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Friday, 27 April 2012 - Romanian government toppled, Czechs face test too |
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      Edition: U.S. Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom Home Business Business Home Economy Technology Media Small Business Legal Deals Earnings Social Pulse Business Video The Freeland File Markets Markets Home U.S. Markets European Markets Asian Markets Global Market Data Indices M&A Stocks Bonds Currencies Commodities Futures Funds peHUB World World Home U.S. Brazil China Euro Zone Japan Mexico Russia India Insight World Video Reuters Investigates Decoder Politics Politics Home Election 2012 Issues 2012 Candidates 2012 Tales from the Trail Political Punchlines Supreme Court Politics Video Tech Technology Home MediaFile Science Tech Video Tech Tonic Social Pulse Opinion Opinion Home Chrystia Freeland John Lloyd Felix Salmon Jack Shafer David Rohde Bernd Debusmann Nader Mousavizadeh Lucy P. 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See the best of Reuters photography.  See more | Photo caption  The Aurora Borealis Stunning views of nature's northern lights.  Slideshow  A day with the LAPD A day with the LAPD where the riots began 20 years ago.  Slideshow  Romanian government toppled, Czechs face test too Tweet Share this Email Print Related News Instant View: Confidence vote topples Romania government 9:10am EDT WRAPUP 1-Czech, Romanian coalitions face confidence votes 5:46am EDT Dutch parties avert crisis with 2013 budget deal Thu, Apr 26 2012 CEE Money-Protests, splits call time on E.Europe budget cuts Thu, Apr 26 2012 France's Sarkozy rules out deal with far right Wed, Apr 25 2012 Analysis & Opinion Congress reshuffling an empty deck? Essential reading: Amazon will collect Nevada sales tax, debating tax cuts, more Related Topics World » 1 of 15. Czech Prime Minister Petr Necas and Karolina Peake, the leader of a breakaway faction from an expelled coalition party that continues to support the cabinet, attend a parliamentary confidence vote, in Prague April 27, 2012. The Czech and Romanian governments were expected to survive confidence votes on Friday, but may soon falter over austerity measures that have prompted some of the largest protests in central Europe since communist times. Credit: Reuters/Petr Josek By Sam Cage and Jason Hovet BUCHAREST/PRAGUE | Fri Apr 27, 2012 9:53am EDT BUCHAREST/PRAGUE (Reuters) - Romania's opposition torpedoed the center-right cabinet in a confidence vote on Friday, raising the prospect of months of political turmoil and questions over a belt-tightening campaign that has caused a wave of protests against IMF-backed reforms. Prime Minister Mihai Razvan Ungureanu's two-month-old government is the latest in a string of austerity-minded ruling coalitions that have fallen across the European Union in disputes over spending cuts and tax hikes. The defeat came ahead of another confidence vote, in the Czech Republic, whose budget-cutting cabinet is expected to survive but may find itself hamstrung by infighting among its scandal-plagued parties and widespread public anger over its policies. Having replaced his predecessor Emil Boc, who resigned in January after anti-government protests in Romania turned violent, Ungureanu was defeated by the votes of 235 deputies, four more than required to topple his government. "Today justice was done," said Victor Ponta, head of the opposition Social Liberal Union (USL). "USL is willing to take responsibility to govern until elections." The European Union's second-poorest member slashed public sector salaries and raised sales taxes to put its economy on a more solid footing, but the measures have hit the poorest in the country of 22 million, which is only now emerging from a two-year crisis-induced recession. President Traian Basescu, a close ally of Ungureanu, now has to nominate a new prime minister, which could take months. Basescu said he was holding talks already with all parties, seeking to form a government and indicating he could find a quick solution. The confidence vote result indicates the USL may have enough support for a majority. Failure to back a new prime minister before a general election slated for November would prompt an early vote. "The most likely version is that Traian Basescu will nominate Victor Ponta as prime minister," said political commentator Mircea Marian. "USL has already prepared a government and could appear in front of parliament towards the end of next week." IMF PULLS BACK The International Monetary Fund, which with the EU has extended two loan packages to Romania, postponed a review there pending more information on the shape of a new government. The deal is crucial to Bucharest's battle to maintain investor confidence. The leu currency showed its biggest daily loss of the year after the vote. Usually protected by market fear over central bank intervention, it fell to match its all time low of 4.401 against the euro. "The end result seems to ... echo what we have been seeing in other countries in terms of a popular move away from the parties that are pushing for austerity," said Koon Chow, a strategist at Barclay's Capital. "France, Holland, the Czechs - it's all connected." The USL, a fragile leftist alliance, has more than 50 percent support in opinion polls and would be favorite to win an election. The cuts and public sector job losses have left millions of Romanians struggling to make ends meet every month and while the government plans to raise some wages again under the IMF's advice, the Fund says caution is needed to ensure stability. Salaries average less than 400 euros a month. While unemployment is only 5 percent, many have left a country riddled with crumbling roads and patchy power and sewage services, prompting a 10 percent drop in population in the last decade. "The current situation is clearly worse than before. We need at least 10 years to get back on track," said Gheorghe Stanciu, a 55-year-old legal adviser outside Bucharest's national theatre, the scene of protests that brought Boc's downfall. CZECHS NEXT Romania's example - a ruling center-right party that has struggled to cling to power through repeated confidence votes that delay reforms aimed at healing the economy - may serve as a warning to Czech Prime Minister Petr Necas. Necas threw out the smallest of the three parties in his coalition, Public Affairs, last week because of strained ties with one of its leaders who has been convicted of corruption. Now he is counting on a breakaway faction from Public Affairs to support his cabinet in Friday's vote. But his austerity drive has angered Czechs and sent the cabinet's approval rating to an all-time low of 16 percent. Some 90,000 people held protests last Saturday in the biggest demonstrations since the fall of communism in 1989, and union leaders said they planned further protests, including strikes before the end of June. Leading opinion polls, the opposition Social Democrats have called for an early election and have said they would reverse some reforms. But Necas has said that even though the country's budget deficits are relatively low, and its debt level is less than half the EU average at around 41 percent of annual output, the country faces even greater dangers like the loss of investor confidence and a spike in borrowing costs if it relaxes policy. He warned on Friday any relaxation of policy would "destroy the future of our country and that of our unborn children". "Debt is the biggest public enemy ... Our responsibility goes far beyond the current political and economic situation," he said as the debate before the vote opened in parliament. Even if Necas wins the vote on Friday evening - he is expected to receive the support of at least 103 of parliament's 200 lawmakers - he could be held hostage by politicians mindful that elections may be held earlier than expected. That would complicate his further plans to reform the healthcare, education and other systems. (Additional reporting by Andreea Birsan and Ioana Patran in Bucharest and Robert Mueller and Jana Mlcochova in Prague; Writing by Michael Winfrey; Editing by Elizabeth Piper and Giles Elgood) World Tweet this Link this Share this Digg this Email Reprints   We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (1) Harry079 wrote:   Edition: U.S. Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom Back to top Reuters.com Business Markets World Politics Technology Opinion Money Pictures Videos Site Index Legal Bankruptcy Law California Legal New York Legal Securities Law Support & Contact Support Corrections Connect with Reuters Twitter   Facebook   LinkedIn   RSS   Podcast   Newsletters   Mobile About Privacy Policy Terms of Use AdChoices Copyright Our Flagship financial information platform incorporating Reuters Insider An ultra-low latency infrastructure for electronic trading and data distribution A connected approach to governance, risk and compliance Our next generation legal research platform Our global tax workstation Thomsonreuters.com About Thomson Reuters Investor Relations Careers Contact Us   Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. 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