Dragnea, Isărescu and Dăncilă. The significance of a strange meeting in the Chamber of Deputies office

To his left, Prime Minister Dăncilă and Minister Teodorovici. To his right, “consigliere” Darius Vâlcov. In front, over the narrow table, the governor and the first deputy governor of NBR. The silent images broadcasted by the Chamber of Deputies show Liviu Dragnea, host and power broker of a strange meeting that had only one political purpose: to show to various audiences that he, the head of PSD, is the first man in the country, the de facto political leader.

The photo itself is dismaying: one convicted for theft of votes and one convicted by first instance to 8 years in prison for money laundering and influence trafficking challenge the NBR heads for the rise in inflation. No shame, no fear of ridicule. Just like in a society with reversed values.

The attempt to align NBR has been going on for months. It was a clear communication strategy where Dragnea and various other actors pressured Governor Isărescu, blamed for the inflation. In vain, Isărescu and NBR explained that inflation is not related to monetary policy, the underlying cause being the government’s fiscal policy. Dragnea continued the charade, by publicly announced letters, ultimate tone, and by bringing Isărescu to a committee for joining the Euro led by – incredibly – Prime Minister Dăncilă.

The plan also has a legislative component: a project not yet tabled to change the NBR act, which would have allowed the central bank’s management to be replaced before the end of the mandate. It was the instrument of maximum pressure that should have aligned NBR.

Only that Liviu Dragnea and his advisors have overlooked one thing: the economic reality cannot be changed. In vain were their struggles: confronted by the results of the government’s fiscal policies, NBR had no choice but to raise interest rates. When they didn’t, they absorbed liquidity from the market. Specifically, they fulfilled their legal mandate to balance a market disrupted by the actions of an unqualified government.

PSD attacks on NBR triggered a strong but invisible reaction. Influential power centers at the top of the European Union warned PSD that attacking NBR is extremely dangerous. It was yet one more battle opened by Liviu Dragnea, alongside justice and foreign policy, which he is struggling to subordinate.

Hence the reaction of president Iohannis, who attempted a mediation at Cotroceni between the government and NBR. PSD’s communication strategy led to a refusal by Prime Minister Dăncilă, followed by the resignation request from the president. A serious political crisis, stemming from the attitude towards NBR.

Liviu Dragnea was forced to a tactical withdrawal. He understood that he could not manage a war with NBR. This explains the mild, seemingly reconciling statements of yesterday, after the meeting with Mugur Isărescu. The retreat is temporary, we will witness new aggressive outbursts on the first hike in key interest rate.

But Dragnea wanted to play politically the great moment of apparent reconciliation. He invited the governor to a discussion in his cabinet, aware that he would come after the exchange of letters and after the visits to Cotroceni and the Senate budget committee (where he was invited by liberal Florin Câtu). The surprise was that he also invited Viorica Dăncilă. Not because her presence added substance to the discussion, but to show that he, Liviu Dragnea, did what president Klaus Iohannis could not do: mediation between the government and NBR. He also benefited from Isărescu’s attitude, rushed to respond to the obvious provocation of a person who, formally, has no place in the NBR-Government equation. The entire scene in the cabinet of the Lower House chairman, its obvious political significance, the presence of an individual like Darius Vâlcov should have got the Governor thinking.

For the party audience, the symbolic move made sense. It showed a powerful leader, wrapping everything around his fingers and summoning any public institution. For the educated audience, however, the move resembles a crafty, yet completely artificial play.

A prospective victory of Liviu Dragnea over NBR would mean that Central Bank abandons its clear line of interest rate hikes, the method seeking to counterbalance the government’s fiscal policy. I would not bet too much on this, not even if I was the most ardent PSD supporter.