Romania's power struggle set to continue as Basecu returns

By bne IntelliNews August 22, 2012

Nicholas Watson in Prague -

Plus ça change, plus c'est la même chose. Romanians understand this not just because French is widely spoken in the country, but because the political fighting - which has already done so much harm to the economy - is set to continue after the suspended President Traian Basescu was reinstated by the country's top court.

On August 21, the nine-member Constitutional Court, as had been expected, ruled that a July 29 referendum, called after Prime Minister Victor Ponta and his Social Liberal Union (USL) managed to get parliament to suspend Basescu, was invalid because the turnout fell short of the required 50% of the 18.3m electorate. In the referendum, 88% of those who voted wanted Basescu out. However, the turnout was only 46%, in no small part because Basescu had called for a boycott.

That should have been an end to it, but this is Romania, where political fighting between the various actors is so ingrained that Ponta and his allies didn't know when to give up. The government then claimed that the size of the total electorate was lower in reality than on paper, and that the turnout threshold had therefore been met. It set about trying to push the Constitutional Court to agree. This resulted in complaints from the court to a judicial commission of the Council of Europe "about continuing pressure and threats against individual judges."

None of this has gone down well in the EU, which accuses Ponta and his government of trampling over democracy and undermining judges - massively counterproductive in a country where corruption is so rife and entrenched. In a statement following the court decision, the European Commission urged all political actors "to comply with the decision... and to respect European values, to act with responsibility and to work constructively in overcoming divisions, in Romania's best interests."

"The European Commission expects the Romanian authorities to abide by the rule of law and the decisions of the Constitutional Court," it said. "Accordingly, the legal procedure to reinstate President Basescu should be respected."

In a positive sign, the government said it would accept the court's decision. "I want to send a signal of stability to Romanians: the court decision will be respected and implemented," Ponta told a news conference.

Less positively, the government gave clear signs that the power struggle is set to continue. Acting president and high-ranking USL official, Crin Antonescu, confirmed there will be no peace between Ponta and Basescu, who has now survived two impeachment referendums since becoming president in 2004. "We do respect the court decision and Traian Basescu will again become a president. But he returns as an illegitimate president," Antonescu said. "The court refused to see that at least 2m Romanians shouldn't have been taken into account for the referendum quorum."

Elections ahoy!

The battlefield will now move to the parliamentary elections set for November. Ponta's Social Democrats had been a shoo-in to win, but the PM is looking a bit ragged after losing the impeachment tussle and an academic panel finding that his doctoral thesis was based on plagiarism. His anti-democratic moves since coming to power in May, such as replacing the ombudsman - a check on parliamentary power - with an ex-party hack, trying to disband that academic panel, and now the failed impeachment, have caused consternation in the EU and frightened the markets.

The leu has fallen to record lows during the latest bout of political instability, an event which hurts not only Romanian pride, but hits hard because most public and private debt is euro denominated. A falling leu raises default rates and potentially destabilises the banking sector. "That is the last thing Romania needs right now," says Martin Prochazka, a independent analyst. Some €2bn left the country in May, according to a report published by the Romanian Academic Society (SAR).

Raiffeisen Bank International said the markets' reaction to the court decision was muted, as the decision was the most probable outcome. "In the very short term, we expect the intensity of political tensions to diminish, but only to return to levels witnessed before the [impeachment] vote. In the months ahead, taking into account the tense relations between President Basescu and the current majority in the parliament led by the USL alliance, as well as the parliamentary elections which are due towards the end of the year, we expect uncertainty related to political developments to persist."

There's been no comment as yet from Basescu, but given his abrasive style, there is no doubt he will make as much as hay possible out of this latest setback for Ponta and the USL, whose motivation for the attempted impeachment is thought to be an attempt to halt Basescu's anti-corruption efforts.

That drive has targeted several USL deputies, while the recent convictions of ex-PM Adrian Nastase and other senior figures suggested that prosecutors are now willing to go to the very top. Basescu is now likely to step up these efforts, meaning he could be dodging impeachment bullets until his term expires in 2014.

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