, he who raises the sword will die by the sword,” warned Mr Ponta, who has bickered with Mr Basescu for the past year—and even tried to impeach him.

In an interview before the election Mr Basescu compared giving the prime minister’s post to Mr Ponta to swallowing a pig. He said he would appoint a prime minister who is pro-European, respects the constitution and the rule of law and whose background does not make him an easy target for blackmail, implying that Mr Ponta does not fit the bill. The European Union criticised Mr Ponta’s government last summer for trying to take control of the judiciary and other public institutions. Mr Ponta has also been accused of plagiarising his PhD thesis and lying in his CV. He denies all such allegations.

According to the constitution, Mr Basescu has the right to appoint the next prime minister, after consultation with the party that wins the most votes. The USL wants Mr Ponta to remain prime minister. So another conflict between the president and parliament seems inevitable. The Ponta camp may try to impeach Mr Basescu again.

All this is a huge distraction for a country in urgent need of reform. Instead of turning his attention to the struggling economy and weak currency, Mr Ponta has begun talks with a tiny party, the Democratic Alliance of Hungarians in Romania. He is trying to form a coalition that has a two-thirds majority in parliament, the number needed to change the constitution. Among the changes he has in mind is a redefinition of the role of the president in foreign and military policy. He also wants to curb the Constitutional Court’s powers.

Early in the new year the European Commission will publish its latest assessment of Romania’s progress since it became a member of the EU in 2007. It is likely to be sobering. Since its accession Romania has mostly stagnated, says the Romanian Academic Society. Chronic political infighting and corrupt administration make it the least capable of absorbing EU funds (it uses only around 10% of what is on offer). It remains poor. According to Eurostat, the commission’s statistical office, GDP per head in Romania and Bulgaria is below 50% of the EU average. Turkey, an EU candidate, now ranks above both countries.

The IMF is watching Romania closely too. In 2009 the Fund and the EU bailed out Romania to the tune of €20 billion ($27.8 billion). The IMF has a €5 billion two-year standby financing agreement for Romania that expires in March. During the election campaign Mr Ponta vowed to roll back austerity measures and lower taxes. This is unlikely to encourage the IMF to grant a fresh standby agreement.

In spite of it all, Peter Sanfey, an economist at the European Bank of Reconstruction and Development, remains relatively optimistic about this country of 20m people. It has a well-diversified economy with a balanced mix of services, industry and agriculture, he argues. For all its domestic political rivalries and strife, the government deserves some credit for macroeconomic stabilisation, even resisting the temptation of a pre-electoral spending splurge. It might not hav

FT: Romania rallies on Ponta’s victory

Could the end to a grim year bring hope for beleaguered Romania? Markets have welcomed the ruling coalition’s landslide victory in Sunday’s election, hoping the country will win a new deal with the IMF and push through reforms in return. But have investors factored in the challenges ahead, or Romania’s fluid political landscape?

The Romanian leu rallied after the victory of the Social-Liberal Union (USL), which secured two thirds of seats in the new parliament. The currency is up 0.3 per cent against the euro, while yields on Romanian government euro-denominated bonds dropped two basis points to 4.58 per cent, according to Bloomberg.

The reaction shows relief that the USL, headed by Prime Minister Victor Ponta, has a clear mandate for a new standby agreement with the IMF and EU. Romania’s current deal, worth €5bn, expires at the end of March. A new arrangement would underpin investor confidence.

Before the election, many feared a less clear-cut result would lead to political turmoil. Had the USL won less than half the seats in parliament, President Traian Basescu, a Ponta rival close to the opposition, might have formed a government including populists and excluding the USL.

Ponta is not home and dry yet. Basescu could refuseto reappoint him prime minister, forcing a showdown, but this seems unlikely given the scale of the USL’s victory. Dan Tapalaga, a Romanian journalist and commentator, says there are signs that the broad-church URL is turning on itself, with Ponta keen to bring in a party representing Romania’s Hungarian minority to dilute the influence of his hardline partners.

“Markets are more confident of the relationship between a new government and the IMF,” Luis Costa, senior emerging-market strategist at Citigroup told Bloomberg. “That means less foreign-exchange debt refinancing pressure, thus improving the outlook on the leu.”

Indeed, investors will be hoping for a smooth transition and that the USL does not use its victory as an excuse to resume its attacks to Basescu and others.

The USL owes its success partly to popular opposition to austerity measures imposed by previous, pro-Basescu governments, including a 25 per cent cut in public sector wages. Those measures helped spark street protests at the beginning of the year and the fall of two Basescu-backed governments.

The last administration – toppled in a vote of confidence in April – tightened so much it overshot IMF targets, allowing Ponta to ease off. And even if his victory is a vote against austerity, he is note expected to change tack. More challenging will be pushing through the reforms that the IMF is likely to recommend – particularly sell-offs of large state enterprises such as airline Tarom, rail freight company CFR Marfa and chemicals outfit Oltchim.

Romania’s GDP is expected to grow 1 per cent this year and 2.5 per cent in 2013, according to the IMF – a respectable performance under the circumstances. The USL has a mandate to push forward an agenda to generate real income growth and tackle issues brushed aside during the boom of the last decade. Whether it will take its chance, rather than indulging in more political wrangling, remains to be seen.

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Wednesday, December 12, 2012

Romania PM urges president to reappoint him

(Reuters) - The winner of Romania's election urged his arch rival President Traian Basescu on Wednesday to acknowledge his victory and reappoint him prime minister to stop the country plunging back into political turmoil.

Victor Ponta's leftist Social Liberal Union (USL) won two-thirds of the seats in Sunday's vote but is locked in a power struggle with Basescu, an outspoken former sea captain who has said he would never again appoint the 40-year-old lawyer.

Any impasse in forming the next government could leave Romania, clawing its way out of a deep recession, rudderless for weeks and delay talks for a new International Monetary Fund bailout once a 5 billion euro deal expires early next year.

The USL tried to impeach conservative Basecu in July, accusing him of overstepping his powers, drawing stern criticism from the European Union for undermining the rule of law and leaving the two men at daggers drawn.

The standoff has raised questions over policy and the leu currency is only about 2 percent off its record low against the euro, while borrowing costs have edged higher over the past month.

"I expect President Basescu to respect the constitution and the will of the Romanians," Ponta told Reuters in written answers to questions. "If he chooses a different path, he threatens Romania with instability in a very delicate moment."

The Balkan country joined the EU in 2007 but remains its second-poorest member due to widespread corruption, a sprawling and inefficient state sector and outdated infrastructure.

Before the election, Ponta was already Romania's third premier this year. Street protests against austerity and corruption in a country where 3 percent of people live on less than $40 a day helped to topple his predecessors.

While the rightist Basescu had softened his language on Ponta slightly, he has made no clear comment on who he may appoint. Analysts say he could try to argue that the USL is an alliance rather an a single party and pick someone else from the grouping in an attempt to split it.

