BUCHAREST (Reuters) - The leader of Romania’s ruling Social Democrats Liviu Dragnea began a three-and-a-half year prison sentence on Monday after the Supreme Court upheld a graft conviction one day after his party lost a European election to centrist groupings.

FILE PHOTO: Social Democratic Party leader Liviu Dragnea reacts during an interview with Reuters, in Bucharest, Romania, May 23, 2018. Inquam Photos/Octav Ganea/File Photo via REUTERS

Since coming to power in late 2016, the Social Democrats (PSD) have steadily chipped away at the independence of the judiciary, raising sharp criticism from the European Union and triggering Romania’s largest street protests in decades.

On Sunday, voters overwhelmingly backed a referendum called by centrist President Klaus Iohannis to prevent Dragnea’s party from further weakening the courts.

With Romania’s most powerful man jailed, the party will be led in the interim by his protege Prime Minister Viorica Dancila.

The PSD and a junior coalition ally retain a fragile majority in parliament, and on Monday Dancila rejected calls from opposition leaders to resign.

The Supreme Court found 56-year-old Dragnea, who is also speaker of the lower house of parliament, guilty of keeping two women on the payroll of a child protection state agency for years even though they were working for his party.

Denying the charges, he appealed against the initial verdict last year and was free until Monday’s final ruling.

Television stations live-streamed his trip through traffic jams to Rahova prison on the outskirts of capital Bucharest, with several protesters shouting “To jail!” at his vehicle.

“We will make an analysis to see what we did wrong and we will try to win back our electorate,” Dancila said at party headquarters at the same time the prison doors closed behind Dragnea. “I think the best solution would be to continue our governing program.”

Dragnea, the first PSD leader to come from outside the capital, was already barred from being prime minister by a previous conviction in a vote rigging case.

Graft issues and chronic inaction building up transport and healthcare infrastructure spurred Romanians to sanction the PSD in the European Parliament election, where its support halved to 22.6 percent from the last national ballot in 2016.

“END OF DRAGNEA ERA”

Tens of thousands of Romanians working abroad were unable to vote on Sunday after queuing for hours outside consulates and polling stations because of bureaucracy and staffing problems.

Analysts said video footage from voting stations across Europe of Romanians chanting “We want to vote” and “Thieves” amplified the ruling party’s loss.

Dragnea, who is also under investigation in a separate case on suspicion of forming a criminal group to siphon off cash from state projects, has repeatedly said he is the victim of a “parallel state” of politically-motivated prosecutors and secret services.

“Today’s ruling ends the Liviu Dragnea era, one of the darkest times in politics of the last 30 years,” leader of centrist party Save Romania Union (USR) Dan Barna said.

“We are returning to Europe.”

Dragnea spent more than a decade as county council president of southern Teleorman county - one of Romania’s poorest areas - where he started amassing power.

Later, as regional development minister, he created a fund doling out cash with little oversight to county councils and mayors, helping shore up his support.

As party leader, he presided over the judicial changes as well as a slew of tax cuts and wage and pension hikes that look set to send the budget deficit above EU limits.

Sergiu Miscoiu, a political science professor at Babes-Bolyai University, said that while the ruling party had hit a low point, it still had the backing of a quarter of the electorate and could rebuild.

“For Romania, it sends a strong signal,” he added.

“It shows the justice system and institutions are working despite all the pressures.”