BUCHAREST (Reuters) - Prime Minister Victor Ponta's governing alliance has won more than two-thirds of parliamentary seats, which could make it easier for him to curb the powers of his main rival, the right-wing President Traian Basescu.
According to Ponta's Social Liberal Union (USL), the alliance won up to 68 percent of parliamentary seats in Sunday's election. That majority would allow it to make constitutional changes, which it wants to limit the president's powers and change procedures for appointing prosecutors and judges.
While the results strengthen 40-year-old Ponta's hand in his long-running power struggle with Basescu, it is still up to the president to nominate the next prime minister.
Basescu had said he would not ask Ponta to be premier again after the USL failed to impeach him in July. He has since softened his tone, but he could try to split the USL by naming someone else from the alliance of leftists and liberals.
And any constitutional changes would still require backing in a national referendum, which will pose a significant obstacle to the kind of sweeping reforms made by Viktor Orban in neighbouring Hungary.
"This large majority was badly needed to bring any constitutional changes but that's not sufficient," said political analyst Mircea Marian. "The biggest challenge in Romania is to fight voter apathy and lure them to take part in a referendum, which is also required to validate the changes."
The uncertainty is causing investors some disquiet. Romania, the EU's second poorest member, needs a new government to negotiate a fresh International Monetary Fund deal to replace a 5-billion-euro ($6.5-billion) agreement expiring in early 2013. The leu currency slipped 0.3 percent on Tuesday.
"I hope the (nomination) process will take place as soon as possible," Ponta told reporters. "Not for me or the USL but because we don't have yet a budget for 2013. If the process is delayed too much, the IMF mission will not come."
Ponta's party has promised to roll back the previous centre-right administration's austerity policies by cutting taxes and raising salaries, though it has limited room to do so given expectations of growth this year of just 0.4 percent.
On many indicators, Romania trails other ex-communist neighbours like Hungary, Poland and the Czech Republic.
Corruption is rife, its roads and rail are outdated and it cannot provide reliable basic services such as running water and electricity to all its 19 million people nearly a quarter of a century after the fall of dictator Nicolae Ceausescu in 1989.
The electoral bureau has not yet confirmed the final seat tally but official results showed the USL got 60 percent of the vote which under the electoral system means it will have more seats in parliament.
Of the USL's component parts, Ponta's leftist Social Democrat Party (PSD) had 37 percent, Crin Antonescu's liberals up to 28 percent and the conservatives about 3 percent.
Basescu, whose allies won less than 20 percent of votes, has not commented on the election results.
Before the vote he said he considered the USL an alliance rather than a single party, which could give him leeway to make a different nomination for prime minister in an attempt to split the group.
"It will be hilarious to see another nomination, but anything is possible from Basescu," said Timisoara University politics professor Adrian Basaraba.
Even if the former sea captain Basescu does appoint Ponta, the two leaders will still be stuck in their uncomfortable co-habitation and more ructions could follow.
But political analysts said Ponta's alliance may prefer not to be too confrontational given the criticism it faced from the EU over the attempt to impeach Basescu, when it was forced to back down on some proposed changes to laws.
(Additional reporting by Luiza Ilie; Editing by Rosalind Russell)