As previously predicted, Lucian Croitoru's hopes of becoming Romania's new prime minister quickly evaporated yesterday after opposition parties voted against his proposed cabinet. Croitoru failed to garner the 236 votes needed for approval of his appointment and that of his proposed cabinet. The vote of no confidence was comfortably won by the opposition, with the proposed cabinet being opposed by 250 delegates, while only 189 legislators supported the line-up. Croitoru, who is a respected economist at the central bank, was nominated in October by President Traian Basescu, following the collapse of former prime minster Emil Boc's minority centre-right government on 12 October. The opposition decision, although expected, has only served to intensify the country's political instability, and could have damaging consequences for Romania's economy.

Destined for Failure…

Croitoru's appointment was destined for failure from the start. On more than one occasion, the members of the opposition clearly and openly expressed their dissatisfaction with his nomination, and openly refused to give him their support. Basescu's intentions in nominating Croitoru were fair: he thought that nominating a non-partisan candidate, who in addition is a respected economist, would guarantee parliament's support. Under the given circumstances, Croitoru tried his best to win cross-party approval for his cabinet: his proposed government consisted of 14 members, half of which were members of the Democrat-Liberal Party (PDL), with the remaining candidates being non-partisan. Out of all 14 nominees, only 2 ministers were approved by the parliament; these were diplomat Bogdan Aurescu, nominated for the position of foreign minister, and Vasile Blaga (of the PDL), who would have become minister of regional development and tourism. The only party to express full support for Croitoru's proposed cabinet was the ousted PDL, whose parliamentary presence consists of 172 senators and deputies, thereby falling short of the required 236 votes.

What Next?

From the outset, the opposition expressed very strong disappointment with the president's choice for prime minister; therefore, no matter who Croitoru had chosen for his cabinet, its chances for approval were minimal. The main question now is what happens next. Realistically, in the near future, the answer is probably not much. Under Romanian law, the president will now have to nominate another candidate for the post of prime minister. This new appointee will then have 10 days in which to nominate his cabinet and obtain parliament's approval. This leaves President Basescu with limited options. First, he could again nominate a candidate of his own choosing. However, considering the disastrous outcome of his previous nomination, he might be hesitant to do so. Second, he can accept the opposition party's nomination, Klaus Johannis. The opposition has been pushing for Johannis' nomination from the start, under the belief that he is best qualified to lead the country out of the political crisis. Considering that the opposition holds a parliamentary majority, it is very likely that Johannis and his proposed cabinet would have little trouble garnering the 236 votes necessary for parliamentary approval. The final—and most likely—option is that the current caretaker government, which has limited powers, will be in charge until the outcome of the second round of the presidential election is known in December. Basescu, who is running for a second mandate, has already stated that the winner of the election would be in charge of designating a new prime minister. The current political turmoil and instability will therefore continue for at least another month.

Outlook and Implications

Worryingly, the rejection of the proposed cabinet does not only bear political consequences. Romania has been hit hard by the economic crisis. The country is now dependant on a loan from the International Monetary Fund (IMF) to avert a worsening of the economic downturn and support the country's longer-term economic recovery. The IMF has demanded that Romania pass a tight 2010 budget by 10 December in order to lower the country's fiscal deficit, under previously agreed rules. IMF representatives, who are currently on a review mission in Romania, will decide whether there is sufficient political support to pass such a budget by the deadline. If Romania achieves this, the country will qualify for the next 1.5-billion-euro (US$2.0 billion) tranche. The opposition has attempted to present a conciliatory approach to the budget issue, allowing Boc's interim government to present a draft budget for 2010. However, obstacles to its ratification remain prevalent.

Another of the IMF's conditions for delivery of the next instalment of the loan is the country's political stability; Romania is clearly failing to meet this criterion. The Romanian parliament needed to take concrete action to demonstrate to the IMF and international lenders that the collapse of the government in early October would not jeopardise the approval of economic reforms. This guarantee has failed to materialise in any convincing form. The presidential election is quickly approaching, and with the main parties fielding candidates, the enacting of unpopular reforms that could alienate the electorate have fallen down the agenda.

If the IMF decided to delay delivery of the next tranche, cash-strapped Romania would be in dire straits. The interim government would be forced to seek alternative sources of funds in order to pay public wages and pensions until the end of the year. This would be extremely difficult, given the short period of time and high market interest rates. This scenario would do little to help Romania's economic recovery or to reassure investors of the country's economic soundness. In fact, the long-term effect of this option would have dire consequences on the country's economic state, and would delay its long-term recovery. Romania's politicians were given an opportunity to convince IMF representatives about the country's stability and its embracing of the higher goal of economic stability and reform; instead, they chose the option of political selfishness. These factors are at present working against Romania, with the new president set to face difficulties in getting a new government approved. Even once the new government is approved, the challenges faced by Romania are only going to get more severe, meaning the new administration will need to act quickly to save Romania from the excesses and mistakes of the past three months.

Global Insight (Reino Unido)