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Romanian government is latest victim of EU austerity

April 27, 2012 | 12:37 pm

Romania
Romania's government fell after a no-confidence vote and the leadership of the Czech Republic narrowly survived a similar challenge Friday in the latest challenges to European efforts to heal the Continent's debt crisis with tough spending cuts and higher taxes.

Jobless rates also rose this week in Spain and France, where austerity measures are angering citizens and undermining faith in the government officials trying to balance budgets and shore up the euro common currency.

The governments of Ireland, Portugal, Greece, Italy, Spain, Slovenia, Slovakia and Finland already have fallen as the European Union struggles to restore economic stability to its 27 member states. Now, the  Romanian parliament by a narrow margin has declared no confidence in the 2-month-old leadership of Prime Minister Mihai Razvan Ungureanu.

Romanian opposition to belt-tightening swelled to an intensity not seen since the 1989 pro-democracy revolution as the government boosted a sales tax to 24% and cut the salaries of government workers. The spending constraints are an attempt to satisfy conditions imposed after a 2009 bailout by the European Union, the International Monetary Fund and the World Bank.

President Traian Basescu later nominated opposition leader Victor Ponta to succeed Ungureanu, the national news agency Agerpres reported. Ponta, 39, had been a critic of government actions that have hit Romanian civil servants with major pay cuts and raised the cost of living for many others. He will have to submit his own proposal to parliament for meeting the country's bailout obligations.

In Prague, where the Czech Republic's three-party coalition collapsed earlier this week, Prime Minister Petr Necas won grudging endorsement to continue his program of tax hikes and spending cuts on services including higher education, pensions and healthcare. Necas won 105 votes from 198 deputies after a nine-hour debate dominated by critics demanding his resignation and early elections, the CTK news agency reported.

Some lawmakers who defected last week nonetheless stood by Necas, heeding the warnings of respected economists that essential austerity measures will only be more painful if postponed.

More than 100,000 people protested the cuts at a rally in Prague a week ago, one of the largest outpourings of discontent since the Velvet Revolution that ended Communist rule 22 years ago. 

Hungary's economy is also hobbled by a credit crunch, and Prime Minister Viktor Orban urged the IMF on Friday to swiftly negotiate an emergency borrowing option for Budapest in case of turmoil in the European bond market.

The Netherlands was at risk of missing the EU's budget-deficit target for a fifth year before the government of Prime Minister Mark Rutte cut a deal with the opposition this week that will keep austerity measures in place until new elections in September. 

Both Greece and France are in the throes of heated election campaigns in which opposition candidates are gaining traction because of hardships brought about by budget-balancing measures.

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-- Carol J. Williams

Photo: Romanian Prime Minister Mihai Razvan Ungureanu at the parliament session in Bucharest Friday that ousted his government with a no-confidence vote. Credit: Vadim Ghirda / Associated Press

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