Ponta said the USL alliance of leftists, liberals and conservatives was "united, lucid and cohesive" despite its different ideologies and would focus on a new IMF deal.

PARTY TALKS

Basescu's spokesman said the president would follow the constitution in appointing the next premier and called on all lawmakers to stop trying to pressure him. Basescu will hold talks with parties over the next few days before making a nomination.

Given Sunday's emphatic win, it would be difficult for him to name anyone other than Ponta without appearing to undermine the constitution and rule of law himself, which could prompt the USL to try to impeach the president again.

Under Romanian law, Ponta's current government remains in power until the new cabinet is approved by parliament. Two failed attempts to form a government within 60 days of the first nomination automatically trigger early polls.

Romania sought IMF help in 2009 after its economy crashed and while it is now on more solid ground, the deal is important reassurance for investors. The budget gap will drop below 3 percent of gross domestic product this year but the IMF has criticized it for failing to push through long-term reforms such as privatizations and using European funds.

"We have respected and we will continue to respect our international agreements. I expect a very constructive discussion with the IMF," Ponta said.

Ponta said governments run by Basescu's Democrat Liberal (PDL) allies, who were in power until an April parliamentary confidence vote, had a "brutal effect" on society with austerity measures including salary cuts and raising sales tax.

Analysts expect the economy to grow only 0.4 percent this year but the prime minister pledged to maintain fiscal stability and said pre-election promises to cut taxes would be implemented responsibly over its four-year mandate.

"PDL's government had a brutal effect on society, especially as there were no impact assessments before any major decision, and that is not responsible government in my view," he said.

"We have ambitious goals, but they are based on accurate estimates and well-measured prognoses."

(Editing by Alison Williams)

Tuesday, December 11, 2012

Romanian president weighs options for PM after vote

(Reuters) - Romanian President Traian Basescu weighed his options for a new prime minister on Monday and could seek to split his rival Victor Ponta's leftist alliance, even though it scored a resounding electoral victory.

Ponta's Social Liberal Union (USL) won up to 60 percent of votes in Sunday's parliamentary election, results showed. The electoral system could give it an even bigger share of seats in the Balkan country's parliament, putting Ponta in a strong position in a power struggle with the right-wing Basescu.

Basescu had said he would not ask Ponta to be prime minister again after the USL failed to impeach him in July. While he has since softened his tone, he could try to split the USL by naming someone else from the alliance of leftists and liberals.

Any uncertainty over a new government would delay talks over a new deal with the International Monetary Fund to replace a 5- billion-euro ($6.5-billion) agreement expiring in early 2013.

The leu currency and Bucharest stocks were a touch lower and bond yields rose slightly, but dealers said they may rally if a new government is in place quickly.

"We may expect any surprise coming from President Traian Basescu in nominating the next prime minister. It may not be Mr. Ponta, but definitely Basescu would have no choice but appoint someone from inside the USL," said Adrian Basaraba, politics professor at the University of Timisoara.

On many indicators, Romania trails other ex-communist neighbors like Hungary, Poland and the Czech Republic.

Corruption is rife, its roads and rail are outdated and it cannot provide reliable basic services such as running water and electricity to all its 19 million people nearly a quarter of a century after the fall of dictator Nicolae Ceausescu in 1989.

Basescu has not yet commented on the election result. Ponta has said he hopes the vote will end the political "civil war".

"I'm just waiting for the presidential decree to appoint me," Ponta told television station RTV.

Ponta's party has promised to roll back the previous centre-right administration's austerity policies by cutting taxes and raising salaries, though it has limited room to do so given expectations of growth this year of just 0.4 percent.

HARSH CRITICISM

Romania joined the EU in 2007 but remains the second poorest and effectively a second-tier member, excluded from the passport-free Schengen zone because of corruption concerns, and with its judicial system subject to special monitoring.

For its attempt to impeach the president, the USL came in for harsh criticism from the European Union and United States, which accused it of undermining the rule of law. Political analysts say that could discourage it from more radical steps.

In Oslo, European Commission President Jose Manuel Barroso told Reuters there would be no difficulty working with Ponta.

"There was concern expressed by us regarding some decisions taken in Romania, but I think Prime Minister Ponta addressed our concerns and he has shown his commitment to correct things that were from our point of view inappropriate," Barroso said.

In recent weeks the outspoken Basescu has stopped short of saying he would reappoint Ponta - saying only that he would seek someone to act in the country's best interest.

Given Sunday's emphatic win, it would be difficult for the former sea captain to name anyone other than Ponta without appearing to undermine the constitution and rule of law himself, which could prompt the USL to try and impeach the president again and another bout of uncertainty.

With 96 percent of votes counted, Basescu's Right Romania Alliance (ARD) allies were in second place on 17 percent and populist Dan Diaconescu on 14 percent, the election bureau said.

"Our wish is to consider that this day puts an end to a civil war...which has destroyed a large part of Romania, destinies, lives and hopes," Ponta said late on Sunday.

An electoral system which tends to favor larger parties could give the USL an even bigger proportion of seats in parliament. With two-thirds of seats it could change the constitution, as Viktor Orban has done in neighboring Hungary.

But political analysts said it may prefer not to be too confrontational given the criticism it faced from the EU over the attempt to impeach Basescu, when it was forced to back down on some proposed changes to laws.

"Perhaps he will delay things a little, but ultimately I believe the president will nominate Ponta," said Sergiu Miscoiu, an analyst with the CESPRI political think tank.

(Additional reporting by Luke Baker and Balazs Koranyi in Oslo; Editing by Michael Roddy)

Infighting blights Romania in the shadow of European austerity

Election victory for Victor Ponta's left-leaning government is marred by tensions with the president and his European backers

