By Luiza Ilie and Radu-Sorin Marinas
BUCHAREST (Reuters) - Romania's leftist-led government, in power barely a month, rejected calls on Monday to resign after mass street protests forced it to scrap a decree on corruption, but there was confusion over its plans to rewrite the criminal code.
Following the largest protests since the fall of communism in 1989, the Social Democrat-led government on Sunday rescinded the decree, which would have shielded dozens of politicians from prosecution.
Critics said the decree would have turned the clock back decades on the anti-corruption fight in Romania, one of the poorest, most graft-prone member states in the European Union.
Political analysts said the government now faced an uphill task restoring shattered public confidence, and even after its embarrassing U-turn, around 250,000 protesters chanted late on Sunday: "We don't believe you, we won't give up."
Some said they would protest daily until parliament confirms the withdrawal of the decree, while others said only the government's resignation would satisfy them.
Social Democrat Party (PSD) leader Liviu Dragnea, the chief target of the protesters’ ire, sounded a defiant note on Monday after chairing a meeting of senior party officials, and he reiterated its support for Prime Minister Sorin Grindeanu.
"The government has no reason to resign, it was legitimately elected," Dragnea told reporters. "As long as this tense state continues in Romania no one has anything to gain."
But the scenes of Romanians thronging Bucharest’s broad boulevards and other cities every evening since Jan. 31 have clearly shaken the PSD, and they will not have gone unnoticed elsewhere across Eastern Europe, blighted by corruption and cozy ties between business and politics since the end of communism.
"They (Romania's leaders) are deeply scared by these huge protests, unprecedented in 27 years," independent political commentator Cristian Patrasconiu said.
"This amounts to more than a simple step back. Any new move by them needs assessment. Everything looks suspicious."
The decree, issued late in the evening of Jan. 31 by the cabinet without parliamentary debate, was designed to decriminalize a number of graft offences, cut prison terms for others and narrow the definition of conflict-of-interest.
The government said it was merely bringing the criminal code into line with recent rulings by the Constitutional Court and an EU legal directive to member states to consolidate some aspects of presumption of innocence, as well as to ease jail overcrowding.
But the opposition, anti-corruption prosecutors, magistrates and hundreds of thousands of Romanian protesters said it had been tailor-made to amnesty dozens of politically-affiliated public officials convicted or accused of abuse of office.
The EU’s executive arm, the European Commission, and the United States both condemned the move as backtracking on anti-graft reforms and the widely-acclaimed work of anti-corruption prosecutors.
On Monday morning, Justice Minister Florin Iordache told reporters he would publish the details of a new, alternative bill to update the criminal code, which would be put to the public for debate for a month.
"We will develop and publish a draft bill which will be submitted to parliament after public consultation," he said.
But his own ministry later appeared to contradict him, issuing a statement that said the justice ministry was not planning to draft a bill.
The government’s decision to withdraw the decree will require the approval of parliament, where the PSD and their junior partners enjoy a big majority.
The government also faces a no-confidence vote filed by the opposition Liberals and Save Romania Union.
"The government's loss of credibility is very serious and any measure it takes going forward, not just in the justice department, regardless of its nature, will be looked upon with suspicion and could trigger street protests," said Sergiu Miscoiu, professor of political science at the Babes-Bolyai University.
(Writing by Matt Robinson; Editing by Gareth Jones)