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Dec 10, 2012 | 11:30 GMT

5 mins read

Romania: Looking for Stability After Parliamentary Elections

Romania: Looking for Stability After Parliamentary Elections

Parliamentary elections in Romania have ended, and the new government will now face the daunting task of addressing the country's pressing foreign policy challenges. Among those challenges are the accession to the Schengen Agreement, the protection of its share of EU subsidies and the preservation of its agreement with the International Monetary Fund. Political infighting prevented Romania from making progress in these areas for most of 2012, but the new government will have to achieve stability if it is to become more assertive with its foreign policy — even as it contends with the ongoing economic crisis and the growing fragmentation of the European Union. 

Romania held parliamentary elections Dec. 9. While the official result has yet to be announced, an exit poll by TVR found that the ruling Social Liberal Union coalition won roughly 57 percent of the votes. Romanian President Traian Basescu will meet with all the parties before appointing the country's next prime minister. The outcome of those negotiations will be central to forming a stable government. The next prime minister probably will come from the Social Liberal Union, which received the most votes.

In 2012, Romania was afflicted with a political crisis, which was caused by rivalries between the country's two main political parties: Basescu's center-right Democratic Liberal Party and Prime Minister Victor Ponta's center-left Social Democratic Party. As a result of these rivalries, Romania has had three prime ministers since January, and Basescu was temporarily suspended from office.

With Romania so preoccupied with internal problems, Bucharest has been unable to advance its foreign policy agenda. But its internal instability only partly explains the problem. Currently, Bucharest has little leverage at the EU level. Romania is the 17th largest EU economy in terms of gross domestic product, and it is not a member of the eurozone. As such, it has comparatively less bearing on EU-level decisions. Meanwhile, the European financial crisis has forced EU leaders to focus more on eurozone problems and less on the problems of other EU member states.

Facing Challenges at a Complicated Time

The challenge to Romania's foreign policy is threefold. First, the country is looking to make progress on negotiations over Schengen area accession. This issue is a priority for Romania, but the European Union's concerns that the country cannot control its borders has stalled negotiations. The European Union is also asking Romania to combat corruption and to issue judicial reform.  

The fact that the Romanian government was so institutionally weak in 2012 made negotiations even more difficult. In September, a EU Justice and Home Affairs Council meeting, which had been called to discuss Romania's Schengen membership, was canceled because of the country's political instability. The European Union also expressed concerns about the government's increasing pressure on the judiciary. The new Romanian government will face the challenge of putting these negotiations back on track (the negotiations are expected to resume in March 2013).

Second, the new Romanian government will try to protect the country's EU funding. One of the poorest EU member states, Romania receives EU aid in the form of cohesion and structural funds, which are designed to help the less developed countries of the bloc, and agricultural subsidies. For the period from 2007 to 2013, Romania has been allocated roughly 20 billion euros (about $25.9 billion) under various assistance programs. Romania was also granted some 14 billion euros from the Common Agricultural Policy.

The European financial crisis — and some EU member states' attempts to reduce the bloc's spending — has endangered these aid mechanisms. In fact, during debates over the 2014-2020 EU budget, some countries, such as the United Kingdom and Sweden, pushed to reduce or at least freeze the budget. But even if current levels of subsidies are preserved, other areas of EU spending, such as European Investment Bank-sponsored project funds, likely will be subject to debate as the crisis continues.

The new Romanian government will have to find a way to protect the financial aid it receives from the European Union. But Bucharest cannot influence the European Union on its own, so it likely will try to strengthen partnerships with other Central and Eastern European governments. For agricultural subsidies, it may also have to court other EU members, such as France.

Third, to protect itself from financial shock, the new government will honor its agreements with international lenders. Since the beginning of the crisis, Romania has signed standby agreements with the International Monetary Fund — once in 2009 and again in 2011 — and it has signed similar precautionary credit lines with the European Commission and the World Bank.

Initially, the crisis struck the Romanian economy hard; Romanian gross domestic product contracted by 6.6 percent in 2009 and by 1.6 percent in 2010. But the economy has been slowly recovering ever since. The European Commission expects that Romania will grow 0.8 percent in 2012 and 2.2 percent in 2013 — one of the highest growth rates in the European Union.

But these economic gains have been compromised by Romania's political instability. In fact, the European Union and the International Monetary Fund expressed concern over the political situation and its economic consequences. The new government likely will renew its agreement with the International Monetary Fund — Romania is vulnerable to foreign economic shock, and its currency was unstable in 2012 — once the current agreement expires in March 2013. The International Monetary Fund and the European Union will send a joint mission to Romania after the Dec. 9 elections, and while an agreement is likely, Romania will be asked to make more progress in economic reform and privatization.

Notably, Romania is facing these challenges at a very complicated time. Europe continues to fragment politically, and the financial crisis is far from resolved. While the tensions between Romania's main political parties are likely to continue under the new government, the Social Liberal Union's strong performance in the general elections make a stable government more probable.

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