After months of political crisis and economic uncertainty, Nicușor Dan, Romania's fifth democratically elected president, was officially sworn in last week. Although his five-year term formally began at that moment, he had already been in talks with the heads of key institutions to gain a clear picture of the country's current state. Since the country has had a caretaker government in place since May 5, most executive power is concentrated in the president's hands. However, the domestic and foreign policy legacy of the previous administration presents numerous challenges for Nicușor.
Author: Balázs Vencz / foreign-policy analyst /
Domestic Political Challenges
Although Romania's economic performance has been strong in recent years, the two-year election campaign period exhausted national resources. Overspending caused public debt to surge to about 55% of GDP by the end of 2024, with the budget deficit reaching 8–9% of GDP—one of the highest in the EU. While Moody’s international credit rating agency has not yet downgraded Romania—maintaining its Baa3 investment-grade status—it has warned investors of a likely downgrade, changing the country's outlook from stable to negative. Moody’s is particularly concerned that political instability and the high deficit will render the current debt trajectory unsustainable.
Acting president Ilie Bolojan—who assumed interim presidential duties following Klaus Iohannis’s resignation—frequently addressed this issue, stating, "We’ve been spending more than we can afford for years," and emphasised that maintaining Romania’s credit rating is crucial for investor and lender confidence as well as sustainable economic growth.
The government that dissolved on May 5 had taken steps to reduce the deficit, but avoided introducing drastic measures due to the ongoing election campaign. Finance Minister Tánczos Barna confirmed after a meeting in Washington that Romania remains committed to reducing the deficit and promoting investment, maintaining close cooperation with international financial institutions. He noted that in the first quarter of 2025, nearly 25 billion lei were spent on investments—10% more than in the previous year.
Given this situation, Nicușor has prioritised the swift formation of a new government. During his campaign, he repeatedly stated that he would like to see Ilie Bolojan as Prime Minister, although the final decision is not solely his. Coalition negotiations are underway, but the parliamentary balance of power has become even more fragmented after the late-2024 parliamentary elections, complicating the formation of a new coalition. The Social Democratic Party (PSD) remains the strongest party, but achieved its worst result in 35 years in last December’s elections. The National Liberal Party (PNL), another historical party, dropped to third place, and all parties have ruled out cooperating with the far-right AUR.
Since the PSD left the coalition on May 5, it is far from certain they are willing to govern during a period requiring draconian austerity measures to address the budget deficit. The PSD has also struggled to manage a decline in its voter base. Party leader Marcel Ciolacu pursued a centrist agenda, but most of the party and its supporters sympathise with AUR’s Eurosceptic and anti-Western rhetoric. In the most recent presidential election, Simion won big in counties that traditionally supported the PSD, a trend also seen in the December parliamentary elections. The PSD’s grand coalition with the PNL was met with mixed public reception, widely seen as a political compromise, leading to declining support for both parties during 2020–2024.
Nonetheless, PSD participation in the new government cannot be ruled out. As the largest parliamentary faction, there is an expectation of political responsibility, particularly during a crisis. Some analysts believe the PSD’s apparent reluctance to govern is more a form of political bargaining aimed at improving their negotiating position in a future coalition.
Several scenarios are possible: a minority government led by the PNL with external support from parties like the RMDSZ and USR; or a technocratic, expert-led cabinet to ensure political stability and address pressing economic challenges in the interim.
In this context, the president’s role is crucial. The constitution grants him the authority to determine the order in which prime ministerial candidates are nominated, and the presidency holds moral weight in encouraging compromise. Dan has made clear that he envisions a pro-Western, European-oriented government that rejects extremist influences.
Another major domestic issue in which the president will play a key role is the appointment of two new Constitutional Court judges, as the terms of two current members are expiring. The nine-member court is one-third appointed by the sitting president for nine-year terms. The court's political and economic ties have sparked controversy, especially after the annulment of the first round of last December’s presidential election. Many suspect political manoeuvring, not without reason. Major parties aim to appoint judges likely to issue favourable rulings. Nicușor has pledged to choose impartial, professionally respected individuals rather than party loyalists, but their selection may still be hotly debated in a politically charged environment, particularly as AUR seeks to bolster its anti-elite image.
Foreign and Security Policy Challenges and Goals
With the inauguration of the new president, a new chapter begins in Romania’s foreign and security policy. Although the core strategic direction remains unchanged—the 2020–2024 National Defence Strategy already emphasised Romania's regional role and defined the country as a "pillar of stability" in Southeast Europe—the strategy was developed before the escalation of the Russia–Ukraine war.
Given historical concerns, Bucharest is determined that Russian military ambitions in the Black Sea region must not succeed, as they threaten both free navigation and coastal natural gas extraction. If the Russian Federation were to gain control of Ukraine’s entire coastline, it could exert direct pressure on Romania.
In response, Romania has taken bold military steps, initiating development at the Mihail Kogălniceanu base near Constanța. Expansion of the airbase began in 2022 and involves long-term investments of around €2.5 billion. The construction of runways, hangars, barracks, and training centres will create one of Europe’s largest NATO bases in southeastern Romania—an area where several drones and missiles have struck in recent years.
The Romanian Ministry of Defence has made it clear that base development will continue regardless of any shifts in U.S. strategic priorities in the region. NATO forces are already present at Kogălniceanu on a rotational basis, with American, French, Belgian, Italian, and other allied troops stationed there. Since 2022, a French-led multinational battle group has been deployed in Romania, and the French air force regularly patrols Romanian airspace.
Romania's national security doctrine, which prioritises the Russian threat, also includes stabilising neighbouring Moldova and supporting its Euro-Atlantic integration. In his inauguration speech, Nicușor Dan addressed neighbours across the Prut River, declaring that “Moldova’s primary goal is EU integration, and Romania has a duty to support this by all means.” Moldova currently holds EU candidate status and aims for accession by 2030. Alongside other European powers, Bucharest actively helps Chișinău carry out necessary institutional and economic reforms and adopt EU legislation. The new Romanian president underscored his "unwavering commitment" to Moldova in areas such as energy security—Romania exports electricity and gas to Moldova, reducing Russian leverage—and strengthening democratic institutions.
Against this backdrop, the first major military-diplomatic event where Nicușor will represent Romania is of crucial importance. At the NATO summit in The Hague from 24–26 June, key topics may include strengthening the eastern flank, reassessing strategy against the Russian threat, and reorganising support for Ukraine. Although strategic guidelines were already established at the 2024 Washington summit, the new U.S. administration is expected to bring new expectations and approaches, likely including increased defence spending.
Romania’s goal at The Hague summit is to secure greater NATO attention to the Black Sea region. A concrete initiative may be the establishment of an integrated regional NATO command in Romania, which would symbolise the region’s strategic importance. Romania is also expected to advocate for a unified NATO approach to hybrid threats—such as disinformation and cyberattacks—that Russia uses to destabilise the region. Given the close cooperation between Bucharest and Washington in the energy sector, and the vulnerability of energy infrastructure to such attacks, this initiative may have a strong chance of success.
In summary, Romania’s new president will have no shortage of challenges in the early part of his mandate. Domestically, the priority is restoring economic balance and public trust; internationally, it is enhancing national security and Romania’s international standing in the shadow of the Russia–Ukraine war. Yet these challenges also present opportunities: a president with strong legitimacy can drive reform in a country facing no elections for the next four years and enjoying relative political stability.