In Stratfor's 2017 Fourth-Quarter Forecast, we wrote that countries in Central and Eastern Europe would face strategic dilemmas as EU member states start discussing the future of the bloc. Romania is one of the Eastern European countries wanting closer integration with the European Union, but domestic political developments could stifle its European aspirations.
Romanians have once again taken to the streets to protest the government and its planned reforms. On Nov. 5, tens of thousands of people demonstrated in Bucharest against reforms that would allow the government to supervise the justice system, possibly weakening anti-corruption investigations in the process. In February, the Romanian government abandoned similar policies after hundreds of thousands of people rallied in the biggest protests since the fall of communism in 1989. The government's failure to address the concerns of its people could undermine Romania's greater aspirations to strengthen its ties with Western Europe.
Romanian politicians have had a turbulent year. In December 2016, the center-left Social Democratic Party (PSD) won general elections with more than 45 percent of the vote. But party leader Liviu Dragnea was blocked from becoming prime minister because of a previous criminal sentence that barred him from holding office. Another PSD member, Sorin Grindeanu, was appointed prime minister in January, but the party ousted him in June amid intense infighting. Mihai Tudose was then appointed prime minister, but he did little to appease power struggles in the PSD or to answer accusations of corruption against his Cabinet. In early October, Tudose reshuffled the Cabinet to inject new life into his increasingly unpopular government.
Despite all the political instability, Romania's foreign policy has remained fairly steady. Most of Romania's political parties agree on core issues including that the country should increase its engagement with the European Union and NATO, both of which it is a member. Romania has a semi-presidential system in which foreign policy is conducted by the president, a role that's much more stable than that of prime minister. In recent years, opposing parties have often controlled the presidency and the premiership, contributing to political upheaval, but that same system has prevented Romania from being controlled by a single powerful party, a problem in several other Central European countries.
Corruption has been an endemic problem in Romania for decades, but Romanians no longer seem willing to tolerate it, as recent large and frequent protests attest. In addition, the European Union and the United States are pressing the Romanian government to fight corruption more efficiently to improve the business environment and raise the standard of living in the country. They also view weak and opaque institutions as vulnerable to foreign powers, such as Russia, who wish to exert influence in the region.
So far, Romania hasn't been targeted by the European Union for its domestic decisions the same way Poland and Hungary have. But a lack of transparency in state institutions such as the judicial system could jeopardize the country's desire to further integrate with the bloc by joining the passport-free Schengen area or potentially entering the eurozone. Moreover, EU officials have recently suggested that structural funds (of which Romania is a net receiver) could in the future be linked to respect for the rule of law. Such a decision, if taken, could hurt the Romanian economy and is something the government will be eager to avoid as it tries to move closer to Western Europe.