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ROMANIAN VOTERS MAY TURN TO EX-COMMUNISTS ON ECONOMIC CONCERNS

Posted by Gilmour Poincaree on November 28, 2008

November 28, 2008

PUBLISHED BY ‘BLOOMBERG’

by Adam Brown and Irina Savu

Nov. 28 (Bloomberg) – The Romanian Social Democrats, led by former communists, may win the most votes in Nov. 30 parliamentary elections by promising increased social benefits as the global financial crisis threatens job losses and economic stagnation.

Support for the Social Democrats rose to 35 percent in the last opinion poll before the vote from 25 percent in September, overtaking the Liberal Democrats, who had 32 percent. In third place was the governing Liberal Party, with 21 percent.

After years of economic boom, Romanians are seeking to prolong the good times and shelter from the worst of the global crisis as emerging markets are buffeted by tumbling stock prices and falling currencies. The Social Democrats, aspiring to power after four years in opposition, risk exacerbating financial instability by increasing social spending in the second-poorest country in the European Union, economists warn.

“The Social Democrats are benefiting from the instability of the global crisis but that’s what we don’t need right now,” Nicolaie Alexandru-Chidesciuc, a senior economist for ING Bank Romania in Bucharest. “We really need a government that can say ‘we need to cut back spending’ and promote fiscal responsibility. The Social Democrats are the very last party that would do it.”

The INSOMAR poll of 12,494 people between Nov. 21 and Nov. 23 showed voter support for the Liberal Democrats, who back President Traian Basescu, has fallen from 39.4 percent in September while support for the governing Liberals has risen from 19.9 percent. The poll has a margin of error of 1.5 percent.

Hungarian Minority

It also showed the Democratic Union of Hungarians in Romania, favored by the 1.4 million-member ethnic minority in the nation of 22 million, had 5 percent support. The nationalist New Generation Party, led by soccer financier Gigi Becali, scored 3 percent.

Though all parties promise to boost spending and shield the country from the global crisis, none is likely to gain a majority, meaning they must seek alliances to form a government. In 2004 elections, that process lasted until Dec. 28 and ended with the appointment of the Liberal Calin Tariceanu as prime minister, excluding the Social Democrats from government.

Alliances forged in Parliament are likely to shape the policy of the future government more than party platforms, said Alina Mungiu-Pippidi at the Romanian Academic Society in Bucharest.

“Controversy is likely to start on Dec. 1, after the elections,” she said. “They have to start talks to form a coalition government and they will have trouble finding any prime minister that they can agree on.”

Coalition Talks

Social Democrat leader Mircea Geoana, 50, a former foreign minister and ambassador to Washington, told foreign reporters on Nov. 14 that he will negotiate with any party to form a majority coalition and return to power.

“Everything is on the table,” he said. “If we get 40 percent of the vote, though, we will be in a much better position to form an alliance than if we get 25 percent.”

Mihaela Lazar, a 34-year-old clerk in a cable and wire shop that earns her $335 a month, has yet to decide if Geoana should lead the nation. Still, her town of Targoviste, where declining demand forced steelmaker Mechel Targoviste SA to lower production this month, may support the return of the Social Democrats, especially among pensioners.

“The older people trust them because they governed the country for a long time and they think they helped raise pensions,” said Lazar, pacing the unheated shop to stay warm.

Economic Focus

Elections in 2004 were focused on graft in the nation rated by Transparency International as the most corrupt in the EU. In the only televised debate between the three main candidates for prime minister, held on Nov. 26, none mentioned corruption, focusing instead on growth, multiannual budgets and potential finance ministers.

Increased wealth associated with EU membership is tangible as cranes bristle on the skylines of Romania’s major cities. Foreign trips, including many who had never been on an airplane, jumped an annual 21 percent in the first nine months of the year. New cars clog streets and imports more than doubled since the last ballot.

Soaring foreign investment, annual net wage increases of as much as 30 percent and a lending boom have spurred shop openings by retailers such as Carrefour SA, Ikea and Starbucks Corp. and driven real estate prices up as much as 10-fold.

Economists say Romanians may have to give up some of those gains as the international financial crisis translates into higher unemployment, factory closures, a weaker local currency, credit rating downgrades and a sharp slowdown in lending.

Spreading Layoffs

Companies including carmaker Dacia SA, food processor Kraft Romania SA and steel manufacturer Arcelor Mittal Romania have announced cutbacks or layoffs totaling 4,000 in October alone and many of their suppliers have said they will fire workers as well.

Gabriel Pana, a 50-year-old technician who earns $410 a month at the Russian-owned Targoviste steel plant, said he is bucking the trend to the Social Democrats and will cast his vote for the Liberal Democrats because the local politicians are younger and Romanian politics “need fresh views.”

“Geoana’s popularity has improved, but nothing else has changed,” Pana said as he closed the plant’s rusty gate behind him and started his walk home. “The promises are too many and too big, you have to be blind not to notice there’s nothing much they can do.”

To contact the reporter on this story: Adam Brown in Bucharest at abrown23@bloomberg.net;

Last Updated: November 27, 2008 17:00 EST

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘BLOOMBERG’

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