Why Romania’s high-stakes presidential election is a pivotal moment

Good morning. Today could mark a decisive moment in the Ukraine war, as Russian and Ukrainian delegations meet in Istanbul. Or it could not.

Our Balkans correspondent previews Sunday’s election in Romania, where geopolitical alignment and economic stability are both at stake. And France’s trade minister takes the pulse of negotiations with the US with our trade correspondent.

Have a wonderful weekend.

Darkening horizon

“Pivotal moment” is an understatement for what Romania will go through this weekend, as the country decides between two starkly different presidential candidates: the centrist, pro-EU mayor of Bucharest Nicuşor Dan, and the ultranationalist rising star George Simion, writes Marton Dunai.

Context: Far-right candidate Călin Georgescu won the first round of Romania’s presidential elections in November, forcing an unprecedented annulment of the vote when it turned out that he had enjoyed clandestine backing from Russia and lied about his campaign. He was banned from running again.

The repeat vote, which enters its run-off on Sunday, elevated Simion to pole position.

Romania’s semi-presidential system offers the country’s head of state a crucial seat on the European Council, as well as a key role in government formation, leadership of the armed forces and the secret services, and the final say on foreign policy.

That would hand Simion, who is banned from entering neighbouring Ukraine and Moldova over statements and activities deemed subversive, significant power.

He represents a style of EU antagonism that has been the hallmark of Hungarian premier Viktor Orbán, who has endorsed Simion, much to the dismay of Romania’s ethnic Hungarian minority, which fears Simion’s virulent chauvinism.

Simion has sought to allay such fears with promises to keep the country in the EU and Nato, and attempts to seek international alliances with leaders from Orbán and Italy’s Giorgia Meloni all the way to Donald Trump.

Still, markets were jolted when Simion received 41 per cent of votes in the first round. The national currency fell below the level of 5 leu per euro for the first time, and a debt auction had to be postponed.

Expect more turbulence if Simion wins — a scenario markets are already bracing for with an eye on the country’s debt rating, one notch above junk with a negative outlook.

In addition to those issues, the coalition government formed by establishment parties fell apart after their defeat in the first round, leaving the tough talks to recreate a ruling majority to the new president.

Chart du jour: Deeper pockets

Germany’s new government has signalled it will follow Donald Trump’s demand for Nato members to raise defence spending to 5 per cent of GDP. This comes as Nato’s procurement arm is embroiled in a corruption probe.

Talking shop

The US and EU are finally getting down to business on tariff negotiations, EU trade ministers heard yesterday, as they approach the halfway stage of a 90-day truce in Donald Trump’s trade war, writes Andy Bounds.

Context: US President Trump hit Brussels with 20 per cent tariffs in April, and then halved them to 10 per cent until July 8 while they negotiate a deal. The US also imposed a 25 per cent levy on steel, aluminium and cars, and threatened more measures.

Speaking on arrival at a trade ministers meeting yesterday, EU trade commissioner Maroš Šefčovič said talks were going to “intensify”, and that he was speaking to his Washington counterparts daily.

Several EU ministers said that the deal the UK made with the US, accepting so-called reciprocal tariffs of 10 per cent in exchange for some relief from sectoral tariffs, was not a model they would replicate.

“Why would there be 20 or 10 per cent reciprocal tariffs? On what basis?” French trade minister Laurent Saint-Martin told journalists.

Saint-Martin, who a month ago was calling for swift retaliation, now is happy with Šefčovič’s more cautious strategy. But he also noted that Trump was de-escalating with China, which had been playing hardball, after their stand-off put pressure on the economy and the stock market.

The EU has paused its retaliatory tariffs on €21bn in goods because of the ongoing negotiations. Paris had lobbied successfully to remove bourbon whiskey from the list, fearing Trump would hit its wine and spirits exports in exchange.

The European Commission has now added it to the next €95bn retaliation package, which must be approved by member states. Saint-Martin did not say whether France would try to remove it again.

But he said the EU would not bow to US pressure to scrap VAT or weaken EU rules. “We have to be consistent in our convictions, in what we defend and what we want to seek at the end of the negotiations.”

What to watch today

1. European leaders attend the European Political Community summit in Tirana, Albania.

2. Defence ministers from Italy, the UK, Germany, Poland and France meet in Rome.

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