Romania: Change Of Government Comes With Economic Worries

By Paul Ciocoiu

Romania President Traian Basescu appointed Victor Ponta, head of the Social Democrat Party (PSD), the country’s largest opposition party, to form a new government after the coalition executive led by Mihai Razvan Ungureanu was unseated Friday (April 27th) in a no-confidence vote.

Ungureanu, a former director of the Romanian foreign intelligence, took over only two months ago, after the previous coalition government, led by Emil Boc, submitted its resignation amid a wave of public dissatisfaction with the austerity measures it had to take.

Ungureanu’s government fell after 235 MPs voted in favor of the no-confidence motion, symbolically named “Stop this blackmailable government! This, no more!”

His defeat also came after a significant wave of defections from the former main ruling party, the Liberal Democrat (PDL). Ponta, who laid the basis of an alliance with the center-right National Liberal Party (PNL) in February 2011, will have to form a government in ten days and then seek a confidence vote in parliament.

The change of power in Bucharest comes six months before the parliamentary elections scheduled for November and amid ongoing evaluation missions of the IMF that Romania signed a framework agreement with in March 2011.

One hour after the fall of Ungureanu’s government, the Romanian lei hit its lowest value on record versus the euro, amid the political uncertainty and worries concerning the economic stability. The IMF delegation has postponed a scheduled visit to the country, pending negotiations for a new government.

“I think this vote of confidence was a bad decision. The just-appointed Ungureanu government should have been allowed to finish his mandate,” Septimius Pirvu, vice president of the Pro Democracy Association, a leading Romanian NGO, told SETimes.

“This political move casts doubt on the stability of the process of preparing the elections in November,” Pirvu said. “Last but not the least, the former opposition, now in power, already signaled its opposition to the agreement with the IMF and thus the negotiations with the international creditors could catch a new shape.”

But the Social Democrats played down these concerns.

“This is a new beginning. Today’s success bodes well for Romania,” Georgian Pop, a Social Democrat lawmaker, told SETimes. “The difference between the previous government and the new one will be seen in the governing manner and I think we can make the difference and solve the country’s current problems.”

Pirvu said the cohabitation between a left and a right wing party is not going to last. “This alliance between the Social Democrats and the Liberals may break up as quickly as it was formed. Their cohabitation can last only for the sole purpose of maintaining the two parties in power. In a decent democracy, with traditional political values, such an alliance would not exist,” Pirvu said.

A previous such experience, when the center-right Liberal Democrats joined forces with the Social Democrats in a coalition government in December 2009, lasted less then a year.

In a bid to calm the markets, Basescu said the country is financially secure. “There is no reason to panic on the markets because Romania has a consistent financial buffer at the finance ministry which it can cope with any kind of events,” he said.

If approved, many challenges are ahead for the Ponta government, which will have to bring back the public employees’ salaries to the level before the severe 25% cut amid the austerity measures. Ungureanu had already signaled one of the main missions of this government would be restoring the salaries in the public sector which many associated with an electoral move.

In the streets, the change at the helm of the government is business as usual. “I am not surprised. Romanian politics have earned itself this reputation of going against the grain,” Vasile Florea, a 67-year-old pensioner in Bucharest, told SETimes.

“This is why I do not see the point of a change in government six months before the very elections or a change of a government that only inherited austerity and set as a declarative goal to reverse it. I am starting to wonder whom this victory really belongs to after all. The new coalition in power may regret dearly it has come to power the very moment when the citizens’ expectations have reached the highest,” he said.