Romania’s political crisis gets 6-month truce as new government formed

Romania ended five months of political paralysis Tuesday with its parliament voting in Luca Niculescu as prime minister after three failed attempts to form a government — but the deal comes with a six-month deadline for the parties to strike a more lasting agreement.

The threat of snap elections, which would likely see the populist right-wing Alliance for the Union of Romanians (AUR) party surge, helped push the center-right National Liberal Party (PNL) and the center-left Social Democrats (PSD) to agree on a government led by independent Niculescu, a former journalist and diplomat who was nominated as prime minister by moderate President Nicușor Dan earlier this month. The socialists will join the cabinet, but the liberals will stay out.

Romania has the sixth-largest population in the EU and plays a critical role in NATO’s defense of southeastern Europe as home to a major military base and a U.S. missile shield site. The country has been plagued by political instability and a mushrooming budget deficit in recent years, fueling a surge in support for hard-right nationalist politics.

The new deal keeping the government afloat expires in six months, and parties will need to renegotiate the pact with no agreement yet on what comes next.

During this period, the Social Democrats will try to pass an investment-focused 2027 budget by the end of November, steering Bucharest away from austerity, party leader Sorin Grindeanu told POLITICO Playbook Capitals in an interview.

“Romania needs an economic recovery plan, not austerity,” he said. “Our priorities are protecting purchasing power and supporting business, restarting public investment, and improving essential public services.” Grindeanu added that he aims to revise the 2026 budget by the end of October and to fast-track implementation of EU projects to unblock funds.

The Social Democrats in May teamed up with AUR to topple the coalition government led by centrists and centre-right liberals, as unpopular debt-cutting reforms drove Social Democrat voters toward the populist right. PNL and USR have refused to govern with the Social Democrats again.

The formation of the new government makes snap elections harder to trigger once the six-month deal expires, as Romania’s constitution requires two failed attempts to install a government before Parliament can be dissolved.

Grindeanu hopes to persuade his former coalition partners to reunite in six months, but with a different economic program. Fearing an uptick in support for the far right, he wants to avoid further cuts.

But the pivot away from austerity puts him at odds with the PNL, which has defended fiscal restraint. The PNL refused to sign a detailed coalition program, Grindeanu said, forcing the administration to cobble together support vote by vote over the next six months.

Grindeanu distinguished between parliamentary votes and lasting alliances, and said he won’t seek a pact with AUR, citing deep disagreements over Europe and national security. He said he rejected an offer from AUR to back a €300 million social spending package during negotiations over the 2026 budget, after the far-right party demanded PSD’s support on another, unspecified issue in return. Instead, he waited to find a compromise with PNL.

“Until I will stay in this position, PSD will not have any agreement with AUR,” he vowed.