Romanian government collapses after ten months of austerity – but Europe demands more!

In the 2025 Romanian elections, the establishment, backed by the EU politicians and intelligence services, pulled out all the stops to prevent the insurgent anti-EU populist Călin Georgescu from getting in. The first election was overturned, and Georgescu, the winner, was arrested and banned from running again on the pretext of alleged ‘Russian interference’.

When pro-EU Nicușor Dan won against the Alliance for the Union of Romanians (AUR) – the party that captured the anti-establishment momentum in the second round – liberals across the continent hailed it as a “vote for stability and the West”. 

But ‘the West’ does not come free. Since then, the EU has pressured its man in Bucharest to cut billions and spend billions remilitarising. As a result, just 10 months later, the government has collapsed. 

Now, with the economy on the cliff-edge, the government is crippled, and the AUR has been strengthened. Yet the EU is still demanding its pound of flesh. 

This contradiction – between political and economic stability, between the demands of the rich and the tolerance of the poor; between the classes – is far from unique to Romania. It is fuelling political instability and social unrest across the whole continent.

EU: lifeline in one hand, scissors in the other

Romania was pulled into the EU in 2007 and transformed into a platform for cheap labour. It was, for a time, an economic success story. But that was built on credit, remittances, and billions in EU funding, of which Romania is today the second-largest recipient. EU funds make up over 18 percent of its entire GDP. 

But the ‘Romanian tiger’ is long dead. With foreign investment in retreat, industry in decline, and the economy stagnating, successive governments have resorted to borrowing huge amounts to preserve social peace. Romania now runs the largest budget deficit in the EU, at 9.3 percent of GDP a year – three times Europe’s ‘acceptable limit’. 

With war on the continent and European member states tipping into crisis and bankruptcy, the EU and America can no longer afford such generosity. They demand Romania pay its way, by buying more guns and less butter.

Economically, the EU threatens to withdraw tens of billions in vitally important modernisation and development funds unless it can hack the deficit down to size, and fast. Losing this money would be devastating. Romania's financial situation is already perilous: all three international creditor agencies have warned that they will downgrade Romania’s credit rating to junk if it can’t ‘restore confidence’, and its bond yields (the cost of government borrowing) are the highest in Europe. Such an economic blow would send the economy spiralling towards bankruptcy.

Nicușor Dan was more than happy to oblige. He pledged to transform Romania into the second-most-military-power in Eastern Europe by raising defence spending to 3 percent of GDP.

Militarily, Romania is on the West’s eastern frontier against Russia. It will soon be home to Europe's largest NATO base and acts as a key transit route for weapons to Ukraine. But now America is attempting to retrench to anywhere but Europe: the first step in Trump's European drawdown was to pull 1,000 troops out of Romania. Dan has tried to convince the American umbrella to stay by sidling up to Trump: he offered up Romania’s bases for the destruction of Iran and called for a permanent US troop presence. But at the end of the day, American withdrawal means that Romania will have to foot the bill instead.

The EU has, in this case, generously agreed to exempt defence spending from its deficit calculations… up to 1.5 percent of GDP. The rest must be paid for with cuts elsewhere. 

An arm and a leg for the West

Nicușor Dan was more than happy to oblige. He pledged to transform Romania into the second-most-military-power in Eastern Europe by raising defence spending to 3 percent of GDP. Simultaneously, as he candidly explained during the election: 

“Put simply… the Romanian state is spending more than it can afford… It is in the national interest for Romania to send a message of stability to financial markets.”

In order to satisfy these vultures, public sector wages and pensions were frozen and conditions slashed. While taxes on companies making over €50 million were halved, VAT was raised by 20 percent, and – amid the ‘worst energy crisis in history’ – household electricity caps were scrapped. In consequence, inflation has shot up to ten percent, the highest in Europe.

Meanwhile, defence spending has risen 34 percent, and the EU – which threatens to starve Romania unless it cuts welfare – has gleefully signed the country on to a €13 billion SAFE loan to spend on war machines and aid to Ukraine.

These measures led to unrest nationally. In September, teachers organised national demonstrations and a boycott as class sizes and working hours were increased, and all schools with fewer than 500 pupils were closed. In February, 1,300 mayoral offices launched a ‘warning strike’ over plans to cut one-fifth of all civil service jobs. If the cuts go further, Romania's trade unions – particularly the healthcare and education unions – are threatening a general strike.

