Romania Needs 'Patience' To Balance Economy After Divisive Election

Pro-European candidate Nicusor Dan won Romania’s presidential elections, a victory that will likely bolster the country's ties with the European Union (EU) and NATO.

The centrist mayor of Bucharest defeated George Simion, a Eurosceptic far-right rival. Dan received 53.6% of the votes in the second round of elections, which analysts said represented a choice between the East and the West.

The turnout of more than 10 million voters showed the "incredible power of Romanian society," the 55-year-old Dan said. "Elections are about community. In today's elections, a community of Romanians who want a profound change in Romania won."

In the past 12 months, elections in Eastern Europe and countries formerly under Soviet influence have become battlegrounds between Western allies and Russia. Dan strongly supports NATO and has pledged to continue providing aid to Ukraine. Critics have accused Simion of seeking closer ties with Moscow and being anti-Ukrainian.

"Dan, a mathematician by training, ran a campaign that was pro-Europe, pro-NATO, and pro-Ukraine," Daniel Fried, the Weiser Family distinguished fellow at the Atlantic Council and a former US ambassador to Poland, wrote on May 19. "Romanians have voted for Europe and democracy, not nationalism. Dan will have a mandate but a big job ahead."

Dan will need to manage uncertainties heightened by domestic political and fiscal volatility and the imposition of US tariffs. He will have to spur exports and improve economic sentiment at home and investor confidence abroad.

European Officials, Markets Welcome Dan's Victory

European officials welcomed the results, fearing a Simion win would have been a shift toward nationalism and euroscepticism. As a candidate of the right-wing party Alliance for the Union of Romanians, he has criticized EU policies and opposed military aid to Ukraine.

Brussels had worried that Simion would slow EU decisions on aid for Kyiv and sanctions against Moscow. Simion has aligned with Hungary's Viktor Orban and Slovakia's Robert Fico than Western leaders. They resent being told what to do by Brussels.

Simion appeared to enjoy support from Russia, though he maintained a distance from Russian President Vladimir Putin. He courted the Make America Great Again movement and visited the US during his campaign.

“The Romanian people have turned out massively to the polls," European Commission (EC) President Ursula von der Leyen said. "They have chosen the promise of an open, prosperous Romania in a strong Europe.”

On Monday, the Leu gained more than 1.5% after shedding as much as 3% this month in the run-up to the election, Reuters reported. Romania’s euro-denominated bonds rallied.

Simion Pledges to ‘Fight' to Make Romania ‘Great Again'

Simion conceded defeat. He vowed to support "sovereigntist patriots and conservatives around the world." Today, he posted on X that he will " Fight, Fight, Fight to Make #Romania Great Again!"

He called for the Romanian Constitutional Court to annul the presidential elections. He claimed that there was "external interference by state and non-state actors without providing tangible evidence."

Simion, who won the first round of elections with 41% of the vote on May 4, accused France of domestic interference. He referred to Telegram CEO Pavel Durov, who stated that a "Western government" asked his company to "restrict conservative voices in Romania."

The French foreign ministry strongly denied any involvement. It added that "the accusations are merely a diversionary maneuver from the real threats of interference targeting Romania."

White House AI and Crypto Czar, David Sacks, weighed in on the accusation of election fraud.

"Judges nullify the first election by disqualifying the leading candidate…based on unproven accusations of Russian interference," Sacks posted on X. "The second election produces a result that is statistically unlikely; globalists tout all of this as pro-democracy.' Does this playbook sound familiar?"

Romania's Constitutional Court Cancelled 2024 Elections

The Central Electoral Bureau (BEC) barred far-right populist Calin Georgescu from participating in May's upcoming presidential election. The Romanian Constitutional Court cited a declassified intelligence report that indicated Russian interference in Georgescu’s favor.

The court unanimously rejected Georgescu's appeal against barring him from the elections. The court charged him with misreporting funds for his campaign, misuse of digital technology, and the promotion of fascist groups.

The decision has sparked angry protests at home and criticism abroad about Europe's commitment to democracy. The court of appeals in Ploiesti ruled that the decision should be annulled, as it constituted a grave violation of Romanian constitutional law.

Dan will need to lead the country's foreign policy at a time when the regional context for Romania has never been more dangerous given Russia's continued war in Ukraine," Anca Agachi, a nonresident fellow at the Atlantic Council, wrote on May 19.

Romania Needs ‘Patience' to Balance Economy

Dan has encouraged his supporters to "have patience," saying a "difficult period lies ahead, but necessary in order to balance the economy of this country." His marginal victory indicated a deeply divided Romanian society that he is required to reunite.

The newly elected president has a challenging mandate. Many Romanians have become disillusioned with EU membership due to widespread corruption and embezzlement of EU funds.

The EC revised its economic forecast for Romania, predicting a modest GDP growth of just 1.4% in 2025, below the 2.5% projected in its previous autumn outlook. The EC anticipates a slight recovery to 2.2% in 2026. It warned that "economic momentum could be constrained by rising uncertainty and internal vulnerabilities."

The budget deficit is expected to remain high, at 8.6% of GDP in 2025, with only a marginal improvement to 8.4% in 2026, according to the EC. The general government deficit was 9.3% of GDP in 2024, "fuelled by very large increases in public wages and pensions," it said.

Dan "will need to help build trust in an economy that has the EU's highest budget deficit compared to gross domestic product," Agachi, who is with the Transatlantic Security Initiative in the Atlantic Council's Scowcroft Center for Strategy and Security, said.

The voters made it clear that "more of the same in Romanian politics is simply not acceptable," she said.

Disclaimer:

Any opinions expressed in this article are not to be considered investment advice and are solely those of the authors. European Capital Insights is not responsible for any financial decisions made based on the contents of this article. Readers may use this article for information and educational purposes only. 

This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.