Anti-cuts protests push Romania PM out

Reuters News
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Posted: Feb 06, 2012 2:59 PM
Anti-cuts protests push Romania PM out

By Ioana Patran and Sam Cage

BUCHAREST (Reuters) - Romanian Prime Minister Emil Boc resigned on Monday, joining a list of European leaders felled by fury at the kind of spending cuts that prompted weeks of mass protests in Bucharest against IMF-backed austerity.

Twenty-two years after they overthrew communist dictator Nicolae Ceausescu, Romanians are the second-poorest people in the EU, earning just a fraction of neighbors in the West, and his departure was welcomed by those braving bitter winter snows to demonstrate against pay and benefit cuts and sharp tax rises.

But as President Traian Basescu sought to minimize the upset by naming justice minister Catalin Predoiu as interim premier, Boc's resignation, nine months before a parliamentary election he seemed doomed to lose, also whetted appetites for more change in the team that turned to the IMF global lender for a bailout.

The leftist opposition called again for an early election, while some protesters want to see the back of the president himself, like Boc a product of the centrist Democrat-Liberal Party (PDL) and a vocal supporter of the austerity program.

However, the International Monetary Fund said it expected no policy change after it helped to rescue Romania's state finances in 2009 with a 20 billion-euro ($26-billion) loan on condition of deep cuts in government spending. Investment analysts also saw little reason to adjust their expectations.

The occasionally violent protests have been Romania's worst unrest in more than a decade. Protesters have hurled bricks and bottles at police who responded with teargas. Demonstrators gathered again on Monday amid the snowdrifts of the capital's University Square, an emblem of hope from the 1989 revolution.

For Boc's PDL, languishing in polls, the message was not positive: "The first hurdle has been overcome," one banner read.

"Boc's resignation is useless, since Basescu is the one that controls everything," said Florin Cioraca, a 56-year-old military veteran, among the demonstrators on the square.

However, few expect further major changes in government yet.

PRESIDENT'S CHOICE

Boc's cabinet will remain in place under Predoiu in a caretaker capacity until Basescu, who has often used his nationally figurehead post to play a significant role in politics, decides whether to ask Predoiu - or someone else - to form a new government that can secure a majority in parliament.

While the opposition Social Liberal Union (USL), riding high in the polls, wants an early election, its lack of a majority in the current legislature means the president is likely to be able to secure parliamentary backing for an eventual nominee who can then most likely run the country until an election in the fall.

Whatever happens, the IMF mission chief in Bucharest, Jeffrey Franks, told Reuters he did not expect major changes in Romania's policies: "I see no reason necessarily for this to have a material effect on the aid agreement," he said.

"We have every expectation the agreement will continue."

Even the main opposition say they would work with the IMF.

Romania had sought IMF aid to maintain investor confidence even though its public debt to gross domestic product ratio was the fourth lowest in the EU - and despite not yet locking itself into the Union discipline of the euro currency, which has posed such difficulties for the likes of Greece.

Forced to borrow from the international lender, the austerity demanded, including cuts of a quarter in public sector wages and an increase in sales tax, has enraged public opinion.

"RELEASING TENSION"

"I took this decision to release the tension in the country's political and social situation, but also in order not to lose what Romanians have won," Boc said in a televised speech, his voice calm and betraying little sign of emotion.

Protesters are angry about low living standards and what they say is widespread corruption in a country where the average income is less than 350 euros ($460) a month - just a quarter of France's legal minimum wage - and some villages and even parts of the capital have no running water or electricity.

Many despair of the country's efforts to change.

"I moved to Boston after the revolution and stayed there for 22 years," said Maria, a 53-year-old architect, who was walking through snow flurries to work in central Bucharest on Monday.

"When I came back, I realized that nothing changed while I was gone," she added, declining to give her full name.

President Basescu, a bluff former sea captain known for his outspoken approach, holds a position that is, in theory, largely ceremonial, but is now seen by many as the real seat of power.

He may prefer to name another PDL ally in the hope they can maintain the current governing coalition in parliament and regain support before the election - though it will be a long way back from the PDL's less than 20 percent in opinion polls.

Basescu's cause is not helped by vivid recent examples of the harshness of life for many people - last week, amid Siberian temperatures across eastern Europe, Romanian social services had to rescue children from a house where the rooms were 20 Celsius below freezing because the parents had no cash to heat them.

Victor Ponta, leader of the leftist USL, which is scoring more than 50 percent support in opinion polls at the moment, wants an early election but says he is also committed to working with the IMF.

The market impact was muted as analysts and traders expect any new government to continue working with the IMF. The leu currency and stocks both lost some ground and the cost of insuring Romanian debt was a touch higher.

Volksbank economist Melania Hancila concluded: "This is just a change of people and will not change radically the government's program."

($1 = 0.7621 euros)

(Additional reporting by Luiza Ilie; Editing by Alastair Macdonald)