Government maimed

All that pressure was too much for the Social Democratic Party (PSD), Romania’s largest party, to bear. Last month, they withdrew from the governing coalition and, two weeks ago, broke the ‘anti-far-right firewall’ by supporting the AUR’s motion of no confidence: ‘STOP the Bolojan Plan of destroying the economy’. Dan’s Prime Minister, Bolojan, was toppled with just two votes against.

Of course, this was not out of any softness of heart – the PSD is Romania’s former corrupt, austerity party and has happily put its signature to every cut and bullet so far. They were only pushed into opposition because Bolojan tried to direct his cuts at the state industries, which the PSD uses to deal out patronage. They have since offered to help form a pro-EU government, just without Bolojan as PM.

Dan’s Prime Minister, Bolojan, was toppled with just two votes against. He was the most popular figure in the coalition.

The damage had already been done. On the day of the vote, the Romanian leu plummeted to its lowest ever level against the Euro. Dan, on manoeuvres with the EU in Armenia, ruled out snap elections and insisted that the right-wing populists would stay well away from power:

“Regardless of what happens… Romania will continue to maintain its Western course… there is agreement on SAFE and the PNRR"

But that is easier said than done. Bolojan was the most popular figure in the coalition, three times more popular than the leader of the PSD! With no majority in Parliament, President Dan, desperately trying to cobble together some new combination of the discredited establishment parties, is now warning it could take up to July. Whoever stumbles into power next will be even weaker and even more hated.

The question of EU funds still hangs over Romania like Damocles’ sword. For all this political pain, Bolojan’s brutal ‘medicine’ only succeeded in shaving a grand total of 1.4 percent from the deficit. This is a drop in the ocean. 

The EU wants more. If Romania doesn’t cut another €11 billion by August, it will withhold 10 billion in funding – equivalent to 6 percent of Romania’s yearly GDP. But to do that, Romania needs political stability. Finance Minister Nazare urged: 

“We have to convince Romanians, international financiers and the Commission to come together in this effort to avoid a [sovereign rating] downgrade that would trigger a more complicated and more painful situation for Romania,” 

But the whole point is that they cannot come together. The Commission and international financiers want Romania to be governed against the people. Their programme is precisely what is undermining political stability, and the more the government continues to impose it – as the EU is forcing it to do – the more it will undermine itself and its firewall.

What next?

Seven in ten Romanians are dissatisfied with President Dan. 56 percent want an early election. If that were to happen – the establishment will fight it – the AUR would undoubtedly come out strongest. Their popularity has doubled since the last election. Is it any wonder? They are the only visible alternative standing outside this grand ‘EU-and-austerity’ coalition. 

Their demagogy has been seemingly proven right by the last 10 months. The EU has made a mockery of Romanian ‘democracy’. As AUR leader George Simion put it, voters wanted “water, food, energy” and got “taxes, war and poverty.” As for corruption, President Dan himself was forced to confess:

“Romania is a corrupt country, and Romanians are right when they say they do not see a will from the state to fight corruption...”

But in power, what could the AUR offer? It is a reactionary, culture war party. It’s ‘Romania First’ nationalism really consists in swapping “the LGBT flag and Alex Soros” for “oil drillers from Texas” – in other words, Europe for America. 

In power, it would be in the same bind. Romania really does depend on the EU and foreign investors. Were the AUR serious about leaving Europe – it is not – it would have to wave goodbye to about one fifth of its GDP. Otherwise, it must cut.

Cuts or no, capitalist Romania is heading for economic disaster. Whoever comes to power will force the poor to pay the bill. It is only a matter of time before things explode. 

As for the EU, its vicious, undemocratic policy has accelerated the fragmentation it was trying to prevent. It has destabilised the Romanian government further, and – by exposing what European ‘values’ mean and cost – is feeding the mass, anti-EU feeling it initially intervened against.

But this is not just a problem of Europe's periphery. Romania only has a particularly advanced strain of an all-European sickness. All the governments of the continent are facing economic disaster. All of them are being compelled to cut and to rearm. And all of them are discovering that the masses cannot bear what the markets demand. Today, that contradiction is expressed in the rise of right-wing populist parties. Tomorrow, it will mean revolution.