* Populist may hold balance of power after Dec. 9 election
* Policies likely to raise doubts over IMF deal
* Vote winner has host of problems to address
By Sam Cage and Luiza Ilie
BUCHAREST, Nov 22 On a sunny October day, Dan
Diaconescu arrived at Romania's economy ministry with seven bags
stuffed with 3 million euros in cash to pay workers' overdue
wages at a chemical plant.
The government turned down the money but the stunt served
its purpose for the media tycoon, raising his electoral profile
along with nightly self-promoting appearances on his own
television channel, calling himself "Romania's next president".
Promising steep tax cuts, his populist party may hold the
balance of power after a December parliamentary election. That
would set up weeks of horse trading which could raise questions
over an International Monetary Fund deal and undermine Romanian
"Once in power we will make things right. We will have
bread, glass and brick factories like in the old days,"
Diaconescu told voters in the impoverished mining town of Targu
Jiu, where he is standing for parliament.
Romania joined the EU in 2007 but its chaotic politics have
brought into question whether it is fit to be part of the block.
It remains a second-tier member - excluded from the
passport-free Schengen zone and its justice subject to
Its leftist government, led by Victor Ponta, is favourite to
win the election and may well secure an outright majority. But
its credibility is damaged abroad after a failed attempt to
unseat President Traian Basescu, who is deeply unpopular due to
his links to austerity and perceptions of cronyism.
If parliament is split then Diaconescu, whose party has poll
ratings of about 14 percent and turns 45 on the Dec. 9 election
day, becomes the likely kingmaker.
Both main parties - Ponta's Social Liberal Union (USL) and
the Basescu-allied Romania Right Alliance (ARD) - have committed
to work with international lenders, but Diaconescu's policies
will alarm the IMF, which leads a 5 billion euro deal that
shores up investor trust.
Diaconescu is proposing to raise salaries and pensions, cut
sales tax to 10 percent and pay budding entrepreneurs 20,000
euros for starting a new business, though demands would be
tempered in a coalition.
Wealthy and with designs on power, the tall, slim and
sharply dressed Diaconescu is standing in Ponta's constituency.
He will almost certainly lose but gain a seat under proportional
party lists - and taking on the prime minister brings publicity.
"Diaconescu is luring people with a vigilante image," said
Sergiu Miscoiu, an analyst with the CESPRI political think tank.
PLENTY IN THE IN-TRAY
Whoever ends up in charge has a long to-do list. Romania is
the second-poorest and one of the most corrupt EU states, with
an average wage of less than 350 euros - about half of candidate
Croatia's and barely a quarter of France's minimum.
While the country of 19 million has made great strides since
the violent revolution of 1989 and execution of communist
dictator Nicolae Ceausescu, it still trails far behind other new
EU members Poland, the Czech Republic and Hungary.
Agriculture is the backbone of the economy but produces
nothing like its potential and swathes of the economy remain in
inefficient state hands. Business and investors complain of
outdated infrastructure and energy production, mind-numbing
bureaucracy and corruption.
The economy is barely growing after a credit bubble burst in
2009 and forced the country to the IMF.
"I don't think, when we look back for 20 years, that there
was any big difference from one government to another," said
Steven van Groningen, head of Raiffeisen Bank's local unit and
the foreign investors' council.
Society is split with a small number of very rich people but
many millions living from subsistence farming or minimal wages.
About 40 percent of residences have no running water and some
areas do not have mains electricity.
"It doesn't matter who will end up in parliament after the
December election, nothing will improve," said Laura Jipa, 42,
who sells newspapers near the government headquarters. "They are
all trying to make things better for them and their families."
While commuters in Bucharest struggle to work in clogged
streets and packed trams, politicians - many of them in politics
since the 1989 fall of communism - have generous expense
accounts and are swept through the city in police motorcades.
In the last seven years, 23 lawmakers have been sent to
trial for corruption.
"Politicians would like to keep their privileges and
influence at the expense of a credible judiciary that would
generate benefits for citizens through the level of foreign
investment to Romania," Horia Georgescu, head of the National
Integrity Agency corruption watchdog, told Reuters.
Should the USL secure a majority, it will take Diaconescu
out of the equation but investors will remain on edge because it
will have to work with Basescu, a blunt former sea captain who
makes enemies easily. The USL could try to impeach him again.
The previous attempt at impeachment last summer drew
criticism from the European Union and the United States, sent
the leu currency to record lows and raised borrowing
"I have to explain to lots of foreign investors what is
happening in Romania - that's not easy," van Groningen said.