WEEKLY FISCAL AND POLITICAL REPORT August 12 – August 18, 2019
The decision of the PSD leadership to reject the requirements of the minority government formation - ALDE (to reform the state institutions, to draft a new government program and to restructure the government) as well as of any possible co-opting of Pro Romania to the government, sent a message of strength to the political alliance. At the same time, it adds further uncertainty on the stability of the government coalition. On Tuesday, August 20, expires the deadline until ALDE expects clear commitments from the prime minister / PSD on the implementation of the requirements submitted by the liberal democrats. Considering the PSD's refusal to respond to the requests, as well as the rejection by the Social Democrats of a government collaboration with Pro Romania (a party with which ALDE started negotiations for the creation of an Alliance), it remains to be seen whether or not ALDE will escalate tensions in within the government coalition. ALDE has a choice between forcing itself out of government or maintaining the governmental status quo. Even if ALDE will remain in government, the two parties will hold an extremely fragile majority (only 3 votes) in the next parliamentary session. Any other departures from the PSD parliamentary groups during the pre-election period will accentuate the fragility of the government stability.  


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WEEKLY FISCAL AND POLITICAL REPORT - August 5 – August 12, 2019
The most important political event of the week is the advancement of political negotiations between ALDE (government formation) and Pro Romania (opposition formation) for the creation of a political / electoral alliance (EN). Political negotiations were initiated with the PSD to establish the way ALDE & Pro Romania will position towards the government. On Monday, 12 August, PSD decided to maintain the current political structure of the Government (PSD and ALDE alliance). Changes of few ministers will follow in the next period. ALDE is forced by the disappointing result of the European Parliamentary elections to create a political/electoral alliance in order to secure its status of parliamentary formation after next year's legislative elections. This week an opinion poll conducted by the IMAS institute was released. The poll confirms the main favorite status, at a large distance from the other competitors, of the incumbent president, Klaus Iohannis (EN). The announcement of a new official meeting at the White House of President Klaus Iohannis with President Donald Trump for August 20 (EN) will further strengthen his electoral profile. At the same time the electoral battle is open for the second ranking candidate, who will join Klaus Iohannis in the second round of this November presidential elections. The main contenders for this position are the PSD representative, PM Viorica Dăncilă and the USR + PLUS representative, Dan Barna. It will also be important if Pro Romania - ALDE will have a common candidate or even if following the political negotiations with PSD, they will support a single candidate in the person of Viorica Dăncilă.


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WEEKLY FISCAL AND POLITICAL REPORT - July 29 – August 4, 2019
The Interior Minister and the General Director of the Special Telecommunications Service have resigned this week (EN). The two resignations came in the context of an increasing public pressure on the way the state institutions handled the disappearance and probable murder of a teenage girl in Caracal, southern Romania. Furthermore, prime Minister Viorica Dancila dismissed Ecaterina Andronescu, Minister of Education, for a controversial public statement on this case (EN). The evolution of the Caracal case dominated the public and political agenda. It has led to a wider debate on the number of disappearances, the problem of human trafficking and the close relations in the local environment between police officers / prosecutors, politicians and persons suspected or convicted of such crimes. The whole scandal thus exposed a crisis of competence and functioning of the state institutions. The Social Democratic Party, which has ensured the government in Romania for most years after the 1989 Revolution, is seen as the main political responsible for this state of affairs. The Social Democratic Prime Minister has acted extremely firmly and quickly, by dismissing different government officials and assuming an active agenda on this issue, precisely to try to limit the risk that public pressure will develop in the direction of her resignation. On August 10 will pass one year since the moment when a large-scale anti-government rally in Bucharest was stopped by an aggressive intervention of the gendarmerie, generating strong domestic and international criticism. A similar protest is announced this year on August 10. It is possible that a large number of participants will mobilize against the background of the Caracal case and give a strong public message in the sense of the desire to replace the prime minister / PSD government. Given the pre-election context, the opposition formations will most likely encourage such an evolution. Even if the PM will not resign her performance in this November presidential elections will be further impacted. In this public and political context, it is likely that no more changes will take place in the government formula in the upcoming period. However, for next week it is expected a decision of the Romania Gov’t to reduce the number of state secretaries (up to 50% of the positions of state secretaries in ministries may be disbanded - EN). The formal criteria will be to improve the efficiency of the governmental mechanism and to cut the budgetary costs. Most likely, however, the moment will also be used for the removal from the ministerial structures of state secretaries closed to the former social democratic leadership. The state secretaries who will keep their positions should be expected to take over the duties of those removed.


