Romanian December Industry Sales Rise for First Time Since 2008

By Adam Brown

Feb. 9 (Bloomberg) -- Romanian industrial sales rose in December for the first time in 14 months thanks to an increase in western European demand for exports of furniture, cars and textiles.

Industrial sales increased 2.8 percent on the year in December after declining 6 percent in November, the Bucharest- based National Statistics Institute said in an e-mail today. On the month, sales dropped 5.4 percent.

The economy contracted an annual 7.1 percent in the third quarter last year after a decline in global trade depleted demand for industrial exports. A return of demand from western Europe will help the European Union’s second-poorest member return to growth this quarter, the International Monetary Fund estimates.

In December, exports increased 7 percent on the year for a second consecutive month of growth, the institute said today in a separate release. Imports dropped 18.4 percent.

bookforum.com: Romania 20 years later

From Romanian Review on Political Geography, Liviu Bogdan Vlad, Gheorghe Hurduzeu, and Andrei Josan (BAES): Geopolitical Reconfigurations in the Black Sea Area at the Beginning of the 21st Century. FromGeojournal of Tourism and Geosites, an essay onRomanian Rural Tourism between Authentic/Traditional and Modern/Contemporary. FromFT, who won the Romanian revolution? Former members of the oppressive old guard are flourishing in Bucharest’s new order. Twenty years on from the fall of Ceausescu, Romanian filmmakers are finally learning how to make people laugh about their country’s dark past. The enduring legacy of Romania's Securitate: How those who terrorized Romanians under communism continue to instill fear. Elise Hugus on Romania 20 years later: Not exactly bread and roses. A Frenchman is building a resort for well-heeled tourists among the ruins of a former communist gulag in Romania. What became of Romania's neglected orphans? A review of Dracula Is Dead: How Romanians Survived Communism, Ended It, and Emerged since 1989 as the New Italy by Sheilah Kast and Jim Rosapepe. Think Italy, not vampires: A fondness for the US is in Romanians' blood (and more). A Transylvanian critic takes on the popular Twilight series; Peter Baker translates from the Romanian. Liliana Hamzea (UTBv): Americanization and Discourses of National Identity in the Romanian Dilema. Ceausescu’s Romania, the drama of the ethnic Germans — all remained in Herta Muller’s memory and are in her books. A Romanian Jewish writer rediscovered: An article on Benjamin Fondane as poet, critic and filmmaker.

EU backs Romanian fiscal effort, extends deadline

BRUSSELS, Feb 8 (Reuters) - The European Union executive told Romania on Monday the country is on track with fixing its finances and extended by a year to 2012 the deadline Bucharest has to cut its budget deficit below the bloc's ceiling.

The European Commission made its assessment as part of the EU's budget disciplinary procedure, under which countries receive deadlines to reduce their fiscal gaps to below 3 percent of gross domestic product.

The Commission said in a statement that Romania, which has been granted conditional aid from international lenders after being hit hard by the economic crisis, had taken effective action to reduce its fiscal gap.

The assessment bodes well for the disbursement of loan tranches from the International Monetary Fund and the EU that had been frozen due to political turmoil in the Black Sea country.

"Romania has made a serious effort to limit the deterioration of its budget deficit and to preserve macroeconomic stability during the past year," EU Monetary Affairs Commissioner Joaquin Almunia said in a statement.

But since recession in the new EU member state had been worse than initially thought, the Commission recommended giving Romania until the end of 2012 rather than 2011 to correct its deficit.

"The worsening of the economic situation since the initial recommendations were made justifies extending the deadline by one year. But the consolidation effort must continue," Almunia said.

Romania's economy shrank by some 7 percent in 2009 instead of the 4 percent once forecast by the Commission.

The recommendation must be approved by EU finance ministers to take effect, but this is not expected to be a hurdle.

The Commission said Romania had met its fiscal austerity commitments by reducing the public wage bill and cutting public expenditure on goods and services in 2009.

The 2010 budget includes a package of measures cutting expenditure by around 2 percent of GDP and raising revenue by around 0.5 percent of GDP, the Commission noted.

The IMF last month successfully completed a review of the 20 billion euro ($28 billion) aid package, recommending its board unlock tranches halted last year due to political turmoil in mid-February.

