Earlier indications suggested his rival, Adrian Nastase of the Party of Social Democracy (PSD) would have undoubtedly continued in power – on the basis of the party’s 5 percent lead in the Parliamentary elections on Nov. 28. The lead was not enough for a majority, but together with their election running mates, the Humanist Party (PUR) and others, suggested the PSD would be able to piece together a government. Instead, Basescu invited his political partner Calin Popescu Tariceanu, the leader of the National Liberal Party (PNL), to form a government.

The power brokering
In two dramatic weeks at the end of the year, Tariceanu then proceeded to steal the two main coalition partners from the PSD, the Humanists (PUR) and the Hungarians (RMDSZ). The resulting coalition enjoys a small majority in Parliament, and is all the more surprising because PUR Leader Dan Voiculescu threw the full weight of his Antenna-1 television station behind the PSD during the election campaign. And RMDSZ leader Béla Marko had urged Hungarians to vote for Nastase in the second round of the presidential race. It was Marko’s, and above all, Basescu’s good fortune, that in many parts of Transylvania they ignored his call and chose Basescu. The exception was the Székelyland, where there was a low turnout, but those who did vote overwhelmingly followed the RMDSZ advice, and chose Nastase.

PRIME MINISTER TARICEANU leader of the National Liberal Party, has joined President Basescu’s Democratic Party in a fragile coalition government.

Because of the all-encompassing nature of the old Romanian Communist Party, its former members and officials are present in parties of all shades in Romania today. But the PSD, as the main successor party, contains more than most.

In their only face to face TV debate, between the two rounds of the presidential election, Basescu taunted Nastase: “I was a member of the Communist Party too, you know – but I’ve changed. You haven’t.” The PSD were in power for all but four of the 15 years since the revolution – the 1996- 2000 period, when President Emil Constantinescu led a loose coalition of ‘anticommunist’ parties behind his own National Peasants – Christian Democrats. That alliance ruled ineffectively, overwhelmed both by their own inexperience, and often incompetence, and the fact that pro-PSD figures remained in de facto control of much of the society and the economy. Basescu’s Democratic Party (PD), as a left of center, non-communist party, was one of the most argumentative members of that coalition. The Christian Democrats did so badly in the 2000 election they failed to even enter Parliament. The new PD-PNL alliance has potential tensions within it, not least a number of deputies who find more in common with the PSD than with the alliance’s current leadership. But they will be balanced in Parliament by some in the PSD ranks, and even in the other main opposition party, Greater Romania (PRM) who see which way the wind is blowing, and are starting to lean towards the alliance.

“Traitors on both sides”
”There are about 2 percent of traitors on both sides,” as one senior PD official remarked, during the election campaign.

President Basescu, pursuing his now rather familiar technique of pushing the new government along from behind, has already made clear he believes the Democrats (PD) and Liberals (PNL) should consider merging – an idea which has already provoked considerable debate, and some resistance.

Within days of the formation of the new government, in the dying moments of 2004, Basescu threw the cat among the political pigeons. Having persuaded Voiculescu and his Humanists (PUR) to join the new government, he insulted them publicly and said new Parliamentary elections were almost inevitable. The PUR threatened to leave the government immediately, but as Basescu knew well, neither they, nor the RMDSZ, and certainly not the PSD opposition want new elections. The PUR owed much of their support to the campaign deal with the PSD. Only the governing National Liberal (PNL) – Democratic Party (PD) coalition stands to gain from a new election. Basescu’s claim the PSD stole around 5 percent of the votes by numerous methods in the first round, and controlled the state and much of the private media, seems quite credible.

What discourages Basescu and Tariceanu from calling new elections is above all the European Union. There was a comfortable, if rather lazy relationship between Brussels and Bucharest under the Nastase government. The political decision to admit Romania and Bulgaria into the EU in 2007 has already been taken. The opposition victory and the new opposition-based government unexpectedly jolted the boat just as it was sailing smoothly towards the April 2005 signature of the accession treaty.

EU accession a priority
The new government wants EU accession as much as the old one did, but Basescu is suggesting that a rather different Romania join. If Nastase paid lip-service to the fight against corruption – the EU’s main remaining problem with Romania – Basescu takes it more seriously – especially insofar as many corrupt threads seem to lead to PSD officials in the past four years.

