The approval by referendum of a new constitution on December 8, 1991, setting up a democratic republic, had given promise of political stability. Nonetheless, grave problems beset the new government. Particularly troublesome was a resurgence of nationalism, which exacerbated relations between Romanians and Hungarians in Transylvania and encouraged the rise of ultranationalist organizations. But the most intractable problem of all remained the economy. The loss of markets following the collapse in 1991 of Comecon (whose members received the bulk of Romania’s exports) and an inability to find new markets in western Europe had catastrophic consequences for an economy already undermined by several decades of mismanagement and inefficiency under Ceaușescu.

Little progress was made between 1991 and 1996 in solving the pressing economic problems left over from the Ceaușescu era. The elections of 1992 brought no significant political change, and the country continued to be governed by Iliescu and former communists. In a sense, they governed by default, because in the 1940s and early 1950s the noncommunist political class had been destroyed or forced into exile. Yet democracy prevailed as party politics returned to something like the give-and-take of the interwar years, and a variety of opinions could be expressed in a diverse newspaper press and even on television and radio, where government influence was strong.

Iliescu pursued closer relations with western Europe, and in November 1992 his government introduced the economic reforms, including price liberalization, recommended by the World Bank and the International Monetary Fund to bring Romania in line with other emerging market economies. The result was soaring inflation (reaching about 300 percent) and rising unemployment. Deteriorating living conditions, mounting corruption, and the inability of the DNSF—renamed the Party of Social Democracy in Romania (Partidul Democrației Sociale din România; PDSR) in 1993—to revive the economy and ensure essential social services led to widespread unrest and strikes. In 1996 Iliescu lost the presidency to Emil Constantinescu, the leader of the Democratic Convention of Romania (Convenția Democrată din România; CDR), whose party had formed a centre-right coalition with the Social Democratic Union (Uniunea Social Democrată; USD) and the Hungarian Democratic Union of Romania (Uniunea Democrată a Maghiarilor din România; UDMR). In 1997 the former monarch Michael, whom the communists had forced to abdicate in 1947, returned to Romania after 50 years in exile.

Prime Minister Victor Ciorbea quickly sought to restructure and privatize the economy, and the new government had some success in alleviating tensions between Romanians and Hungarians. However, continued economic recession—the economy contracted by more than 15 percent between 1996 and 2000—and corruption led to a collapse of support for the CDR. As a result, Iliescu was returned to power in the elections of 2000. The following year, the ruling PDSR was reorganized as the Social Democratic Party (Partidul Social Democrat; PSD). In 2004 it was ousted from power by another centre-right coalition of parties, including the Democratic Party (Partidul Democrat; PD), whose Traian Băsescu was elected president.

In the first years of the 21st century, gross domestic product (GDP) began showing positive growth, inflation fell, and privatization was accelerated. In March 2004 Romania entered the North Atlantic Treaty Organization (NATO), and in January 2007 it joined the European Union (EU).

In the spring of 2007 the Romanian parliament voted to impeach President Băsescu, but the result of a subsequent referendum allowed him to remain in office. Parliamentary elections in 2008 resulted in a near tie between the leftist PSD and the Democratic Liberal Party (Partidul Democrat-Liberal; PDL), Băsescu’s new centrist party; the two parties formed a centre-left coalition government that December. This government lasted only until October 2009, when the PSD left the coalition in protest over the dismissal of a PSD member from a ministerial post. With a caretaker government still in place, no clear winner emerged in the country’s presidential election in November 2009. In a runoff election held the following month, Băsescu won the vote by less than a percentage point, prompting runner-up Mircea Geoană of the PSD to contest the results in court. Romania’s Constitutional Court subsequently ruled in favour of Băsescu, who took office in December. The president asked Emil Boc, who had been heading the caretaker government, to continue serving as prime minister, this time at the helm of a new coalition government comprising the PDL and the Democratic Alliance of Hungarians in Romania.

