Outlook for 2008-09

Septembrie 2008

JOAN HOEY - Senior Analyst, Central and Eastern Europe THE ECONOMIST INTELLIGENCE UNIT

 

Political outlook

Domestic politics

The results of the local elections on June 1^st and 15^th give some indication of the likely shape of the political landscape following the parliamentary election that is expected in November. The two main opposition parties, the Social Democratic Party (SDP) and the Democratic Liberal Party (DLP), both won 28% of the vote, although the SDP won the largest number of council and mayoral seats. Nevertheless, the main beneficiary of the elections may be the ruling National Liberal Party (NLP), which now holds the balance of power. Local elections have in the past proved more reliable than opinion polls in suggesting the outcome of subsequent parliamentary elections. These results suggest that the parliamentary election will result in either a minority government, ruling with the tacit support of other parties, or a coalition government.

It is highly unlikely that any single party will win an overall majority in the new parliament, but if the DLP emerged as the largest parliamentary party it is likely that the president, Traian Basescu, would nominate a prime minister from the DLP and invite him to form a government. Mr Basescu has indicated that he would have no objection to the formation of a strong minority government. This implies that he would have no qualms about asking the DLP to form a government, even if it could be outvoted by an SDP-NLP alliance. However, there is a strong possibility that this would be unworkable. In that case, the most probable outcome is that the SDP would form a government either with the tacit support of the NLP or with a formal coalition agreement.

Whatever party mergers may take place before the elections, the NLP would hold the balance of power if the broad pattern of voting in the local elections were to be repeated in the parliamentary election. There were signs of increasing co-operation between the SDP and the NLP between the two rounds of elections at the national and local levels, with party officials urging their supporters to vote against the DLP in constituencies where the SDP or NLP candidate had been eliminated in the first round, sometimes supported by the Hungarian Union of Democrats in Romania (HUDR, the NLP’s junior coalition partner). This could become even more critical in a parliamentary election if the single constituency voting system, with run-offs between the two leading candidates, is introduced to replace the system of party lists. The most likely outcome is that the SDP and the NLP will contest the elections separately, but will form a coalition afterwards, with the HUDR also joining. The possibility of the DLP engineering a rapprochement with the NLP or the SDP cannot be discounted entirely, but the recent history of bad relations between the DLP and the NLP, and the longer-term history of acrimony between the SDP and the DLP’s predecessor, the DP, make either of these alternative outcomes unlikely.

International relations

The European Commission has criticised the government for the slow pace of judicial reform and for its failure to tackle corruption since Romania joined the EU in January 2007. The main weaknesses it has highlighted include delays in implementing a coherent recruitment strategy for the judiciary; the failure of the National Integrity Agency (ANI) to begin functioning; parliament’s endorsement of a criminal procedure code and a penal code that will have a negative impact on the efficiency of criminal investigations; and delays in drafting a national anti-corruption strategy focused on key sectors and local public administration. The Commission, which will publish a detailed assessment report on July 23rd, is further dismayed by the failure of parliament to permit enquires into allegations of corruption against the former prime minister Adrian Nastase. There is a significant risk that Romania’s non-compliance with EU norms could trigger safeguard clauses on justice after the report is published in 2008.

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