Key findings

 

  • Hopes that Romania’s presidential election would break the country’s political logjam were dashed as accusations of election fraud undermine the credibility of incumbent President Traian Băsescu’s paper-thin victory over his challenger, Mircea Geoană. Results from the December 6 vote shook already-skittish investors: Bucharest’s benchmark BET index fell 4.5% on December 7, its steepest single-day drop since August 17. The leu slid 0.9% against the euro and credit-default swap prices rose by approximately 5.5%. Further deterioration is expected until the political crisis ends.

  • Although Geoană’s Social Democratic Party (PSD) claimed fraud, observers from the Organization for Security and Cooperation in Europe said the vote was in line with international standards. It is unlikely that the result will be overturned: The fraud reports are only significant because they give Băsescu’s opponents a chance to attack the legitimacy of his mandate.

  • Crucial talks on the future of Romania’s IMF loan will be subject to further delays. International financial players who were counting on a new government will be forced to wait, since Băsescu has no prospective prime ministerial candidates who would be able to gather a majority in Parliament.

  • While Băsescu’s victory raises the likelihood of early parliamentary elections, it is more probable a new PM will be able to form cabinet with the current parliament. It is difficult to predict which parties will form the next coalition and whom they will elect to lead the government, especially now that Sibiu Mayor Klaus Johannis has withdrawn his name from consideration. Former Prime Minister Călin Popescu Tăriceanu, hitherto one of Băsescu’s most vocal critics, has hinted at a possible coalition between his National Liberal Party (PNL) and Băsescu’s Democratic Liberal Party (PD-L). In a radio interview this week, PNL chief and former presidential candidate Crin Antonescu also mentioned this scenario.

 

Election Results

 


The election was a nail-biter until the very end. As Political Capital anticipated in its last flash report on Romania[1], the two weeks between the first and second rounds of the election were marked by bitter personal attacks and negative campaigning. As a consequence, turnout was almost 4% higher than in the first round, which proved to be decisive. Băsescu also gained momentum from the success of his November 22 referendum on reducing the number of MPs in the Chamber of Deputies and abolishing the Senate. The president took 50.33% of the ballots to Geoană’s 49.66%, confounding three of the four exit polls that forecast a Geoană victory. The president’s margin of victory over his opponent was smaller than in the first round. Romanians living outside the country overwhelmingly favored Băsescu, giving him a 78.9% share of their votes (115,831 votes). As Băsescu’s overall lead was fewer than 70,000 ballots, support from abroad proved decisive as well.

 

 

 

 

Consequences of the Election

 

  • Romania may experience dire financial problems as the next tranche of its emergency loan from the International Monetary Fund is delayed. The IMF has said it will freeze its financial lifeline to Romania until lawmakers pass a budget for 2010; since Băsescu has no obvious prime ministerial nominee capable of forming a government, putting together a budget will be difficult. The IMF, the World Bank and the EU together agreed to lend Romania €20 billion to help compensate for its loss of capital inflows in the global financial crisis. Now, the loan’s second and third installations will arrive in March at the earliest, not the latest. International financial players who were hoping a new coalition would be formed quickly will have no choice but to wait.

  • The election failed to provide a definitive answer to the “What’s next?” question. The president has once again defied expectations. He would clearly prefer a solid right-wing coalition with the National Liberal Party (PNL), despite the fact that PNL leaders endorsed his opponent in the second round. Geoană’s defeat seems to have weakened the PNL’s resolve: Former PNL Prime Minister Călin Popescu Tăriceanu – hitherto one of Băsescu’s most ardent critics – now says a coalition with Băsescu’s PD-L is party is not out of the question, provided the PNL gets to nominate the prime minister. PNL leader Crin Antonescu has spoken in similar terms.

  • The PNL is also under pressure from its voters to soften its approach to the PD-L. A third of PNL voters cast ballots for Băsescu, ignoring the fact that the party had endorsed Geoană, according to a survey by the Insomar agency. The Democratic Union of Hungarians in Romania (UDMR) faces a similar problem, but on a bigger scale: Although UDMR candidate Hunor Kelemen threw his support to Geoană, fewer than half of his voters followed his lead, according to the Insomar poll. Ethnic Hungarians also expressed their unhappiness with the official UDMR preference by “voting with their feet” – turnout was significantly lower than the national average in counties with sizeable Hungarian populations.

 

Election fraud - political attacks with no expected effect

 

  • As Political Capital forecast, claims of election fraud preceded the actual vote, thereby setting the stage for post-election conflicts (“Whoever loses the December 6 runoff will probably make an issue of the reported irregularities, especially if the margin between winner and loser is very small. Reasonable reports of election fraud may undermine the new president’s legitimacy. If Băsescu manages to win a second term, appearances of electoral impropriety will be bolstered by the fact that the president’s PD-L party controls the Interior Ministry, which oversees elections. (…) Should Geoană lose, the political forces behind him may revive the scandal in order to discredit the president. This would further fuel the instability in the country” [2]). The Social Democratic Party (PSD) has officially challenged the result, citing numerous irregularities and exit-poll results published after the voting booths closed. Also, the PNL, the UDMR, the Greater Romania Party (PRM) and the Green Party refused to accept the tally of out-of-country ballots and have asked for a recount.
  • As we noted in our CEE Risk Watch Special Issue in Romania[3], lack of political transparency and allegations of electoral fraud seriously undermine trust in political institutions, politicians and democracy as a whole. The accusations of fraud mean the next president will face challenges to his legitimacy throughout the next term.

 

 

 

Questions on the Future Unfold


  • The election failed to bring a clear-cut resolution to the political stalemate. However, Băsescu has emerged from the elections with enhanced authority. He will be able to lean on political parties more heavily than before, thus improving his chances of ending the deadlock and nominating a prime minister capable of forming a majority in the current parliament.

  • Romania is under the thumb of international institutions, mainly the IMF, all of which have expressed the desire for a government with which they can negotiate. The most pressing item on the agenda is to pass next year’s budget as soon as possible so Romania can receive the second and third tranches of the IMF loan. A government with a stable majority is essential for passing the IMF-mandated austerity measures that will be crucial in controlling Romania’s ballooning budget deficit.

  • Both the PNL and the UDMR are poised to strike a more conciliatory tone with Băsescu and the PD-L. Romania urgently needs a stable government as soon as possible; either party can use this fact as an “excuse” to minimize the loss of face they would incur by joining forces with the PD-L. The PNL could sweeten the deal for its voters by claiming the premiership.

  • Political parties have no incentive to call early elections for at least two reasons.
  1. Party preferences have not changed significantly since last year’s elections, so an early vote would only lead to further delays in forming a stable government. In addition, the current caretaker government lacks an interior minister – the government official in charge of organizing elections – who is acceptable to all parties.
  2. Băsescu’s win may give additional momentum to PD-L, meaning the party could be the big winner of an early general election.

 

 

 


[1] „The Gloves Come Off After Băsescu Wins Round One of the Fight for the Presidency” Political Capital Flash Report, 25 November 2009.  http://www.riskandforecast.com/post/flash-report/the-gloves-come-off-after-Băsescu-wins-round-one-of-the-fight-for-the-presidency_347.html

 

[2] „The Gloves Come Off After Băsescu Wins Round One of the Fight for the Presidency” Political Capital Flash Report

 

[3] „Most Significant Risk Factors that Could Hinder Economic Recovery in Romania”  Political Capital Risk Watch http://www.riskandforecast.com/post/risk-watch/most-significant-risk-factors-that-could-hinder-economic-recovery-in-romania_333.html