What Are the Political Implications of the Feuds between PSD and PNL?

The stability of the PSD-PNL coalition faces its greatest test. The two parties are forced to adopt unpopular measures, impacting both public sector employees and the private sector, and each is now trying to shift the blame onto the other. The initial public attacks reveal tensions not only between the two parties but also within their own ranks. Both Ciolacu and Ciucă realize that the time has come to face the consequences of years of excess at the expense of the citizens.

Why is it important to analyze the political moment: the reaction of the two parties will determine both the stability of the current government and a potential political crisis, as well as the outcome of the super-electoral year 2024. Other political stakes of the austerity package involve the political survival of Nicolae Ciucă and Marcel Ciolacu.

The economic analysis itself must wait for the final drafts of the Emergency Government Ordinances. However, there are clues provided by the Minister of Finance, Marcel Boloș: he stated yesterday that the measures are expected to bring in 12 billion lei, and the impact of the so-called reform in the public sector is estimated at 2.5 billion lei. This means that the burden of the tax and fee increases will be approximately 9.5 billion lei. It is evident, from the figures presented by Boloș (PNL), that the private sector will bear the heaviest burden of austerity, while public sector employees will undergo a largely formal reform. However, a more detailed discussion on the package of measures can only be had once the two drafts of the Emergency Government Ordinances are published.

The crucial cause behind this situation is a budgetary disaster created by PSD, under the watchful eyes of PNL. The enormous budget hole, far exceeding the 4.4% of GDP deficit assumed, was created by the former PSD Finance Minister, Adrian Câciu, who overestimated revenues and underestimated expenses. This is how the coalition has been forced to impose new taxes on the private sector. And now, PSD is doing everything possible to shift the blame onto PNL, even though Ciolacu’s party is responsible for creating this unrealistic budget. There is, of course, also PNL’s fault: for accepting, through former Prime Minister Nicolae Ciucă, such a deceitful budget. And if we talk about historical guilt, then PSD is ultimately responsible: Dragnea’s laws from 2017-2019 are true time bombs with delayed explosions, with budgetary costs increasing exponentially each year.

And here lies the novelty of the situation: it is the first time that PSD, as a party in government, has to manage a disaster created by PSD itself. Until now, right-wing parties were the ones that had to resolve the crises left behind by PSD, with political consequences that led to their de facto disappearance, as seen in the cases of PNȚCD and PDL.

Each party has a clear stake: to be held accountable for as little as possible of the inevitable political losses. Political losses will come from cutting state expenditures and increasing taxes and fees. Hence, the tensions between PSD and PNL, as well as within PNL. For now, there is no information from PSD about dissatisfaction with Marcel Ciolacu’s mandate, but the current Prime Minister also has a few formidable adversaries who could initiate an internal discussion.

The critical tone of the public criticisms between the parties was set by Rareș Bogdan, who rejected PSD’s proposals for tax and fee increases on Monday and called for cuts to the ‘bloated state.’

The PSD’s response came first, from Prime Minister Marcel Ciolacu himself, who veiledly criticized PNL during Wednesday’s press conference at the Ministry of Finance. He said, „After two unfortunate governments, we have reached a 9.2% deficit,” and „I cannot help but regret that these measures have not been discussed for several months, perhaps since February-March, so that they would be gradually implemented.”

The truly harsh attack from PSD came through Mihai Tudose, the former Prime Minister who had fallen into obscurity after the scandal of alleged sexual harassment at the European Parliament. In his blunt style, Tudose wrote on Wednesday about the „pink liberal ghosts with polka dots” launching „suburban attacks against Prime Minister Ciolacu” – an allusion to the colorful costumes sometimes worn by Rareș Bogdan. Tudose sent a warning to Nicolae Ciucă that „some smart guys from PNL” want to remove him from the party leadership.

Robert Sighiartău then followed suit, stating that „we from PNL are waiting for public apologies from Comedian Ciolacu,” referring to the special pensions law returned by the Constitutional Court to Parliament.

What do these attacks tell us?

First and foremost, they indicate a state of dissatisfaction within PNL. Liberal sources declared to G4Media that many leaders are dissatisfied with President Nicolae Ciucă and Minister Marcel Boloș behaving like puppets for Prime Minister Ciolacu, thus risking alienating right-wing voters if they accept the tax and fee increases demanded by PSD.

However, PNL’s discontent is still in its infancy, as evidenced by the fact that the only voices challenging Ciucă in internal meetings are Deputy Presidents Dan Motreanu and Rareș Bogdan, both with little power base within the party. No other local or central leaders, with significant

weight, join them, meaning there is no critical mass within the party to contest Ciucă, who is still strongly supported by President Klaus Iohannis. Nevertheless, Ciucă understands the potential danger, and there are already discussions within the party about a possible PNL congress in autumn where he would cement his position by being designated as the candidate for the presidential elections.

Secondly, the exchanges indicate the liberals’ fear of losing a substantial number of votes if they accept PSD’s proposals for tax and fee increases. Supported by economists such as Cristian Socol, Leonard Badea (BNR), and Liviu Voinea (IMF), Ciolacu has come to dominate discussions within the coalition on fiscal matters, and Ciucă often leaves these negotiations with PSD ideas. PNL has understood that accepting even half of PSD’s proposals for tax and fee increases would lead to huge losses.

Thirdly, there is PSD’s fear of the electoral consequences of the package of measures. Not coincidentally, Marcel Ciolacu refused to present the so-called reform of the budgetary system from the government headquarters and went to the Ministry of Finance, symbolically controlled by PNL. The Prime Minister quickly recited his speech for a few minutes and literally left the press conference, leaving PNL Minister Boloș to detail the measures impacting public sector employees. Furthermore, Ciolacu refused any dialogue with journalists and left quickly by car.

It is easy to understand why: any small reform in the public sector, with cuts to management positions and mergers of rather marginal institutions, will inevitably hit the party’s clientele with which PSD has filled the institutions to the brim. As such, Ciolacu and PSD will try their best not to get stuck with this issue and leave it in the hands of PNL. PNL, in turn, has a lot to lose because they have also placed tens of thousands of party clients in local and central administration, who are now worried about their salaries and positions.

There is another fear within PSD. That Ciucă could be replaced as PNL leader with a leader who has an anti-PSD discourse. Tudose explicitly stated this in his post, warning Nicolae Ciucă about this scenario. Marcel Ciolacu has already announced several times: if Ciucă is ousted from the leadership of PNL, a coalition breakup is likely. The PSD leader knows that almost any other leader besides Nicolae Ciucă would make a coalition improbable, even impossible, and this would mean that he would go home from the Victoria Palace and weaken his position within the party.

This is the current picture, with the ruling coalition navigating through shifting sands. And time is ticking away inexorably under the pressure of an urgent need to reduce the budget deficit. PSD and PNL must announce tax and fee increases next week. That will be the critical moment, the point where political tensions will boil over.