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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