Romanians vote for big change by backing USL coalition

By bne IntelliNews December 10, 2012

Bogdan Preda in Bucharest -

Romanians on December 9 voted for substantial change to the way their country is run by giving the governing Social-Liberal Union (USL) coalition about 60% of the more than 500 seats in the two-chamber parliament. The unusual alliance that comprises both centre-left and centre-right parties won the greatest share of the vote in legislative elections since 1992, a sure sign that Romanians are sick of unfulfilled promises and desperate to restore living standards lost during the economic crisis.

Voters punished the previous ruling alliance led by the centre-right Democrat Liberals backed by President Traian Basescu by giving them no more than 17% of the seats, nearly final official results showed, based on the count of some 95% of total ballots.

Despite massive snowfall over almost all the country that forced Romanians to cast ballots by candle or torch light because storms had cut power supplies in some rural areas, turnout stood at almost 42%.

The biggest surprise came from the People's Party, established this year by Dan Diaconescu, the owner of a tabloid television channel who turned politician with help from his TV station, which he used to broadcast populist promises and criticise his opponents. He got almost 14% in both chambers, a result that shows how susceptible Romanians are to any promises of a better life.

The ethnic Hungarian Democratic Union party made the 5% threshold in both chambers, meaning its members could be courted by the USL if they plan to change the country's constitution, a move that requires two-thirds of votes in parliament. Otherwise, the USL have a big enough majority to pass any other laws in both chambers even without help from the Hungarians.

Reasons for change

"We need a start, we need the politicians to understand that one cannot keep promising without delivering, so voting against those who failed to keep their promises is the only way for us to send a visible signal out there," Petre Murgu, a supermarket worker, tells bne. "Unfortunately, there aren't many accountable politicians out there, the guys we elected this time aren't necessarily better than the past ones, but I felt we needed to somehow show that we do exist and that something needs be done with this country of ours."

In essence, the result of Sunday's vote shows that those who voted were either seeking vengeance against the Democrat Liberals and President Basescu for having cut state salaries by a quarter and increased VAT in 2010, or because they had become sick of the false promises and economic stagnation.

To be fair, there were some genuine efforts made by former prime minister Emil Boc and President Traian Basescu, who marginally survived an impeachment vote brought by Prime Minister Victor Ponta's USL during the summer, to step up the fight against corruption and move closer to EU norms during Boc's in office from December 2008 until February 2012. But too many other members of the then coalition did nothing or very little to help the country's economy develop. Such a performance was reflected in their poor results in this election.

Between December 2008 and today, the usual parliamentary four-year term, Romanians have seen four governments, three premiers, and 79 ministers. Among them, the finance minister has changed six times, labour minister changed 8 times, while economy and transport ministers changed four times, to name just a few of the key positions.

Although the Transport Ministry had a total budget of some €12bn, it has built no more than 250 kilometres of new highway. Then again, despite Romania being entitled to get almost €30bn in non-reimbursable funds from the EU since 2007, a lack of proper governance, political infighting and corruption has resulted in an absorption level of less than 10%, while the public debt has doubled from €25bn to around €50bn.

Raiffesen Bank International's chief economist in Romania, Ionut Dumitru, laid out to reporters on December 3 how dire the economic governance in the country is. "Just for you to understand the amount of strategy in this country: we export a lot of wheat, but we import biscuits, we export wood logs but import paper... we produce salt but import salt," Dumitru said. He added that Romania uses nearly three-times more energy than the EU average to produce €1,000 worth of GDP. "How can we become competitive under such circumstances?" he asked.

As many as 500,000 Romanians have lost their jobs during the past four years, while 20,000 companies went bankrupt and applied for insolvency procedures. The government gas maintained the 16% income tax, but failed to lower hiring costs, as it also failed to put in place much-needed reform packages pertaining to the healthcare system, energy, education and retirement.

In 2013, most employers will likely continue to act very cautiously in hiring new people, while large investors are also expected to stay away until they understand what the new governing alliance will be up to in terms of economic and fiscal policies. President Basescu has the power to appoint Ponta for another stint as prime minister, contrary to what he wants and has said he will do, this will far from solve the country's most pressing issues.

Ponta, 40, took the reins of government in May following a no-confidence vote that pushed out the cabinet of Mihai-Razvan Ungureanu. Ponta persuaded voters to help him secure his first election victory with promises to restore wages cuts and tax increases passed by the opposition in 2010 to counter the debt crisis that is sweeping across Europe. But thr PM and his governing alliance need money and that money can only come from better absorption of EU funds, more direct foreign investment and higher labour productivity. None of these look likely anytime soon.

Ponta and Basescu, however, both agree that the country needs to reach a new deal with the International Monetary (IMF) and the EU next year over a new stand-by loan to replace the €5bn one agreed in 2011. The nation has drawn no money from the precautionary facility. Romania got a €20bn bailout from the IMF and the EU in 2009. But first Ponta will have to persuade the EU that his government will respect laws and democratic institutions after his government in the summer attempted to change certain laws and contested Constitutional Court decisions in its bid to impeach Basescu.

That could be a tall order given the general feeling in Brussels that Romania (and its neighbour Bulgaria) were admitted to the club too soon, as they seem incapable of adhering to democratic norms and EU laws, while failing to bring down the rampant corruption that plagues their countries.

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