Turnout likely to be critical in Romanian election

Turnout likely to be critical in Romanian election
By Clare Nuttall and Andrew MacDowall in Bucharest December 9, 2016

The turnout in Romania’s December 11 general election could be critical in determining whether the current technocratic government under Prime Minister Dacian Ciolos stays in power for another term or is ousted in favour of the Social Democratic Party (PSD). While the PSD, which has benefitted from its infrastructure across the country, leads in the polls, a high turnout of potential voters for the newly formed Save Romania Party (USR) could tip the scales in favour of the centre-right.

The PSD’s appeal to voters centres around the benefits it plans to offer to voters, chiefly public sector pay increases and tax cuts. Meanwhile, the USR and fellow centre-right party the National Liberal Party (PNL) say that by backing Ciolos they are offering an reform-minded alternative to Romania’s old corrupt party politics.

Despite the PSD’s advantage in the polls, even with the help of its ally the Alliance of Liberals and Democrats (ALDE), the party may not take enough seats to form a government without searching for another coalition partner. This leaves the field open to the PNL and USR to try to gather enough MPs to keep Ciolos’ government in power.

Polls conducted in the run-up to the election have shown some wide variations, but an average of recent polls compiled by Teneo Intelligence shows that the PSD is set to take 42.4% of the vote compared to 24.6% for the PNL and 12.0% for the USR. ALDE, the People's Movement Party (PMP) founded by former President Traian Basescu and the Democratic Alliance of Hungarians in Romania (UDMR) are all set to pass the 5% threshold to take parliament seats, while the nationalist United Romania Party (PRU) may only just scrape into the parliament.

The PSD’s lead will not necessarily translate into a majority, although the very latest poll, carried out by IRES independent think tank for Digi 24 TV station and published on December 8, indicates that together the PSD and ALDE will receive 50% of the vote. Teneo previously estimated that a centre-right coalition led by the PNL was slightly more likely than a PSD-led coalition, while also not ruling out a grand coalition between PSD and PNL. “[The] PNL has more natural allies among parties likely to enter the parliament,” the think tank’s CEE advisor Andrius Tursa writes in a December 6 analyst note. Tursa also notes that President Klaus Iohannis “has indicated his preference to reappoint current technocrat PM Ciolos”.

“The outcome of the December 2016 parliamentary election is the most unpredictable in the post-communist period, as a result of weakened party loyalties among the electorate and the fragmentation of the political scene,” Maximilien Lambertson, research analyst, Europe, at the Economist Intelligence Unit tells bne IntelliNews

He believes that the PSD will win the election, helped by the return to the full party list system and expected low turnout resulting from “deep popular disappointment with the political class” but notes there is also “significant support for … Ciolos”.

A critical factor in the election, according to Gunter Deuber, head of CEE research at Raiffeisen Bank, could be how well the USR performs. “The Social Democrats will most likely make it as the first party, but there is a little bit of uncertainty with regard to the outcome because the USR could get a stronger vote than some polls indicate. We don’t really know what the USR can achieve,” he says.

“The big unknown for this election is the voter turnout, which has been fairly low in recent years. There is a chance that voting surprises on the global level could help the centre-right parties, if people fear Romania will once again depart from the improvements made in recent years.” 

A quiet revolution

A few days before Romanians are due to go to the polls, red, yellow and blue tricolour flags left over from National Day are still fluttering in the chill breeze in Bucharest, but there are few signs of the imminent election. Rather than the giant billboards usually seen before elections, this year campaign posters have been restricted to a handful of shared noticeboards dotted around the capital.

This is because amendments to the electoral law have restricted spending, giving hope to some of the smaller parties that a more level playing field will enable them to increase their presence in the new parliament.

Speaking to bne IntelliNews shortly before the election, Roxana Wring, a member of the USR’s national executive, said the party’s main focus was on getting people out to vote. Formed just a few months ago, initially as the Union Save Bucharest, the party went nationwide after the local elections in June and is fielding candidates in all 43 Romanian constituencies. The party hopes to benefit from restrictions on campaign funding intended to prevent “black money” from being used by political parties, though Wring believes the reforms could have gone further.

“We hope to force the PSD into a position where they have to form a coalition and they are not able to form a government,” Wring says. She stresses that the USB is an opposition party and is not forming a coalition with the PNL even though they both favour Ciolos for prime minister.

