Summary

 

The Social Democratic Party (PSD)’s decision to quit the governing coalition can be explained as an effort to distance itself from unpopular IMF-mandated austerity measures, to return to traditional left-wing rhetoric, and to boost the party’s chances of winning back the post of Interior Minister – the office responsible for organizing presidential elections. The National Liberal Party’s (PNL) motion of no confidence against the government is likely to pass with backing from the Socialists and the Hungarian party.

 

 

Background

 

Ever since Romania’s Social Democratic Party (PSD) entered into a grand coalition with the Democratic Liberal Party (PD-L) in December 2008, it has come under a hail of criticism from members who fear that the party will lose its left-wing character. Indeed, the Socialists had to abandon much of their program. The preparation of the budget was a very delicate balancing act between Socialists and Liberals. As Political Capital warned in Regional Risk Watch Issue 7/2009 (10 July 2009), the disputes centered on the IMF-mandated austerity measures that Romania needs to implement if it wants to receive financial support. These measures include implementing a unitary pay law and cutting public expenditures. The conflicts were also sparked by numerous allegations of corruption against government ministers. However, the “final nail” in the grand coalition’s coffin was the dismissal of Interior Minister Dan Nica (PSD) by PM Emil Boc, following Nica’s prediction of possible electoral fraud in the November presidential vote. The PSD refused to accept Nica’s ouster and after 3 days of fruitless negotiations Mircea Geoana made good on his threat to bolt the coalition. All PSD ministers and secretaries of state handed in their resignations on 1 October 2009. The Interior Minister is responsible for organizing the elections, thus this position became extraordinarily important ahead of presidential elections set for 22 November and 6 December. The two main rivals are Traian Basescu (PD-L) and Mircea Geoana (PSD). The instability at the Interior Ministry is a good indicator of the tensions that plagued the new administration from the very start: Nica was the third minister to hold this position in less than a year.

 

 

Possible scenarios

 

  1. Interim government, followed by a PD-L minority government after the presidential elections
    • Events are currently unfolding along these lines, since the President has appointed interim ministers for 45 days.The new ministers:
      • Justice Minister Catalin Predoiu will be interim head of the Foreign Affairs Ministry
      • Economy Minister Adriean Videanu will run the Health Ministry
      • Transport Minister Radu Berceanu will take over the Agriculture Ministry
      • Finance Minister Gheorghe Pogea will be in charge of the Labour Ministry
      • Tourism Minister Elena Udrea will lead the Environmental Ministry
      • Communications Minister Gabriel Sandu will be the interim minister for SMEs
      • Youth and Sports Minister Luminita Placinta will be in charge of the Ministry for the Relation with Parliament.
    • An all-PD-L government after the presidential elections is possible, but it would be difficult to muster the necessary support to approve new ministers with only 117 seats in the 332-member Chamber of Deputies. So far, only the Democratic Union of Hungarians in Romania (UDMR) has signalled a willingness to cooperate with the PD-L -- but even so, the Hungarians wouldn’t add enough votes to give the PD-L a functioning majority. The PNL has explicitly stated it would not support either of the big parties and expressed a desire for a caretaker government to organize the presidential election, followed by early parliamentary elections. The PNL also declared that they would file a motion of no confidence against a PD-L government as soon as possible; they can depend on the support of the PSD. A motion of no confidence requires the signatures of one-fourth of all MPs and senators (118), and a combined session of the Chamber and the Senate will vote on it after 3 days. Passage requires a simple majority of MPs and Senators combined. If the vote is successful and no new government is able to gain the support of the legislature within 60 days, the president can dissolve Parliament, after which new elections must be held within 3 months.


  2. Return of the grand coalition
    • The return to the grand coalition will remain a theoretical scenario until after the presidential election, as reuniting with the PL-D would result in a major loss of face for the Social Democrats and would further diminish Geoana’s chances of narrowing Basescu’s opinion-poll lead in the presidential race. By freeing himself from the “chains” of governance, Geoana hopes to use with characteristically left-wing rhetoric to capitalize on the growing economic pains. The coalition breakup can also be seen as a way to escape the certain loss of popularity that the IMF-mandated austerity measures entail. However, Romania needs the lifeline of the IMF loan. Losing it would spell financial doom for the country, but it seems that short-term domestic political interests can trump the economic rationale for the loan and the long-term benefits it can bring. Populist electioneering may undermine the political will to fulfil the extremely unpopular IMF conditions. Relaxing the conditions is out of the question, as it is only possible when economic conditions allow, according to the term modifications in August. Standard and Poor’s and Fitch Ratings have already signalled that Romania’s sovereign debt rating may suffer should it fail to respect the IMF’s conditions.
    • The PSD’s backing of the PNL-sponsored no-confidence motion may be part of a blackmail strategy, in which the PSD will try to secure a greater role – the position of prime minister for one – in a future coalition. The possibility of a second grand coalition appears more likely after Geoana told Romanian public radio that working in the future with PD-L is not out of the question: "In life and in politics, never say never," he said. However, the president’s relationship with Geoana is strained to say the least, and he is not known to budge under pressure.
  3. Early elections
    • This scenario is the least likely, as in the mid-term the PD-L and the PSD are expected to tone down their attacks on each other as their electoral support is almost the same, and the result of an early election could mirror the outcome of last year’s vote. A theoretical coalition of PD-L, PNL and UDMR is also on the table, but the PNL would probably insist on the right to name the Prime Minister, creating the same deadlock as last year. The mid-level MPs are also against an early election, as a significant number of them contributed large amounts of money to the parties for places on their candidate lists so that they could enjoy a position in the legislature, along with the immunity from prosecution it entails.