Simon Tisdall
guardian.co.uk, Monday 10 December 2012

Fresh political battles loom in Romania, one of Europe's poorest countries, following Sunday's big election victory by the ruling left-of-centre coalition led by the prime minister, Victor Ponta. After Ponta tried and failed to impeach Romania's combative president, Traian Basescu, last summer, Basescu vowed never to reappoint him as prime minister. If Basescu sticks to his word, a new constitutional crisis may follow. Even if he accepts another Ponta-led administration, a new attempt at cohabitation, given the bad blood on both sides, looks likely to end in tears.
The results of the parliamentary polls were clear-cut, suggesting Romanian voters have little patience with continued political feuding. Ponta's Social Liberal Union (USL), backed by Crin Antonescu's liberals and Dan Voiculescu's conservatives, won about 58-60% of the vote, according to exit polls, with the pro-Basescu Right Romania Alliance (ARD) trailing on 18%. The outcome will be seen as a strong repudiation of Basescu, who is widely accused of exceeding his powers and who narrowly survived July's impeachment referendum thanks to a low turnout.
But the voting also reflected deep differences on economic management, mirroring the wider European debate on austerity. Basescu has backed tough and unpopular measures to counter the effects of the financial downturn, including a 25% cut in public sector salaries and sharp sales tax rises. Two successive centre-right coalition governments backed by the presidency collapsed earlier this year before Ponta took over, pledging a more balanced, socially responsible approach.
Speaking last week, Ponta said he was committed to "fiscal consolidation and smart growth". He set his battle with Basescu and Romania's political right in a broader pan-European context:
"Romania was one of the countries hit hardest by the economic crisis in Europe. The austerity programme enacted at the time was a poorly judged, knee-jerk response that had a devastating social and economic impact on our country. Teachers and doctors were put on lower salary levels than those for unskilled workers, and Romania experienced massive emigration of our middle class … Europe has witnessed rising popular frustration at the failure of austerity to deliver employment and sound fiscal balances. Voters from Denmark, France, the Netherlands, Lithuania and Romania have put their trust in pro-European Union, progressive governments with economic programmes like ours – shunning the values of populist politics based on xenophobia and protectionism ... International consensus, buoyed by the likes of the IMF, has already started to warn of the consequences that too much austerity will have on an already struggling Europe."
Romania's infighting also has a European political dimension. At the height of last summer's impeachment crisis, the European commission in Brussels, Angela Merkel, Germany's conservative chancellor, and Viktor Orbán, Hungary's maverick prime minister, were accused by Ponta's supporters of gross interference in Romania's internal affairs by appearing to back Basescu. In September Romanian members of the European parliament and others wrote an open letter to EU leaders, complaining that the country's problems were not being dealt with objectively.
"We have been particularly troubled by the way the European commission has responded to events. The line between the legitimate enforcement of the EU's democratic standards and partisan political interference … is a crucial safeguard," they said.
Hannes Swoboda, leader of the social democrats in the European parliament, said the commission's meddling in the impeachment referendum row had led a to a slide in Romanians' support for EU membership after they were "saddled with a president they manifestly do not want". Swoboda said: "Many Romanians have concluded that the commission's intervention had less to do with enforcing democratic standards than keeping a political ally from the European People's party [the largest centre-right group in the European parliament] in power."
While Ponta and his allies are hoping Basescu and his European backers will not pick another fight, it remains unclear which way the president will jump. Financial analysts were quoted on Monday predicting that Basescu will give way rather than risk more damage to the country's political and financial reputation, including its hopes of obtaining a crucial new IMF standby loan.
But whatever Basescu says now, tensions are certain to continue. Andrew MacDowall, writing on the FT's Beyond Brics blog, warned: "There is still a chance that the pugnacious Basescu will attempt to use his political leverage to force a post-election split in the broad-church USL and hive off its more amenable factions to build a coalition with his ARD … and representatives of minorities, most notably Hungarians. Basescu may see this as a last chance to stave off another impeachment attempt."

Romania’s center-left gov’t overwhelming wins parliamentary elections, first results show

By Associated Press, Published: December 10

BUCHAREST, Romania — Romania’s government has swept to victory in a parliamentary election but even that convincing win may not defuse the rancorous rivalry between the country’s two top politicians.

The center-left alliance led by Prime Minister Victor Ponta won nearly 60 percent of the vote, trouncing President Traian Basescu’s center-right allies, with 95 percent of the vote counted Monday.

Many Romanians are fed up with a power struggle between Basescu and Ponta and are desperate for political stability after a year of upheaval. The financially struggling Balkan nation has run through three prime ministers and Cabinets this year and endured huge protests against the austerity measures that have been imposed in return for a €20 billion ($26 billion) bailout.

Continued political feuding could create a lasting atmosphere of instability that would deter much-needed foreign investment.

The Organization for Security and Cooperation in Europe, which monitored the vote, said “the election campaign was largely overshadowed by the power struggle” between Basescu and Ponta.

“The continuation of a highly-charged political atmosphere, with sharp rhetoric and reported pressure on authorities undermined confidence but did not challenge the overall conduct” of the vote, it said in a statement.

“We won a clear majority, a majority recognized by our adversaries, who have to accept the rules of democracy,” Ponta said after the polls closed Sunday. “I assure them we will treat the opposition with the respect that we did not get when we were in opposition.”

His group is expected to get about 270 seats in the 452-seat Parliament.

Ponta attempted unsuccessfully to impeach Basescu this year, describing him as a divisive figure who has overstepped his role as president by meddling in government business. The Romanian government was criticized by the European Union and Washington for failing to respect the rule of law in the way it conducted the impeachment process.

In return, Basescu has threatened to withhold his blessing for Ponta, a presidential act that is usually a formality. However, it looked unlikely Monday that Basescu had the political capital to stick to his threat.

“Basescu is unpredictable, but he doesn’t have the mandate not to name Ponta as prime minister,” analyst Stelian Tanase told The Associated Press. “He can’t prolong the political crisis.”

Basescu could nominate someone else, but his choice would have to be approved by Parliament. If his candidate was rejected twice, Parliament could be dissolved and new elections called.

The government has threatened to try to impeach Basescu again if he refuses to nominate Ponta.

Basescu has not spoken since the election. On Monday, he was in Norway along with other European Union leaders to collect the bloc’s 2012 Nobel Peace Prize for fostering peace on a continent ravaged by war.

Election official Marian Muhulet said Basescu’s group won less than 17 percent of the vote. A populist party led by a media tycoon scored about 14 percent and an ethnic Hungarian party won just over 5 percent. Other parties did not get the minimum 5 percent.

Basescu’s allies in government grew unpopular due to the harsh austerity measures — spending cuts and tax hikes — they imposed and allegations of cronyism. Ponta was appointed prime minister in May after a confidence vote — making him the third prime minister this year.

Ponta restored most pensions and salaries that were slashed as part of the bailout loan agreement, but has largely continued the policies of the previous Basescu-allied governments, including a 24 percent sales tax, one of the highest in the 27-nation EU.

In Romania, the job of prime minister entails running the country and distributing public finances, while the president names the chiefs of the intelligence services, appoints ambassadors and chairs the country’s top defense body, the Supreme Defense Council.

Since his election as president in 2004 and re-election in 2009, Basescu has represented Romania at the EU and other international summits, which has caused friction with Ponta.

Monday, December 10, 2012

NYT: Romania Faces Upheaval as Center-Left Wins Vote

By DAN BILEFSKY
PARIS — Romania’s center-left government overwhelmingly won parliamentary elections, according to partial results released Monday, an outcome that threatened to push the country into further political upheaval because of bitter rivalry between the prime minister and the president.

The central electoral office said the center-left alliance led by Prime Minister Victor Ponta won about 59 percent of the seats in the 452-seat legislature, followed by about 17 percent for a center-right group linked to President Traian Basescu. Around 81.45 percent of the votes have been counted.

