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December 7, 2020

Europe

ROMANIA: PNL set to remain in power despite PSD’s victory

BY Andrius Tursa

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( 4 mins)
  • Even though the opposition center-left Social Democratic Party (PSD) won the 6 December parliamentary election, the ruling National Liberal Party (PNL) will lead the formation of the new government.
  • Given the ongoing public health pressures and a busy policy agenda, the coalition talks might be swift, with the new cabinet entering office this year.
  • The handling of the pandemic and public finances will be key priorities in the near term.

With 96% of votes counted, the center-left Social Democratic Party (PSD) won the poll with 29.8%, coming ahead of the ruling PNL with 24.7%. The Liberal alliance of USR-PLUS came in third with 15.4%, while a nationalist newcomer Alliance for the Unity of Romanians (AUR) outperformed most pre-election projections and is set to become the fourth-largest parliamentary group with 8.7%. Besides the top four parties, only the ethnic minority UDMR can be certain to enter parliament, claiming nearly 7.6% of votes. The conservative People’s Movement Party (PMP) currently ranks slightly below the 5% threshold but could still enter parliament after all votes (including those coming from abroad) are counted. Meanwhile, the PRO Romania Social Liberal appears unlikely to win seats in parliament. Its leader, former prime minister Victor Ponta, has hinted he might retire from politics after such a disappointing result.

Public health woes, the cold weather, and electoral fatigue after four elections in less than two years were probably the main reasons behind the record-low turnout of 31.8%. This has benefited the PSD, which has a stable electoral base. Despite winning the greatest share of votes, the PSD is expected to remain in opposition due to the lack of potential coalition partners. Nonetheless, the party’s better-than-expected performance will strengthen the position of Marcel Ciolacu as the PSD leader. Low turnout has also favored the right-wing AUR, whose skepticism towards the existence of Covid-19 probably helped to mobilize its supporters. While AUR is unlikely to partner with PNL or PSD, it will stir controversy in public debates given its nationalist and anti-systemic policy stances.

Since none of the parties received an absolute majority of votes, President Klaus Iohannis (independent but associated with PNL) can propose any candidate to lead the next government. Incumbent Prime Minister Ludovic Orban is a clear favorite in this respect. Orban will likely enter coalition talks with the liberal USR-PLUS and the Hungarian ethnic minority UDMR, both of which have already voiced their intentions to join the government. The conservative PMP could become another partner if it (eventually) enters parliament. The first session of the newly elected legislature is scheduled for 21 December. Given public health concerns and the packed policy agenda, the coalition talks might be swift, with the new cabinet entering office this year.

While PNL and USR-PLUS might have some challenges in aligning their policy positions on issues like public sector optimization, judiciary reforms, or handling the pandemic, the two parties share a vision on general macro-economic policies. Overall, the outlook for government stability is positive as the three-party coalition (PNL-USR-PLUS and UDMR) government would likely hold an absolute majority of seats in both houses of parliament and could rely on support from deputies representing ethnic minorities. Meanwhile, the weakened parliamentary representation of PSD – and ideologically fragmented opposition – will limit the probability of successful no-confidence votes.

The handling of the pandemic will remain a near-term priority and, with electoral pressures behind, Orban might call for tighter restrictions over the holiday period. Finalizing the vaccination strategy and preparing for its smooth implementation will be the next challenge. In terms of public finances, the new cabinet will move to postpone steep pension and public sector wage increases and is expected to pursue fiscal consolidation in the medium term. Also, parliament is expected to vote on the 2021 budget in the first part of January. Around the same time, the national recovery and resilience plan outlining medium-term investment and reform priorities could be finalized.

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