Romania names interim premier as turmoil deepens
Romania's liberal interior minister Catalin Predoiu has become interim premier, the presidency announced, a day after the prime minister's resignation deepened political tumult in the EU nation.
Romania's pro-EU Prime Minister Marcel Ciolacu stepped down yesterday after a far-right candidate topped the first round of a tense presidential vote rerun.
Far-right EU critic George Simion topped Sunday's election first round, while the ruling coalition's candidate narrowly lost out to Bucharest's mayor for the second spot.
Mr Ciolacu's resignation comes just two weeks ahead of the presidential vote runoff on 18 May in the EU and NATO member, which has gained in strategic importance since Russia invaded Ukraine, neighbouring Romania.
Mr Ciolacu said his Social Democrats (PSD) party would leave the ruling coalition but they are expected to remain in the government on an interim basis until after the election run-off.
Mr Predoiu, 56, is a former justice minister who already served as interim premier in 2012.
Mr Predoiu, who practiced as a lawyer in the past, is also the current interim president of the liberals (PNL).
He told reporters yesterday that the liberals have "sworn-in ministers in the government, they will carry out their duties".
"As long as these mandates are in office, the PNL does its duty," he said.
Closely watched rerun
In Sunday's first round, Mr Simion, who leads the nationalist AUR party, gained almost 41% of votes, double the score of the pro-EU Mayor Nicusor Dan, an independent.
A far-right victory in the second round - closely watched by Brussels and Washington - could mark a shift in the country's foreign policy.
The president represents Romania at EU and NATO summits and can veto EU votes. He also appoints the premier and other government posts.
Campaigning on a vow to put Romania first, Mr Simion, a fan of US President Donald Trump, has criticised "Brussels' unelected bureaucrats", accusing them of having meddled in the Romanian elections.
In December, Romania's constitutional court in a shock move scrapped the presidential ballot after far-right politician Calin Georgescu unexpectedly won the first round.
The annulment followed allegations of Russian interference and a massive TikTok campaign that emerged in favour of Mr Georgescu.
Mr Simion has called the annulment "a coup d'etat". Mr Georgescu was barred from the rerun but two major far-right parties decided to back Mr Simion instead.
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As G7 leaders converge on Kananaskis in the Canadian Rockies this weekend, the prospect of decisively tougher sanctions on Russia will loom large. The Ukraine War is reaching another inflection point: Vladimir Putin has intensified missile and drone attacks on Ukrainian cities and there are fears a Russian ground offensive is imminent. While President Trump has been publicly frustrated with Mr Putin's relentless attacks on civilian targets, he keeps deferring a tougher response. Over the next 10 days, a key NATO summit in The Hague, and a meeting of EU leaders in Brussels, will further clarify Mr Trump's intentions when it comes to Ukraine and the broader issue of European security. Supporters of Ukraine, therefore, are banking on harsher sanctions to convince Russia to move towards the 30-day ceasefire to which Ukraine has in principle already agreed. 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The idea was to ensure that the global south did not suffer from a complete ban (which would also have pushed up prices and therefore the Kremlin's revenues), whereas a cap would keep the oil flowing but with less benefit to Russia. 'Shadow fleet' The price cap was policed through the west's virtual monopoly on maritime insurance. To circumvent the cap, Russia began buying end-of-life vessels, effectively creating a parallel shipping network with dubious insurance - what became known as the "shadow fleet". The EU and G7 then sanctioned individual ships: the US hit 200 vessels, the EU 154 and the UK 177. As a result, ports became increasingly unwilling to let these oil tankers dock while flag states like Panama and Honduras were de-registering them (on Wednesday the EU added an additional 77 shadow fleet vessels to the sanctions list). Experts suggest Russia, which still gets one third of its export revenues from crude oil, is still finding ways to circumvent the price cap. 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India and Turkey imported 1.7 million barrels per day of Russian crude in the first quarter of 2025, according to LSEG data; EU member states imported more than 350,000 barrels from both countries in the same period. EU officials say the burden of proof would be switched to the exporting countries to show that the refined oil is not originally Russian, but that could be tricky. "The [European] Commission implementing such a ban would be difficult, given that refiners blend different types of crude oil," writes Warren Patterson, head of commodities strategy with ING. "Determining the origin of the crude oil becomes challenging." The Kremlin is publicly unperturbed. "Naturally, Russia has not been living under restrictions for just a day," spokesperson Dmitry Peskov said this week. "We have long operated under such conditions, which we continue to regard as unlawful. Russia has gained valuable and substantial experience that allows us to minimize the adverse effects of such measures." The Commission has also proposed cutting off a further 22 Russian banks from the Swift international payments system and converting the partial ban on financial institutions to a full ban. The 18th sanctions package could be agreed by the end of the month, with the usual caveat of potential objections by Hungary and Slovakia. Robert Fico, Slovakia's pro-Russian prime minister, has warned he would not support the package - which requires unanimity - unless the Commission provides a solution to the problems caused by a full phase out of Russia fuel. In reality, it has been the contradictory response by the Trump administration to the Ukraine War that has pushed the EU into launching what could be its toughest sanctions package yet. In Kyiv, on 10 May, the leaders of Ukraine, Britain, France, Germany and Poland had called on Russia - on the assumption they had the backing of the Trump administration - to agree to an immediate 30-day ceasefire or face massive sanctions. Instead, the US President enthusiastically backed a call by Vladimir Putin to start talks in Istanbul the following week (with no commitment to a ceasefire). Mr Putin refused to attend the talks, which were conducted by a low-level Russian delegation, and has since intensified air attacks while continuing to insist on his maximalist war aims. Moscow appears convinced that military gains and the demoralisation of the Ukrainian population are a better bet than ceasefires. "The aim of the [18th sanctions] package is to increase pressure on Russia and to make it agree to negotiate with sincere intentions," says Svitlana Taran, an analyst with the European Policy Centre (EPC). "At the moment Russia is engaging in negotiations, but without any real intention to actually negotiate. Russia still thinks that it can win. Moscow is confident they still have more potential to sustain a war of attrition against Ukraine than Ukraine does." In the absence of tougher action from the White House, US senators Lindsey Graham and Richard Blumenthal are currently pushing a bill through the Senate which would - if approved by President Trump - allow for tariffs of 500% on countries which are continuing to buy Russian crude oil, gas, uranium and other exports. The bill currently has 82 sponsors on both sides of the aisle with Graham - regarded as a weathervane on Republican sentiment towards Ukraine - and Blumenthal hopeful it can be adopted before the 4 July recess. Supporters of the bill complain that Mr Putin has been stringing the US president along and has no incentive to get to the negotiating table in the absence of tougher measures. 