What is the political context of the Eurozone crisis period in Romania? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?
The Eurozone crisis period in Romania is characterised by high political unrest and instability. Since 2008, Romania has known six government changes, one suspension of the President (2012), two national parliamentary elections (2008; 2012), two presidential elections (2009; 2014 forthcoming) and two referenda (2009; 2012). The long electoral periods did not favour a coherent approach to austerity packages and to their implementation, generating a largely unstable environment.
The political unrest has partially its roots in the institutional architecture put in place by the 1991 Constitution of Romania as revised in 2003. The fundamental law enshrines a semi-presidential political system whereby the responsibilities of President, Parliament and Government are often intertwined and mutually dependent. The legislature of Romania is bi-cameral, formed by the Chamber of Deputies and the Senate, directly elected for a period of four years. The President is directly elected for a five years mandate. The executive power is bicephalous (dualist executive), with both a directly elected President and a Prime Minister, invested by the President after receiving the Parliament’s vote of confidence. The system ensures important space for checks and balances. However, at the same time it makes the ‘cohabitation’ of the three political institutions particularly difficult when not on the same side of the political compass. This was often the case in the analysed period.
Three parties have largely dominated the political discourse: the centre-right Democratic Liberal Party (PDL), the centre-left Social Democratic Party (PSD) and the centre-right National Liberal Party (PNL); the two latter parties allied as Social Liberal Union (USL) from February 2011 to March 2014.
The time sequence of major political events in the context of the main EU financial assistance agreements follows the order below:
· 2008, November 30, Parliamentary elections
· 2008, December 22, Government Boc (1) [PDL, PSD]
· 2009, June 23, MoU EC-Romania 2009-2011
· 2009, October 1, PSD ministers resign
· 2009, October 13, Motion of censure of the Parliament, Government dissolved
· 2009, November 22, December 6, Presidential elections
· 2009, November 22, Referendum on transition to unicameral parliament and reduction of MP seats to maximum 300
· 2009, December 23, Government Boc (2) [PDL]
· 2010, February 22, 1st supplemental MoU EU-Romania 2009-2011
· 2010, August 08, 2nd supplemental MoU EU-Romania 2009-2011
· 2011, January 19, 3rd supplemental MoU EU-Romania 2009-2011
· 2011, April 08, 4th supplemental MoU EU-Romania 2009-2011
· 2011, June 29, MoU EU-Romania on precautionary assistance 2011-2013
· 2011, December 27, 1st supplemental MoU EU-Romania 2011-2013
· 2012, February 6, Government Boc (2) resigns
· 2012, February 9, Government Mihai Razvan Ungureanu [PDL]
· 2012, April 27, Motion of censure of the Parliament, Government dissolved
· 2012, May 7, Government Ponta (1) [USL]
· 2012, June 29, 2nd supplemental MoU EU-Romania 2011-2013
· 2012, July 29, Referendum on the dismissal of the President
· 2012, December 9, Parliamentary elections
· 2012, December 21, Government Ponta (2) [USL]
· 2013, November 3, MoU EU-Romania on precautionary assistance 2013-2015
· 2014, February 25, fall of USL coalition, PNL ministers resign
· 2014, March 5, Government Ponta (3) [PSD]
· 2014 November 2, November 16, Presidential elections (forthcoming)
The November 2008 parliamentary elections were a close call. The Social Democrats (PSD) won followed with less than one per cent difference of votes by the Liberal Democrats (PDL). As a coalition agreement was reached between PSD and PDL, President Traian Băsescu (candidate of PDL predecessor party in 2004 presidential elections) nominated the leader of PDL as Prime Minister (Emil Boc). On December 22, 2008 the Parliament gave the vote of confidence to Prime Minister Boc and his cabinet, formed by PDL and PSD members. The invested Government had as first two governance objectives to ensure a stable economic climate in the context of global economic crisis and job creation. Since the two parties of the governing coalition were so far apart ideologically, the coalition generated endless disputes. The Government operated in an atmosphere of constant conflicts and tensions from the very beginning. By mid-2009, political instability became so deep that the PSD eventually started acting as an opposition party, regardless of the fact that it was a member of the coalition. During this period, Romania requested direct financial assistance form the European Union and the International Financial Institutions, agreement announced on March 25 2009.
On October 1st 2009, a few weeks before the presidential elections of November 22, 2009, the fragile coalition collapsed. Shortly after, on October 13, 2009, the Government collapsed under the vote of no confidence passed by the Parliament (the ‘motion of censure’). The motion of censure was the first one to get the quorum since the first post-communist legislature of 1992. Government Boc nevertheless remained in charge as a caretaker Government until late December 2009, as the subsequent attempts of the President to appoint different cabinets failed.