“Whether we back the next government depends on the kind of people to be proposed as ministers. We would support a government made up of people who are competent and honest … [we] would support a government headed by the current prime minister.” The USB is highly critical of the PSD and has ruled out backing any government that includes the party.

Budget battles

Some of the most intense debates in the run up to the election have surrounded the fiscal stimulus measures pursued by the PSD in particular, though many were also backed by the PNL. By contrast, Romania has been largely immune to the populist and eurosceptic winds of change sweeping over the western world this year. All the major parties favour further EU integration.

In what the party probably hoped was a death blow for the opposition, on December 7 PSD president Liviu Dragnea outlined the budget the party plans to implement if it wins the election. In line with the party’s rhetoric earlier in the campaign this included an average 20% pay rise for public sector employees, a national reindustrialisation programme, and spending hikes for health, education, defence and agriculture. Cuts were few, and concentrated on the parliament and public administration.

Dragnea told journalists that the party had drawn up the budget in advance so as not to waste time after the election, though it was clearly also a populist pre-election move. “I hope that Romanians will vote for themselves, for higher wages and a better life,” he said.

Support for the centre-right has already been weakened by Ciolos’ stance against generous pay rises for public sector workers in the run up to the election. Ciolos and international observers such as the International Monetary Fund (IMF) have argued in favour of fiscal consolidation and warned that Romania risks squandering the benefits of its current rapid economic growth through pay hikes and tax cuts. Immediately after the election the constitutional court is expected to rule on an ordinance backed by the PSD and ALDE that introduced  pay rises with an estimated cost of €1bn. The current government and the PNL challenged the ordinance via the constitutional court.

Dragnea, however, has defended the PSD’s expansionary policies, referring to the “courageous economic model” pursued in 2012-2015 in contrast to the austerity programmes in most of Europe. “I believe that Romania can become itself a successful model. We must just have confidence in ourselves,” he said in an interview with bne IntelliNews.

He also accused Ciolos of failing to connect with ordinary Romanians. “The disconnect of the government of Dacian Ciolos is felt increasingly more at grassroots level. We have economic growth, but the money - instead of reaching the pockets of ordinary people - remains unspent in government coffers,” Dragnea argued.

“We said all along that the performance of government is not measured by economic indicators, but by the reality on the ground: whether people live better, if pensions and wages increase, if the tax burden is lower - this means that government did a good job.”

Analysts argue there is some room for fiscal expansion if the new government is measured

“Some policy measures to support the poor and raise the minimum wage are already in place, and these will boost the deficit a bit. Whether a PSD government will do much more on top of this depends on their policy priorities and the wider integration of Romania into the EU,” says Deuber.

“Some moderate fiscal loosening while the economy is doing well wouldn’t result in clashes with the EU, and the rational scenario would be not to overdo it. This would also make it easier to push through privatisations.”

While the PSD is focussing on material benefits for its voters, the two parties backing Ciolos have stressed the benefits of his technocratic government over previous party political governments, and achievements such as initiating public administration reform that were  made during its single year in office. The USR is also campaigning against the old corrupt Romanian politics, and has stressed that the PSD’s reputation has been tarnished by repeated corruption scandals, including among its top leaders.

This has resulted in another major uncertainty surrounding the election: the PSD has outlined its budget but it has so far been coy about revealing the identity of its nominee for prime minister should it win the election.

President Klaus Iohannis has said that he will not nominate any candidate who had been convicted or was under investigation for corruption. This rules out Dragnea, who has been convicted of voter manipulation in the 2012 referendum, former Prime Minister Victor Ponta who has been charged with 17 counts of forgery, as well as money-laundering and complicity in tax evasion, and several other top officials.

The party is not the only one to be involved in corruption scandals; the PNL’s lacklustre campaign is partly attributed to the fact that its former co-leader and campaign chief Vasile Blaga was indicted for influence peddling a month before the election.

However, Wring describes Iohannis’s statement as a “shot across the bows” to the PSD, warning them not to nominate Dragnea “or there would be a scandal, national and international”. However, when asked on December 7 what would happen if Iohannis rejected the party’s choice, Dragnea said he did not believe the president would have “such evil thoughts”.

There is therefore uncertainty not only over the outcome of the vote but on the likely candidate for prime minister should the PSD take the helm. With both the PSD and the main centre right parties polling very closely, and neither appearing set to take an outright majority, more uncertainty can be expected in the weeks following the election, as potential coalition leaders try to hammer out deals with the smaller parties.