Romanian Premier Survives Vote as Corruption Storm Set to Linger

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Romania’s prime minister defeated a no-confidence motion against his government on Friday. That probably won’t silence the furore around him.

Premier Victor Ponta faces conflict with the president and the judiciary, a tougher time passing legislation and possible pressure from Romania’s foreign allies, according to Texas-based risk consultants Stratfor. President Klaus Iohannis already wants him to quit. The opposition still aims to topple him.

“Even if these factors don’t force Ponta to resign, they’ll undermine the stability of the government,” Stratfor said in an e-mailed report. “The standoff between his supporters and his critics could weaken the legislature’s ability to pass domestic reforms.”

Battling to retain his three-year premiership, Ponta denies allegations including money laundering and complicity in tax fraud, leveled in the first Romanian criminal probe to target a sitting head of government. The storm has rattled markets, sending bond yields to a seven-month high. Ponta has warned that a protracted crisis would risk damaging the economy.

Friday’s no-confidence motion was backed by 194 lawmakers, falling short of the majority needed in the 555-seat house. Ponta’s Social Democratic party boycotted the ballot. Parliament on Tuesday rejected a motion to strip Ponta of his immunity.

“We have to get back to work now,” Ponta said Friday.

Leu Sinks

The leu weakened 0.1 percent after the vote and has sunk 0.7 percent in the past week, the worst performance among eastern European currencies tracked by Bloomberg. The Finance Ministry has canceled a debt auction planned for next week after government bond yields jumped.

The opposition Liberal Party vowed to keep the pressure on Ponta in the run-up to next year’s general election.

“We won’t sit on our hands,” Liberal leader Alina Gorghiu said. “Another no-confidence motion in the autumn against a government that lacks legitimacy will surely be successful.”

Ponta, who repeatedly fell out with former President Traian Basescu, has already ignored two calls by his successor to step down. Iohannis, from the opposition Liberal Party, has labeled the current crisis “an impossible situation.”

The premier needs stability, particularly among his ruling coalition, to push through planned tax cuts and negotiate a new precautionary loan with the International Monetary Fund. Friction may jeopardize economic growth, which at an annual 4.3 percent last quarter was the EU’s fastest, Ponta said Thursday.

Legal Equality

He’s also under pressure to show his commitment to fighting graft. The EU, which hasn’t allowed Romania to join the Schengen visa-free zone in the eight years since it joined the bloc, is monitoring the corruption situation. The U.S. said last week, when the case against Ponta was announced, that “the law should be applied equally to everyone.”

Ponta, who’ll present his defense to prosecutors next week, sees Friday’s vote putting an end to the crisis.

Ponta would be the biggest scalp in a graft crackdown that’s already swept up an ex-finance minister, a former presidential hopeful and a Constitutional Court judge. His mother, brother-in-law and father-in-law are also being probed.

While his immunity covers a conflict-of-interest case, he may still be investigated on the other allegations, which date back to his work as a lawyer, before he joined government. That leaves a potential threat hanging, according to Stratfor.

“If the prosecutors find additional evidence against Ponta, they could ask the parliament again to withdraw his immunity, forcing his backers to fight for him once more,” it said. “Having to repeatedly protect their leader could become too politically costly for the party.”

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