The country now has a new cabinet in place, but it faces a tough task in enforcing fiscal cuts given its fragile parliamentary majority and the risk of mounting discontent over mass lay-offs to cut the bloated administration. (Editing by Dale Hudson)

EU gives Romania an extra year to rein in deficit

08 February 2010
www.eubusiness.com

(BRUSSELS) - The European Commission on Monday gave Romania an extra year, till 2012, to bring its swollen public deficit back to the EU's limit of three percent of GDP, due to the gravity of the economic crisis.

"Romania has made a serious effort to limit the deterioration of its budget deficit and to preserve macro-economic stability during the past year," said the EU's Economic and Monetary Affairs Commissioner Joaquín Almunia.

"The worsening of the economic situation since the initial recommendations were made justifies extending the deadline by one year," he added in a statement.

Last July EU nations opened a an excessive deficit procedure against Romania, due to its enlarged budget deficit and recommended that it be brought within the acceptable range by 2011.

However Romania, like the rest of Europe, experienced a recession estimated at around seven percent last year, against the four percent forecast.

The general government deficit in 2009 is now thought to have reached 7.8 percent of gross domestic product (GDP).

The pushing back of the deficit deadline is the second bit of good news for the country in recent weeks.

The International Monetary Fund and European Union announced late last month that they will resume crisis aid to Romania, after the crisis-hit country passed an austerity budget.

The IMF will unblock 2.3 billion euros this month while the EU will unlock one billion euros (1.4 billion dollars).

Yields down at Romanian 1-yr T-Bill tender

BUCHAREST, Feb 8 (Reuters) - Romania sold a planned 500 million lei ($165 million) in one-year treasury bills at an auction on Monday that was oversubscribed while yields fell nearly 150 basis points, in line with market expectations.

Analysts have said investors still covet Romanian debt, as yields remain high for the region, although they have fallen significantly across maturities from a flat 10 percent level seen for most of the fourth quarter of 2009.

On Monday, the average accepted yield was down to 7.48 percent, from 8.86 percent at a previous tender on Jan. 18, central bank data showed.

So far this year, the finance ministry has sold roughly 7 billion lei, but it has lowered February issuance plans as the resumption of Romania's 20 billion euro aid package led by the International Monetary Fund has eased budget funding concerns.

The Fund's decision to free up as much as 3.3 billion euros in IMF and European Commission funds this quarter has also provided support for the currency and interest rates.

Romania did not disclose a full issuance figure for 2010. The ministry has said it plans to sell 10-12 billion lei in treasuries in the first quarter, and issue a Eurobond worth roughly 1 billion lei.

It sold 65 billion lei worth of paper last year.

Romania Jan unemployment rises to 8.1 percent

BUCHAREST, Feb 8 (Reuters) - Romania's unemployment rate rose to 8.1 percent in January from December's 7.8 percent, the employment agency said on Monday.

Dwindling demand from the euro zone states, the new European Union member's main trading partners, has hurt central and eastern European economies, forcing many companies in the state-controlled and private sectors to cut output.

Bucharest needs to make deep spending cuts to curb Romania's large imbalances, since the country secured 20 billion euros in aid from international lenders in 2009 to lift its economy out of recession.

Among these, it plans to cut up to 100,000 public sector jobs in 2010.
JAN 10 DEC 09 JAN 09


Number of unemployed 740,982 709,383 444,907
Jobless rate 8.1 7.8 4.9

Russia condemns US move to put missiles in Romania

Russia has attacked a US decision to site interceptor missiles in Romania, saying the move imperils Barack Obama's much-vaunted "reset" of relations between the two countries and the final stages of nuclear arms reduction talks.


By Andrew Osborn, Moscow Correspondent
Published: 07 Feb 2010www.telegraph.co.uk

The Kremlin said it was taken aback by news that Romania's top military body had agreed to host US SM-3 interceptor missiles and other military infrastructure in response to an alleged missile threat from Iran. Sergey Lavrov, the Russian foreign minister, said he had demanded an "exhaustive explanation" from Washington, citing a treaty that would prevent US ships delivering the necessary equipment via the Black Sea.

"How can we stay calm when alien military infrastructure, US military infrastructure, has come to the Black Sea area?" Dmitry Rogozin, Russia's ambassador to Nato, told Russian state TV separately.

