The last few months have seen Romanian politics in disarray. Wider questions are now being asked by investors about their longer-term options, and whether the criminal investigation into Călin Georgescu signals a return to stability or whether it is a sign of further political turmoil to come.
The criminal investigation launched by Romanian prosecutors into Călin Georgescu could mean one of two things.
Either this is a return to Romania’s usual stability, which has seen the country make major strides over the past decade, tackling corruption, increasing foreign investment, and creating closer financial and diplomatic ties with the EU.
Or, this is a turning point in Romanian politics and a sign that further political unrest will not be too far behind. With the election rerun anticipated for May, there is still plenty of opportunity for further developments, in what has been a tumultuous few months.
Investors will be monitoring the situation closely to see whether Romania is worth the gamble.
According to SeeNews, the number of new businesses with foreign owners established in Romania dropped by 13.2% in 2024. Given the current political situation, it is possible that this figure has fallen further in 2025.
Similarly, Fitch Ratings, a US provider of credit ratings and research for global capital markets, recently revised its outlook on Romania from ‘Stable’ to ‘Negative’, citing political uncertainty, large budget deficits and increasing public debt as reasons behind the change.
All this is bad news for a country where FDI amounts for 38.4% of the country’s GDP. If investors begin to pull out of the country, the economy could begin to spiral too.
Whatever the outcome of the elections in May, the most important thing to secure Romania’s economy will be a return to stability, a clear policy direction, and certainty for investors.
But Romania’s government should not be waiting until May to send these positive signals and should not be seen as a lame duck government.
It can, and should, be taking steps to shore up investor confidence well ahead of the election.
While it is true that larger strategic positioning efforts, such as closer alignment and integration with the EU, are unlikely to happen before the election, Romania needs a ‘quick win’.
This could include securing a major investment deal with a Western company. Whilst providing obvious benefits to Romania in terms of jobs and taxes, it would also show Romania’s determination to closely associate itself with the West and integrate with the European economy.
The Invest Romania programme lists Renault, Procter&Gamble, and Microsoft as some of its leading success stories, but adding another serious name to this list would help to give smaller businesses the confidence either to invest, or simply not to pull their money out.
Another option would be to evidence its commitment to enforcing international standards. Institutions like the International Centre for Settlement of Investment Disputes (ICSID) give businesses the confidence they need to invest, knowing that international investment treaties and investment laws will be upheld.
Romania has eight pending cases with ICSID, with several awaiting payment. Petrochemical Holding GmbH won an arbitration enforcement with ICSID against Romania in November 2024 and is awaiting compensation for the award. The €85 million sum is easily payable by Romania, and a cheap way to signal Romania’s commitment to investment.
In addition to this, by paying this promptly, Romania would signal to international investors that it was determined to uphold the rule of law, despite the political turmoil. This would help to secure investor confidence ahead of a period of significant instability.
Romania still has serious growth opportunities, despite current challenges, and its history shows what periods of political stability and clear policy direction can bring.
With Romanians, the international community, and investors monitoring political developments in the country, what all are hoping for is a degree of clarity in approach. Ideally, this should happen sooner rather than later, with any change in investment having a serious knock-on impact on Romania’s GDP.
Whether Romania is still open for business remains to be seen. However, whatever happens next in the current political saga, it is sure to have reverberations on Romania’s economy, as well as its politics.