The clear victory in Sunday’s election made Mr. Ponta the front-runner for prime minister. But Mr. Basescu, who has the power to appoint a prime minister, has indicated that he would not select Mr. Ponta, in part because Mr. Ponta tried to have him impeached over the summer.

During the campaign, Mr. Basescu called Mr. Ponta a “compulsive liar” and an “ogre” and said that appointing the man who tried to oust him would be like swallowing a pig. Mr. Ponta’s coalition, in turn, threatened a new impeachment effort if it won a majority and Mr. Ponta was not named prime minister.

Analysts said Mr. Basescu could be forced to back down due to the large margin of the center-left’s victory, which made Mr. Ponta’s reappointment seem inevitable. As of Monday morning, the president had not announced his intentions.

If he refused to appoint Mr. Ponta, the standoff threatened to produce a protracted political fight that could destabilize the country, undermine its struggling economy and delay a loan deal from the International Monetary Fund that Romania is hoping to negotiate when its current arrangement expires early next year.

In Bucharest, the Romanian capital, political commentators called the election “Basescu’s revenge.”

“The most we can hope for is that it is not a long war, and the parties find a compromise,” said Cosmin Stan, a leading Romanian broadcaster with Realitatea Television.

Romania, a poor Balkan country that has struggled to shed the legacy of decades of dictatorship under Nicolae Ceausescu, has undergone some of its worst political turbulence in recent memory. The country has weathered a series of unstable governments and come under criticism from the European Union and the United States. In October, the European Commission, the union’s executive body, said that concerns about corruption and fraud had prompted it to block development aid potentially worth billions of euros. All the while, the public remains deeply disillusioned amid a simmering dissatisfaction with austerity — including a 25 percent cut in public sector wages — for which many voters blame Mr. Basescu.

Mr. Ponta, at 40 the youngest prime minister in the European Union, has been locked in a bitter power struggle with Mr. Basescu, a 61-year-old former sea captain. The acrimony was made worse by the July impeachment vote, which Mr. Basescu called a “coup d’état” and which drew sharp criticism from the European Union and the United States. Mr. Ponta had accused Mr. Basescu of overreaching his mandate by, among other things, refusing to appoint ministers chosen by the prime minister.

Many Romanians say they are tired of the dueling leaders, and in a sign of that discontent, the populist People’s Party of Dan Diaconescu, a flamboyant television station owner who campaigned in a white Rolls-Royce and is being investigated for fraud, won about 14 percent of the vote, according to the partial results. As part of his campaign, Mr. Diaconescu has promised around $26,000 to every Romanian who starts a business.

But the feud between Mr. Ponta and Mr. Basescu dominated the election.

Under the Constitution, the president must name a prime minister from the party that receives a majority, in consultation with the party. Mr. Ponta is the coalition’s choice. The candidate for prime minister then needs to be approved by the Parliament, where Mr. Ponta’s center-left coalition has won a strong majority. While the Constitution gives the president the prerogative to name the prime minister, he cannot ignore the popular vote.

Mr. Basescu could try to bypass Mr. Ponta by appointing another candidate from the center-left coalition. But constitutional specialists said Mr. Basescu’s room for maneuver was severely circumscribed now that Mr. Ponta’s coalition had such a clear mandate.

Some experts said that Mr. Basescu was banking on the fact that the Constitution says the president must appoint the prime minister from the winning party but is unclear on whether this applies to a coalition like Mr. Ponta’s. The Constitution is open to interpretation, and each side is interpreting it in its own interests.

Catalin Ivan, a spokesman for Mr. Ponta’s coalition, the Social Liberal Union, said that if Mr. Basescu did not appoint Mr. Ponta as prime minister, he would face an impeachment vote as well as Europe-wide condemnation. “We would like to think we have democracy in Romania,” Mr. Ivan said.

Cristian Parvulescu, the dean of political science at the National School of Political Studies and Public Administration in Bucharest, said that under the Constitution, Mr. Basescu was obligated to appoint a prime minister from the party that won a majority. While Mr. Basescu can reject the candidate put forward by the winner, Mr. Parvulescu said, such a move could put him on shaky constitutional grounds.

Laura Stefan, a legal specialist at Expert Forum, an independent research institute in Bucharest, argued that it was Mr. Ponta’s political immaturity that had plunged Romania into crisis and that Mr. Basescu was within his legal right to choose someone more qualified. She noted that two failed attempts to form a government within 60 days of Mr. Basescu’s first nominating a candidate would prompt early elections.

“It is clear that Mr. Basescu doesn’t like or trust Mr. Ponta, and so we are entering a period of uncertainty,” Ms. Stefan said. “But I don’t think anyone wants more political upheaval or early elections, and my prediction is there will be a hard-fought compromise.”

Analysts said that the poisonous atmosphere in Romanian politics showed little sign of abating, given that whoever became prime minister would have to try to work with Mr. Basescu, whose mandate ends in 2014. “We are in for a long political struggle,” Mr. Stan said.


George Calin contributed reporting from Bucharest, Romania.

Romania’s Ponta Vows New Cabinet by Year-End on Victory

By Irina Savu & Andra Timu - Dec 10, 2012 

Romanian Prime Minister Victor Ponta vowed to form a new government by the end of the year and build a super majority in Parliament after his ruling coalition won yesterday’s general elections.

The ruling Social Liberal Union, or USL, got 58.6 percent, the Central Electoral Commission said today in Bucharest, with 99.6 percent of votes counted. The opposition Right Romania Alliance, aligned with President Traian Basescu, got 16.5 percent. The People’s Party of media owner Dan Diaconescu received 14 percent of the votes, while the ethnic Hungarian party got 5.15 percent, according to the partial results.

“I take the responsibility for leading a new government and we plan to have a Cabinet in place by the end of this year,” Ponta said last night. “We will negotiate with the ethnic Hungarians to get their backing for a constitutional majority. We will concentrate on creating jobs and securing the country’s fiscal stability.”

Ponta, who took power in May, persuaded voters to help him secure his first election victory with promises to undo wage cuts and tax increases passed by the opposition in 2010 to counter Europe’s debt crisis. He must now convince Basescu, a rival who survived Ponta’s effort to impeach him July, to designate him again for the top government job, sharpening a feud between the two leaders.

Leu Impact
The turmoil boosted borrowing costs and pushed the leu to a record low of 4.6520 against the euro on Aug. 3. It weakened 0.4 percent last week ahead of the elections, one of the worst- performing currencies in the region. The leu strengthened as much as 0.4 percent before trading little changed at 4.5337 per euro by 6 p.m. in Bucharest.

“Taking into consideration the bitter rivalry between Basescu and Ponta, there is a risk that the president will not name Ponta as prime minister and this could trigger political volatility, with implications on financial-market developments,” Florentina Cozmanca, a Bucharest-based economist at Royal Bank of Scotland Group Plc’s Romanian unit, said in a note today.

