By Sam Cage
BUCHAREST (Reuters) - The winner of Romania's election urged his arch rival President Traian Basescu on Wednesday to acknowledge his victory and reappoint him prime minister to stop the country plunging back into political turmoil.
Victor Ponta's leftist Social Liberal Union (USL) won two-thirds of the seats in Sunday's vote but is locked in a power struggle with Basescu, an outspoken former sea captain who has said he would never again appoint the 40-year-old lawyer.
Any impasse in forming the next government could leave Romania, clawing its way out of a deep recession, rudderless for weeks and delay talks for a new International Monetary Fund bailout once a 5 billion euro deal expires early next year.
The USL tried to impeach conservative Basecu in July, accusing him of overstepping his powers, drawing stern criticism from the European Union for undermining the rule of law and leaving the two men at daggers drawn.
The standoff has raised questions over policy and the leu currency is only about 2 percent off its record low against the euro, while borrowing costs have edged higher over the past month.
"I expect President Basescu to respect the constitution and the will of the Romanians," Ponta told Reuters in written answers to questions. "If he chooses a different path, he threatens Romania with instability in a very delicate moment."
The Balkan country joined the EU in 2007 but remains its second-poorest member due to widespread corruption, a sprawling and inefficient state sector and outdated infrastructure. Before the election, Ponta was already the third premier this year.
While the rightist Basescu had softened his language on Ponta slightly, he has made no clear comment on who he may appoint. Analysts say he could try to argue that the USL is an alliance rather an a single party and pick someone else from the grouping in an attempt to split it.
Ponta said the USL alliance of leftists, liberals and conservatives was "united, lucid and cohesive" despite its different ideologies and would focus on a new IMF deal.
Basescu would follow the constitution in appointing the next premier, a spokesman said, calling on all lawmakers to stop trying to pressure the president. Basescu will hold talks with parties over the next days before making a nomination.
It would be difficult for him to name anyone other than Ponta without appearing to undermine the constitution and rule of law himself, which could prompt the USL to try to impeach the president again.
"Clearly the most stable and more likely outcome is PM Ponta being asked to form a government, but history tells us that a different outcome is possible, meaning we prefer to recommend sidelined asset positions for the time being," said ING economist Simon Quijano-Evans.
Under Romanian law, Ponta's current government remains in power until the new cabinet is approved by parliament. Two failed attempts to form a government within 60 days of the first nomination automatically trigger early polls.
The leu rose 0.4 percent on Wednesday on expectations Basescu would name Ponta, though one USL senior member said the president would probably try to save face by first picking another USL member before going back to the current premier.
"For the first nomination, Basescu cannot simply pick Ponta after his repeated attacks on him, despite the overwhelming majority," said the USL politician, who did not want to be identified because of the sensitive nature of the talks.
"Eventually, Basescu will say that for the sake of stability in Romania he is forced to name Ponta as premier."
Romania sought IMF help in 2009 after its economy crashed and while it is now on more solid ground, the deal is important reassurance for investors. The budget gap will drop below 3 percent of gross domestic product this year but the IMF has criticized it for failing to push through long-term reforms such as privatisations and using European funds.
Ponta said governments run by Basescu's Democrat Liberal (PDL) allies, who were in power until an April parliamentary confidence vote, had a "brutal effect" on society with austerity measures including salary cuts and raising sales tax.
Analysts expect the economy to grow only 0.4 percent this year but the prime minister pledged to maintain fiscal stability and said pre-election promises to cut taxes would be implemented responsibly over its four-year mandate.
"PDL's government had a brutal effect on society, especially as there were no impact assessments before any major decision, and that is not responsible government in my view," Ponta said.
"We have ambitious goals, but they are based on accurate estimates and well-measured prognoses," he said. "I expect a very constructive discussion with the IMF."
(Additional reporting by Radu Marinas; Editing by Alison Williams)
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