Referendum voting system key to Romanian president's fate

By bne IntelliNews July 9, 2012

bne -

Romania's political and economic crisis is set to deepen at the end of this month as the people of this EU member state go to the polls to vote in a referendum on whether to impeach their president - though the outcome will be heavily dependent on the voting system used.

Romania's parliament, led by the current coalition of the centre-left Social Democrats and the centre-right National Liberals that took over in April, voted 256 to 114 to suspend President Traian Basescu on July 6, accusing him of violating the country's constitution and overstepping his authority, setting the stage for an impeachment referendum on July 29. If he is impeached, presidential elections will follow.

According to a poll by IMAS taken July 5-7, 64.3% of Romanians going to the ballot boxes will vote to impeach President Basescu, 27.4% of those say they will vote against such a move, and 8.3% do not know or would not want answer.

"Given the fairly clear picture painted by this snapshot, the outcome of the referendum will depend on the voting system," notes Vlad Muscalu, senior economist at ING Bank Romania. "The Constitutional Court is to decide today [July 9] if the ruling alliance can change the voting system so that the president can be impeached with only 50% of the votes, and not 50% of the votes of all eligible Romanians as in the past. If it finds this change unconstitutional, the president is most likely to survive the referendum."

The RON95.66 (€21m) earmarked to pay for the referendum won't directly impact the economy, but it's still a lot for a country whose finances are so dire and the mere fact of greater political turmoil in this increasingly unstable country is already having a detrimental effect on the economy. "The markets reacted quickly to the rapid deterioration of political stability and the leu weakened to an all-time low of RON4.499 on Friday [July 6] morning," noted Erste Bank economist Eugen Sinca. "The Ministry of Finance's auction for two-year bonds was only partly successful and debt managers sold bonds worth RON286m, well below the initial guideline of RON500m. Yields increased by 15 basis points as compared to the previous auction in June and reached 5.97%." The leu was trading at 4.52 to the euro at 13:00 Bucharest time on Monday, July 9.

All this is raising fears abroad that Romania will struggle to stick to its €5bn International Monetary Fund-led aid deal, and whether it can improve its appalling record on corruption, which Brussels in the past has used as a reason to halt EU funds to the country. According to Agence Europe, Olivier Bailly, spokesman for the European Commission, indicated the Commission would be following the political situation in Romania very closely and would also be responding to the forthcoming report on the Cooperation and Verification Instrument (CVM), which is supposed to assess the progress made by Romania and Bulgaria over measures to reduce corruption and improve the legal system. Bailly said that this would be published sometime later this month. German Chancellor Angela Merkel condemned the government's action and spoke of "consequences."

New faces needed

Romania's politics have been in chaos for months: the current prime minister, Victor Ponta, is the third PM this year, after protests against austerity and corruption toppled the previous ones. Since Ponta ousted the previous Democratic Liberal Party (PDL) government of Mihai Razvan Ungureanu, his coalition of the centre-left Social Democrats and the centre-right National Liberals have tightened their grip on power in some dubious moves. Ponta, derided as "Mr Copy Paste" in the media, scrapped an academic panel before it concluded he had plagiarised a good part of his doctoral thesis - a failing that seems to have afflicted many an Eastern Europe politician.

The presidency on paper may be largely a ceremonial post, but Basescu has been the dominant figure in Romanian politics since he assumed the presidency in 2004 and was re-elected for a second five-year term in 2009 through his close links to the centre-right PDL.

During Romania's boom years of the middle of the last decade, Basescu's popularity was high, but now he carries the can for Romania's economic crisis, stalled reform and the rotten state of Romanian politics, whose elites are widely regarded as aloof, corrupt and incompetent. Adrian Nastase shot himself (though not fatally) in June as the police arrived at his house four hours after a court sentenced the former prime minister to two years in prison for a party funding scam.

Basescu has already withstood such a challenge in 2007 when an impeachment referendum called by the then-ruling coalition (much the same as Ponta's government) was defeated. But, as Romanian columnist and blogger Dan Tapalaga points out, that was before the economic crisis and the collapse of Basescu's popularity rating to less than 15%.

Such is the state of Romanian politics that the electorate may well judge all established parties negatively in this autumn's election. An entirely new party is needed to provide Romanian voters with a viable choice, experts say.

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