The ruling USL got about 62 percent of the seats in Parliament, while the opposition alliance got 22 percent of the seats, according to a forecast by private television Romania TV yesterday. Under Romania’s voting system based on constituencies and party representation, USL may get a higher percentage of seats than indicated in their vote total because of distribution rules.

Turnout at yesterday’s ballot was 41.8 percent, according to the electoral commission. The commission will probably announce final data tomorrow around 2 p.m. in Bucharest, spokesman Marian Muhulet said today.
Growing Tension
“We expect a couple of weeks of negotiations and it is quite likely that the tensions between President Basescu and Ponta will lead to some surprises on the appointments,” said Raffaella Tenconi, an economist at Bank of America Merrill Lynch in London. “We expect the National Bank of Romania to continue to manage the leu, supporting a stable trend.”

Romania earlier this year was engulfed in a power struggle between Ponta and Basescu that culminated in a 52-day suspension for the president, followed by an invalidated nationwide impeachment vote on July 29. Basescu returned to office at the end of August.

Market Relief

“Although we will need to wait for the official individual party results, there is likely to be a sense of relief that the exit polls for the alliances are in line with opinion polls,” said Simon Quijano-Evans, ING Groep NV’s London-based head of emerging-market research for Europe, theMiddle East and Africa.

Three other polling companies, including Geopol and CCSB showed similar results for USL’s score, while the opposition ARD gained between 15 percent to 18 percent of the votes.

Under the constitution, the party that wins more than 50 percent of parliamentary seats is entitled to negotiate the nomination of prime minister with the president. If no party has a majority, the president chooses a premier after consulting with all the parties.

“I voted for a change and I hope things will get better, though I doubt they can be worse than now after this terrible period of uncertainty and political struggle,” said Oana Hoarda, a 35-year-old accountant.

Premier Designate
After the failed impeachment attempt, Basescu said he won’t designate Ponta as prime minister again. He has since declined to repeat that statement in public. Ponta said he is the only candidate for prime minister should his political alliance win.

The premier-designate has 10 days to draw up a governing program and pick his ministers before seeking a confidence vote in Parliament.

Ponta and Basescu agree that Romania needs to reach a deal with the IMF and the EU next year, once the current 5 billion- euro ($6.5 billion) precautionary accord, signed in 2011, ends. The nation has drawn no money from the facility. Romania also got a 20 billion-euro bailout from the IMF and the EU in 2009.

To contact the reporters on this story: Irina Savu in Bucharest at isavu@bloomberg.net; Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romania Regional Shale-Gas Referendum Invalidated, Agerpres Says

A referendum on the exploration of shale-gas in several Romanian towns and villages near theBlack Sea was invalidated because of a lower-than-required turnout, Agerpres reported, citing local authority officials.

A minimum turnout of half of the electorate, needed to validate the vote, wasn’t met in the city of Mangalia, Mayor Cristian Radu said, according to the Bucharest-based news service. The turnout in Costinesti and Limanu villages reached 49.7 percent and 39.2 percent respectively, Agerpres said.

The citizens were called to vote on whether they agree or not with shale-gas exploration through hydraulic fracturing, after Chevron Corp. (CVX) announced plans to explore the area for the resources.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romania PM’s alliance wins poll landslide

The Financial Times
By Neil Buckley, East Europe Editor


The centre-left alliance of Romania’s prime minister Victor Ponta has won a landslide victory in Sunday’s parliamentary elections, setting up an awkward period of cohabitation with the centre-right president, Traian Basescu.

With 81.5 per cent of votes counted on Monday morning, Mr Ponta’s USL liberal-social democrat alliance had won 58.6 per cent of the vote for the lower house, and 60 per cent for the senate.

The centre-right ARD alliance, aligned with Mr Basescu, trailed on 16.7 per cent of lower house votes, and 16.95 per cent for the senate. Turnout was 41.6 per cent, higher than the last election in 2008, despite heavy snow and rain.

USL’s share of the vote could translate into more than 60 per cent of seats in the parliament – making it almost impossible for Mr Basescu not to nominate Mr Ponta as premier, though the president had hinted he might attempt to appoint someone else.

The two men have been bitter rivals since the USL government attempted in summer to impeach the president for allegedly overstepping his powers, in a move that was sharply criticised by EU leaders.

“The election score is very clear, an absolute majority admitted by our opponents,” Mr Ponta said. “I hope this day puts an end to a civil war that has been tearing Romanians apart for several years”.

The size of USL’s victory may reduce the chance of short-term political uncertainty resulting from an attempt by Mr Basescu to nominate an alternative prime minister.

But with the next presidential election not due until 2014, a period of tricky cohabitation between the two men beckons.

Some analysts have speculated that the government, now backed by a strong popular mandate, could within months make a renewed attempt to topple the president, though Mr Ponta has denied that he intends to do so.

Mr Ponta on Sunday night said he had proposed negotiations with the UDMR Hungarian minority party, which won just over 5 per cent of the vote. That could potentially give his USL alliance a two-thirds majority needed to amend the constitution, and strengthen the premier’s powers.

Mr Ponta was asked by Mr Basescu to form a government in April after two previous centre-right governments collapsed within months following street protests by Romanians in January.

Romania pushed through one of the toughest austerity programmes in Europe after receiving a €20bn bailout in 2009 from the International Monetary Fund and the EU.

During what was seen as a lacklustre campaign from all sides, Mr Ponta’s party pledged to reverse wage cuts and tax increases passed as part of the austerity programme, to boost the largely stagnant economy. Economists say it is not clear how he will be able to afford to.

Though the president has limited economic powers under Romania’s constitution and is required to be politically neutral, Mr Basescu was heavily associated with the austerity measures, one of the factors behind the attempted impeachment in July.

Almost four-fifths of voters in the impeachment referendum voted to remove Mr Basescu. But the vote was invalid after less than the required 50 per cent of registered voters turned out – partly because of a boycott of the referendum by Mr Basescu’s supporters.

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Romania government headed for parliament majority

(Reuters) - Exit polls showed Romanian Prime Minister Victor Ponta's alliance won a clear victory in a Sunday election, putting him in a strong position in a power struggle with the rightist president.

Ponta's leftist Social Liberal Union (USL) won 54-58 percent of votes according to three exit polls and is headed for a majority, but his opponent President Traian Basescu has the power to ask someone else from the USL to form a government.

That may yet unnerve markets, as any prolonged period without a new administration in place would raise questions about how Romania would obtain a new International Monetary Fund deal once the current agreement expires in early 2013.

Ponta tried to impeach Basescu in July, a campaign that brought harsh criticism from the European Union and United States and has left the two men in an uncomfortable power share. The president has previously said he would never appoint Ponta again, though his language has softened in the last two weeks.

