Romania After the Presidential Election

8 MINS READNov 17, 2014 | 20:58 GMT
Romania After the Presidential Elections
Images of Romania's two presidential candidates, Victor Ponta (L) and Klaus Iohannis (R), are displayed in Bucharest before the election.

Klaus Iohannis' victory in the Romanian presidential election marks the beginning of a period of complex decision-making for the country as the newly elected center-right president shares power with a parliament dominated by the center-left majority. Meanwhile, despite his electoral defeat, challenger Victor Ponta will continue on as prime minister.

This situation will likely produce tension on domestic issues since Romania will have to keep public spending under control to honor the terms of its credit agreement with the International Monetary Fund (IMF). The first challenge for the Romanian government will arrive in the coming weeks when the country's parliament votes on a budget for 2015. However, the presidential election probably will not bring about substantial changes in Romania’s foreign policy, and Bucharest's alignment with the United States and deeper ties with other countries in Central and Eastern Europe will remain the key objectives of the country's agenda.

The results of Romania's presidential election were unexpected. Iohannis, the mayor of the Transylvanian city of Sibiu, managed to defeat incumbent Prime Minister Victor Ponta and secure the Romanian presidency for the next five years. Ponta had won the first round of the election by a margin of 10 points, and most opinion polls pegged him as the favorite in the runoff. But in the final round of the election, which saw an unusually high turnout of 62 percent and strong participation from Romanians living abroad, Iohannis was able to win 55 percent of the vote. (During the first round of voting, only 160,000 Romanians voted abroad; by the runoff election, this number had risen to some 371,000.)

Some Domestic Turbulence Can Be Expected

Romania is a semi-presidential republic with a constitution emulating that of France’s Fifth Republic. The president has the power to reject legislation and send it back to parliament, and he shares responsibilities with the prime minister in representing Romania abroad. However, most of the powers of public administration lie in the hands of the Romanian parliament, which exercises legislative initiative. Despite his defeat in the presidential election, Ponta’s center-left coalition is still comfortably in control of the Romanian Parliament, and the next parliamentary elections will not occur until 2016.

The Romanians have navigated the peculiarities of political cohabitation since the center-left Ponta was elected prime minister and had to share power with the outgoing center-right president, Traian Basescu. This structure led to a ferocious internal competition as Ponta tried to reduce Basescu’s power and even attempted to remove him from office, organizing an impeachment referendum in 2012 that ultimately failed because of low voter turnout. While confrontation between Ponta and Iohannis has yet to be seen, their competing political interests could affect the legislative process.

In the coming months, Bucharest will have to make many tough decisions. The Romanian economy is still growing at a decent rate, but it is slowing down. In its autumn forecast, the European Commission lowered its projection for Romania’s 2014 GDP growth to 2 percent, down from its original forecast of 2.5 percent. Romania is also under pressure to honor the terms of its credit agreement with the IMF and the European Commission, and delegations for the two organizations will arrive in Bucharest in mid-January.

During the electoral campaign, Ponta promised to loosen the country's fiscal policy by increasing pensions and raising the minimum wage. The IMF responded by urging Bucharest not to undo recent progress in getting the country's spending under control. The European Commission also recently warned Bucharest about its budget deficit, which is projected to grow from 2.1 percent of GDP this year to 2.8 percent in 2015. In the coming weeks, the Romanian Parliament will have to approve next year's budget, the first test of Iohannis and Ponta's ability to collaborate.

The presidential election showed a significant divide among Romanians, with a large number of voters protesting against what they perceive to be high levels of corruption and government inefficiency. While the social situation has calmed since demonstrations against austerity measures and corruption put an early end to former Prime Minister Emil Boc's administration in early 2012, the tight race between Ponta and Iohannis revealed a split country. After Ponta admitted his defeat around midnight on Nov. 16, some Iohannis supporters demanded the prime minister’s resignation. Ponta will have to rebuild his power within the center-left, which could force him to seek out clashes with Iohannis.

