COMMENT: April Fools' Day "ultra-minority" govt in Romania is risky gamble

By bne IntelliNews April 5, 2007

Bogdan Preda in Bucharest -

This is no April Fools' joke: Romanian Prime Minister Calin Popescu-Tariceanu, the head of the National Liberal Party, kicked out all of the Democratic Party's ministers from his government on April 1. Two days later, Tariceanu's new cabinet received support in parliament from the former governing coalition's fiercest political enemy - the centre-left Social Democratic Party.

In just two days, the governing alliance that ruled Romania for more than two years came to an end. If this is a political hoax, then it's a very dangerous one. Foreign direct investment (FDI), which Romania counts on mainly in the form of new projects in the absence of large assets to sell, could fall as a result of unstable politics. That, in turn, would cause even more problems with financing the country's widening current-account deficit, which is being fueled by record consumption and import levels.

Tariceanu takes a big risk

Moreover, government tenders, and orders for roads and similar infrastructure projects could also see delays before the new ministers follow up on work previously done by their former Democratic Party colleagues. And last, but not least, Romania is in danger of missing out on EU financial assistance to which it's entitled after having joined the trading bloc on January 1, if its ministries fail to carry out proper project analysis.

Pushing out the Democratic Party ministers, who are supporters of President Traian Basescu, Tariceanu's main critic, means the new cabinet must compromise and rely on help from the Social Democrats, who make up the largest opposition party in Parliament. And their leader Dan Mircea Geoana warned Tariceanu that he shouldn't count on his party's unconditional support. Indeed, the Social Democrats have repeatedly stated that the first thing they would do if they got into power would be to repeal the 16% corporate and personal income flat tax introduced in 2005 by Tariceanu's Liberal Party and its former ally the Democratic Party.

Tariceanu's move to oust the Democratic Party could also result in exactly what he has tried to avoid since coming to power in mid-2006 – namely, early elections. Support from the Social Democrats has come because the latest opinion polls gave them only 22% support among Romanians after a bout of internal fighting within their own party, thus joining the government buys them more time to build support in the event of early elections or in case the government survives until the end-2008 polls.

According to the same opinion polls carried out in March and April, Tariceanu's Liberals would get a maximum of 13%. Keeping things going allows him to spend time bringing fresh faces from his party into the government, as well as attempting to boost popular support with measures such as cutting health and welfare taxes by 6 percentage points.

By contrast, the Democratic Party would get between 28-34%.

For now, Tariceanu's new government can count on direct support of little more than 20% in parliament from the Liberal Party and the Democratic Alliance of Hungarians if it loses that of the Social Democrats.

In his push to govern Romania without the Democratic Party, Tariceanu has chosen to rely solely on a handful of his very close allies, other lower-ranking members of his party, plus help from the Hungarian ethnic party, which received one more ministry on top of the three it already had in the cabinet.

Therefore, his move has turned the government into an "ultra-minority" one from a previously minority one, says President Basescu.

Reshuffle casualties and surprises

Former Justice Minister Monica Macovei, perceived by European Commission officials as the spearhead in the fight against corruption in Romania, was replaced with 31-year-old Tudor Chiuariu, the former head of the Anti-Fraud Department. Macovei, the only independent minister in the previous cabinet, said she believed she was sacked because she "insisted too much on legislation aimed at fighting corruption."

Former Finance Minister Sebastian Vladescu, a member of Tariceanu's party who completed the sale of Banca Comerciala Romana to Erste Bank for a record €3.75bn in October, left Tariceanu's cabinet without uttering a word. His ministry was added to that headed by Varujan Vosganian, now the minister of economy and finance, whom the European Commission was reluctant to appoint as Romania's Commissioner at the EU.

Dan Motreanu, another member of Tariceanu's Party who got his job as agriculture minister only three months ago, also left without opposing the decision to replace him. His job was taken by Decebal Traian Remes, a former finance minister from 1998-2000, who, upon his hearing as new agriculture minister, warned that Romania isn't prepared enough to use all the €500m the EU is offering to improve farming and help rural development.


Tariceanu's decision to break the governing alliance with the Democratic Party, comes after more than a year of public squabbling with Basescu, who criticized him for refusing to step down to allow for early elections that would have potentially give their alliance majority support in parliament.

Upon announcing that he was ousting the Democrats from the government, Tariceanu accused Basescu of "blowing up a solid political construction."

Basescu retorted that Tariceanu was only interested in having "a weak government, incapable of promoting much-needed reforms."

"The current government looks like an administration board, which represents business interests, not the general interest," Basescu told Romanians on Wednesday in a televised statement, as he called again for early elections, stressing that Tariceanu's new government has a "serious problem of political legitimacy."

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