Romania's Corruption Scandal Threatens Political Stability

6 MINS READJun 10, 2015 | 09:00 GMT
Romania's Political Crisis: Worse for Bucharest than for the West
Romanian Prime Minister Victor Ponta arrives at a press conference in Bucharest.

Romania is facing a political crisis. The country's National Anti-Corruption Directorate has officially opened a criminal investigation against Prime Minister Victor Ponta over charges including tax evasion, money laundering and conflict of interest. President Klaus Iohannis and opposition parties are calling for Ponta's resignation. Even if Ponta is able to retain his position, the standoff between his supporters and his critics could weaken the legislature's ability to pass domestic reforms that the country needs to attract Western investment. The crisis, however, is unlikely to change Romania’s foreign policy priorities.

Now that Romania's prime minister has become the target of serious corruption allegations, voices in parliament are calling for his resignation. If Ponta does step down, the president will have to consult the parties in parliament to see if they can form a new government. But neither the ruling coalition nor the opposition seem to have a clear successor to replace Ponta. An empty executive seat could set off a political struggle between the ruling coalition, led by the Social Democratic Party, and its opposition.

Ponta may not have to resign. So far, his party is standing behind him. Two days after the National Anti-Corruption Directorate officially announced their investigation, the Social Democratic Party issued a press release expressing its support for Ponta. The anti-corruption body asked for a waiver of immunity, which would allow Ponta to be prosecuted for his alleged crimes. But on June 9, the Chamber of Deputies — the lower house of Romania's bicameral legislature — rejected the request. For the time being, the prime minister is protected. Furthermore, the Social Democrat Party and its coalition partners currently hold a majority in Romania's parliament. Regardless of whether Ponta resigns, the coalition will likely remain in place. 

Pressure Intensifying

But the prime minister's position could weaken in the coming weeks. The opposition has called for a vote of no confidence against Ponta to take place June 12, which could remove him from office. Since his party controls the majority of the legislature, Ponta will likely survive the vote. But if the National Anti-Corruption Directorate finds additional evidence against Ponta, it could ask the parliament again to withdraw Ponta's immunity, forcing his backers to fight for him once more. Having to repeatedly protect their leader against no confidence votes and demands to lift his immunity could become too politically costly for the Social Democratic Party, especially with general elections approaching in 2016.

Popular opposition could also threaten Ponta. On June 5 and June 7, hundreds of protesters gathered in front of the parliament to demand Ponta's resignation. So far these protests have been small, but they could escalate. In 2012, it was after weeks of anti-government protests that a predecessor of Ponta, Emil Boc, lost the support of his party and resigned. Ponta could also come under pressure from Romania's foreign allies, most notably the European Union and the United States, which have repeatedly called for more institutional transparency in the country.

Even if these factors do not force Ponta to resign, they will undermine the stability of the government. Romania, a semi-presidential republic where the prime minister shares power with the president, suffered from political paralysis when Ponta shared power with former President Traian Basescu. The same could happen if Ponta severs all ties with Iohannis and the opposition. 

Romania's Ties With the West

Romania's foreign allies will be watching the growing political instability closely. Located by the Black Sea, Romania is one of the two largest countries on the eastern border of NATO and the European Union along with Poland, and Bucharest has become an important ally for the West since violence erupted in Ukraine.

Like Poland, Romania has been particularly vocal about pursuing a hard line on Russia by calling for a stronger Western military presence in the region and tougher economic sanctions against Moscow. Romania is also competing with Russia for influence over Moldova at a time when the European borderlands are the focus of international attention — Russia has a military presence in Moldova's breakaway territory of Transdniestria. From the West's perspective, Romania and Poland are key players capable of limiting Moscow's influence in Central and Eastern Europe and weakening Europe's dependency on Russian energy.  

Political scandal and divisions in the legislature will not change Romania's foreign policy. No matter which factions gain the upper hand in a future power struggle, all of them share an interest in maintaining close ties with the West, primarily because NATO and EU membership is the cornerstone of Romania's foreign and defense policy. Moreover, Western investment is important to developing Romania's economy.

One of the key areas of cooperation with the West is energy. There is a consensus among Romanian political parties that the country needs a new energy strategy, and plans to rejuvenate the energy sector require regulatory reforms that would make investment in Romanian energy projects more palatable to Western investors. The implementation of certain pending regulatory reforms, for example, is of great importance to Western investors in the country.

Twin Challenges: Anti-Corruption and Economic Reform

Amid the scandal surrounding the prime minister, the divide between Ponta's critics and supporters could delay or prevent the passage of the regulatory reforms. Even if Ponta's party can pass legislation through parliament, the president could veto any reform bills. Thus, whether or not Romania's prime minister resigns, the scandal has introduced a political crisis in Bucharest. And while it will not make Romania a less reliable NATO ally, it could hurt Romania's economic development.

Perhaps the biggest threat to Romanian political stability is the prospect of additional corruption probes. In recent months, the National Anti-Corruption Directorate's investigations have led to the conviction of prominent politicians from both the ruling coalition and the opposition, including former ministers, mayors and members of parliament. Romania's intelligence services cooperate closely with the anti-corruption organization by providing intelligence and technical support for its investigations. These intelligence agencies, in turn, often cooperate closely with their counterparts in the United States.

Meanwhile, tensions have been heightening between the National Anti-Corruption Directorate and Romania's prime minister. The agency's chief prosecutor, Laura Kovesi, recently denounced attempts by the government to weaken her position and reduce the prerogatives of Romanian prosecutors. Earlier this year, the U.S. Embassy in Bucharest criticized the government's plan to amend the criminal code to make it harder for prosecutors to convict alleged criminals. In May, the embassy also gave an award to Kovesi in recognition for her efforts fighting corruption in Romania — an indication that the White House supports the directorate's work.

U.S support for the anti-corruption body is unsurprising. The agency, which was founded in 2002, has become increasingly active in pursuing high-profile corruption partially because of pressure from the United States and the European Union. But the expanding anti-corruption push is also a Romanian government effort to improve the country's transparency in order to attract foreign investment.

Now the very program meant to make the environment safer for Western investment is threatening to have the opposite effect: As more Romanian officials face corruption charges, the probes may create an unstable environment in Romania's parliament, undermining those in power and delaying the legislative process. The anti-corruption drive has given rise to political divisions that could destroy the political stability necessary to oversee a well-regulated economy.

Romania needs to root out corruption while also enacting economic reforms. The question is whether it can do both simultaneously.

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