Romania’s government collapse is a trap with no easy exit

Problem

Romania no longer has a fully functioning government. On May 5th, a no-confidence vote initiated by the Social Democratic Party (PSD) and the far-right Alliance for the Union of Romanians (AUR) toppled reformist prime minister Ilie Bolojan. The PSD’s motive was to protect its grip on state patronage networks—but now no one wants the top job.

Whoever leads Romania’s next government will inherit a punishing fiscal situation. The country has the EU’s highest budget deficit and a reform programme that has triggered tax hikes, public-sector wage freezes and spending cuts. Meanwhile, the leu has fallen to a record low against the euro, meaning higher prices for imports, fuel and debt servicing on top of austerity measures and rising global oil prices. The prospect of a sovereign credit downgrade to junk is real. EU funding benchmarks are at risk.

All of this is unfolding on NATO’s eastern flank as Russia exploits social and political fractures across Europe to erode support for Ukraine, and attempts to weaken alliance resolve and democratic resilience. Meanwhile, Bucharest is due to host the B9 summit on May 13th and President Nicuşor Dan has already cancelled some Europe Day celebrations. The signal, however unintentional, is a damaging one.

Solution

European political families and institutions have limited leverage—but they should nonetheless act now to prevent Romania’s constitutional drift.

Europe’s Party of European Socialists has already expressed support for the PSD, despite the party willingly bringing down a pro-European government in alliance with the far-right to protect its patronage interests. High-profile European figures should now make it clear that a government accommodating anti-European forces will receive different treatment from Brussels than a government that is responsible and reform-oriented.

The European Commission should establish that Romania’s agreed reform path is non-negotiable, and that the political costs of deviation will fall on the party responsible for blocking it. Romania already stands to lose EU funds, market confidence and strategic influence due to prolonged instability, especially following the 2024 presidential election, which was annulled on account of Russian interference.

European partners should also engage Dan directly. He has the constitutional tools and mediation power to manage this transition, but needs political backing to resist being worn down. However, this is contingent on Dan reinforcing his commitment to a pro-Western government, ideally without trading short-term stability for long-term democratic backsliding. The AUR will be the sole winner if the “pro-European” coalition returns to government only to accelerate the populists’ rise in opposition.

Context

Legislators in Romania have voted 281 to four to remove Bolojan in a no-confidence motion jointly filed by the AUR and the PSD. The latter is a former member of the grand coalition with the Liberals and two other parties.

Romania’s constitution allows the president to appoint an interim prime minister for renewable 45-day periods, but a caretaker government cannot push through meaningful reform. AUR, now polling at around 36%, has every incentive to stay in opposition and continue its surge until the next election in 2028. PSD, for its part, wants access to state resources and political appointments, but not the responsibility for what comes next.

The four-party coalition formed in June 2025 was always fragile, held together primarily by a shared interest in keeping the far-right out of power. Throughout, the PSD maintained distance from fiscal reforms while limiting their scope, particularly where cuts threatened its networks of local administration appointments.