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WEEKLY FISCAL AND POLITICAL REPORT July 22 – July 26, 2019
The head of the Romanian Police was replaced (EN) and, on July 29, the leadership of the Special Telecommunications Service (STS) and the Interior Ministry will be heard in the Defense Committee of the Chamber of Deputies. These developments were caused by the state institutions faulty management of the kidnapping and killing a 15-year-old girl in Caracal (southwestern Romania). The case generated a strong emotional response nationwide, police intervening at the suspect's home at a distance of 19 hours after the victim asked for help via the unique alert system, 112. During Saturday, July 27, several public protests were organized nationwide. The topic will also be discussed at the meeting of the Supreme Defense Council scheduled for Tuesday, July 30. It is possible that new dismissals/resignations may occur, as well as that criminal legislation be amended. In this context, PSD President, Viorica Dancila, asked the leaders of the PSD branches to postpone the party congress (scheduled for August 3). The congress should bring the validation of Viorica Dancila as PSD candidate for the presidential elections this autumn. This step represents just a formality, following this week's decision of Permanent Bureau and the PSD Executive Committee to support the candidacy of Viorica Dancila for the position of President of Romania (EN). This designation will lead to a more active communication agenda of the PM, who will focus on improving the public perception over the government performance and on consolidating her own political profile. To track both coordinates, the Premier may be looking to continue the gov’t reshuffle. President Klaus Iohannis's decision this week to accept all the Prime Minister's proposals for the three vacant ministerial portfolios (at the Interior Ministry, at the Foreign Ministry and for the Deputy Prime Minister for Strategic Partnerships position) may encourage the PM to replace other ministers. However, the emergence of the tragic case at Caracal at the end of the analyzed period will most likely lead in short term to a new moment of accentuation of the hostile position on the president-government axis, the subject being already a highly politicized one. In this context, it is likely that the PM will postpone the moment of replacing new ministers.


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WEEKLY FISCAL AND POLITICAL REPORT 15 - 21 July, 2019
Prime Minister Viorica Dancila sent President Klaus Iohannis the nominations for the portfolios of domestic affairs and foreign affairs, which became vacant following the replacement of former holders this week. Nicolae Moga (PSD), member of the Romania Senat on his third term, was proposed to head the Ministry of Internal Affairs. Ramona Manescu (ALDE), a former EMP (2007 -2019) was proposed for the post of Foreign Affairs Minister. Mihai Fifor (PSD), member of the Romania Senate and general secretary of the Social Democratic Party, was proposed for the position of Deputy Prime Minister for Strategic Partnerships, currently held interim by the Minister of Justice Ana Birchall (EN) According to the new Administrative Code recently adopted by Government through Emergency Ordinance, President Klaus Iohannis has 10 days to announce whether he approves or rejects any of the nominees. He also may reject only the first nomination for a ministerial position. If the President do not respect the 10 days term, the Government may ask the Constitutional Court to settle the dispute – which may only further delay the entire process. It is possible that other ministers will be changed in the next period, once the PM will finalize the formal evaluation process of each minister activity. If President Iohannis will delay the appointment of the aforementioned nominees for the vacant ministerial portfolios, the PM/PSD leadership may decide to not dismiss other ministers until a final resolution on the current reshuffle will be reached. On a different coordinate, Alliance 2020 - USR+PLUS announced that it will support USR President Dan Barna in this November electoral race for Romania Presidency. PLUS president Dacian Ciolos, will be endorsed by the Alliance for the PM position (EN). The coming week will offer more indications on the strategy that will be followed by the main governing party, PSD, on this topic. The party leadership will nominate the social democrat candidate on Tuesday and on August 3, the decision will be validated during an extraordinary congress of the party (EN). For now, the PSD chairman and prime minister, Viorica Dancila and the mayor of Bucharest, Gabriela Firea, seem to be the main internal contenders. By announcing her intention to run for Romania presidency, despite Viorica Dancila agenda on this matter, Gabriela Firea is questioning Viorica Dancila authority in the party. The acting mayor of Bucharest may force a political rupture with the party leadership so as to position as an independent candidate (either for Romania Presidency or for a new mandate at the Bucharest City Hall). A final decision on the PSD candidate will also be made in the light of the outcome of the talks with the leaders of ALDE and Pro Romania.


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