'Making astronomically high tariffs the center of US policy toward Russia's war is misguided' But the Sanctioning Russia Act (SRA2025) is not without its critics. President Trump would have to determine every 90 days that Mr Putin is refusing to negotiate a peace agreement at which point sanctions would be mandatory. These would be on President Putin himself, on Russian oligarchs and on banks and other financial institutions. But the most eye-catching element is the 500% tariffs on countries buying Russian crude oil. Since China is among the biggest purchasers, this would upend the current negotiations between Washington and Beijing on averting a damaging trade war. "Making astronomically high tariffs the center of US policy toward Russia's war is misguided: a threat that will never be carried out lacks real coercive power," argues Stephen Sestanovich of the Council on Foreign Relations. "And a bill that stops all trade with the United States' most important commercial partners is precisely that kind of threat." The authors of the bill insist it is designed precisely to focus minds and to convince Mr Putin that he cannot maintain his war effort for another two or three years. "Russia is in a very perilous state already economically, because 40 percent of its economy is devoted to war production or compensation for soldiers," Senator Blumenthal said during a recent visit to Kyiv. "It's only real source of revenue is oil and gas and other similar energy products, of which 70 percent is sold to India and China together." While Lindsey Graham stresses he has worked closely with the White House in formulating the bill, President Trump has been urging him to water down key aspects and has made his distaste for some of the elements clear. EU officials, while supportive of the need for tougher US pressure on Moscow, are aware of this. "I'm not convinced that the bill will be what gets adopted, even if Trump decides to put sanctions on Putin," says a senior EU source. "These bills in the Senate are notoriously aspirational until the White House gets at them and says: this is what's actually realistic. [Senator] Graham won't do anything without Trump's approval." Russian economy 'clearly heading toward zero growth' Yet, there is a growing body of opinion that this is precisely the time to hit the Russian economy. On paper, Moscow has weathered the sanctions well since 2022. While the economy contracted by 2.1% in 2022, there was economic growth in the following two years as Russia switched to a military economy, deepened trade links with China and India, availed of windfall fossil fuel profits and used its accumulated reserves as a buffer against the sharp decline in exports. This allowed Mr Putin to pour huge resources into military spending. Between 2011 and 2021 the defense budget averaged $53 billion per year. In 2022 it rose to $79 billion and $94 billion in 2023. Last year, defence spending soared to $140 billion, while this year it will eat up 32.2% of the federal budget. Such spending has allowed the Kremlin to mute popular unease about the war by boosting military salaries and social benefits, while buying off business elites. Pouring money into the military industrial complex has generated its own economic growth. However, there are strong indications that this formula is running out of road. Up to a million able-bodied Russians are thought to have left the country either in protest or to avoid being drafted, and while up to half have returned the civilian economy is deemed dangerously starved of labour. That has forced companies to boost salaries so they can compete with military pay, which in turn has fueled inflation. To cut inflation from its current rate of 10.2%, the Russian central bank has raised interest rates to over 20%. In March, President Putin called on his government not to strangle growth in its fight against inflation, while Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs, warned Russia was "clearly heading…toward zero growth." A report this week by the Centre for Strategic and International Studies (CISS) concludes that Russia has reached the limit of massive state spending on the military sector, with the side-effects of prolonged sanctions, soaring inflation and interest rates starting to bite. "Russia's current account remains the country's most glaring economic vulnerability," the report says. "A dramatic drop in export revenues, a surge in capital flight, or a further increase in the country's import costs, if timed fortuitously, could push Russia in the direction of a balance of payments crisis." 'Good-cop-bad-cop' tactics The growing frustration in Washington at the Kremlin's unrelenting assault on civilians appears to have prompted a change in heart. While the Biden administration steered clear of tough sanctions against Russia's energy sector until the very end of his tenure, and those countries filling Mr Putin's war coffers by buying its crude oil paid no penalty, there is today a change in mood. It is true that European countries which continue to rely on Russian oil could be caught up in the US tariffs. Lindsey Graham insists there will be exemptions for countries that have supported Ukraine's defence. A much tougher bipartisan response from Congress could provide President Trump with a 'good-cop-bad-cop' tactic to be used on Mr Putin, notwithstanding his tendency to cut the Russian president a very generous amount of slack. Brussels would prefer to act in tandem with Washington. However, observers point to Europe's complete oil embargo on Iran in 2009, and how it pushed the country to negotiate the 2015 nuclear deal, as an argument for going it alone. "Just as the EU oil embargo on Iran helped spur action in Washington a decade and a half ago, major new EU sanctions on Russia could do the same today," writes Edward Fishman, a former Obama administration official in Foreign Affairs. "Instead of waiting around for Mr Trump, Brussels should advance new penalties on Russia's energy sector. Even unilateral EU measures would tighten the screws on Moscow - and could prompt Washington to follow suit."
