Weekly Policy and Political Report Political Evolutions May 21-29, 2018
Last week, the PSD-ALDE ruling coalition briefly lost its majority in the Chamber of Deputies after five PSD MP’s migrated to Pro Romania party, former PSD PM Victor Ponta's party. After deflections to Ponta's party, PSD & ALDE were left with 164 seats in the Chamber of Deputies, one less than the necessary number to pass legislation in the Chamber (50% + 1, 165 votes). However, with the move of PMP MP Valeriu Steriu to PSD the coalition regained control. Nonetheless, the situation is less comfortable that at the end of 2016 when PSD-ALDE had 174 deputies; at the same time, it is expected that more PMP MPs are going to change teams mid-race and move to PSD. Other changes and moves are likely to occure in the coming weeks.  Victor Ponta stated that next week he will register a request in order to establish a parliamentary group since the movement already consists of 11 deputies and senators. With regards to a prospective candidate for the upcoming Presidential elections, Ponta withheld in revealing a name, even though PSD member Ecaterina Andronescu (Former Minister of Education) was among the ones mentioned. Despite PSD members starting to withdraw from within the ranks of the party to join the newly founded Pro Romania (the latest addition being former HealthMin Nicolae Banicioiu), Ponta stated that PSD remains a natural ally if it redirects towards a European social democratic model.  


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Fiscal Policies Review, May 21 - 29, 2018
On May 23, FinMin Teodorovici announced that by the end of June, beginning of July, a new concept on Pillar II will be presented to the public. A broad discussion concerning the issue will take place over the following “one or two weeks”. Also on May 23 evening, FinMin Teodorovici held a press conference; main points: public procurement and the introduction of centralized procurement. On Friday, May 25, FinMin Teodorovici came back on the subject and said that Pillar II is currently under analysis in order to be improved, however contributions will not be suspended. Initially Gov’t’s Legislative Agenda read that payments were suspended for six months (July – December). The Ministry of Public Finances published a press release stating that the Government does not intend to dissolve Pillar II, and that the EC has not been informed of such intentions, contradicting PNL Senator Cîțu’s claims. Divergences over the subject are expected to continue.             The EC country specific recommendation was received (May 23), as expected, with mixed views. Dan Nica, leader of Soc-Dem MEPs argued that it contradicts all “alarmist news” and that it confirms that Romania does not face short-term fiscal sustainability risks. On the opposite end, Dan Barna, USR leader, stated that the European Commission, naturally ascertains that Romania is in “full economic and justice slippage”.  


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Progress Report on the Priorities of the European Commission, May 16 - 23, 2018
A press release issued by the Ministry of Foreign Affairs informs that it has taken note of specific country recommendations published by the European Commission in the framework of the European Semester 2018 and will coordinate the process of drawing up the national position on this issue in order to secure active participation in the decision-making process, which will result the Council of the European Union adopting such recommendations. According to the release, in the period immediately ahead, the proposals for recommendations submitted by the European Commission will be subject to an in-depth analysis at the level of the ministries responsible for the areas concerned so that the concrete implementation measures can be identified.


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Weekly Policy and Political Report May 14 – 21, 2018
On Thursday, May 17, PNL President Ludovic Orban filed a criminal complaint to the Prosecutors' office attached to the High Court of Cassation and Justice against PM Viorica Dăncilă and PSD President Liviu Dragnea for high treason, disclosure of classified information and usurpation of public office. The complaint was then passed on to DIICOT. Art. 109, para (2) of the Constitution stipulates that "only the Chamber of Deputies, the Senate and the President have the right to demand the start of criminal proceedings against the Government representatives.” If such an action occurred, the President can trigger the suspension procedure against the person concerned.  Liviu Dragnea reacted swiftly and said the complaint is nonsense, unconstitutional and that the attempt resembles a coup.  Moreover, he stressed that Orban is not the playmaker, but the  President, who would like to gain complete control over the state’s institutions. He also sounded a warning to civil servants that would decide to be involved in this process, stating that they might be accomplices to two potential criminal offences (e.g. misleading the judiciary and willingly lying about certain offences). He added that a complaint from his side is not off the table.


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Fiscal Policies Review, May 14 - 21, 2018
On May 20, the news broke that a draft bill on regulating privately administered mandatory pensions (Pillar II) is on the Gov’t’s legislative program for 2018. The official document reads that contributions for July – December 2018 are to be suspended. Minister of Labor Vasilescu promptly reacted and stressed that Pillar II will not be dissolved, while Ion Ghizdeanu, president of the Committee for Strategy and Forecast stated that publishing the information was only a material error.  Immediate negative reactions to the news came, among others, from the Association for Privately Administered Pensions, Romanian Business Leaders, PNL’s Florian Cîțu, and former PM Victor Ponta. On Monday, May 21, PSD’s Liviu Dragnea said that Pillar II may or may not be suspended based on Gov’t’s assessment. On May 15, Deputy PM Viorel Ștefan held a press conference where he presented the status of the Romanian economy in 2018’s first quarter. Among the main points presented by the official: pensions’ fund deficit reduced to less than half of its value in 2016, the country’s economic growth ranks fifth among the 28 EU countries, the number of unemployed individuals reduced by 92,000 since 2017, 695,000 Romanians are no longer in the poverty risk zone. Deputy PM Ștefan stated that the Government aims for investments to be become the main economic engine in 2018. On May 16, PM Dăncilă announced a new state aid scheme. The program is designed to support foreign investments of more than EUR 10 million. The PM sees the new program as a clear signal that the Government wants to encourage major investments in Romania.


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