November 3, 2014 / 1:23 AM / in 3 years

Romania's PM Ponta wins first round of presidential election

BUCHAREST (Reuters) - Prime Minister Victor Ponta won the first round of Romania’s presidential election, a step towards a victory that would consolidate his leftist party’s hold on power but would also raise questions about judicial independence.

Romania's Prime Minister Victor Ponta and his wife Daciana Sarbu prepare to cast their votes at a polling station in Bucharest November 2, 2014. REUTERS/Bogdan Cristel

With nearly all ballots counted, Ponta, leader of the Social Democrats and a former prosecutor and amateur rally driver who became prime minister two years ago, had won 40.3 percent of the vote in Sunday’s election. That compared with 30.4 percent for his nearest challenger, Klaus Iohannis, an ethnic German mayor backed by two center-right parties.

The results make Ponta, who has consistently led opinion polls over Iohannis, favorite to win a run-off vote on Nov. 16.

A Ponta presidency could bring more stability to the Black Sea country of 20 million, which endured a painful recession and spending cuts during the global slowdown and has made mixed progress in implementing reforms under an IMF-led aid deal.

As prime minister, Ponta often feuded with his bitter rival, outgoing President Traian Basescu - who served as president for a decade - often slowing policymaking.

However, without the check on power hitherto provided by Basescu, Ponta’s rise has raised concerns that he might tighten political control over the judiciary and anti-corruption prosecutors.

Ponta rebuffed EU criticism in 2012 that he did not appear to respect the rule of law and democratic institutions, denying allegations that he had put pressure on judges.

Ponta promised after his win on Sunday that if he secures the presidency his government would stick to the economic program he set as prime minister, which includes easing austerity measures and a pledge to increase the state pension next year.

“We will make sure that the governing program that Romanians voted for in 2012 will be enforced until the end of 2016,” Ponta told reporters late on Sunday.

A senior official in the ruling Social Democrat party said, on condition of anonymity, that potential candidates to become prime minister in a Ponta presidency include the head of Romania’s secret service, George Maior, who is also Ponta’s godfather and a former Social Democrat lawmaker, and former prime minister Calin Tariceanu of the Liberal Reforming Party.

Tariceanu, a Harley Davidson-riding businessman, is a Ponta ally who also ran for president but came third in Sunday’s first round. As premier from 2004-2008, Tariceanu oversaw sharp increases in pensions and ran double-digit current account deficits, despite warnings from the IMF and ratings agencies to maintain fiscal discipline.

IMF DEAL UNCERTAINTY

As well as loosening fiscal policy, a new Ponta-appointed government could end the deal with the International Monetary Fund when the current 4 billion euro agreement expires next year. The deal has bolstered Romania’s credibility with investors and nudged successive governments to reform.

“After the IMF agreement expires there will be two questions. Will it be further extended?” Greg Konieczny, the manager of Romanian investment fund Fondul Proprietatea, said in a recent interview.

“But that will be a decision for the new government. And second, if it is not extended, then will the government keep behaving in a responsible way?”

Flagging Tariceanu as a possible prime minister could help Ponta scoop up votes in the run-off that Tariceanu received in the first round. Choosing someone from outside his own party could also head off any possible infighting in the Social Democrats.

Run-off opponent Iohannis, who is credited with transforming the Transylvanian city of Sibiu, has the support of opposition Liberals and Democrat-Liberals. He has pledged to support anti-corruption prosecutors, boost EU fund absorption and raise the healthcare budget, while supporting the IMF deal and aiming to eventually lower value-added tax.

Romania joined the EU in 2007 but remains its second- poorest and also one of its most corrupt states, driving millions abroad in search of better pay and living standards. It has struggled to absorb EU development funds. Tax evasion is rife and nearly half of all households lack an indoor bathroom.

“I am fed up with politicians and their corruption,” said Marin Tudose, a 48-year-old tool maker. “When will we start to live better? Because so far it hasn’t happened for me.”

The Social Democrats, heirs to the Communists whose single-party rule was toppled in a 1989 revolution, have courted voters by increasing pensions and wages for state workers cut under Ponta’s predecessor.

Ponta has also cut an employment tax. Economic growth however is set to slow to 2.2 percent this year, from 3.5 percent in 2013, analysts forecast.

Analysts said his election campaign was also helped by a government ordinance approved in August that allowed local mayors to join a party other than the one from which they were elected in office without losing their seat. That prompted around 400 mayors to switch to the ruling leftists.

But Ponta’s campaign faced setbacks as well. Basescu accused him of spying for the foreign intelligence service in the 1990s - a charge Ponta’s camp rejected as a political smear. Ponta’s father-in-law and other ruling party politicians were also hit by graft allegations in the last weeks of the campaign.

Writing by Matthias Williams; Reporting by Matthias Williams, Radu-Sorin Marinas and Luiza Ilie; Editing by Susan Fenton

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