Weekly review: with a new government, Romania turns left, with an eye on Crimea

Weekly review: with a new government, Romania turns left, with an eye on Crimea


By Daniel Stroe – Bucharest

This past week’s headlines in Romania touched upon a country in alert and scrambling to get the West’s attention following the events in Crimea and the installment of a new government after the former ruling coalition forged by the social-democrats and the liberals broke up, changing the political balance in the Romanian Parliament, but also the ideological orientation of the main policies.

The week started with the home politics being overshadowed by the events in neighboring Ukraine where Russian troops took over Crimea, just 400 kilometers from the country’s borders. There is no direct security threat to Romania of the crisis in Ukraine, the Romanian President said after an emergency meeting of the state security apparatus, but he warned that the appearance of another frozen conflict in the area would incur long term effects on Romania’s national security. Romania is already sensitive about such developments since its former territory, now the sovereign Republic of Moldova, hosts the breakaway Transnistria, the dark legacy of the former Soviet Union and its policy of division. Romania is all the more concerned the instability in Ukraine may spread to Moldova and divert it from the pro-European course, with the European Parliament just voting to lift visas for Moldovans, a clear signal Brussels is supporting Chisinau’s aspirations.

Basescu urged the West to include Romania in any possible negotiation format over settling the Ukrainian crisis. „We have the following arguments: there are over 400,000 Romanian ethnics, which makes the Romanian community second to the Russian one. The second argument is that Romania is the closest EU member state to Crimea (…) only 160 nautical miles away” Basescu said. He also pointed out that, at the same time, only 100 km away from the Romanian borders lies Transnistria. At the same time, Romania has the longest border with Ukraine of all the EU member states, he argued. „Last, but not least, Romania is not dependent on the Russian gas imports (…) so we can be a participant in these negotiations without raising questions” Basescu further said.

Later on Thursday, at the extraordinary European Council on the unfolding situation in Ukraine, Romania announced it was sending observers to Ukraine and is weighing further measures in correlation with its Western partners. A US navy warship is on its way to the Black Sea port of Constanta for pre-planned, according to the Pentagon, military drills with the Romanian and Bulgarian navy, but many couldn’t help noticing the synchronization of events in Crimea with these drills.

In the shadow of the events in Ukraine, Romania installed a new government. Last week, the liberals left the social-liberal union, the former ruling coalition led by PM Victor Ponta. The social-democrats were left scrambling to raise a new majority with a couple of minuscule parties, but had to recruit the Magyar ethnics’ party UDMR to ensure a secure vote in the Parliament. The Magyars got two positions in the new executive, but their cooptation raised eyebrows after the social-democrats had to accept claims a few years ago they were vehemently opposing to, while in the opposition, such as the hoist of the Szekely flag on public institutions, but only together with the Romanian and EU flags. The opposition warned it would file a complaint to the Constitutional Court if the Magyars’ flag proposal is maintained. Ponta resisted though calls for the establishment of a Magyar language university, which the bulk of politicians across the spectrum oppose to and could have cost the PM dearly from an electoral standpoint.

But President Basescu asked Ponta to assume a new governing program since the structure of the government changed entirely or else he will have to appoint a new prime-minister or refuse to sign the decrees for installing the new ministers. As a consequence, Ponta turned upside-down to come with a new governing program which is not much different from USL’s, but reeks of leftist ideology once the liberals are no longer part of the executive. The new government where the new Finance minister is merely 34 years old has set to enlarge the tax basis by introducing an incremental income tax ranging from 8 to 12 and then 16 per cent, a project Ponta has long eyed. At the same time, the Ponta 3 government, as the media labeled it, seeks to reduce the VAT from 24 to 19 per cent and even lower it to 9 per cent for certain essential food, as the case is now with bread. Ponta says such decisions are meant to cut fiscal evasion in the food industry where it has reached alarming levels. He also aims to raise the legal minimum wage up to 1,100 lei (about 244 Euros) by 2016 and cut social contributions by 5 per cent for employers. But all these proposals are accompanied by the mention “if allowed by financial constraints”. The government also maintains a housing program destined to youths by facilitating bank loans, but this time it ties governmental help to buying newly built homes only.

Many are afraid Ponta’s social-democrats may be tempted to resort to populist measures in this electoral year, once the liberals are no longer in the government. Several projects have been already considered, such as partially exempting bank indebted people from paying their installments for two years and a currency conversion law to switch bank loans from foreign currency into the national currency.