05BUCHAREST1511 / 2005-07-07 16:38:00
Embassy Bucharest
                C O N F I D E N T I A L SECTION 01 OF 02 BUCHAREST 001511 
E.O. 12958: DECL: 07/07/2015 
     B. BUCHAREST 1205 
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Classified By: Political Section Chief Robert S. Gilchrist for Reasons 
1.4 B and D 
1. (C) Summary: Prime Minister Calin Popescu-Tariceanu 
announced the resignation of his cabinet July 7, pending 
acceptance by President Traian Basescu.  The move, ostensibly 
in response to a Constitutional Court decision against a 
judicial reform package, will likely spark new parliamentary 
elections sought by Basescu to increase his government's 
majority.  Many observers also believe new elections raise 
the odds of a delay by a year of Romania's EU accession now 
slated for 2007.  Although the macroeconomic impact of new 
elections would likely be slight, businesses may defer 
investments until certainty is restored. End Summary. 
A Surprise Announcement 
2. (C) In a surprise announcement July 7, PM Tariceanu stated 
in a hastily called press conference that he and his cabinet 
were submitting resignations, effective immediately, 
precipitating likely snap parliamentary elections by early 
fall.  President Traian Basescu was expected to accept the 
resignations in a planned televised speech later the same 
evening. Basescu is bound by the constitution to appoint a 
caretaker cabinet, which will likely include many of the 
members of the current government led by the center-right 
Liberal-Democratic (PNL-PD) alliance. 
3. (SBU) Tariceanu's announcement followed a Constitutional 
Court decision on July 6 that annulled key elements of a 
judicial reform package passed in Parliament on June 22.  The 
court decision was interpreted as largely political, as the 
court is comprised largely of members closely associated with 
the opposition Social Democratic Party (PSD).  Tariceanu told 
the press that once he received word of the court's decision, 
he immediately began to contact key party leaders and members 
of the government to consult on next steps.  New elections 
appeared to be the "only way forward" and the Cabinet 
convened at noon on July 7 effectively to vote itself out. 
Tariceanu communicated the decision to President Basescu.  He 
also vowed to enact by emergency ordinance elements in the 
judicial reform package that the Court did not strike down, 
including the organization of a fund to compensate 
individuals for properties seized under communism (Ref B). 
Between Now and Elections 
4. (C) There now remain several procedures the governing 
alliance must pass through before new elections can actually 
be held (Ref A).  According to the Constitution, upon the 
resignation of a cabinet, the President should designate a 
new prime ministerial candidate who must present a new team 
and governing program to the Parliament within ten days.  If 
that fails, the process must be repeated again, and if the 
second attempt fails the President is empowered to call new 
elections.  Romania has never held snap parliamentary 
elections in the 15 years since the restoration of democratic 
government.  Constitutional vagueries allow much leeway, and 
political contacts tell post that requirements will likely be 
followed only in form but without any intention of preventing 
a new vote.  Presidential Advisor Claudiu Saftoiu told 
PolChief "Romania is clearly headed towards new elections." 
5. (C) The Government is couching the decision by the 
Constitutional Court as an impediment to Romania's ability to 
enact reforms necessary for EU accession.  The measures the 
Court struck down would implement a mandatory retirement age 
for judges and prosecutors; allow the Supreme Council of 
Magistrates (the managing body for the courts) to dismiss or 
transfer senior judges and prosecutors; and strengthen and 
professionalize court management.  In sum, the reforms were 
intended to remove older judges and prosecutors in place 
before the end of communism, many of whom remain associated 
with the PSD.  The latter is widely regarded as the inheritor 
party to the former communist party led by Nicolae Ceausescu. 
Implications for EU Accession 
6. (SBU) Some local pundits have opined that snap elections 
would lead to a delay in Romania's EU accession from 2007 to 
2008.  EU officials have repeatedly expressed public concern 
that elections would distract officials charged with 
BUCHAREST 00001511  002.2 OF 002 
implementing accession requirements.  Romania's Accession 
treaty signed in Brussels in April provides for such a delay 
if Romania lags in implementing key reforms required for 
membership.  Nonetheless, in recent days there have been 
indications that the government had become increasingly 
resigned to such a delay regardless of whether there were new 
elections.  Tariceanu himself said 2008 appeared more likely 
and would not be debilitating. 
7. (C) Comment:  Embassy contacts point out that the 
Government made no effort to call the Parliament back into 
session to work out compromise legislation with the 
opposition PSD.  Many opined that the events of recent days 
merely provided a pretext for moving to new elections, which 
President Basescu seeks to increase the currently narrow 
majority of the PNL-PD led government.  Post agrees with that 
assessment.  Interestingly, as recently as July 5, Basescu 
said he had given up interest in new elections for the time 
being and that the country should focus on implementing EU 
accession requirements.  With those comments -- and 
Parliament in recess and many Romanians on vacation -- it 
appeared that the political leadership would stick with the 
status quo.  However, Tariceanu's announcement has completely 
reversed the course. 
8. (C) Comment Continued:  The macroeconomic fallout from the 
GOR's resignation will probably be slight.  The currency will 
probably not suffer a major jolt, given the relative overall 
financial stability of the country at this time.  However, 
businesses may defer key investments.  Post is aware of two 
potential U.S. investments that government chaos, or even 
uncertainty, could hinder, if not fully torpedo.  It will 
also be more difficult for Post to press ahead on major 
investment problems and disputes.  In particular, Bechtel's 
ongoing struggle with the GOR to get paid for work already 
done on the Transylvanian Motorway has probably just gotten 
harder.  Oher, more low-key investment and business climate 
issues might become more difficult to work throug a 
bureaucracy waiting to see what happens in the fall 
elections, but Post thinks it is still manaeable.  End 
9. (U)  Amembassy Bucharst,s reporting telegrams are 
available on the Buharest SIPRNET Website: 

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