Romania's president picks as PM man who tried to oust him

(BUCHAREST) - Romanian President Traian Basescu on Monday re-appointed as prime minister the man who tried to impeach him earlier this year, averting the risk of fresh a political crisis in one of the European Union's newest states.

The return of Victor Ponta as Romania's premier follows December 9 parliamentary elections, when his ruling centre-left Social-Liberal Union (USL) secured 60 percent of the vote -- faring far better than the 17 or so percent won by the Basescu's Right Romania Alliance (ARD).

"Noting that political parties called in for talks on Monday came with a single proposal for the new prime minister, President Traian Basescu has named Victor Ponta as designated premier," a statement from the presidency said.

Ponta now has 10 days to form a new government and for it to be endorsed by the new parliament, but he said he would be ready to submit the new lineup on Thursday.

"On Friday morning, we can have the confidence vote and if the government is approved the swearing-in ceremony can take place in the evening," he said.

He added his nomination reflected the will of Romanian voters and hailed a "return to normality" in political life.

Tensions between Ponta and Basescu have simmered since the USL and Ponta led a failed attempt to impeach Basescu this summer. The move drew sharp rebukes from Washington and the European Union.

Basescu hinted during the campaign that he would not reappoint Ponta, calling him a "mythomaniac" and casting doubt on his European credentials.

Analysts however warned that Basescu risked prolonging the political crisis if he refused to re-appoint Ponta after the USL coalition's clear victory.

On Friday, even before Ponta's reappointment, the president of the European Commission Jose Manuel Barroso said he was "looking forward to working with Prime Minister Ponta and President Basescu in the coming years."

Basescu announced Ponta's re-appointment through relatively low-key means -- a press release. Observers said this indicated his lack of enthusiasm towards the appointment, as prime ministerial picks are often announced at press conferences.

Despite winning a large majority in parliament, Ponta must cohabit with Basescu, whose term runs until December 2014.

His government is expected to include ministers from the three parties allied in the USL -- the Social Democrats, the Liberals and the Conservatives.

Ponta failed to convince his Liberal allies to accept ministers from the Hungarian minority's party, the UDMR, in the new governement.

The new government's first task will be to outline a budget for 2013.

Romania, the EU's second-poorest member after Bulgaria, is struggling to recover from one of Europe's most painful austerity drives.

The average monthly wage currently stands at 350 euros ($450) and about three million Romanians have emigrated looking for jobs and better living conditions elsewhere.

Meanwhile, the 2012 growth forecast was revised down to 0.7 percent from 1.7 percent.

Romania hopes to negotiate a new deal with the IMF in the coming months after getting a 20-billion-euro lifeline in 2009 and a five-billion-euro precautionary loan in 2011.

Romania joined the EU in 2007 and is closely monitored by the bloc as it clamps down on corruption.

The government's next critical test on this issue will be the appointment of the new anti-corruption prosecutor.

The US last week said it expects strategic ally Romania to stick to its rule of law and IMF commitments in order to avoid a "replay" of the summer's political crisis.

Ponta has pledged to respect the rule of law.