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Presidential poll in Romania could solve crisis
A second round of voting will take place on Dec. 6 if no candidate wins an absolute majority.
The center-left coalition government collapsed last month, just weeks before the election, as a result of party feuding and the new president is expected to appoint a prime minister to form a new cabinet. Its main task will be to win back the trust of international lenders, including the IMF and the European Commission, and restore investor confidence damaged by political instability and back-pedalling on reforms.
With the presidential vote too close to call, what kind of government will emerge is unclear. Whoever forms it will have three election-free years to overhaul bloated public finances and clear out a political class steeped in murky deals and graft.
Broad reforms are vital. Twenty years after the end of communist rule, Romania, a Balkan country of 22 million people, remains one of the poorest and most corruption-prone corners of the European Union.
“Most other countries seem to have already done these reforms, it’s ancient history for them ... and Romania is losing the confidence of investors as it still struggles with them,” said Daniel Hewitt, Barclays Capital senior economist in London. “But having three election-free years is its best chance to reforms.”
Budget plan
In the short-term, mending relations with the IMF will be vital to restore payments from Romania’s 20 billion euro aid package led by the Fund earlier this year, and to ensure the economy moves smoothly out of recession.
This will require passing a sound budget plan for 2010 and making further cuts in public spending, particularly difficult ahead of the election. The new president will have little direct effect on policy implementation but he will play a vital role in helping build a sound coalition after the election.
If Basescu is re-elected, he may try to revive his drive against corruption which won him votes in 2004. To see reforms through, the former sea captain may have to change the confrontational style that has alienated politicians across the spectrum.
After sweeping into office in 2004 on a promise to reform a democracy steeped in interest-based politics, Basescu has seen his support crumble from 50 percent at its peak, as voters lost patience with slow progress.
His main opponent, Geoana, is less likely to tackle graft with a firm hand and a government formed around his Social Democrat Party, dogged by sleaze scandals, would be less motivated to reform public finances than a center-led cabinet. Both politicians support Romania’s IMF deal but the third candidate, Antonescu, has said in the past the agreement should be renegotiated.
“There’s a great deal of tension from the investors’ side as to what it [the presidential election] means for the government and further what it means for the budget,” said Jon Levy from Eurasia Group think tank.
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