Well – it turns out cancelling an election doesn’t suddenly make the losing side more popular. Who could have guessed.
Romania’s May 4 presidential re-run thrust nationalist George Simion into a top position with 41 percent of the vote, well ahead of pro-EU candidate Nicușor Dan on 21 percent, setting up a showdown on May 18 that is reshaping the country’s political and economic calculus.
The immediate market verdict was brutal, but expected by anyone who has taken econ 101: the lei slid past the symbolic 5-per-euro barrier and kept falling to a record 5.12, its steepest three-day drop in decades, while ten-year bond yields spiked above seven percent, however unsurprising as rating agencies had previously warned of a possible downgrade (this could and likely will be a whole separate article). At first glance, such turmoil hardly looks like a magnet for foreign direct investment, yet the very forces unsettling investors and bureaucrats in Brussels could paradoxically lure more American money to Romania.
Precedent from Washington suggests polarization does not automatically kill business. American markets recoiled on election night in 2016, only to rebound as investors priced in tax cuts and deregulation. American outward investment slowed during the tariff battles of 2018 but ultimately shifted, not vanished, favoring jurisdictions that sat inside free-trade areas yet signaled political affinity with the Trump administration. Romania under Simion would tick both boxes: an EU customs system for seamless market access and a leadership eager to stay in Trump’s good graces, (American) NATO commitments included. It’s highly unlikely that Romania will leave the EU under Simion, considering he’s said that himself & Brussels definitely isn’t going to kick out one of their most compliant consumer markets.
Why a Simion Presidency Could Spur American Investment
President Trump’s April executive order on “reciprocal tariffs” codifies a strategy of mirroring foreign duties including VAT and adds new levies of up to 20 percent on a broad range of EU goods. Brussels has responded with draft counter-measures covering €95 billion worth of wide U.S. exports, from aircraft to bourbon. For multinationals that sell into Europe but depend on U.S. supply chains (including labor), the prospect of an escalating tariff war makes production sites inside the single market more valuable, especially if those sites sit in an EU member state led by a US-friendly, Brussels-skeptical president.
Simion styles his Alliance for the Union of Romanians (AUR) as “Trumpist before Trump,” (at least, that’s how I’ve been describing it to my fellow Americans) promising to ease tariffs and claims “our respective interests converge, presenting an opportune scenario whereby my potential presidency would significantly favor American investments and enterprises in Romania.”
He’s not wrong – as an American living in Romania, I would much prefer a pro-American AUR leadership over a socialist/pro-EU one. The European Union has been fairly aggressive in penalizing Americans doing business and living in Europe, especially since the COVID-19 lockdowns. I’ve provided an anecdote in several articles, in which the majority of American investors I’ve met over the years eventually call it quits and leave Europe because they’re tired of being treated like third-class citizens after investing millions, or tens of millions, into local economies. I’m certainly sick of it.
Romania’s electoral drama is therefore less an emerging-market cautionary tale than a test of strategic agility. This includes the citizen’s ability to just keep it together – if the average Romanians start to behave as American Republicans and Democrats do, Romanian society will collapse within twenty years – guaranteed.
Modern geopolitics fragments supply chains and trade rules, and thus it’s realistic that American companies may discover that the safest way to remain inside Europe is to plant capital where Brussels worries it could lose sway. Whether that bet pays off will hinge on the second-round vote, but also on how quickly corporate America rewrites its risk maps to turn Romania’s turbulence into a first-mover advantage. Until then, I’ll be sitting on the sidelines and parking my cash elsewhere for a little bit.