Romanians Seek to Impeach Basescu Amid EU Criticism

Romanian voters will probably impeach suspended President Traian Basescu in a referendum today if turnout, the key condition to validate the vote, reaches a minimum threshold of half of the electorate.

About 37.7 percent of the 18.3 million eligible voters cast ballots by 8 p.m. in Bucharest, according to estimates from the central electoral bureau. Polling stations are open until 11 p.m. About 72 percent of voters want to oust the 60-year-old Basescu, while 28 percent will back him, figures from polling company Operations Research showed.

Premier Victor Ponta’s government, the Balkan nation’s third this year, took power in May riding a Europe-wide backlash against austerity steps. His efforts to ease impeachment rules and diminish the Constitutional Court’s powers have drawn criticism from European Union leaders including German Chancellor Angela Merkel, who voiced concern that democracy is backsliding in the former communist country. The tumult has pushed the leu to record lows and boosted borrowing costs.

An invalid vote “would be the worst outcome and trigger a selloff in the currency in the coming weeks as we may see the government undertake more constitutional gymnastics in order to remove the president,” Peter Attard Montalto, an economist at Nomura International Plc in London, said by e-mail. Impeachment would “remove uncertainty” for investors in the medium term.

Leu Weakens

The leu has been the world’s second worst-performing currency against the euro in the past month after the Sudanese pound. The leu has dropped 3.5 percent, touching a record-low 4.6509 per euro on July 24, and traded at 4.6075 late on July 27. The yield on Romania’s 2022 Eurobonds has risen 19 basis points to 6.18 percent over the same period.

The plebiscite was called by Ponta’s ruling coalition, which wants to remove Basescu for overstepping his duties in announcing austerity measures. Basescu, who said “jailable politicians” are trying to orchestrate his ouster, has urged citizens to boycott the vote to invalidate it because of insufficient turnout. The president, who took office in 2004, survived a similar vote in 2007.

Two prior polls showed about 69 percent and 66 percent of the electorate would vote to dismiss Basescu, who announced state wage cuts and tax increases in 2010.

‘Individual Solutions’

Europe needs individual solutions to tackle individual problems as the union can’t be turned into a success story against the interest of European nations,” Hungarian Prime Minister Viktor Orban said in Baile Tusnad, Romania yesterday according to the Hungarian state news service MTI. Orban urged ethnic Hungarians living in Romania to “take good decisions, meaning to take no decision at all” during today’s vote, according to Mediafax.

Ponta, who is entangled in a plagiarism scandal similar to one that prompted Hungarian President Pal Schmitt to resign in April, said after voting today that he is outraged by Orban, who encouraged the ethnic Hungarians not to vote.

Should Basescu lose, the government must organize early presidential elections within three months. If the final turnout is below the required minimum, Basescu will return to office, according to constitutional rules. Ponta has said repeatedly any collaboration with a reinstated Basescu would be impossible.

“If Basescu is reinstated, we’ll see more attacks and criticism from both sides,” said Alexandru Cumpanasu, a Bucharest-based political analyst at the Association for Implementing Democracy, who gives the suspended president a “50-50” chance of returning to office. “If he is dismissed, we’ll see political campaigning before the elections in November because the government’s majority in Parliament is tenuous.”

The political wrangling that led to the referendum has delayed until July 31 the start of a planned quarterly review by the International Monetary Fund, the EU and the World Bank of Romania’s 5 billion-euro ($6.2 billion) precautionary loan. They will also discuss the Cabinet’s 2013 budget plans amid the European sovereign-debt crisis.

“The more important issue than the referendum and Constitutional Court setup is what happens with fiscal policy in the 2013 budget as we approach the election at the end of the year,” Nomura’s Montalto said. “This should be the key concern for investors.”

To contact the reporters on this story: Irina Savu in Bucharest at isavu@bloomberg.net; Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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