- "36100","7/7/2005 16:38","05BUCHAREST1511","Embassy Bucharest","CONFIDENTIAL","05BUCHAREST1433","VZCZCXRO7128
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RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY","C O N F I D E N T I A L SECTION 01 OF 02 BUCHAREST 001511
STATE DEPT FOR EUR/NCE - WILLIAM SILKWORTH
E.O. 12958: DECL: 07/07/2015
TAGS: PGOV, PREL, ECON, KDEM, SOCI, RO
SUBJECT: GOVERNMENT RESIGNS; ROMANIA HEADS TOWARDS SNAP
REF: A. BUCHAREST 1433 B. BUCHAREST 1205
BUCHAREST 00001511 001.2 OF 002
Classified By: Political Section Chief Robert S. Gilchrist for Reasons
1.4 B and D
1. (C) Summary: Prime Minister Calin Popescu-Tariceanu announced the resignation of his cabinet July 7, pending acceptance by President Traian Basescu. The move, ostensibly in response to a Constitutional Court decision against a judicial reform package, will likely spark new parliamentary elections sought by Basescu to increase his government\'s majority. Many observers also believe new elections raise the odds of a delay by a year of Romania\'s EU accession now slated for 2007. Although the macroeconomic impact of new elections would likely be slight, businesses may defer investments until certainty is restored. End Summary.
A Surprise Announcement
2. (C) In a surprise announcement July 7, PM Tariceanu stated in a hastily called press conference that he and his cabinet were submitting resignations, effective immediately, precipitating likely snap parliamentary elections by early fall. President Traian Basescu was expected to accept the resignations in a planned televised speech later the same evening. Basescu is bound by the constitution to appoint a caretaker cabinet, which will likely include many of the members of the current government led by the center-right Liberal-Democratic (PNL-PD) alliance.
3. (SBU) Tariceanu\'s announcement followed a Constitutional Court decision on July 6 that annulled key elements of a judicial reform package passed in Parliament on June 22. The court decision was interpreted as largely political, as the court is comprised largely of members closely associated with the opposition Social Democratic Party (PSD). Tariceanu told the press that once he received word of the court\'s decision, he immediately began to contact key party leaders and members of the government to consult on next steps. New elections appeared to be the \"only way forward\" and the Cabinet convened at noon on July 7 effectively to vote itself out. Tariceanu communicated the decision to President Basescu. He also vowed to enact by emergency ordinance elements in the judicial reform package that the Court did not strike down, including the organization of a fund to compensate individuals for properties seized under communism (Ref B).
Between Now and Elections
4. (C) There now remain several procedures the governing alliance must pass through before new elections can actually be held (Ref A). According to the Constitution, upon the resignation of a cabinet, the President should designate a new prime ministerial candidate who must present a new team and governing program to the Parliament within ten days. If that fails, the process must be repeated again, and if the second attempt fails the President is empowered to call new elections. Romania has never held snap parliamentary elections in the 15 years since the restoration of democratic government. Constitutional vagueries allow much leeway, and political contacts tell post that requirements will likely be followed only in form but without any intention of preventing a new vote. Presidential Advisor Claudiu Saftoiu told PolChief \"Romania is clearly headed towards new elections.\"
5. (C) The Government is couching the decision by the Constitutional Court as an impediment to Romania\'s ability to enact reforms necessary for EU accession. The measures the Court struck down would implement a mandatory retirement age for judges and prosecutors; allow the Supreme Council of Magistrates (the managing body for the courts) to dismiss or transfer senior judges and prosecutors; and strengthen and professionalize court management. In sum, the reforms were intended to remove older judges and prosecutors in place before the end of communism, many of whom remain associated with the PSD. The latter is widely regarded as the inheritor party to the former communist party led by Nicolae Ceausescu.
Implications for EU Accession
6. (SBU) Some local pundits have opined that snap elections would lead to a delay in Romania\'s EU accession from 2007 to 2008. EU officials have repeatedly expressed public concern that elections would distract officials charged with BUCHAREST 00001511 002.2 OF 002 implementing accession requirements. Romania\'s Accession treaty signed in Brussels in April provides for such a delay if Romania lags in implementing key reforms required for membership. Nonetheless, in recent days there have been indications that the government had become increasingly resigned to such a delay regardless of whether there were new elections. Tariceanu himself said 2008 appeared more likely and would not be debilitating.
7. (C) Comment: Embassy contacts point out that the Government made no effort to call the Parliament back into session to work out compromise legislation with the opposition PSD. Many opined that the events of recent days merely provided a pretext for moving to new elections, which President Basescu seeks to increase the currently narrow majority of the PNL-PD led government. Post agrees with that assessment. Interestingly, as recently as July 5, Basescu said he had given up interest in new elections for the time being and that the country should focus on implementing EU accession requirements. With those comments -- and Parliament in recess and many Romanians on vacation -- it appeared that the political leadership would stick with the status quo. However, Tariceanu\'s announcement has completely reversed the course.
8. (C) Comment Continued: The macroeconomic fallout from the GOR\'s resignation will probably be slight. The currency will probably not suffer a major jolt, given the relative overall financial stability of the country at this time. However, businesses may defer key investments. Post is aware of two potential U.S. investments that government chaos, or even uncertainty, could hinder, if not fully torpedo. It will also be more difficult for Post to press ahead on major investment problems and disputes. In particular, Bechtel\'s ongoing struggle with the GOR to get paid for work already done on the Transylvanian Motorway has probably just gotten harder. Oher, more low-key investment and business climate issues might become more difficult to work throug a bureaucracy waiting to see what happens in the fall elections, but Post thinks it is still manaeable. End Comment.
9. (U) Amembassy Bucharst,s reporting telegrams are available on the Buharest SIPRNET Website: www.state.sgov.gov/p/eurbucharest