Vol 1, No 20
8 November 1999
C E N T R A L E U R O P E A N N E W S:
Romanian News Round-up
News from Romania since 1 November 1999
Catherine and David Lovatt
The initially antagonistic response to the suggestion by European Commissioner for European Union Enlargement Gunter Verheugen that there should be an international group of experts to help plan a strategy for the development of Romania's economy has changed. The government accepted the idea after investigating the operation of a similar successful group in Slovakia. A group of Romanian experts representing all political parties, trade unions and the civil society will work with Prime Minister Radu Vasile and economic ministers. The group will be funded by the EU and be advised by representatives of the International Monetary Fund (IMF), World Bank and EU. Steven Skovmand, EU representative to Romania, has said that any developed strategy would be Romanian and will match the reality of life in the country. Beginning next year, Romania will begin to receive non-repayable grants and credits worth USD 700 million annually and USD 1.5 million from the IMF and the World Bank.
Reuters reported the results of their survey of banks and major institutions across Europe in which respondents were asked about the expansion of the European Union. Comments about Romania suggest that the country is thought unlikely to achieve EU membership before 2010.
The IMF confirmed on Thursday that they would ease the condition to seek private loans prior to receiving the second phase of the stand-by loan. Conny Lotze of the IMF said, "The managing director of the IMF has sent a letter to the president of Romania indicating that the IMF will ease the private financing requirement." (Reuters - 4 November 1999)
Romania has had some success in the financial sector from the Romanian Central Bank (BNR) reserves which reached USD 1.559 billion - a much higher level than was forecasted. The gold reserves also saw a rise to a total of 101.8 tons and National Trade Registry figures show that foreign investment worth USD 6.1 billion has come into the country over the last ten years. The National Commission for Statistics has published figures to show that Romania's trade deficit has reduced in the first eight months of this year and imports were reduced by 13.9 per cent, while export levels only fell by 3.2 per cent.
The Romanian currency continues to fall against the dollar. On Wednesday, the BNR set the official exchange rate at ROL (Romanian lei) 17,033 to the dollar. There has been a devaluation in the currency of over 50 per cent since the beginning of the year, as the official exchange rate at the end of December 1998 was 10,951 lei to the dollar. Mugur Isarescu, governor of the BNR, said, "Against the DM or the EUR, the devaluation is not that high. We are focusing on the ROL/EUR exchange rate, because two-thirds of Romania's trade is with EU member countries." (Mediafax - 3 November 1999) He went on to say that the inflation rate is likely to exceed the governments forecast of 40 to 42 per cent by year's end and that he believes that inflation will now be between 45 and 47 per cent. In September, the purchasing power of the average Romanian fell by 6.7 per cent.
At a meeting of the Balkan Reconstruction International Conference in Salonika, the decision of where to site a new bridge link between Romania and Bulgaria was postponed until further discussions had taken place. Romania would like the bridge to be built in the Turnu-Magurele to Nicopole region or in the Silistra to Calarasi region. The Bulgarians, however, would prefer the bridge to be sited in the Vidin to Calafat area. The building costs of the bridge will be funded by the Balkan Stability Pact.
Romanian Finance Minister Traian Remes said that Romania is to introduce a new finance package in January which will be designed to increase investment in the country. He added that four per centage points will be cut from the rate of the Value-Added Tax (VAT) and that corporate income tax would be halved. In addition, regulations would be set in place to bring accounting practices into line with those of EU. In his speech to the Balkan Reconstruction conference, Remes referred to the effect the UN sanctions on Yugoslavia and the blockage of the Danube were having on Romania. He went on to say, "Romania expects to take part in the reconstruction of the former Yugoslavia, especially in raw materials (and) the construction industry. I am saying this because Romania has the best of the best industry in construction material in the area and also (is) the best provider of steel material, necessary to rebuild Serbia and Kosovo." (Reuters - 2 November 1999)
Bulgarian President Petar Stoianov met with Romanian President Emil Constantinescu and Greek Prime Minister Costas Simitis on Thursday for an official summit conference. Items on the agenda included trade, telecommunications, transport, organised crime and drug trafficking. Other items to be discussed are EU and NATO membership and the Balkan Stability Pact.
On Tuesday, Prime Minister Vasile met with leaders of his own party, the National Christian Democratic Peasants' Party (PNTCD), to explain his reasons for halting the emergency ordinance which would set up an agency to administer former state-owned farm land. Ion Diaconescu, leader of PNTCD, and his deputy, Remus Opris, censured the Prime Minister's action and demanded that the ordinance be put in place. Vasile's decision not to use the emergency ordinance procedure followed warnings from Petre Roman of the Democratic Party (PD) that the opposition Party of Social Democracy in Romania (PDSR) would refuse to continue to take part in the debate on land reform. Rumours circulating after the meeting suggested that Vasile may be considering resigning from the office of prime minister.
"Dura Lex, Sed Lex" is the title given to a programme to reinstate the death penalty into the Romanian Constitution. The Romanian National Party (PUNR) are planning to get as many signatures of support as possible for their project which plans to bring back the death penalty for serious crimes such as murder, rape leading to death and drug trafficking.
President of the PUNR Virgil Marureanu has stated that he agrees with former Prime Minister Victor Ciorbea's comments about corruption at the highest levels of Romanian life. Ciorbea asserted that there are 15 mafia-type families who control the economics of Romania. Marureanu believes that all civic dignitaries should declare both their assets and those of their families and then have the information checked.