Mr Obama last year dropped a Bush-era plan to install a missile defence shield in the Czech Republic and Poland. Russia at the time hailed that decision as "brave", viewing it as a diplomatic victory. But a few months later, Kremlin officials say they are deeply disappointed that Washington did not consult Moscow about the Romanian missiles. They were similarly nonplussed last month when the US confirmed it was planning to place Patriot missiles in Poland close to the Russian enclave of Kaliningrad.

The disagreement comes as Russian and US negotiators finalise a pact that will make deep cuts in their nuclear arsenals.

Sergey Ivanov, Russia's deputy prime minister, warned the Romanian move would complicate those talks. "It is impossible to talk seriously about a reduction of nuclear capabilities when a nuclear power is working to deploy defensive systems against nuclear warheads possessed by other countries," he said.

Military experts warned the interceptor missiles could be upgraded to pose a threat to the Kremlin's intercontinental nuclear missiles. Colonel Igor Korotchenko, editor of Russia's National Defence magazine, urged the Kremlin to retaliate. "Russia should warn Romania that if elements of a US missile shield are sited in the country they will be viewed as legitimate targets for Russian missile attack."

On Sunday the head of Nato said the alliance should develop closer ties with China, India, Pakistan and Russia and become the forum for consultation on global security.

Anders Fogh Rasmussen, Nato secretary-general, said: "What would be the harm if countries such as China, India, Pakistan and others were to develop closer ties with Nato? I think, in fact, there would only be a benefit, in terms of trust, confidence and co-operation ... Nato can be the place where views, concerns and best practices on security are shared by Nato's global partners."

But Konstantin Kosachev, chairman of the Russian Duma's International Affairs Committee, reacted with scepticism, saying Nato first had to think globally, and complained that Russia had not been involved in the process.

NYT: Russia Cool to U.S. Plan for Missiles in Romania

February 6, 2010

By ELLEN BARRY

MOSCOW — Russian officials reacted coolly on Friday to the news that Romania had agreed to host American missile interceptors starting in 2015, with a top envoy saying that the announcement could directly affect Moscow’s position as negotiations to replace the Strategic Arms Reduction Treaty, or Start, reach their conclusion.

Dmitri O. Rogozin, Russia’s permanent representative to NATO, said the United States had not fulfilled its promise to consult Russia on developments in the missile defense system. He suggested that the interceptors could pose a threat to Russia’s security, while noting that both Romanian and American officials went out of their way to assure Moscow otherwise.

“It seems to be in line with Freud’s theory — it means they have some thoughts that the system could be targeted against Russia, otherwise why would they dissuade us about something we never asked about?” he said.

Though the general outlines of the new missile defense plan — including the staging of land-based interceptors in Europe — were made public months ago, Russian officials made it clear that they were taken aback by the announcement of Romania’s role. Foreign Minister Sergey V. Lavrov said the Russian and American presidents had agreed that the “threats and risks of missile proliferation will be assessed jointly as a first step.”

“We expect our American partners to provide exhaustive explanations on those issues in the context of this dialogue,” the Interfax news service quoted Mr. Lavrov as saying at a news conference in Germany, where he traveled to attend the Munich Security Conference.

The announcement came at a sensitive moment. At the Munich conference, Mr. Lavrov has meetings planned with Iran’s foreign minister, and he has suggested that Russia may be ready to consider sanctions against Iran if he is not satisfied with the response in their discussion about Tehran’s nuclear program.

And with the Start renegotiation, a central project in the “reset” between the countries, in its final stages, Russian leaders have repeatedly said missile defense remains a stumbling block.

Russian analysts said the SM-3 interceptors planned for Romania posed no threat to Russia’s nuclear deterrent, since they target medium- and short-range missiles. But that might change when a second generation of interceptors is put in place in 2018, a possibility that makes Moscow wary, because the United States is under no obligation to share data about the system, said Sergei M. Rogov, director of the Institute for the U.S. and Canada Studies in Moscow.

“Here comes the question of transparency,” he said. “Why is the U.S. making a decision again without consulting with Russia?”

The announcement is not likely to derail Start negotiations, Mr. Rogov said, but could jeopardize talks that negotiators hoped would follow, including deeper cuts to strategicnuclear weapons. The news from Romania came, he said, amid various signs of “reverse movement” in the “reset”: Start negotiations have dragged on, Secretary of State Hillary Rodham Clinton rejected Russian calls for a new European security structure, and Poland and Sweden called for Russia to withdraw its nuclear missiles from Kaliningrad.