"Starting tomorrow, we can talk projects for the next four years ... because we have peace and stability," Ponta, a 40-year-old lawyer, told reporters in his Targu Jiu constituency, a few hours from Bucharest.

The former communist country has made progress in some areas since the 1989 revolution that overthrew dictator Nicolae Ceausescu, but although it joined the European Union in 2007 it remains the bloc's second poorest member.

Heavy snow, rain and fog across the Balkan country hampered turnout, which was only 37 percent by early evening, but also reflected deep dissatisfaction with politicians - many of whom voters view as corrupt - among an electorate of just over 18 million. First official results are due early on Monday.

Romania lags regional peers Poland, Hungary and the Czech Republic and struggles to supply running water and reliable electricity to some of its 19 million people. Long-term reforms such as privatization of inefficient state companies and an overhaul of health care have failed to materialize, and the economy is struggling to recover from a deep recession.

The exit polls put opposition Right Romania Alliance (ARD), allies of Basescu and unpopular for pushing austerity, on 19 percent and populist Dan Diaconescu, who wants deep tax cuts, in third place with 10-13 percent of the vote.

The USL has benefited from disenchantment with Basescu and the ARD, who pushed through salary cuts and higher sales tax before they lost power in a parliamentary confidence vote in April. But lackluster economic growth will give the next administration little room to ease cost cuts and tax rises.

"Things will remain exactly the same after this election, if not worse," said pensioner Mufide Suliman in a cold and rainy Bucharest. "I don't hold any hope for us. Maybe my grandchildren will have a better life."
BIG MAJORITY

Romania's complicated electoral system - combining constituencies and proportional representation - favors large parties and analysts say the USL would probably thus win even more seats than its proportion of the vote.

Ponta said he would discuss working with the ethnic Hungarian UDMR party, which exit polls put in fourth place with about 5 percent of votes. Two-thirds of seats are needed to change the constitution, along with backing in a referendum.

By late afternoon, the Interior Ministry had recorded 370 instances of alleged fraud in the election, which is being monitored by the Organisation for Security and Cooperation in Europe (OSCE).

"I gave a chance to the team which is now ruling (USL)," said former textile worker Doina Isopescu at a polling station in Bucharest. "I'm fed up with cuts, cuts and again cuts."

The leu fell to a record low against the euro in August during Ponta's attempt to remove the conservative Basescu from office, using tactics which the EU and United States said undermined the rule of law. The currency remains near lows and borrowing costs edged higher in the weeks before the election.

The focus will now be on Basescu's comments for an indication of whom he might nominate, which he will do after full results - should be due on Wednesday - and talks with parties.

(Additional reporting by Luiza Ilie; Editing by Stephen Powell)

Romania Gov't Easily Wins Parliamentary Elections

By ALISON MUTLER Associated Press
BUCHAREST, Romania December 10, 2012 (AP)

Romania's center-left government swept a strong majority of seats in parliamentary elections, official results showed Monday, setting the stage for a clash with President Traian Basescu who says he won't reappoint the prime minister.

The center-left alliance led by Prime Minister Victor Ponta won nearly three-fifths of the seats in the legislature, trouncing Basescu's group, with 81 percent of votes counted.

Despite the clear victory, Basescu has indicated he would not appoint Ponta. The two are bitter rivals after the government tried to remove Basescu from office in an impeachment vote in July, a bid that failed as too few people voted to make it valid.

"We won a clear majority, a majority recognized by our adversaries who have to accept the rules of democracy," Ponta said after polls closed Sunday. "I assure them we will treat the opposition with the respect that we did not get when we were in opposition."

Basescu could nominate someone else, but his choice would have to be approved by Parliament. If his candidate was rejected, Parliament could be dissolved. The government has threatened to move to impeach Basescu again if he refuses to nominate Ponta.

Election official Marian Muhulet said Basescu's group won less than 17 percent of the 452 seats in the legislature. A populist party led by a media tycoon scored about 14 percent and an ethnic Hungarian party won just over 5 percent. Other parties did not get the minimum 5 percent.

Ponta was appointed prime minister in May, the third prime minister this year, but he had a bitter battle with Basescu, whose mandate expires in 2014.

Basescu's allies, who were in government from 2008, grew unpopular due to harsh austerity measures demanded by the International Monetary Fund in exchange for a €20 billion ($26-billion) bailout loan in 2009 from the IMF and the EU, and allegations of cronyism.

Ponta restored most pensions and salaries that were slashed as part of the loan agreement, with the IMF's agreement, but has largely continued the policies as previous Basescu-allied governments including a 24 percent sales tax, one of the highest in the European Union.

Romanian exit polls: center-left gov't wins vote

By By ALISON MUTLER, Associated Press

BUCHAREST, Romania (AP) — Romania's center-left government won a clear victory in Sunday's parliamentary elections, according to exit polls. The result could inflame the personal rivalry between the nation's top two officials and bring yet more political upheaval.

The prime minister's governing alliance had about 57 percent of seats in the 452-seat legislature, according to a poll published after elections on national television TVR.

Coming in second was a center-right group, allied to President Traian Basescu, which polled over 18 percent. A populist party headed by a media tycoon won about 13 percent, according to the poll. First results are expected Monday.

Basescu and Ponta are bitter rivals after the government tried to remove Basescu from office in an impeachment vote in July, a bid that failed as too few people voted to make the election valid.

Basescu has indicated he won't appoint the 40-year-old Ponta again, calling him a "compulsive liar" and saying he plagiarized his doctoral thesis. Ponta says Basescu is a divisive figure who overstepped his role as president by meddling in government business.

"We won a clear majority, a majority recognized by our adversaries who have to accept the rules of democracy," Ponta said after the vote. "I assure them we will treat the opposition with the respect that we did not get when we were in opposition."

Ponta became prime minister in May, the third prime minister this year, but his appointment brought a bitter battle with Basescu, whose mandate expires in 2014.

Basescu could nominate someone else, but his choice would have to be approved by Parliament. If his candidate fails in two rounds of voting, Parliament could be dissolved.

As he voted, Basescu again accused the government of the former communist country of failing to devote itself to democratic reforms. He said Romania must continue its "path toward the West" and show the world it is "headed toward Brussels, not Moscow, and Washington, not Beijing."

For his part, Ponta said he remains committed to leading Romania to a better future.

Many Romanians are fed up with the power struggle between the top two leaders, especially as the country remains one of the poorest and most corrupt members of the European Union. Romania is enduring deep austerity cuts in return for a €20 million ($26 million) bailout to help its foundering economy.

Sunday's vote was hampered by heavy snow and authorities asked the army and the defense ministry to help clear roads closed by blizzards. About 250 polling stations were prevented from opening on time, officials said. Turnout was more than 30 percent three hours before the polls closed.

Heavy rain was falling in Bucharest early Sunday, but it eased off later.

