By Sam Cage and Luiza Ilie
BUCHAREST (Reuters) - After four months in power and a failed attempt to oust the president, Romanian Prime Minister Victor Ponta is under fire at home and abroad, with his coalition under strain before an election in December when victory is now far from assured.
Ponta, a leftist Social Democrat, seemed to have it all when he became the European Union's youngest prime minister in May, his alliance with liberals enjoying a robust parliamentary majority and opinion poll ratings above 60 percent.
Now the man who was supposed to represent a change of guard for his party, successors to the Communists of late dictator Nicolae Ceausescu, is under strain.
Rather than tackling the many problems of the EU's second poorest country, Ponta's term so far has been dominated by his party's attempt to overthrow President Traian Basescu, which has provoked conflict with the judiciary, concern in Brussels and uncertainty among investors over a deal with the IMF.
"The governing parties have come across as trying to secure all the levers of power without regard to democratic checks, and the very negative reaction of western states has shaken confidence," said Sergiu Miscoiu, an analyst at the CESPRI political think-tank.
Five years after joining the EU, Romania has made little progress under a series of short-lived governments in reforming its state-dominated economy and fighting widespread corruption. Basic problems which most EU countries overcame decades ago, such as running water supplies for all, remain unsolved.
Instead, many Romanians feel sidelined within the EU. Brussels is monitoring its respect for the rule of law and its drive against corruption, and the country remains excluded from the passport-free Schengen area.
"We hope that following the elections in December, the political turmoil will end and the authorities will focus more on improving the country's economic situation," said Grzegorz Konieczny, who runs Fondul Proprietatea, a 3.4 billion euro fund that holds stakes in dozens of Romanian companies.
AUSTERITY AND CRONYISM
Ponta, a former prosecutor and amateur motor rally driver who turned 40 last week, won power in a parliamentary confidence vote which toppled the previous centre-right prime minister after just three months in office.
His Social Liberal Union (USL), a fragile alliance of social democrats and liberals, drew on discontent with austerity and cronyism to dispatch the old Basescu-allied government. Then it set its sights on the president himself.
The new government issued more than 40 emergency decrees in its first two months, allowing it to bypass parliament and limiting the powers of the Constitutional Court.
Ponta accused Basescu, a former oil tanker captain, of blocking government policies and turning a blind eye to corruption. The USL used its parliamentary majority to suspend the centre-right president and called a referendum in July on his impeachment.
Of those who voted, 88 percent backed Basescu's impeachment but the turnout was only 46 percent. The Constitutional Court, which had ruled that at least half the electorate should vote, threw out the result and the president was re-instated.
As tensions rose between the government and judiciary, the Strasbourg-based Council of Europe said the Constitutional Court had asked for help in protecting its independence from political pressure. European Commission President Jose Manuel Barroso also expressed his deep concern to Ponta about allegations of pressure being applied to judges on the court.
With Basescu back in office, Ponta has tried to portray the incidents as mere fallout from disputes at home.
"I don't like those who come to make denunciations in Brussels or Strasbourg hoping this will help them at home, but on the other hand I don't think we should battle the European Commission over our domestic wars," he said.
Ponta played down the possibility of trying again to oust the president for now. "I don't think we can take such a decision today and such a risk for the country. Romania must avoid a crisis of the same depth in the future," he added.
The rows with Basescu and the court have hurt international trust in Ponta. "Where is the guarantee it won't happen again?" said an EU diplomat. "Regaining the lost credibility with external partners will be neither easy nor quick."
The turbulence has also raised doubts among investors over how closely Romania will stick to the reforms required under its 5 billion euro aid deal, which is led by the International Monetary Fund and is needed to shore up investor confidence.
The cost of insuring Romanian debt against default rocketed and the leu currency plunged to all-time lows over the summer.
While the government has largely stuck to the headline targets of the 2011-2013 aid deal, bringing down the budget deficit, Romania has consistently failed to use EU funds fully, privatize and reform its failing state-owned companies or overhaul its outdated energy production.
The presidential dispute has an additional twist. Soon after coming to power, Ponta was accused of plagiarism in the thesis which earned him a doctorate in law.
Ponta accused Basescu of planting the charges but the row took off when former Prime Minister Adrian Nastase, a political ally who supervised Ponta's disputed doctorate, was jailed for corruption. Nastase tried to kill himself and Ponta once again blamed the president, claiming he controlled the courts and had orchestrated the conviction.
Nastase's case was an overdue signal that Bucharest was finally getting serious on graft, and anti-corruption experts say this may have prompted Ponta's rush to oust Basescu. The president has the final say on nominated judges and prosecutors.
With 19 members of parliament from Ponta's alliance and several from the opposition under investigation, both sides want to keep their people out of jail and the EU is monitoring the appointment of a new chief prosecutor and anti-corruption chief.
All the turbulence is also undermining what little faith Romanians still have in the political class.
"The issue is politicians put their well-being first rather than the country's. This is something that needs to be changed," said Madalin Teodoroiu, a 26-year old junior architect.
SHOWING THE STRAIN
The USL, formed last year, could still win an outright majority of seats in parliament in December. But failing to remove Basescu has knocked its popularity, which polls now put at just above 50 percent, and the USL is showing the strain.
"This alliance was created so that everybody would win, and at the moment they are starting to lose," said Adrian Basaraba, a political science professor at the University of Timisoara.
A gap is widening between Ponta's Social Democrats and the smaller Liberals (PNL), led by the older and gaffe-prone Crin Antonescu. Ponta has warned his party members to keep their opinions private or risk exclusion from the election race.
"Together with the PNL we have failed, so it is being considered as a joint failure - though Crin Antonescu is seen by many as the main culprit," said one senior Social Democrat.
Basescu will nominate the prime minister after the election, and if the USL falls short of a majority he could ask a conservative ally to form a coalition. Even if the USL scores an outright win, Basescu has a record of trying to split alliances and has said he will never again appoint Ponta.
"We are all aware that this close to elections we have to stick together, whether we want to or not," said one USL member of parliament.
(Additional reporting by Andreea Birsan and Radu Marinas; Editing by David Stamp)