US Secretary of State Hillary Clinton on Thursday gave a terrible blow to the double-faced policy promoted by Romania's governing coalition of Social Democrats and Liberals (USL), who are wearing a pro-Western mask before foreign officials and journalists while launching furious attacks on institutions and ignoring any economic reform when at home. Clinton held a tough speech in which she mentioned Romania along former USSR countries and Hungary as countries with democratic difficulties. The speech came a few days after European Commission officials had sent the least wanted message from Brussels, the Commission is unwilling to conclude a new precautionary accord along the IMF in 2013 because Romania has not fulfilled its promises in the current accord. The two pieces of news mean two things: Romania's access to funding will be more expensive, while investors are to avoid Romania.
The situation comes after only seven months of USL government in Romania, marked by weekly attacks on key institutions of the state of law. The attacks, sparked by the necessity of criminally investigated politicians to avoid sentences similar to that of convicted ex-PM Adrian Nastase, sparked horror throughout the civilized world. Senate speaker and Liberal party leader Crin Antonescu and the Social Democratic party leader, PM Victor Ponta have become the outcasts of the West. But apparently they have strengthened their domestic stand, as voters wants to sanction the Democratic Liberals (PDL) and PDL-supported President Traian Basescu for austerity measures doubled by the arrogance and unjustified public-fund spending of former ministers such as Elena Udrea.
Forced to deal with a possible popular vote that would impose the option of Romanian voters for an alliance which protect alleged or proven criminals and dismantle any effort of reform - not only in the justice sector, but also in the economy - Western allies are turning to heavy artillery. No Western politician is able or interested in changing the popular vote, but all want to bring the USL leaders on the right path of reform, civilization and democratic values.
And what is the most efficient weapon? The economic one. After the political turmoil sparked by the referendum to impeach the President this summer, there was hope that the West will use economic pressure to keep USL within democratic limits and that USL leaders understood they were not playing with their own political careers only, but also with Romania's European leaning. It did not came to be. Ponta, Antonescu and other USL majors maintained constant pressure on institutions and even allowed local USL leaders to interfere with the activity of "dangerous" institutions.
Facing such a behaviour, the West reached a point where its only solution is economic pressure.
Hillary Clinton's statement, translated in economic language, says: Investors, beware of Romania where "challenges to constitutional processes" exist. Romania has gone a long way back in the past seven months: from a country to which the US granted part of the missile shield to a country listed along "democratic champions" such as Belarus, Uzbekistan, Russia, Hungary, Ukraine, Tajikistan, Turkmenistan.
Clinton's statement has already been received with due concern within the foreign business circles in Romania. While efforts were building until several months ago to draw as much foreign investment here as possible, the current picture depicts foreign capital withdrawals from Romania. And the Secretary of State's warning is announcing a stronger tendency for investments to flee Romania.
Another blow came from Brussels. At negotiations with Romanian officials, EC representatives announced they would not sign along the IMF and the World Bank a new precautionary accord with Romania. The reason? Romania has not fulfilled almost any of its promises in its current accord: privatization processes failed or were delayed, the introduction of professional managers to state companies proved to be a mockup, major arrears remain.
The refusal of a new accord would mean an extremely strong negative signal for foreign lenders. It may be accompanied by dropping country ratings, meaning more expensive credits which the government contracts to run its activities. This would lead to difficulties in covering current payments such as salaries and pensions, doubled by a suspension of investments from the state budget, to the misfortune of companies running contracts with the state but also of the so-called "local barons" who would remain resourceless.
Does Romania afford to reach such a point? Does Romania kick away all its gains of the past eight years? The parliamentary elections on December 9 will show.