Valentina Lupan, an architect voting in Bucharest, said she was determined to cast a ballot, despite the bad weather.

"People will go and vote even if there's snow and rain because they've had enough," she said. "We've had enough of being insulted and humiliated. We want a normal life."

Besides the failed bid to impeach Basescu, the country has seen three prime ministers and Cabinets this year and huge anti-austerity protests. The EU and the U.S. criticized the government for failing to respect the rule of law and of ignoring constitutional rules during the impeachment attempt.

The Organization for Security and Cooperation in Europe monitored Sunday's vote.

Copyright © 2012 The Associated Press. All rights reserved.

Romania withdraws ambassador from Syria because of war

(Reuters) - Romania has withdrawn its ambassador and most of its embassy staff from Syria due to growing concerns over security in Damascus, the foreign ministry said on Sunday.

There are close links between the two countries dating from the time of Romania's communist former dictator Nicolae Ceausescu, who had a long and warm friendship with Bashar al-Assad's father.

While many European countries have expelled Syria's ambassadors, its envoy to Romania remains in place and security has been stepped up around the embassy in Bucharest.

"Starting from December 7 2012, the Foreign Ministry has reduced diplomatic personnel to the minimum at the Romanian Embassy in Damascus due to security reasons," it said in a statement.

"Most of the personnel, including the ambassador, have been relocated to Beirut in the Republic of Lebanon, from where they will continue to monitor the situation in Syria and, if necessary, provide required consular assistance."

Friday, December 7, 2012

Populist media tycoon emerges as alternative in bitter Romania parliamentary election race

By Associated Press, Updated: Friday, December 7

BUCHAREST, Romania — Media tycoon Dan Diaconescu drives a white Rolls Royce, looks like a used car salesman in his shiny mauve jacket, promises to create thousands of jobs and has emerged as a key player in Romania’s bitterly contested parliamentary election.

The owner of two television stations, Diaconescu’s populist party is running third in Sunday’s vote, according to polls. The gray-haired, multimillionaire talk show host from Romania’s disenfranchised south appears to be tapping into widespread discontent with traditional political parties seen as arrogant, sniping and corrupt.

“People cling to me like I’m their only hope,” the lanky 44-year-old said in an interview with The Associated Press this week, after driving six hours from the poor mining town of Targu Jiu, where he is running for a seat in Parliament. “They say I’m the one who’ll save them from poverty, they ascribe to me qualities that I don t really have, or they consider me some sort of Messiah, a savior of Romania.”

Even by Romanian standards, politics have been tumultuous this year. The impoverished Balkan nation has seen three prime ministers and Cabinets, huge anti-austerity protests, and a government criticized by the European Union and the United States for failing to respect the rule of law during a failed bid to impeach President Traian Basescu.

Many in the country of 19 million are fed up with a bitterly personal power struggle between Basescu and Prime Minister Victor Ponta, especially as the country remains one of the poorest and most corrupt members of the EU, and endures deep austerity cuts in return for a €20-million ($26-million) bailout to help its foundering economy.

Polls give Ponta’s center-left governing coalition a comfortable 57 percent of the vote. But a fresh political crisis could break out after the election if, as threatened, the center-right Basescu refuses to nominate Ponta — whom he recently called “a pig,” ‘’a compulsive liar” and a “little cat.”

Diaconescu is frequently dismissed by mainstream politicians as an unsophisticated arriviste from the backward south, whose marathon talk shows on his OTV channel — with the slogan “Live Sensationally” — made him a star. But he has taken votes from both Basescu and Ponta, and will likely be a pivotal voice in the new Parliament. Basescu’s allies are expected to rely on him for support.

He has earned admiration from everyday people as a sort of Romanian Oprah Winfrey, a man from a modest background who made good and hasn’t forgotten his roots. Though he drives a luxury car, he has never fixed his crooked teeth and is very quiet about his personal life and assets.

“I like Diaconescu because he is pleasant and respectful to everyone whatever their class,” said Lucia Popescu, who works as a security guard in Bucharest. “He thinks before he speaks, he is gentle and people have had enough of mudslinging all day long, on the TV and in the newspapers.”

In a country where corruption is virtually a way of life, Diaconescu has not been immune to such allegations himself. Ponta accused Diaconescu of being a con man over his failed attempt to buy a chemical plant for €45 million ($59 million), saying the entrepreneur never had the money and that it was just a pre-election publicity stunt.

Diaconescu himself is under investigation for two fraud-related cases, for allegedly trying to blackmail a mayor to stop him airing damaging information, and for fraud in the chemical plant deal. He claims the charges were trumped up — and calls himself an outsider who understands business better than many in government.

Diaconescu, whose campaign is awash with his “lucky” color purple, promises to slash sales tax from 24 to 10 percent, create thousands of jobs and give €20,000 ($26,000) to budding entrepreneurs. He told the AP he would find the funds from public money that is currently siphoned off by corrupt officials.

“We believe that if this money is no longer stolen by our new political class, Romania would have 40 percent more, and here I’ m talking about wages or pensions,” he said.

His populist party, which was only created two years ago, is polling 15 percent, trailing just behind Basescu’s allies, the Just Romania Alliance, a new grouping of center-right parties.

They are unpopular for past austerity measures and perceived cronyism.

“We work 15 hours a day for 1,000 lei (€225) a month, is that normal?” said Ioana Stoian, a 27-year-old vendor, wrapping a sweet cheese pastry. “Diaconescu will do something. They (politicians) do nothing apart from steal and fill their pockets.”

But some wonder whether he can be anything more than a protest candidate.

Diaconescu’s party emerged “due to the disappointment of the electorate and Romanian society toward unfulfilled promises made by President Basescu and governments,” said Stelian Tanase. But he predicted the party might not have the staying power to last.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Romania election: Stage set for showdown

By Nick Thorpe 
BBC News, Romania

Romanians go to the polls on Sunday to elect a new parliament in a ballot which may force a bitter political cohabitation.

"We have in Romania a power in decline, that of President [Traian] Basescu," said Stelian Tanase, an independent political commentator in Bucharest.

"And another political group which is emerging to power, that of Prime Minister Victor Ponta. The fight between them is like one between two mafia clans. Cohabitation is impossible."

That battle between President Basescu and his Democratic Liberals on the one hand, and Victor Ponta and his Social Liberal Union (USL) on the other, comes to a head in the parliamentary election.

Few in Romania doubt that Mr Ponta will win but the margin of victory is crucial.

President Basescu has said clearly that he will use his powers on the day after the result to appoint a prime minister "in the national interest".

Given the enmity he feels towards Mr Ponta, it is hard to imagine that he has the leader of the USL in mind. But any attempt to appoint someone else from the USL or its allies may result in a constitutional crisis.

"According to our constitution, the president has to appoint a political personality who is able to get the support of the majority in the parliament,' said Sever Voinescu, deputy leader of the Democratic Liberals.

