Romanian Government Falls as PM Loses Feud With Party Boss

(Bloomberg) -- Romania’s government collapsed for the second time in less than a year as Prime Minister Mihai Tudose lost a struggle with the Black Sea nation’s powerful ruling-party boss.

Tudose, 50, resigned Monday as the Social Democrats withdrew support for him following a five-hour-long crisis meeting in Bucharest. President Klaus Iohannis on Tuesday slammed the party for its governance, naming Defense Minister Mihai Fifor as interim premier. He’ll speak with political parties Wednesday before naming a replacement. The Social Democrats are meeting Tuesday to pick a candidate.

“I’m deeply unsatisfied and concerned about the situation we’re in as we have two failed governments in the first year since elections,” Iohannis said in Bucharest. “I want a fast procedure to set up a new cabinet because I want to prevent potential negative effects on the economy.”

Tudose’s ouster shows the power party leader Liviu Dragnea wields even as he stays outside the government. Tensions between the two men had been building for weeks, most recently over Tudose’s plans to reshuffle the cabinet and his desire to replace the interior minister because of a child-abuse scandal inside the police. Dragnea, whose party toppled its own government last June amid a similar spat with then-Premier Sorin Grindeanu, can’t lead the cabinet himself because of a criminal conviction.

Romania, an ex-communist member of the European Union and NATO, is no stranger to political upheaval: it’s had 14 prime ministers since 1990, with only two completing their full term. The latest shakeup comes as the economy grows at one of the EU’s fastest paces and the nation’s currency is this year’s star performer in eastern Europe.

“The country suffers from this political instability since we have no guarantee it won’t also happen with a new premier,” Cristian Pirvulesc, dean of Bucharest’s Political Science University, said by phone. “They can only afford to do this because there’s practically no solid opposition and early elections are hard to trigger.”

Economic Boom

The new premier will take over an economy that surged an annual 8.8 percent in the third quarter, though the central bank and the European Commission have warned about the sustainability of growth and the budgetary dangers of the Social Democrats’ tax cuts and public-sector wage hikes.

The latest bout of political tensions has erased most of the leu’s gain this year, leaving it 0.3 percent stronger against the euro.

Dragnea, whose party won elections convincingly in 2016, said he won’t propose Tudose’s replacement, handing that task to his party colleagues because his past picks haven’t worked out. Tudose fell out with Dragnea over plans to streamline his cabinet by abolishing some positions, while the interior minister he wanted to fire is an ally of the party head.

“I’m leaving with my head held high,” Tudose said late Monday in televised comments. “My colleagues are satisfied with the government’s work but that’s life.”

--With assistance from Elizabeth Konstantinova

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net.

To contact the editors responsible for this story: Andrea Dudik at adudik@bloomberg.net, Andrew Langley, Balazs Penz

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