MINISTERIAL MUSICAL CHAIRS: IT'S ALL ABOUT THE

C O N F I D E N T I A L SECTION 01 OF 02 BUCHAREST 001838

SIPDIS

SIPDIS

STATE FOR EUR/NCE - AJENSEN

E.O. 12958: DECL: 12/08/2016
TAGS: ECON PGOV RO
SUBJECT: MINISTERIAL MUSICAL CHAIRS: IT'S ALL ABOUT THE
MONEY

Classified By: Economic Section Chief John Rodgers, for reasons 1.4 (b)
and (d)


1. (C) Summary: The latest round of Romanian government
(GOR) ministerial changes have increased the turmoil in the
ruling coalition and demonstrated yet again that control of
public funding (including from the EU) is a core concern for
party leaders. The fight for political leverage over the
money will likely intensify as the coalition continues to
unwind. One cause for concern in light of this turbulence
may be increased difficulties for the GOR's in carrying out
an economic agenda that includes privatizations of interest
to U.S. companies. End Summary.


2. (U) In a series of dramatic moves in the past few weeks,
several key ministerial portfolios in the GOR have changed
party hands or been left empty. First to go was Agriculture
Minister Gheorghe Flutur, whom Prime Minister Tariceanu fired
because he bolted to the "platformist" Liberal Party faction
led by former PM Stolojan. Next to go were Economic Minister
Codrut Seres and Deputy PM Bogdan Pascu, both members of the
small coalition partner Conservative Party, when the
Conservatives voted on December 3 to leave the coalition
government. In another, less heralded, move on December 7,
former Conservative Party member Eugen Chirovici also
resigned from his ministerial position as president of the
Small and Medium Enterprises Authority, accusing the
Government of failing to offer the necessary support for the
absorption of European funds. Chirovici had resigned from
the Conservative Party on December 3, in the hope that he
could maintain his portfolio after the Conservatives jumped
ship.


3. (U) The remaining members of the ruling coalition GOR
(Democrats; Liberals; and Hungarian ethnic party, UDMR)
appeared to have agreed this week to replace the ministers in
the government, giving the agriculture portfolio to a young
Liberal, Dan Munteanu; the economic portfolio to a Democrat,
Mircea Toader; and the Deputy PM slot to a Liberal, Varujan
Vosganian (who had recently withdrawn his candidacy to become
European Commissioner after past ties with the security
services were publicized). The UDMR also claimed the
directorship of the national lottery and other positions at
lower levels in ministries.


4. (U) The seeming agreement among the Democrats and Liberals
dissolved in rancor, however, at a heated GOR Cabinet meeting
on December 6, in which the Democrats walked out and the
Liberals pushed through an emergency ordinance placing the
Economic Ministry's privatization office (OPSPI - responsible
for energy and defense industry privatizations) into the
Liberal-controlled privatization authority (AVAS). AVAS is
now under the control of the former Defense Minister and
Liberal Party bagman Teodor Atanasiu. The following day, the
Democrats called a press conference at which they called the
emergency ordinance illegal, and announced that they no
longer wanted the Economic Ministry portfolio since it had
been stripped of its asset management function and left only
with the headaches of combating energy shortfalls during the
coming winter. The Liberals finally nominated Vosganian on
December 8, for the Economic Minister post (withdrawing him
from candidacy for the Deputy PM slot).

Comment:
--------------

5. (C) The moves by the remaining GOR coalition members
underscore the intensifying fight over government portfolios
that have the most leverage over state funding and creative
opportunities for "public-private partnerships." With the the
Ministries of Finance and Health, and the privatization
authority AVAS already in their hands, the Liberals have
retained their hold on the Agriculture Ministry (including
substantial future EU agriculture funds) as well as carved
out the lucrative OPSPI from the Economic Ministry and send
it to AVAS. The UDMR went directly for the control of a
non-ministerial agency that controls large amounts of income
(lottery).


6. (C) The loser in the short term is the Democratic Party,
which declined to be saddled with the remnant Economic
Ministry's portfolio because the Democrats rightly recognized
that it they would be burdened by political liabilities as
the winter approaches and energy prices rise. The stability
of the ruling coalition's minority government will be put to
the test when the Liberal candidate for Economics Minister is
put under parliamentary scrutiny, probably next week.
Vosganian, a loyal supporter of PM Tariceanu, may find
himself in the sights of Democrats wanting to direct their
ire at having lost in this latest ministerial shuffle.
Uncertain, too, is the ultimate fate of the emergency

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ordinance that moves OPSPI to AVAS. The Minister of Justice,
the famously independent Monica Macovei, must weigh in on its
constitutional validity in the coming days.


7. (C) One concern is that the ongoing turmoil may harm the
chances for the smooth privatization of the Craiova
automotive factory, of interest to both Ford and General
Motors. Post will continue to engage with the key figures in
the current government, no matter how precarious its
position, to urge that the tender process be completed on
schedule during the first half of next year.

TAUBMAN