Executive Summary

Succession of short-lived prime ministers
From December 2016 to November 2019, Romania was governed by a coalition between the Social Democratic Party (PSD), the clear winner of the elections, and the Party of the Alliance of Liberals and Democrats (ALDE). After a succession of two short-lived prime ministers, Viorica Dăncilă (PSD) became prime minister in January 2018. PSD leader Liviu Dragnea, whose voting fraud conviction and eventual imprisonment in May 2019 barred him from holding office as prime minister, pulled the strings of these events behind the scenes. In October 2019, the PSD-ALDE government collapsed when ALDE changed sides. In November 2019, a minority government led by Ludovic Orban, the leader of the National Liberal Party (PNL), was sworn in.
Extremely polarized environment
In the period under review, the strong polarization between the governing coalition and the center-right opposition continued. The opposition, backed by President Klaus Iohannis, a former chairman of the PNL, took to the streets and used all available parliamentary means to derail the governing coalition’s attempts to strengthen its ability to influence the judiciary and undermine the fight against corruption. In turn, pro-government supporters criticized Iohannis and the opposition for not accepting the results of the parliamentary elections and for instrumentalizing the judiciary and the National Anti-corruption Directorate (DNA) as an illegitimate means of climbing back to power. The polarization was further fueled by the presidential elections in November 2019, which were handily won by Iohannis.
Serious flaws in quality
of democracy
The quality of democracy in Romania has not only suffered from the government’s attempts to control the judiciary and undermine the fight against corruption. The limited number of polling stations among the diaspora in Europe restricted the ability of some Romanians abroad to cast their ballot in the European Parliament elections on May 26, 2019. Media freedom and pluralism remain limited, as the government exerts strong control over the public media, and most private media are owned by shady, politically well-connected oligarchs who do not respect editorial independence. The Dăncilă government continued to make widespread use of government emergency ordinances (OUG), thereby undermining legal certainty and the quality of laws. Concerns about the erosion of democracy in Romania have led the European Commission to launch an article 7 procedure against the country.
Growth fueled by tax cuts, wage increases, deficits
Despite the political turbulences, the Romanian economy continued to grow by about 4% in 2019. As in previous years, growth was stimulated by tax cuts and strong wage increases and is accompanied by high, and increasingly unsustainable, deficits in the fiscal balance and the current account. The 2019 pension reform has raised further concerns about the sustainability of the public finances. The Dăncilă government did little to address long-standing problems such as a weak education and R&D system, poor infrastructure, cumbersome procedures for businesses, low labor market participation and a lack of qualified labor. The strong wage increases at home have not sufficed to bring the many Romanians abroad to return in their country.
Reforms fail to improve governance
Institutional reform under the Dăncilă government was confined to changes in the portfolios of ministries. Upon coming to office, Dăncilă split the Ministry for Regional Development, Public Administration and European Funds into two separate ministries and abolished the Ministry of Public Consultation and Social Dialogue. However, these changes failed to improve the government’s strategic capacity. The absorption of EU funds remained low, and public consultation became even less important. There were no institutional reforms to address long-standing problems such as limited planning capacities or the low quality of RIA. The pledged reforms of subnational administration were not adopted. However, the Dăncilă government managed to make Romania’s presidency of the EU Council in the first half of 2019 relatively smooth.
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