The Poultry Breeders Association of Romania (UCPR) has expressed its concerns about the safeguards that have been put in place to restrict foreign imports. Although Hungarian imports have fallen, the poultry breeders have warned the government that no restrictions are in place which prevent the sale of poultry in Romania that has been rejected by the importing country as being unsafe. Even though the restriction on foreign imports was designed to maintain the price paid to the Romanian producer, there was a significant fall of about USD 0.10 per kilo recorded in June this year.
The National Association of Millers and Bakers have announced that the price of bread is likely to rise again. The millers and bakers have only enough wheat to last for a further two weeks, and so they will have to import either wheat or flour to continue production. The source of this problem can be traced to farmers who prefer to see their wheat go to waste rather then sell it at the current low prices and to the fact that producers will no longer sell their wheat on credit.
The leaders of the main trade unions representing workers in the food industry have called on the government to remove VAT from meat, bread, milk and oil. They are also demanding VAT reductions on other foods and higher duties on food products which are imported into the country. At least 7,000 workers are to stop work to highlight their demands.
Student anger continues to grow with strikes and protest marches spreading from Bucharest to the rest of the country. Reports have been received of action taking place from Wednesday in Timisoara, Suceava, Arad and Galati. The students are demanding higher grants, free transport and more places in residences. Bucharest students took to the streets again on Thursday to try to force Prime Minister Vasile negotiate with them. Student leader Luis Lazarus said, "We found out the Premier has to leave the country for an official visit so our march is aimed at stopping him from dodging talks with us." (EvZ - 4 November 1999) Student leaders met with the Prime Minister last week. Following this meeting, government experts were to investigate means by which they could fund student demands.
On Thursday 4 November, at least 8000 workers protested outside the Roman SA lorry plant in Brasov. Trade Union leaders at the factory reported that the reasons for this action were that promises to increase wages had not been kept and the workforce had no confidence in the management. Roman SA is one of the major companies in Romania but it is still waiting for restructuring after the Communist years. In July 1999, the workforce was offered a 15 per cent wage raise to be paid in October, but because of a fall in orders, funds are no longer available to meet this planned expenditure.
The Bucharest City Council is facing many problems. A strike has been threatened by the staff of the underground railway. If this goes ahead, the union representing bus and tram workers (RATB) has warned the council that, as they are already working to full capacity, the city is likely to experience traffic gridlock. At the same time the Bucharest City Cleaning Company (REBU) is taking legal action against the city council as a result of a decision to remove their monopoly.
The City Council has also been investigated by the government control body (DCG) and by the local administration department (DAPL). Their findings will be presented at the next meeting of the cabinet and details of the irregularities that have been found will be made public after this meeting.
As if this was not enough, Industry Minister Radu Berceanu came out with a major criticism of the Bucharest City Council on Wednesday. Berceanu was commenting on the demand by the council that the government should subsidise the city's thermal power costs when he said that at least half the thermal power supplied by Termoelectrica was lost on the way to peoples' homes as a result of the council's neglect of the maintenance and refitting programmes. The Bucharest City Council spent less than half a per cent of its budget earmarked for these programmes.
Nuclear power company Nuclearelectrica closed down the Cernovoda nuclear power plant for 31 days to carry out routine maintenance. Unfortunately, as a result of limited funding, the work remains incomplete and is thought to require at least a further 15 days. Nuclearelectrica hoped to get funds from the Romanian national electricity company, Conel, to help pay for the work which will cost USD 8 million. This fell through, however, even though it is reported that Conel owes Nuclearelectrica USD 9 billion for electricity supplied to them. It is believed that Romania will have to import at least USD 6 million worth of oil to produce replacement electricity until the work at Cernovoda is complete. The lack of funds has created a further problem, as the plant may not be able to pay the next installment of its insurance policy which would lead to Cernovoda having its operating licence suspended.
On Thursday, the BBC television programme Newsnight reviewed the ten years since the end of the Ceausescu regime. Apart from a brief comment from President Emil Constantinescu, the programme focussed on the role of the mine workers and how they have influenced the political scene. The programme included several comments from the leader of the PDSR, Ion Iliescu, and an interview with two street children. The report gave viewers a very negative impression of most aspects of Romanian life and implied that a violent crisis is not far off in the future. No attempt seemed to have been made by the editorial team to give any credence to the positive achievements of Romania in moving from a Communist dictatorship toward membership in the EU and NATO.
Victor Piturca, the Romanian national football team coach, has been dismissed following disputes between him and senior players. The Romanian Soccer Federation (FRF) president, Mircea Sandu, said that he wanted the team to have the opportunity to prepare for next year's European Championship finals in an atmosphere that was not charged with conflict. Piturca said, "I'll fight for justice because I was behind Romania's qualification." (Reuters - 4 November 1999) Earlier in the week, it became clear that at least six leading players, such as Gheorghe Hagi and Dan Petrescu, would leave the international team if Piturca remained coach
According to the Finance Ministry's web site, Romania is to introduce "a tax on stupidity." The site went on to say that the new tax would help pay bribes to help achieve NATO membership. It also showed that the Romanian currency was worth much more against the dollar than the official exchange rate. Apparently hackers had accessed the web site and made the changes and the site was closed down while the damage was repaired and security was improved.
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