Foreign Policy Unlikely to Change

While Romania could see some domestic turbulence in the coming two years, its foreign policy is unlikely to substantially change. The country is strategically located in Central-Eastern Europe, on the Black Sea. As a result, throughout its history external powers have competed over Romania, including the Turks, the Russians and the West. Romania was under Ottoman control for centuries, was a communist satellite during the Cold War, and joined NATO in 2004 and the European Union in 2007.  

Since the end of the Cold War, Romania has sought integration with the West as a way to secure private sector investment, public funding and military protection. The first two decades following the collapse of the Soviet Union were relatively comfortable for Bucharest. Russia was weak and the European Union was a significant source of financing, first in the form of pre-accession funds and then through structural funds and agricultural assistance.

The Russian-dominated Moldovan breakaway territory of Transdniestria, however, serves as a permanent reminder of Russia’s strong presence in the region. Until recently, Romania did not feel substantially threatened, but the crisis in Ukraine has made the Romanians worried about the security situation in the Black Sea, especially since Russia annexed the Crimean Peninsula.

Bucharest reacted in two ways. First, it sought to strengthen its ties with the United States, seeing the Americans as a source of military protection and financial investment, particularly for its energy sector. Romania is not nearly as dependent on Russian energy as other members of the European Union, but it still needs additional investment to achieve energy security. Bucharest therefore is pursuing legislative reforms to make the country more attractive to foreign investors, especially in the oil and gas sectors. This policy priority is unlikely to change under the new presidential administration.

Since the beginning of the Ukrainian crisis, America's two most important allies in the region, Romania and Poland, have been vocal in calling on Washington to enhance the U.S. presence in Eastern Europe to dissuade a resurgent Russia. Their calls have led to a series of military exercises and missions that include allies in the Baltic and Black Sea regions.

Bucharest is also interested in expanding its military budget. In April, the government announced plans to increase its defense spending by $215 million this year, and in October, Romanian Defense Minister Mircea Dusa said Bucharest would increase defense funding by 2 percent in 2015. This move ties into Romania’s alliance with the United States: Part of next year's expenditures will be allocated toward the installation of a U.S. ballistic missile defense system. Iohannis will continue to support Bucharest’s policy of maintaining close ties with NATO and the United States.

Because Romania understands that it cannot rely on the United States alone, the second part of its strategy has been to strengthen its political and military ties with other countries in Central and Eastern Europe. So far, Romania and Poland are more interested in increasing their bilateral ties with the United States than improving their own relationship, but in recent months their ties have seen some improvement. Romania has participated in summits of the Visegrad Group, an alliance that formally includes Poland, Hungary, the Czech Republic and Slovakia, and Warsaw and Bucharest are interested in building an alliance of Central and Eastern European countries that would eventually lead to a larger military and political bloc, spanning from the Baltic region to the Black Sea, to deter Russian aggression.

Romania and Poland are also interested in deepening their energy ties. Both want to create a better-integrated energy market in the region, improve north-south infrastructure and reduce dependence on Russian energy sources. As the largest agricultural producers in the region, Warsaw and Bucharest also have a common interest in pushing against any attempts to reduce the European Union’s agricultural subsidy, which substantially benefits Polish and Romanian farmers.

Finally, Romania will continue to value its membership in the European Union. According to a recent study by The Telegraph, Romania received some 5.6 billion euros (nearly $7.0 billion) in EU funds in 2013, while only contributing 1.5 billion euros to the bloc. This makes Romania one of the main net recipients of EU money and helps explain why most political parties in the country want to remain members of the European Union. Because of these benefits, and despite their differences during the presidential campaign, Ponta and Iohannis repeatedly portrayed themselves as pro-EU, pro-U.S and pro-NATO — sentiments that are shared by most Romanians.

These factors mean that although the results of Romania's Nov. 16 presidential election surprised most analysts, the next president's agenda will not bring about a change in Bucharest's policies. Iohannis will still seek to deepen Romania's military relationship with the United States and regional allies, reform the country's energy regulations to attract investors and find a way to manage the budget without running afoul of the IMF and the European Union. Cohabitation between Romania's opposing political forces will probably be tense, and will likely mean that compromises will have to be made, but the country's objectives remain unchanged. 

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