BBC News Online: World: Europe

New government takes power in Romania

Centrist and right-wing parties supported Mr Nastase's Party of Social Democracy (PDSR), which will form a minority government.

The PRM is the second largest party in the new parliament, and its leader, Corneliu Vadim Tudor, made an strong showing in the presidential poll.

The success of Mr Tudor and his party - with its strongly nationalist policies - caused concern in the European Union, which Romania aspires to join.

Growth promise

Mr Nastase promised to accelerate growth and take the country into Nato and the EU.

"Romania's future is linked to that of Europe," he said, adding that Nato was "the only reasonable option to guarantee our security".

The European Commission has said that Romania "cannot be regarded as a functioning market economy", and wants more austerity and reform.

Mr Nastase said his government aimed for economic growth of between 4.5% and 6%, mainly from foreign investment, growth of small and medium-sized enterprises, and privatisations.

He also hopes to reduce annual inflation to below 10% by the end of his mandate in 2004, from its current level of 40%.

Double victory

Mr Nastase was Romania's foreign minister from 1990-1992, and is a close ally and protege of President Ion Illiescu, who has regained power himself after four years in the political wilderness.

Their double victory completes a triumphant return for the PDSR. The party was ousted in 1996, but the centrist coalition which took power then failed to fulfil its promises of economic reform.

Mr Nastase is the country's key political force, since the presidency has limited powers under the constitution.

With Mr Illiescu barred by the constitution from seeking another term at the next elections in 2004, Mr Nastase is a serious candidate for a future head of state.