Romanian Premier Set to Return for Second Act to Curb Far Right

(Bloomberg) — Romanian Prime Minister Marcel Ciolacu is poised to stay in power with the backing of a newly-emerged coalition that will aim to end the country’s biggest political crisis in decades.

The next ruling alliance formed by pro-European parties is likely to fast track a vote to confirm the new government later on Monday after President Klaus Iohannis formally designates Ciolacu as the premier. 

The decision will mark a stunning comeback for Ciolacu, 57, who only weeks ago appeared down and out after losing a now voided presidential election and stepped down as the leader of his Social Democratic party. He is now set to lead an alliance with a slim parliamentary majority and a series of urgent tasks on its to-do list.

The priority for the new government will be to agree on how to rein in the European Union’s widest budget deficit as it tries to avert a potential rating downgrade and prevent a surge of support for far right during a re-run of presidential election expected in March or April.

“It won’t be an easy mandate for the next government,” Ciolacu said on Monday after the leaders of Social Democrats, the Liberals, a party of ethnic Hungarians and a group representing other minorities signed a coalition agreement. 

“But Romanians expect us to carry out reforms, reduce budgetary expenses and to ensure a sustainable and predictable environment for businesses,” he said. 

The pro-EU coalition has also agreed to back a joint candidate for the presidential elections next year, veteran former Liberal Party leader Crin Antonescu.

Ciolacu’s government will have to tackle a budget deficit that’s poised to surge to over 8.5% of economic output this year, in large part due to pre-election spending spree under his previous administration. Fitch Ratings signaled earlier this month it may cut Romania’s credit grade to a junk status, citing high political uncertainty.

The new administration will also need to organize a re-run of a presidential ballot after the top court annulled the previous vote following accusations of Russian meddling and a stunning victory of a maverick far right candidate Calin Georgescu. The vote triggered the deepest political crisis in the country in decades. 

The coalition talks have been fraught by infighting as parties faced up to the prospect of budget cuts ahead of the presidential vote and after a strong performance of the far right in parliamentary ballot earlier this month. The Social Democrats briefly walked away from the talks last week in a move that almost torpedoed the nascent government. 

The new cabinet will include 16 ministries, two fewer than Ciolacu’s previous government. The Social Democrats will run eight ministries, the Liberals will get six, while the party of ethnic Hungarians will appoint a new Finance Minister, Barna Tanczos, as well as the development minister. 

After three days of intense negotiations, Liberal Party leader Ilie Bolojan acknowledged the tough challenges ahead for the next government. 

“The room for maneuver of the new government that we hope will get confirmed on Monday in parliament is very narrow,” Bolojan told reporters in Bucharest late on Sunday. “It has to take measures to avoid worsening the budget.”

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