Romania, regional leader on legislative amendments for the 4th year in a row, Grayling report says

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Romania ranks first in the regional legislative changes ranking, with over a quarter (280 laws) out of a total of 1,040 laws passed between August 1, 2016-August 1, 2017, according to a report conducted by Grayling in Central & Eastern Europe (CEE) and examines laws passed in six CEE countries (Bulgaria, Czech Republic, Hungary, Poland, Romania and Slovakia). Poland ranks second (220 laws) and Hungary third (200 laws).

Reviewing the political stage in Romania in the past one year, the report says that “the left-wing Social Democratic Party (PSD) returned to power in December 2016, after one year out of power, during which time Romania was run by a technocratic government led by former EU Commissioner Dacian Ciolos. Last year’s overwhelming victory in the general election, based on an ambitious mix of unsustainable spending, allowed PSD, together with their junior Liberal Democrat (ALDE) ally, to secure a strong majority in the new Parliament and form a government. This enabled the government to march through with all its major bills, some of them quite controversial as they aimed to alleviate corruption-related offences. PSD managed to infuriate hundreds of thousands of Romanians who took to the streets calling for the cabinet, then led by former PM Sorin Grindeanu, to repeal its decision. The fight of PSD’s autocratic political leader to keep a tight grip on the government’s actions threw the country into a major political crisis, and eventually led to Grindeanu’s expulsion from the government. The cabinet change brought former Economy Minister Mihai Tudose into the Prime Minister’s seat, together with an unexpected change of the governing program. The newly installed cabinet pledged, in July, a complex overhaul of Romania’s fiscal framework, widely criticized by the business community, with new attempts to curb the judiciary’s independence currently underway.

Most of these decisions are set to be made through Government Emergency Ordinances, to evade Parliament in the first phase and leave little room for intervention by the business community. The envisaged measures focus on wage benefits for public- sector employees, the function of the economy and that of the justice system.”

After three years, the number of approved acts decreased in the region 1,040 acts were approved in the six CEE countries between August 2016 and August 2017, a very similar level to 2014/2015 but 58 (5.3%) fewer than last year.

While Romania, Poland and Hungary saw the same increases as the previous years, the most significant change can be seen in Bulgaria, where the number of approved acts decreased by 45% (76 acts) compared with the figures in 2015/2016.

The report also notes that 18% of the acts with a direct impact on business were submitted by MPs. The proportion of these acts has doubled in the past three years in Romania.

This is the outcome of a more dynamic business environment, with large and medium-sized companies more aware of the importance of direct communication, via official channels, with policy-makers.

Consolidated through established or new trade associations, the business community has been determinedly speaking with one voice about the functioning of the economy. Even if engaging with the Government has brought faster results, interacting with the Parliament has also proved very productive: amending Emergency Ordinances already implemented by the Government, pushing for fresh proposals etc.

Moreover, the survey claims that in Romania, the proportion of acts passed using an extraordinary procedure is still by far the highest in the region, and it increased from 41% last year to 49% this year.

Emergency Ordinances submitted by the Government for debate in the Parliament are approved by extraordinary procedure. Last year, many proposals debated in the Parliament were in fact from the executive branch. The technocratic government in power in 2016 lacked political support, therefore the majority of its decisions were made through Government Emergency Ordinances. In the last part of 2016, this government attempted to advance more liberal decisions to support the right-wing parties in the coming elections, which necessitated emergency ordinances. Today, we see a similar approach with the current Social-Democrat Government, who are advancing their political agenda.

Across CEE, 17.7 % of approved acts with an impact on business were passed by an extraordinary procedure, slightly less than last year.

While 48.5% of acts generated significant media attention in the region last year, this figure dropped to 33.1% this year. Results in Hungary and Bulgaria barely changed, while they significantly decreased in Poland, Romania and Slovakia.

In Romania, the end of the Parliamentary term and the approaching elections (December 2016) brought significant media attention last year. The interest decreased from the start of this year due mainly to the lack of engagement from MPs’, who are no longer interested in sending out press releases or organizing press conferences. The media’s focus remains, however, on the Government, which is aggressively pushing its political and economic agenda.

The report also refers to the Social Democrat Party chairman Liviu Dragnea, saying that “steamrolling its way to power, the leftist ruling coalition strongly dominates the political scene, steered mainly by PSD’s autocratic political leader Liviu Dragnea, who controls both the cabinet and the parliament through his PSD chairman and Lower Chamber Speaker positions, as all well the big government decisions are taken either at the party’s headquarters or amended in Parliament under Dragnea’s strict supervision.”

“With no elections on the horizon, PSD’s goal in 2018 is to find a balance between delivering on most of the policies it has prioritised so far (i.e. tax cuts in early 2017 together with raising pensions, public wage hikes etc.), find other sources of revenues, and keep the country on a stable macroeconomic footing. Mission almost-impossible, as the general climate of instability is generated both by a tsunami of changes in the country’s fiscal and economic framework and the majority’s striking attempts to put a leash on the fight against corruption. The investigations which many of the current ruling coalition’s leaders face also need to be considered in this hectic context. Among them, Social Democrat leader Liviu Dragnea himself is currently being investigated in a criminal case for abuse of office. Such instability combined with a lack of critical voices within the coalition will generate more frustration among the population, with Black-Swan driven social protests just around the corner, as Romanians re-discovered in recent years their appetite to take to the streets and force governments into U-turning on deceptively minor but controversial decisions,” the report concludes.

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