The political instability impacted on the engagements with the International Financial Institutions signed in April 2009. After the first review of the IMF Stand-by-Arrangement on October 9, 2009 the collapse of the Government on October 13, postponed the second review until the new Government was in place. In this sense the IMF country report on Romania states:“[w]hile offsets through cuts in capital spending, lower interest payments, and some late revenue recovery enabled the government to ultimately meet the revised end-year deficit target, implementation delays in spending measures and budget uncertainties in the run up to Presidential elections delayed completion of the second review.”
The Presidential elections and referendum held on November 22, 2009 fuelled the political rivalry between PDL, on one hand, and PSD, on other. First, the Romanian citizens endorsed the referendum initiated by the President, voting in favour of a unicameral Parliament to replace the bi-cameral one and the reduction of the parliamentary seats to a maximum of 300. In the second tour of December 6, 2009, President Traian Băsescu (PDL candidate) outvoted Mircea Geoană (PSD candidate) roughly by 0.7%. The Constitutional Court dismissed the allegations of fraud and validated the results of both the Presidential elections and the referendum.
The re-elected President again put forward the candidacy of Prime Minister Emil Boc (PDL), who managed to get the Parliament’s vote of confidence by a fragile majority on December 23, 2009 and maintained the position in office until February 6, 2012. This time, the Prime Minister’s governance agenda included as a top priority the revision of the Constitution according to the results of the 2009 referendum (unicameral Parliament with maximum of 300 seats); followed by: economic redress, including no raise in VAT; respect of commitments agreed with IMF, World Bank and European Commission; transition to multi-annual budget model; revision of pension system, et al.
The elections have again generated delays in implementation of the first 2009 MoU adjustment measures. Once a new Government was in place, the first addendum to the 2009 MoU between Romania and the EU has been signed in February 2010, updating the initial conditions and targets on the background of crisis deepening and worsening output indicators.
The Government led by Prime Minister Boc (PDL) was the one to adopt the harsh and highly unpopular austerity packages of 2009 and mid 2010, including the fixed annual tax on private companies, the public sector salary cut by 25%, the attempt to cut the pensions by 15% and the raise of VAT by 5% (from 19% to 24%), all passed by way of the so-called ‘engagement of responsibility’ in front of the Parliament (whereby the government subjects the measures to a confidence vote procedure), thus avoiding parliamentary and public debates on the matter (please refer to sections III.9, X.3, X.4, X.5 below).
On 5 February 2011, the Social Liberal Union (USL) opposition was formed by an alliance between PSD, PNL and two other small parties: the Conservative Party (PC), and the National Union for the Progress of Romania (UNPR). The highly unusual alliance between socialists and liberals was fed by the common goal of a strong opposition against the governing PDL party and the President (Traian Băsescu) whose public popularity fell dramatically after the enforcement of the two adjustment packages in 2009 and 2010 respectively (please refer to section X.6 and X.9 below).
In January 2012 the growing public discontent burst into large-scale protests, supported by the USL opposition. The protests forced Prime Minister Boc and his Cabinet to resign on February 6, 2012.
On February 9, 2012 President (Traian Băsescu) designated Mihai Răzvan Ungureanu, a formally politically independent candidate, to form a new Government. Prime Minister Ungureanu staid in office for less than 3 months, as the reunited chambers of the Parliament supported by the USL majority passed a second motion of no confidence on 27 April 2012, dissolving the Government. The declared reasons of the motion were, inter alia, the failure of the Government to address the economic downturn and the lack of transparency, including lack of parliamentary debates on the Fiscal Compact. (On the Fiscal Compact please refer to section IX below).
Left with no other option, the President designated Victor Ponta (PSD leader) as Prime Minister. Led by Prime Minister Ponta, USL was given the Parliament vote of confidence and became the governing coalition on May 7, 2012. The Coalition maintained in office until early 2014. Immediately after the investiture, on May 18, 2012 the Government passed emergency legislation on gradual recoupment of 2010 salary cuts and restitution of certain pensions and social security rights.
The new Government investiture brought about the onset of a difficult period of cohabitation between President Băsescu one the one hand, and the Prime Minister and his USL Cabinet on the other. Political tension was on constant rise on the background of the constitutional dispute between the President and the Prime Minister about the representation of Romania to the 28-29 June 2010 European Council meeting. On 27 June 2010 the Constitutional Court decided that it was for the President to represent the country. Nevertheless the Prime Minister ignored the decision of the Court explaining that it was impossible to change the European Council delegation list just one day before the summit. On the same date, the Constitutional Court declared the local electoral law amendment establishing a first-past-the-post system (the-winner-takes-it-all), introduced less than six months before the local elections unconstitutional.
