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By Justyna Pawlak
BUCHAREST, Dec 10 (Reuters) - Liberal economist Theodor Stolojan won the nomination to head Romania's probable centre-left coalition government on Wednesday, raising hopes for political stability, key to coping with global economic crisis.
After two years of policy gridlock due to bickering between main political parties and Bucharest's outgoing minority government, Romania needs firm decision-making and fiscal restraint to prevent recession, economists say.
Stolojan's experience as prime minister in the tumultuous early 1990s in Romania, marred by violence and tension over reforms, may help him introduce unpopular spending cuts.
The respected ex-World Bank expert will also face the challenge of bridging policy differences in an uneasy union between historic rivals, his Democrat-Liberal Party (PD-L) and the ex-communist Social Democrats.
The leftists, whose voters are traditionally poorer and less educated, are widely expected to demand more expansionary budget policies and social protection.
Romania's economic growth is slowing and many economists say the new European Union member may slide into financial crisis next year because of its high dependence on foreign cash.
Already there are signs of a downturn that most economists
say will halve growth rates in 2009. Several big manufacturers,
including French-owned carmarker Dacia
The two main parties finished nearly tied in the Nov. 30 election and jointly hold 70 percent of parliamentary seats.
Stolojan's nomination needs the approval of parliament, meaning he will have to finalise coalition talks and secure a deal before the vote, expected to be held on Dec. 22.
"My challenge is to give a proper response to the global economic crisis that is already felt throughout Romania," he said.
CORRUPTION
The future of Romania's efforts to fight corruption, an endemic problem in the country of 22 million people, are also at stake in coalition talks.
Observers warn the PSD, tainted by sleaze scandals in recent years, may want to water down justice reforms to protect some of its members who face investigations on graft charges.
Most such probes have been blocked by parliament or courts. The PSD says they were politically driven.
Stolojan has few friends in the PSD, having accused many of its politicians in the past of patronage and graft.
But the EU is adamant that Romania must step up efforts to combat abuse and the PD-L's own credibility depends on the success of further reforms.
Negotiations between the two parties continued on Wednesday and are expected to resume on Thursday, with main sticking points including the possible participation in the coalition of the ethnic Hungarian party.
Shortly after his nomination, Stolojan pledged to draft a budget plan for next year quickly and revive reforms which have stalled in the last two years.
"We have two extremely urgent missions," he said.
His main challenge will be to cut back welfare spending, trim bureaucracy and limit state debt at a time when many Romanians are angry about wealth disparities and afraid of the impact of the global crisis.
Appointed in 1991 after his predecessor was ousted in anti-reform riots led by coalminers, he played a crucial role in liberalising the economy after decades of central planning.
He won public support with down-to-earth explanations of the bitter medicine of reforms, as Romanians suffered hard times due to the freeing of prices of basic goods. (Additional reporting by Radu Marinas; editing by Andrew Roche)