The presidential contest between incumbent Traian Băsescu and his Social Democratic opponent, Mircea Geoană, was a nail-biter until the very end. As Political Capital anticipated in its last flash report on Romania, the two weeks between the first round of voting on November 22 and the second round on December 6 were marked by bitter personal attacks and negative campaigning. As a consequence, second-round turnout was almost 4% higher than in the first, which proved to be decisive for Băsescu. The president also drew momentum from the success of his November 22 referendum on reducing the number of MPs in Parliament and abolishing the Senate. In the end, 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. 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, the support from abroad also proved decisive.

 

 

Analysis and forecast: increasing risk

 

 

Romania has been without a permanent government since October, when Geoană’s Social Democratic Party (PSD) bolted its coalition with Băsescu’s Democratic Liberal Party (PD-L). Since then, Băsescu has been unable to appoint a prime minister capable of forming a new government in the current parliament. With no government, talks on the future of Romania’s financial lifeline from the International Monetary Fund will be further delayed. International investors anxious to know about the future of Romanian fiscal policy will be forced to wait.

 

Băsescu’s win on December 6 shook the already-skittish markets. 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.

 

Băsescu’s paper-thin victory is also marred by accusations of fraud from Geoană’s Social Democratic Party (PSD). However, 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 main significance of the fraud accusations is that they give Băsescu’s opponents a chance to attack the legitimacy of his mandate, prolonging political instability.

 

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 participate and whom they will elect as prime minister, 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 PD-L. In a radio interview, PNL chief and former presidential candidate Crin Antonescu also mentioned this scenario.