The Week in Review, 19-25 July

A review of the main developments in Romania over the past week.

România Internațional, 25.07.2015, 14:18

The pros and cons of the new fiscal code

Romanian Prime Minister Victor Ponta said he
wanted that the issue of the new Fiscal Code to be resolved by September 1st.
The bill was last week sent back to Parliament for debates by the country’s
president Klaus Iohannis who argued that the fiscal relaxation it envisages
could produce serious economic imbalances. The Prime Minister defended the
bill, saying the new code, which, among other things, stipulates a series of
tax cuts, particularly the VAT and which was discussed with the representatives
of the business community and passed by Parliament, will keep Romania on the
path to economic development. Ponta says the new fiscal code will be discussed
again:

Maybe after August 15th we’ll hold
a special meeting, first in the Senate, as this is the first Chamber, and then
in the Chamber of Deputies. Of course we will vote in favour of the Fiscal Code
and I believe it will be signed into law by September 1st so that
all those who make their investment and job creation plans for 2016 should know
they have something clear they can rely upon.

The president’s rejection of the Fiscal Code has caused a series of
divergences between the ruling coalition and the Liberal opposition, which
supported the president. The Social-Democrats, number one in the government,
lashed out at the National Liberal Party, the main opposition force, accusing
them of petty politics, given that they initially voted in favour of the bill
in Parliament. The Liberals explained that in spite of their yes vote, they
have constantly voiced their doubts regarding the sustainability of the fiscal
relaxation the new code envisages.

Amendments
to the new election law in Romania

Romanian president Klaus Iohannis has
promulgated the law on the election of senators and deputies and on the
organisation and functioning of the Permanent Election Authority. The law
amends the rules for the election of MPs and gives more prerogatives to the
Permanent Election Authority. The new law also reintroduces the proportional
representation voting system used until 2008. Under the new election law, the
number of MP seats will be cut by more than 100. Thus, the number of senators
and deputies will stay at maximum 466 as compared to 588 at present. The 5%
threshold for parties to enter Parliament will be maintained but the new law
also provides for a threshold varying between 8 and 10% in the case of
electoral alliances.

After the flawed staging of the 2014
presidential elections, when many Romanians living abroad were unable to cast
their ballots due to huge queues at the polling stations, the new election law
has a special provision to help voters abroad: polling stations will also be
set up in places where there are at least 100 Romanian registered voters. The
condition is that they must have their names and addresses included in the
Election Registry following a written application to the Permanent Election
Authority.

The Social Democratic Party, the senior partner in the ruling coalition
in Bucharest, has a new interim leader

Liviu Dragnea is the new interim leader of the Social
Democratic Party, the senior member of the left-wing ruling coalition in
Romania, until the next party congress in November. The decision was taken by
the Social Democrats leadership body following the resignation of Victor Ponta
after five years as leader of the party. Ponta, who is also Romania’s prime
minister, is currently under criminal investigation. The new leader said the
party is united and, together with its coalition partners, the National Union
for the Progress of Romania led by Gabriel Oprea and the newly-created Liberal
and Democratic Alliance, would continue to support Victor Ponta’s cabinet.

The Liberal opposition says the appointment of Liviu
Dragnea shows that Victor Ponta has lost the political support of his party and
called for his resignation as prime minister. Dragnea served as executive
president of the Social Democratic Party and a development minister, but had to
resign after receiving a one-year suspended sentence in the court of first
instance in a case related to the 2012 referendum on the impeachment of the
then president Traian Basescu.

Hans Klemm has been proposed as the new US ambassador to Romania

Proposed by president Barack Obama as the new US
ambassador to Romania, Hans Klemm was heard by the US Senate Committee on
Foreign Relations. Klemm pledged to consolidate ties with Bucharest and support
the institutions fighting against corruption. Romania, which he described as an
excellent ally and strategic partner of the United States, has a key role to
play in ensuring prosperity in south-eastern Europe, said the American
diplomat, who also urged Bucharest to invest in its energy infrastructure.
Since the end of Mark Gittenstein’s tenure as US ambassador to Bucharest in
December 2012, the US embassy has been run by a charge d’affaires.