The new government has already
announced it will closely re-examine three projects in particular – all signed in the last year of the PSD government. The USD 2.8 billion contract signed – without any tendering process – with the US company Bechtel to extend the motorway system from Brasov to Bors, on the Hungarian border; the USD 400 million contract with the French company Vinci, to construct another section of the same motorway, further south; and a EUR 650 million contract with the European consortium EADS to revamp Romania’s border arrangements, ahead of joining the Schengen visa regime in 2007.

PRIME MINISTER TARICEANU visits Budapest on his first trip abroad as Romanian prime minister

Prime Minister Tariceanu said while there was no question at this stage of abandoning the contracts, he had doubts over the legal framework and the financial conditions in which they were signed.

Tax restructuring
The cornerstone of the new government’s economic policy is a flat rate of personal income and corporate tax of 16 percent - following Slovakia’s introduction of a 19 percent rate more than one year ago. This replaces a previous three band personal income tax rate, between 18 and 40 percent, and a 25 percent corporate rate. The radical reform is designed to encourage people to declare their true incomes – and bring a substantial area of the grey economy into the white. It should also give a boost to foreign investment.

Other Central European countries, Hungary in particular, sandwiched between Slovakia and Romania, will be watching the two countries closely. The leader of the Hungarian conservative opposition, Viktor Orbán has already said if it succeeds for Romania and Slovakia, Hungary will have no choice but to introduce a similar flat rate of its own.

Basescu has begun the new year by reading the riot act to policemen, judges, and Interior Ministry officials in general. You have to understand, he said in an address to the police, ‘that you are not serving any political forces, you are not serving a president, you are not serving a government, and you are not serving God knows which local dignitary. You are serving the nation…’

Top police and border guard officials were axed soon afterwards. Basescu also visited the National Anti-Corruption Office, established under the outgoing PSD administration, and one body which has earned some international praise. Basescu offered the office his full support, announcing his own, long-running battle with it was over. The office was investigating his sell-off of a part of the rusting Romanian merchant fleet, while he was transport minister between 1996-2000.

Decentralization of the state
In another domestic policy area, Basescu and Tariceanu have already stressed the need for Decentralization of the state – going against a centralizing tendency which has dominated most of the past 80 years. One proof that Tariceanu is serious came with the appointment of a Hungarian prefect in Covaszna County, where ethnic Hungarians comprise a large majority of the local population. Tariceanu overrode strong objections from within his own party to do so, arguing he had appointed Romanian citizens whose success or failure would depend on their record in office – not on their ethnicity. In the past, Romanian governments have insisted that prefects in majority Hungarian areas should always be Romanians – to ensure the Hungarians do not carry their ambitions for local autonomy too far, and to stand up for the rights of resident ‘minority’ Romanians.

The new administration’s foreign policy seems likely to follow closely in the steps of the direction of the PSD government. Romania’s 730 soldiers are likely to remain in Iraq, and one of the first decisions of newlyappointed Foreign Minister Mihai Razvan Ungureanu was to send an extra 100 troops to Iraq for the elections.

The visit to Romania of General James Jones, commander of US and NATO ground forces in Europe, also re-enforced another plank of policy – the offer of bases on Romanian soil to the US. The final decision will be taken by the US Congress, but between seven and ten bases, in Romania and Bulgaria, are under consideration. US troops there will tread more lightly than those stationed in Germany or elsewhere in Europe until now. There will be limited infrastructure, no accommodation for family members, and soldiers will use them, in peace-time at least, mainly for training purposes.

London, Washington, Bucharest
In his first interviews, on the morning of his victory, Basescu underlined the importance of London and Washington in Bucharest’s foreign policy in his next five years as president. London will be among his first destinations abroad.

While Tariceanu’s first trip abroad as prime minister was to Budapest, Basescu chose neighboring Moldova – the first visit of a Romanian president there for six years. Moldovans face parliamentary elections on March 6, and the ruling communists are facing a challenge from opposition centre-right parties favoring a closer partnership with Romania, and through Bucharest, with the European Union. In imitation of the anticommunist opposition in Ukraine, in Romania, and in Hungary, the Moldovan opposition have also adopted the colour orange.

In his talks with President Vladimir Voronin, Basescu underlined another message from his own election campaign –he regards himself as the president of all those who regard themselves as Romanians – at home and abroad, including in Moldova. Unlike the storm provoked by Hungarian Prime Minister Jozsef Antall’s words in 1990, no scandal has resulted.

"In the same way in which we have given Hungarians rights to education and culture, Romania has a right to claim the observance of the same rights, be it in the Timok Valley (Serbia), or the Republic of Moldova," the Romanian president said.