UPDATE 5-Anti-cuts protests push Romania PM out

Mon Feb 6, 2012 2:57pm EST

Related Topics

* PM resigns after weeks of anti-government protests

* Existing coalition set to continue under new PM

* Parliamentary election due by November

* IMF sees no change in bailout deal

By Ioana Patran and Sam Cage

BUCHAREST, Feb 6 (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.

President Traian Basescu asked foreign intelligence service head Mihai-Razvan Ungureanu to form a new cabinet. Ungureanu quickly pledged to continue the unpopular economic reforms and his appointment may do little to assuage popular anger.

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

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 International Monetary Fund in 2009 to prevent a financial meltdown.

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 programme.

Ungureanu, a 43-year-old historian and former foreign minister, pledged to continue Boc's economic reforms during a short speech at the president's palace.

"The reforms will continue. The advantage that I will bring is to be a good administrator who, first and foremost, has a logical efficiency," he said.

Ungureanu looked likely to seal parliamentary backing with support of Boc's centrist coalition, which has a small but functioning majority.

The IMF, which 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, said it expected no major policy change after Boc's resignation. 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 tear gas. Demonstrators gathered again on Monday amid the snowdrifts of the capital's University Square, an emblem of hope from the 1989 revolution.

The message was not positive for Boc's PDL, languishing in polls. "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.

The president named Justice Minister Catalin Predoiu as interim prime minister until Ungureanu puts his team and plans up for parliament's approval, a vote which will probably come next week.

PRESIDENT'S CHOICE

While the popular opposition Social Liberal Union (USL), wants an early election, it does not have enough seats in parliament to block Ungureanu's nomination unless it can attract defectors from Boc's previous coalition of PDL, ethnic minorities and a group of independents.

That would leave Ungureanu in charge until the election. Basescu said the continuity would help to keep Romania's financing costs down.

"This is not a manoeuvre, but the need to try revive the government's credibility," he said in a speech.

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.

The IMF's mission chief 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 USL say they would work with the IMF.

"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 realised 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 now hopes a change at the top of the government will allow the PDL breathing space to regain ground in the polls, though it is a long way back from less than 20 percent support.

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 programme."

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.