Romania PM demands president resign, row persists

Mon Jul 30, 2012 10:37am EDT

* President survives impeachment on low turnout

* EU insisted Ponta abide by minimum turnout rule

* Political row will simmer through Nov parliament election

By Luiza Ilie and Sam Cage

BUCHAREST, July 30 (Reuters) - Romanian Prime Minister Victor Ponta demanded the president resign on Monday, saying he had lost all credibility, but Traian Basescu refused, indicating Sunday's referendum had not ended a feud which has delayed vital economic reforms.

The election bureau said turnout in the referendum, called by Ponta to seek support for Basescu's impeachment, was 46 percent - below the 50 percent needed to make it valid - though 88 percent of those who did vote, backed Basescu's removal.

The result - still to be confirmed by the Constitutional Court - lifted the leu currency, but meant the unresolved feud could dominate parliamentary elections in November and slow reforms linked to an aid deal backed by the International Monetary Fund.

"He (Basescu) will probably stay in Cotroceni (presidential palace), will have cars, villas and some profiteers around him who will continue to advise and praise him," Ponta said. "But for the Romanian people he stopped being a leader last night."

Basescu, a conservative whose perceived cronyism and support for economic austerity has made him unpopular, said he would not quit because the vote had shown that more than half of Romanians did not want to remove him. He had called for a boycott of the referendum.

The 88 percent vote for his impeachment, even on a low turnout, undermined Basescu's authority, but the result also reflected badly on Ponta's leftist Social Liberal Union (USL), the ruling party, analysts said.

"The political class was slapped by Romanians yesterday and it's time ... it understood that it can't go on without a minimum shred of consensus," said Sergiu Miscoiu of the political think tank CESPRI.

"Ponta's comments suggest he will continue with his belligerent attitude, which he may have learnt from Basescu," said Miscoiu. "There is a need for reconciliation if we want to clean up Romania's image and have somewhat functional institutions."

Basescu's role - he can block legislation once before being over-ruled by parliament, controls foreign policy and appoints the chief prosecutor and some judges - means he can delay but not stop reforms such as privatisations and health reforms.

CONCERN OVER REFORM DELAYS

The IMF will start a review of Romania's 5 billion euro aid deal this week, having delayed it until after the referendum, and may raise concerns over delays in cutting the budget deficit and carrying out longer-term reforms.

The European Commission had no immediate comment on the referendum result.

Brussels had accused Ponta of undermining the rule of law and intimidating judges in his drive to remove Basescu, and had insisted he respect the Constitutional Court's ruling that the referendum's validity depended on a 50 percent turnout.

The election bureau said it would send its final count to the Constitutional Court on Wednesday.

"(Ponta's) USL has the chance to repair some of the damage in the relationship with the EU by accepting the decision of the Constitutional Court without pushing for the removal of the president," said Otilia Simkova, analyst with Eurasia Group.

Brussels has had more success with Romania than with neighbouring Hungary, where Prime Minister Viktor Orban has often been at loggerheads with the bloc over issues like the independence of the central bank and the judiciary.

"Sadly those 8 million people (against Basescu) don't seem to matter. On the other hand, Ponta managed to do exactly the same thing as Basescu, split the country into two," said Iulian Manolescu, a 38-year-old economist.

The failed impeachment may damage the popularity of the USL, which remains favourite to win the parliamentary election in November, but may now be unable to secure an outright majority.

Basescu's survival eased some market concerns, because if he had lost there would have been two elections - presidential and parliamentary - in the next few months. The leu rose 1 percent in early trading, moving away from record lows against the euro, though dealers said gains could be short-lived.

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