The culmination of the political crisis hit in early July 2012 when the USL Government together with the USL members of Parliament attempted an overthrow of President Băsescu. First, on July the 3rd, the Ombudsman and the PDL presidents of the two Chambers of the Parliament were dismissed by way of Parliament resolution. Second, on July the 4th the law on the functioning of the Constitutional Court was amended by way of Emergency Ordinance, so that the Court could not review Parliament resolutions. Third, on July the 5th the referendum law provisions on the quorum were amended by Emergency Ordinance, in the sense that a referendum may be validated if endorsed by fifty plus one per cent of the participants as opposed to prior fifty plus one per cent of the citizens with a right to vote. Fourth, on July 6, the Parliament adopted the decision to suspend the President for serious acts of infringing the Constitution, pursuant to Article 95 thereof and decided on the date of the referendum on the dismissal of the President. (The same president has been suspended also in April 2007, the outcome of the referendum on dismissal was negative.) In spite of the fact that more than 87% of the referendum participants favoured the dismissal of the President, the Constitutional Court did not validate the referendum held on July 29, 2012, as the half plus one quorum had not been met. In the view of the Court, despite the legislative change introduced, the provisions were still to be interpreted as meaning fifty plus one of the citizens with a right to vote.
The above-enumerated events stirred prompt and harsh reactions from the part of EU institutions and the international community. The Council of Europe Venice Commission framed the problem in terms of constitutionality and the need of constitutional review to avoid further institutional clashes in the future, whereas the European Commission adopted a rule of law discourse.
The overwhelming USL victory in the parliamentary elections of December 9, 2012, brought USL the absolute majority quorum in both Chambers of the Parliament. Supported by the Parliament majority, Prime Minister Ponta was re-stated in office on December 21, 2012. The parliamentary elections brought the much-expected stability awaited both internally and externally, notably by the International Financial Institutions. As the USL Government enjoyed a stable parliamentary majority the decision making process was much eased. The USL coalition controlled largely the legislative initiatives, having the certainty that these are supported by the Parliament. After a period of relative stability, the USL coalition fell apart on February 25, 2014 on the eve of the European Parliament elections of May 2014 and forthcoming presidential elections of November 02 and 16, 2014.
On March 5, 2014 Prime Minister Ponta presented the new PSD Cabinet, invested with the Parliament’s vote. The cabinet is currently in office. It is expected to change (or not) depending on the results of the Presidential elections of November 2014.
The eve of the forthcoming presidential elections of November 2 and November 16, 2014 finds the country in the midst of a recession period and attempts of economic consolidation, burning discussion on improvement of the European Structural and Investment Funds absorption capacity; fight with extreme poverty and corruption; implementation of justice reform; continuing efforts towards joining the Schengen area (blocked in 2012), attainment of euro adoption benchmarks; and – highly important – on-going discussions on Constitutional reform, which puts forward two fundamental challenges for the future: the reshaping of central inter-institutional competences and attributions; and the territorial administrative reform (on constitutional reform please refer to Section III.2, below).
Along these lines, Mr. Herman Van Rompuy’s speech in Bucharest on 25th April 2013 presents a comprehensive summary of Romania’s current priorities:
“Prime Minister Ponta updated me on the constitutional reform in the country […] I encouraged him to continue the reform process, in full respect of fundamental values such as: respect of the rule of law and separation of powers and ensuring the widest possible consensus in the society. We addressed important economic topics. […] In this context, we further talked about further improving Romania’s absorption capacity in order to make better use of the existing EU funds. […] We also discussed the necessity to move gradually but relentlessly towards a genuine economic and monetary union. […] In terms of Romania’s aspirations to adopt the euro, we share the view that it is important for Romania to stay as close as possible to the euro area’s developments in order to ensure a good preparation for it. There is progress on the convergence criteria, and now, I encouraged the Prime Minister to continue these efforts, for meeting all the necessary conditions for your euro joining later on.”
The social context has also known escalating tensions on the background of the 2009 and 2010 economic redress packages (see section X.6 and X.9 below) .
On October 5, 2009, more than 800.000 public sector employees protested against the harsh austerity measures that included the freezing of the public sector bill, cut of bonuses, gradually decreasing the number of public servants, freeze of pension point, prohibition to accumulate the pensions with the salary, et al. In this sense, observers reported that: “[n]umerous offices, administrative departments and schools closed for the day. Hospitals restricted services to emergency cases. Some 15,000 workers and public servants took to the streets of Bucharest to protest, bringing traffic in the national capital to a standstill for hours.” The social movement was reported as “the biggest in the country since the fall of Communism in 1989”.
The 2010 austerity package, including the 25 % cut of public employers salaries, 15% cut of unemployment benefits, child raise support and numerous others social benefits, did not bring large immediate protests. These however fed the public discontent generating massive violent clashes and continued protests in January-February 2012. The protests were triggered by certain adjustment measures on the public health reform agenda but shortly transformed into countrywide protests, which gathered about 90.000 people on the streets of the largest cities in Romania, including the capital Bucharest. The protests led to the resignation of the Boc Government on February 6, 2012 (see above).