ROMANIA'S centrist government faces huge pressure to water down plans to slash public sector wages and state pensions, essential to secure IMF-led aid, and will struggle to force some of the painful measures through. President Traian Basescu promised the cuts as an alternative to hiking taxes in the recession-hit economy, trying to meet International Monetary Fund requirements for the release of the next tranche of loans in a 20 billion euro rescue package. Romania, the European Union's second-poorest member, has pledged to reform its sprawling and highly-unionised public sector which accounts for one-third of all jobs. “These cuts are heavy ammunition for trade unions and the population,” said independent political analyst Cristian Patrasconiu. “If people take to the streets in big numbers, the government would bow...and soften the measures eventually.” Powerful unions of teachers, doctors and civil servants have threatened a wave of mass strikes, raising the spectre of debt-ridden Greece. The cabinet still has to negotiate passage through parliament and probable legal challenges. Trade union leaders say up to 60,000 could protest in Bucharest on Wednesday, which would be one of the biggest rallies in Romania since the fall of communism in 1989, casting doubt on the austerity plan and the economy's recovery hopes. Union sources say blocking public transport, including road and rail networks, from later this month could be a convincing way to force the government to soften its plans to cut wages by 25 percent and pensions by 15 percent from June 1. Another Greece? Wary of stoking public unrest similar to that which caused rioting and deaths in the late 1990s Asia crisis, the IMF has taken pains to focus on the social aspect of reforms. But aid packages across the region have hit groups such as retirees and state workers, causing outcry in countries like Greece, which has been rocked by violent protests and strikes. Some unionists and protestors raise the spectre of similar action in Romania. “I am willing to fight in the streets ... what more can I lose?” said 46-year-old Gabriela Carlan, a kindergarten assistant dressed in black during a teachers rally in Bucharest. “Eventually, the situation will evolve to street violence because we can't tell our children we have no food to put on the table,” said Valentina Apostol, a 40-year-old nurse from Buftea, a town near Bucharest. “It will be like it was in the 1989 revolution and people will end up dying on the streets. We are practically living worse than in the communist era.” Although it joined the EU in 2007, Romania has since struggled to transform itself into an open economy and is the bloc's most corrupt state alongside Bulgaria and Greece, according to anti-graft watchdog Transparency International. In a report due over the next few months, the EU is expected to criticise Romania's corruption levels and shortcomings in its justicial system which analysts have said hinder genuine change in a bloated public sector marred by cronyism. Economists said failure to enforce the cuts may lead to renegotiation of the IMF deal and bring tax hikes. “Failing to implement these cuts or their partial implementation will clearly bring higher taxes ... they can affect Romania's recovery in 2010 and 2011,” said Nicolaie Alexandru-Chidesciuc, chief economist at ING Bank in Bucharest. Painful cuts Parliament would likely rubber stamp the cuts but the government could face further legal obstacles to its bid to rein in a yawning fiscal decicit. The constitutional court is seen blocking plans to cut pensions from an average 170 euros per month, as happened with IMF-backed cuts in Latvia. Economists say the arguments could easily undermine Romania's efforts to kick-start its recession-hit economy, which contracted more than 7 percent in 2009. “Chances for the cuts to materialise are a bit above 50 percent. The court can be a brake to reforms,” said independent political analyst Bogdan Teodorescu. “If we see no (backup) measures, such as tax hikes, economic collapse is what I see on horizon for Romania.” The government will probably continue talks with unions through this week and could even end up reviewing its plans, Prime Minister Emil Boc's economic adviser said on Tuesday. “We are still negotiating ... I am not Nostradamus to say how this will end up. Any major change to the plan would need to be discussed again with the Fund,” Andreea Vass said.