Discontent with the government simmered throughout 2010 as Boc implemented a series of austerity measures that were required as a condition of a €20 billion ($26 billion) loan that was granted in 2009 by the EU, the International Monetary Fund (IMF), and the World Bank. Sales tax was increased to 24 percent, and the salaries of public workers were cut by one-fourth. As the euro zone struggled with an ongoing public debt crisis, Romania’s economy continued to falter, and in February 2011 the EU and the IMF granted the government an additional €5 billion ($6.8 billion) line of credit. In return, the government pledged to accelerate privatization plans for state-owned enterprises. However, a scheme to partially privatize emergency health care services proved to be the tipping point for many Romanians. In January 2012 Raed Arafat, a popular health minister, resigned over the matter, and violent street protests left more than 50 people injured. Arafat was ultimately reinstated in his position, but by that time the demonstrations had begun to focus on wider issues related to the government’s austerity program, its perceived corruption, and its apparent disconnect from the Romanian people. As protests continued in the streets of Bucharest, Adrian Nastase, a former prime minister (2000–04), was sentenced to two years in prison for misusing campaign funds. After almost a month of civil unrest, the Romanian government collapsed. On February 6, 2012, Boc resigned as prime minister, and Băsescu appointed Justice Minister Cătălin Predoiu interim prime minister. Later that day Băsescu nominated intelligence chief Mihai Răzvan Ungureanu to succeed Boc, and Ungureanu began talks with coalition leaders about the composition of his cabinet and the formation of a new government.

Ungureanu continued the budget-cutting policies of his predecessor, and protesters returned to the streets with renewed intensity. Opposition lawmakers headed by Victor Ponta of the PSD had united under the banner of the Social-Liberal Union (Uniunea Social Liberală; USL), and they brought down the two-month-old government in a vote of no confidence on April 27, 2012. Ponta, who became prime minister the following month, acted quickly to solidify his power, prompting criticism from EU officials when he stripped Romania’s Constitutional Court of its oversight function and orchestrated the impeachment of his political rival, Băsescu. As in 2007, Băsescu was subject to a referendum on his presidency, but the vote, held on July 29, 2012, fell short of the 50 percent participation rate required to validate the result. After the failure of the referendum, Ponta and his allies used various measures in an attempt to prevent Băsescu from returning to office. On August 21, 2012, the Constitutional Court ruled the impeachment invalid, and Băsescu was reinstated a week later. Despite widespread criticism from the EU and declining domestic popularity, Ponta was reaffirmed as prime minister when the USL was victorious in parliamentary elections in December 2012.

A string of high-profile corruption trials in 2013 might have restored faith in the Romanian political class, but Ponta pushed for the sacking of a key prosecutor, and a fresh round of squabbling and intrigue commenced. The credibility of the ruling parties suffered an additional blow later that year when the Ponta government voiced its approval for an open-cast gold mine at Roșia Montană in spite of concerns about the project’s effect on the region’s groundwater supply. Widespread protests ensued, and Ponta withdrew authorization for the mine pending a parliamentary investigation.

Ponta suffered a series of reverses in 2014, including the investigation of a number of prominent allies on corruption charges. Nevertheless, he appeared certain to triumph in his bid to capture the presidency in elections that November. In the first round, Ponta finished well ahead of his chief challenger, Klaus Iohannis, the mayor of the Transylvanian city of Sibiu and a member of Romania’s small German Lutheran minority. The initial round of polling was plagued with irregularities, however, with instances of multiple voting observed in PSD strongholds and tens of thousands of Romanians living abroad unable to cast their votes because of prohibitively long lines at embassies. Members of the diaspora had traditionally voted against the PSD, and concerns registered by other European governments led to the resignation of Ponta’s foreign minister. On November 16 Romania experienced its highest voter turnout since 2000, and Iohannis vaulted to the presidency with a convincing victory in the second round of balloting. Ponta remained prime minister at the head of a cohabitation government, but he faced frequent calls from the opposition to step down.

In July 2015 Ponta was charged with money laundering, fraud, and tax evasion. The accusations dated to a period before he was elected prime minister, so the prosecutorial immunity he enjoyed as a result of that office did not apply. Although he decried the indictment as politically motivated, Ponta resigned as leader of the PSD to devote time and effort to his defense. He rejected Iohannis’s request that he resign as prime minister, however. On October 30, 2015, a fire at a Bucharest night club claimed dozens of lives and left scores injured. Thousands took to the streets to protest government corruption and a regulatory regime that would allow for such a tragic lapse in public safety. Within days, Ponta announced his resignation.