Romanian parliamentary election: backlash against austerity by Lulian Stanescu

Policy Study

Romanian Social Democrats achieved their second best election result ever last month.

The Social Liberal Union won a landslide victory in the parliamentary with around 60% of the vote. As senior member of the political alliance, the Social Democratic Party has the largest number of MPs in the new parliament. The party president carries on as prime minister. The harsh austerity policies put in place in 2010 shaped the outcome of the election. The campaign settled just the size of the majority.

Back in 2010, president Basescu’s EPP-affiliated party was firmly in government. With the Western European baking system in crisis, the capital inflows that spawned an economic boom in Central and Eastern Europe in the mid 2000s were cut off. The country was facing ballooning foreign and fiscal deficits, a sharp GDP decline, and rising unemployment. The IMF, the European Commission, and the World Bank were on hand for a bailout package, but a political decision had to be taken on who would bare the burden of the fiscal adjustment.

Napoleon once said that a great disaster points to a great perpetrator. As a man with military background, president Basescu sought to name and shame the great perpetrator: the state. The president even sketched a vivid image. The economy was like a thin man carrying on his back an obese – the state.

Therefore, state reform and austerity were in, the welfare state and waste were out. The narrative spelled out the enemy within: welfare queens, the unemployed that are just lazy, fraudulent pensioners with disability scams, bureaucrats that lived a life of luxury, corrupt doctors, incompetent teachers, etc. The story’s implicit good guys were the president and his EPP-affiliated government. They were the leaders ready to take the tough, but necessary decisions that would put the economy back on track.

But the economy never really got back on track. The green shoots of growth kept being postponed season after season. Social spending and wages were cut and VAT increased. Inequality widened as the economy went through a mild, but jobless recovery. The low GDP growth was technically achieved through higher corporate revenues that failed to trickle down. A credibility gap opened.

The austerity policies changed the mood of the country as well. Insecurity and fear crept in as people were in competition for fewer and not well-paid jobs. This divided people in opposite camps. Union versus non-union, private versus public employees, young versus old, employed versus unemployed, etc.

In the end, the majority of the country turned against the president and his party. A bill to open the public healthcare system to privatization brought people into the streets in early 2012. The prime minister was replaced with the head of the foreign intelligence service, in a move reminiscent of the old autocrats swept away by the Arab Spring.

By then the Opposition had organized itself in the Social Liberal Union, a political alliance comprising as main partners the PES and ALDE-affiliated parties in Romania. In just four months enough MPs crossed to the Opposition so that the government fell to a no confidence vote in Parliament. The Social Liberal Union formed a government with just a month before the June local elections. In the end, the regressive right was defeated by its own austerity policies.