BUCHAREST Romania's president accused the government on Thursday of using an attempt to impeach him as a way of grabbing control of the judiciary and other state institutions.
The leftist Social-Liberal Union (USL) government is set to use its parliamentary majority to vote on Friday to suspend right-winger Traian Basescu. A referendum would then be held on his impeachment within a month.
The impeachment threat is part of a wider political clash that has paralysed lawmaking and raised doubts over Romania's ability to keep to a 5 billion euro International Monetary Fund-led aid deal - hurting the currency and increasing debt costs.
Basescu told parliament: "The major objective of this suspension is to put the justice system and state institutions under the control of parties in the USL."
Some 2,000 supporters of the opposition Democrat-Liberals (PDL) backing Basescu gathered in downtown Bucharest, shouting anti-government slogans. In another square, people backing Prime Minister Victor Ponta shouted: "Out with Basescu."
In power since May, after the previous, centre-right government collapsed, the USL, led by Ponta, Romania's third prime minister in four months, is favourite to win an election late this year.
Opponents accuse him of trying to cling to power, but many people are tired of an austerity drive enforced by a centre-right government in 2010.
"We are witnessing a systematic attack on state institutions ... now they attack presidency and the final target is to subordinate justice," newly elected PDL leader Vasile Blaga told the gathering.
The USL passed a law to make it easier to impeach Basescu, whose position is ceremonial but who influenced the previous government's austerity policies. In the impeachment request, USL lawmakers said the president broke the constitution and pressured judges.
The new law, still pending judgment in the constitutional court, would make it possible for a simple majority of voters to impeach a president in a referendum, rather than requiring a majority of the entire electorate.
In late afternoon, the government approved a decree setting a simple voting majority for referendums. It is not clear whether the decree or the court verdict, likely due on Monday, will prevail.
Both reverse previous legislation by the PDL, which has close links to the president and is now in opposition. The PDL had switched the referendum rule to a majority of the electorate after a previous attempt to unseat Basescu in 2007.
Basescu would probably lose the referendum and his post if the new legislation is enforced, but easily survive if the old threshold is kept.
Ponta did not attend the parliamentary debate on Thursday, seeking instead to reassure investors.
"I am not in parliament for a political debate but I am here with you because I feel that in this type of political battle it is essential to maintain economic balance," Ponta told a meeting of investors, according to news agency Agerpres.
The USL has come under severe pressure itself. Ponta faces calls to resign over plagiarism charges and the government had to back down from an attempt to replace judges on the constitutional court, after international criticism.
The president of the Venice Commission, the Council of Europe's advisory body on constitutional matters, issued a statement expressing "deep concern (at) various attempts to exercise pressure on the Constitutional Court of Romania and to undermine its independence".
The leu struck a new record low on Thursday beyond 4.492 per euro, while yields rose at a two-year Romanian bond sale, reflecting rising investor concern.
Dealers said the central bank might have intervened to support the currency.
"Romania looks now rather like Ukraine or Belarus than a CEE state. It looks everyone wants to get out and the central bank seems to be present on the offer side as it wants to prevent sharp swings," a dealer at a foreign bank in Bucharest said.
(Additional reporting by Radu Marinas; Editing by Alison Williams)