By Radu Marinas - Reuters

BUCHAREST – Romania’s president will nominate a new prime minister from his own political camp, he said yesterday, spurning the opposition’s pick and prolonging a policy deadlock before this month’s presidential election.

Parliament has already rejected Basescu’s first choice and analysts said it would do the same again, extending the crisis that has jeopardized a 20-billion-euro ($29.70 billion) International Monetary Fund-led rescue deal for the European Union member state.

Financial markets have responded to the increased risk by demanding higher interest on Romanian debt. Yesterday, the government rejected all bids at a tender for 5-year treasury bonds, because yields were unacceptably high.

Credit default swaps on 5-year bonds were up 10 basis points to 285 and have risen 85 basis points in the last six weeks, meaning it now costs $85,000 more to insure $10 million of bonds against default.

The crisis, which began when parliament toppled a centrist cabinet last month, is complicated by wrangling among rival parties ahead of the presidential election.

The ballot – a November 22 first round and a likely December 6 runoff – is one of Romania’s most important votes since the fall of communism, as the victor will pick the head of the next two governments and influence long-delayed economic reforms.

The opposition-dominated parliament rejected Basescu’s first pick on Wednesday and asked him to name theirs, Klaus Johannis, a provincial mayor. The president refused.

“The prime minister will represent the party with the most seats in parliament: PD-L,” Basescu told radio Realitatea FM, referring to the centrist Democrat-Liberal Party.

His statement boosted expectations that no new government is likely before the presidential election.

“I expect one or two days of political consultations with Basescu [and then] a PD-L proposed premier, who will then fail in a parliamentary vote,” said political analyst Mircea Marian. “I expect things to crawl along until after the second round of elections when the next president will be known.”

Romania’s three most powerful politicians – Basescu, Social Democrat leader Mircea Geoana, and Liberal Crin Antonescu – are vying for the five-year presidency.

The winner faces a raft of reform challenges such as fixing creaky pension and state payroll systems, but is also expected to lead the country into the eurozone in around 2014.