WRAPUP 1-Czech, Romanian coalitions face confidence votes

Fri Apr 27, 2012 5:46am EDT

* Both expected to survive motions

* Votes raise questions over austerity

* Romania result expected after 1000 GMT

* Czech vote likely in afternoon or early evening

By Jason Hovet and Sam Cage

PRAGUE/BUCHAREST, April 27 (Reuters) - The Czech and Romanian governments were expected to survive confidence votes on Friday, but may soon falter over austerity measures that have prompted some of the largest protests in central Europe since communist times.

Both EU members have been forced to cut costs and increase taxes to try to maintain investor confidence, fearful that they will be sucked into a European debt crisis that has felled governments in the 17-country euro zone bloc.

Both nations, which joined the European Union last decade hoping to break with their communist pasts and catch up with richer Western states, have suffered from the crisis despite not being members of the currency bloc.

Romania, the EU's second poorest member, is only just emerging from a two-year recession. The Czechs slid back into recession last year.

Czech Prime Minister Petr Necas, who called a confidence vote after infighting over corruption threatened to bring his austerity-minded government down, warned parliament that any relaxation of policy would "destroy the future of our country and that of our unborn children".

"Debt is the biggest public enemy ... Our responsibility goes far beyond the current political and economic situation," he said as the debate before the vote opened in parliament.

"The reforms have been delayed. That's why they hurt. If they are delayed further, they will hurt more."

About 90,000 Czechs protested last Saturday against austerity and corruption in one of the biggest anti-government rallies since the end of communism in 1989.

With unemployment stuck at almost 9 percent, Czech unions have threatened more action, and the opposition Social Democrats have called for an early election. The cabinet's approval rating is at an all-time low of 16 percent.

Necas has said that even though the country's budget deficits are relatively low, and its debt level is less than half the EU average at around 40 percent of annual output, the country faces even greater dangers like the loss of investor confidence and a spike in borrowing costs if i t relaxes policy.

Last week, Necas threw out the smallest of the three parties in his coalition, Public Affairs, because of his strained relations with one of its leaders who has been convicted of corruption. However, he is counting on a breakaway faction from Public Affairs to support his cabinet in Friday's vote.

Before the split, the cabinet agreed to spending cuts and tax increases worth 57 billion crowns ($3 billion), which will particularly hurt pensioners and middle earners.

ROMANIAN EXAMPLE

Romania's experience may serve as a warning to Necas.

The country's ruling centre-right Democrat-Liberal party has clung to power through repeated confidence votes since 2010, delaying a reform drive it had hoped would attract more investors and boost a struggling economy.

Even if Necas wins the vote on Friday evening - he is expected to receive the support of at least 103 of parliament's 200 lawmakers - he could be held hostage by politicians mindful that elections may be held earlier than expected.

"The government may get support for its mere existence, but not for its programme," said Erik Tabery, editor-in-chief and chief political commentator for weekly magazine Respekt.

If the Czech government falls, early elections would probably hand power to the Social Democrats, who have promised to undo some of the government's pension and welfare reforms while taxing the rich and companies.

"If the government wins support of the parliament today, it will only extend the agony," Social Democrat leader Bohuslav Sobotka told a news conference before the debate began.

"The main impulse for this coalition's survival is the fear of new elections."

SCRAPING THROUGH?

While the two governments are deeply unpopular, there is little sense that enthusiasm for the European Union is waning in either country more than 20 years after the fall of communism started to reunite the continent.

The cuts are particularly painful in a country like Romania, which has an average wage of less than 400 euros a month and relies on International Monetary Fund backing to maintain investor confidence.

While unemployment is only at around 5 percent, many jobless have left the country. Austerity has particularly hurt public sector workers like teachers and nurses, whose salaries have been cut, and the elderly whose pensions have to be stretched.

"The current situation is clearly worse than before. We need at least 10 years to get back on track," said Gheorghe Stanciu, a 55-year old legal adviser outside Bucharest's national theatre, the scene of protests that brought Boc's downfall.

Romania's ruling coalition is deeply unpopular because of the salary cuts and tax rises.

Parliament is expected to vote after 1 p.m. (1000 GMT) on the fate of Prime Minister Mihai Razvan Ungureanu, who has held the job for only two months. His government should scrape through but has been hit by defections that could yet topple it.

Ungureanu took over leadership of the coalition in February from Emil Boc, who resigned after austerity protests turned violent, and economic growth that is only slowly returning leaves him little chance of winning elections due in November.

Despite sticking to the terms of the IMF deal, the cabinet plans to ease some austerity by increasing state wages, even though it aims to cut the budget deficit to 1.9 percent of gross domestic product from 4.1 percent last year.

"I am nervous because we are talking of Romania's life and destiny. Today's decision and vote will influence the destiny of millions of Romanians," said opposition leader Victor Ponta, who says he needs only four more votes to win the motion.

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