"That person must be reliable, and not someone who will lead the country into adventures to advance a certain political agenda."Vanity feud?

What strikes a regular visitor to Romania as astonishing is that the public have not grown bored of a political feud which often seems to have more to do with the vanity of the main players than with genuine differences in policy.

Two governments, both backed by President Basescu, fell in quick succession in the spring of this year in a wave of street protests against the austerity measures which they introduced.

Romania failed to make use of the profits from the boom years in the mid-2000s and most people have few savings to survive the crisis.

Three million Romanians abroad still send money home but the envelopes waiting on the counters of Western Union money transfer desks all over the country are getting thinner and thinner.

There has been no mass return of Romanians from Spain or Italy. There is less and less construction or seasonal work but still a demand for cheap east European labour, in nursing homes in particular.

And even unemployment benefit or occasional work abroad seems better to most Romanians than what they would face at home. Not surprisingly, there has been little mention of absentee Romanians in the election campaign.

Economic issues are in the forefront but, according to economist Dorin Citu, the debate is at a rather low level.

"Everyone says they want to create jobs - obviously," he said.

"And they want lower taxes. It just looks like they paid someone to do a survey to see what the concerns of Romanian people are and they put those in their programmes.

"The economic programmes of the main parties don't make much sense."

Inside the oldest church in Bucharest, in the historic centre of the city, people queue with slips of paper, hand-written prayers.

At the front of the church, a priest reads the prayers out loud, one by one, surrounded by the faithful. The icons are brilliant reds and golds.

There are more women than men here but a surprising number of young people as well.

For those who do not have the time to queue, you can even dictate your prayers to a motley crew of disabled people at the end of the road, who write them down and take them in for you and supplement their meagre disability benefit.

Whatever the result, the behaviour of Romania's politicians after the elections will be even more closely scrutinised in Western capitals than it was until now.

Despite Victor Ponta's relative popularity at home, his government has been sharply criticised internationally for trampling democratic norms in its eagerness to attack the president.

"The sharp and public interventions by Romania's Western partners have tempered the grab for power of the ruling alliance," said Christian Mititelu, a commentator in Bucharest.

"Unfortunately, for many Romanians exasperated with austerity and Basescu's behaviour, they also left a bitter taste," he added.

Romania GDP Falls in 3rd Quarter on Drought, Consumption

Romania’s economy shrank in the third quarter, the first contraction since the January-March period, according to revised data, as consumption fell and a drought hurt farm output.

Gross domestic product fell a seasonally adjusted 0.5 percent from the previous three months, matching a Nov. 15 preliminary report, compared with 0.1 percent growth in the second quarter, the National Statistics Institute in Bucharest said on its website today. GDP declined 0.6 percent from the same period a year ago.

Romania’s economy went through its worst recession on record from 2008 until 2010 and a second one in the last quarter of 2011 through the first quarter of this year, according to the revised data. It will probably see growth slow to about 1 percent this year from 2.5 percent last year, because of sluggish industrial-output growth and a poor harvest amid Europe’s debt crisis, according to forecasts from the International Monetary Fund and the government.

“Falling external demand for Romanian industry and a harsh summer drought in agriculture took a severe toll on third- quarter economic growth and real GDP fell at the steepest pace since the introduction of austerity measures in the summer of 2010,” Banca Comerciala Romana SA economist Eugen Sinca said in a note today. “Economic growth will gain speed to 1.1 percent in 2013, from an estimated zero percent in 2012.”

Final consumption contracted 1.6 percent in the third quarter from a year earlier, compared with 1.3 percent growth in the second quarter, according to the statement.

Construction output shrank 0.7 percent, compared with 3.6 percent growth in the second quarter. Agriculture, one of the main drivers of the economy last year, declined 30 percent in the third quarter, while industry fell 0.3 percent, according to the institute.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Thursday, December 6, 2012

Romania's elections: An uneven fight

The Economist
Romania's elections
An uneven fight

Dec 5th 2012

IN Romania's strident political environment, dominated by ex-spooks, dodgy businessmen and their sons and daughters, Iulian Craciun (pictured above) is a refreshing exception. If elected on December 9th, the 34-year old IT expert would be the first disabled person ever to enter the Romanian Parliament.

Mr Craciun's first task would be to see that the marble staircase leading to the "House of the People", a monstrous building designed at the orders of the Communist dictator Nicolae Ceausescu in the 1980s and now housing the Romanian parliament, is fitted with wheelchair ramps. For now, the guards have instructed him to use the back door of the parliament where there is such a ramp.

Mr Craciun's bid reaches beyond rights for disabled persons. "I am sick and tired to see that the majority of young Romanians have no models in life, no will and no motivation to do something with their lives," he told our correspondent. After having run for two years a motivational project called StartEvo, which had famous artists, journalists and entrepreneurs tell their success stories and offer mentoring to young Romanians with a business idea or an unexploited talent, Mr Craciun hopes to replicate this effort at national scale. He joined the ranks of the Civic Force, an offshoot of the larger Democratic-Liberal Party (PDL) of President Traian Basescu, because it was "the least worse option". All political parties in Romania are guilty of something, he says. All have weird members. The new party, whose candidates are running on joint lists with the PDL, is "the newest political entity and there are a lot of fresh people".

The Senate race for Mr Craciun's Bucharest constituency is an uneven one, as his main opponent from the Social-Liberal bloc (USL) of Victor Ponta, the prime minister, is no other than Dan Voiculescu, one of the most influential media moguls and a former Securitate (secret police) operative. Mr Voiculescu, whose wealth is estimated at €650m ($850m), is on trial for corruption and money laundering and has used a trick to avoid sentencing: Earlier this year, he resigned from the Senate so that his file is sent to another court. If elected, the court would be changed again and meanwhile, his alleged deeds may hit statute of limitations.

"I started with almost zero chances. He is one of the wealthiest Romanians, I am a normal person. He has thousands of employees, I have thousands of friends. He owns 40% of all media in Romania, I have a Facebook page," Mr Craciun admits. But he is confident that Romanians will listen to his message of hope, of changing something in his country, first by starting with practical education and "resetting" the role models in society. His trump card is the fact that he has made it against all odds, that he graduated from university, got a job and started his own business despite his muscular atrophy and a society which offers few opportunities for disabled persons. "Yes, Mr Voiculescu's TV channels tried to diminished my presence. They say I am being used by others and I should stay home and take care of my health. Fortunately, I am totally different that any other candidates and I am un-attackable: I was not enrolled in the old Securitate, I did not work with the state, I did not steal."

Opinion polls this week show a strong lead for the USL, at over 60%, while Mr Craciun's party is rated at a meagre 17%. But the mere fact that Mr Craciun is running, against all odds, is a sign that perhaps not all hope is lost for the young generation in Romania.