European Parliamentary elections resulted in a victory for the parties of the big coalition in Romania
The Romanian elections passed by in Romania with a turnout (27,4%) that can be regarded as extremely low compared with the EU average (43,2%) but by no means the lowest in the region (the average turnout for the 10 former Communist countries was 31 percent, but only 20 percent voted in Lithuania, 19.64 percent in Slovakia, and 28 percent in Slovenia and the Czech Republic). The turnout was a bit lower than in the 2007 EP-elections (29.47 percent). The PSD got 31% of the votes (11 seats) while the PDL achieved almost 30% (10 seats). The party of the former Prime Minister Taricaneu won 14% of the vote and came third with 5 seats. The Democratic Union of Hungarians in Romania and the nationalist, anti-Hungarian far right PRM both got almost the same percentage of votes (8.9 and 8.7%, 3-3 seats). Elena Basescu, the daughter of the President received 4.2% of the votes and thus succeeded in entering parliament. The PSD is delegating its members to the socialist fraction (PES), PDL, Elena Basescu and 2 members of UDMR are heading to the moderate right (EPP) faction, PNL members will join the liberal (ALDE) faction. The Great Romania Party will delegate its members to the extreme faction (if founded), and the UDMR is sending one MP to the green faction (Greens/EFA). Further parties were unable to delegate members to the EP.
Analysis and forecast (↓ decreasing risk)
Despite the credibility loss of the governmental parties and the Prime Minister Emil Boc because of the introduction of austerity measures and the delay in some welfare measures of the government, the parties of the big coalition dominate the political field with an almost equal, head-to-head result and sharing more than 60 percent of the votes and two-thirds of the EP-seats altogether. These results constitute a stabilizing factor for the government, proving that the big coalition is a politically successful experiment for the participating socialists and the PDL – at least in the short run. The convincing victory of the two parties can thus sedate the conflicts between the two governmental parties in the coming months, while the recession on the other side, expected to deepen further in the following months (see next item) and the unpopular crisis management can induce further tensions in the coalition. The return of the Great Romania Party to the EP and the head-to-head results with the Hungarian party show that ethnic tension could increase and strengthen again between Romanians and Hungarians after the Hungarian party was forced into opposition (they were members of the former coalition). If the right-wing Fidesz takes governance in 2010 or even 2009 (which seems to be almost sure), the controversies can be fuelled even further.
Percentages of the Romanian parties on the EP-elections, 2009 (Source: European Parliament)
The slump in the Romanian economy is deeper than expected
The debate over the possible extent of the recession in Romania has strengthened since Traian Basescu addressed a critical message towards the Head of the National Bank on 15th June because of the overtly optimistic prognosis on the growth potential of the Romanian economy. According to Basescu, Romania’s economy is headed for a recession and the central bank’s forecast of zero growth is absolutely unrealistic. It was a reply to a former statement of Mugur Isarescu, head of the central bank that the loan by the International Monetary Fund will avert a drop in GDP in Romania for the full year of 2009 and GDP-growth will remain around zero percent. Basescu also declared that he would like the central bank to lower minimum reserve requirements for commercial banks, currently at 40 percent for foreign-exchange deposits and 18 percent for deposits in the local currency. Traian Basescu made his statements after participating in a meeting of the cabinet and made some recommendations for the government and some ministers on the next steps of the crisis management.
Analysis and forecast (↑ increasing risk)
The statement of the president is interesting from two aspects:
- Macroeconomical. Focusing on the content of the presidents’ statement, Traian Basescu’s more pessimistic prognosis can prove more accurate than the NBR’s. The $165 billion Romanian economy last year expanded 7.1 percent, the fastest rate in the European Union, but the outlook for 2009 and even 2010 looks frightening for the country. Romania’s economy contracted at an annual 6.2 percent in the first quarter, partly because of a decrease in consumer demand by 13.7 percent. According to the latest prognosis of the European Commission (which is not regarded to be the gloomiest) the recession in 2009 could reach 4 percent, and the 0 percent growth can be expected in 2010 the earliest. Some sources (for example Ziarul Financiar, a financial daily) go even further, saying representatives of IMF and EU overestimated the potential of the Romanian economy with this prognosis. Political Capital estimate a minimum 6 percent recession for 2009. The lack of generous governmental overspending also decreases the growth potential of the Romanian economy, and the IMF condition of holding the budget deficit target of 5.1 percent of gross domestic product this year is also insufficient to significantly stimulate the economy.
- Political. Concentrating on the possible political motives behind the presidents’ statement, it is easy to recognize the connection between these statements and the approaching presidential elections. Basescu tries to prove his competence in crisis management by criticizing the governments’ and national Banks’ decisions on the crisis management. These statements can establish an argument for the future (when the crisis deepens further) for Basescu that he predicted that the crisis would be deeper, and with these recommendations this process could have been avoided or at least dampened. Preparing for the elections with an intense campaign is important for Basescu, because – while still being the most likely politician for the next 6 years – his popularity has fallen dramatically (from 57 percent to 39 percent) in recent months.