“Additional issues are overloading the ‘reset,’ which is not moving very far or very fast,” Mr. Rogov said. “So I am concerned about it.”

Those concerns were underlined when Russia released its new military doctrine, approved on Friday by President Dmitri A. Medvedev. The document, which guides military policy for a decade, identified the American missile defense system as a major threat to Russian security, saying it “undermines global stability and violates the current balance of nuclear forces.” Another central concern of the document was the continued expansion of NATO and the organization’s attempt “to globalize its functions in violation of international law.”


Michael Schwirtz contributed reporting.

Russia expects US comprehensive answer about missile defense sites in Romania

05.02.2010

BERLIN, February 5 (Itar-Tass) -- Russia has reminded the United States about the Montreux Convention, which limits the ability of warships to pass through Black Sea straits and which is signed by Romania, due to the U.S. plans to deploy missile defense sites in Romania.

“We expect a comprehensive answer from our American partners, as the Montreux Convention regulates the Black Sea regime,” Russian Foreign Minister Sergei Lavrov said on Friday.

He also referred to missile defense agreements with the United States. “There is an agreement with the Barack Obama administration that is already being fulfilled. The sides agreed to start with the joint analysis of missile proliferation threats and risks. We think that European colleagues, among them Germany, should join this work,” he said.

“Once we evaluate missile proliferation risks and related threats, we may discuss diplomatic, economic or, possibly, military-technical measures that must be taken,” Lavrov said.

Romanian President Traian Basescu said on Friday that his country was ready to host the American missile defense sites.

“The network will become operational in 2015. We will soon start negotiations with the United States, and the prospective agreement will have to be ratified by the parliament,” he said.

In his words, U.S. Under Secretary of State for Arms Control and International Security Ellen Tauscher delivered President Barack Obama’s message to Romania. The new system will protect the whole of Romania from ballistic missiles, he said.

“The system is absolutely not targeted against Russia. It is directed against other threats,” Basescu said.

Romania to host new version of US missile shield

VALENTINA POP

05.02.2010 

EUOBSERVER / BRUSSELS – Romania on Thursday announced it had agreed to the new US anti-missile defence shield envisaged by the Obama administration after scrapping initial plans in Poland and the Czech Republic.

In a brief statement, Romanian President Traian Basescu said the country's top security body had accepted Mr Obama's invitation to host parts of the American anti-missile defence shield.

Mr Basescu stressed that the system was aimed against threats coming from countries such as Iran, not Russia, in anticipation of potential criticism from Moscow. Previous plans tabled by the George W. Bush administration, which would have put the interceptors in Poland and a radar in the Czech Republic, had been seen as a direct threat to Russia.

The Obama administration decided to scrap those plans, an announcement that caused a stir in Warsaw, especially as a result of the timing, made on the very day when the country was remembering the 60th anniversary of the Soviet invasion.

Mr Basescu also pointed to the fact that the previous version would not have covered his country's territory in case of an Iranian attack, as the range of the Polish-based shield would have reached its limit somewhere in western Romania.

The Romanian Parliament has the last say on the deal, with the new facilities expected to become operational in 2015.

"The US has determined that Romania is well-suited for the location of this system to provide protection for European Nato Allies," the US embassy in Bucharest said in a statement.

Foreign minister Teodor Baconschi said the plan was first presented to Mr Basescu during a visit by US vice-president Joe Biden to Bucharest in October but was not made public.

Romania is already hosting US training facilities for its military, part of a Pentagon shift from large Cold War-era centres in Germany toward smaller and "more flexible" installations closer to the Middle East.

It was also embroiled in a scandal surrounding alleged secret CIA prisons as part of the so-called rendition programme developed by the Bush administration during the "war on terror", in which individuals were secretly flown out of countries like Afghanistan to intermediate locations before being released or transferred to the prison in Guantanamo, Cuba.

Back in Washington, US State Department spokesman Philip Crowley said this announcement was a "first step" in terms of the new anti-missile shield architecture, which would later also include ship-based interceptors in the Black Sea.

Mr Crowley also noted that Poland was still in talks for a "northern land-based" missile site. "That development is still under consideration and discussion with Poland," he said.

The spokesman insisted as well that the new shield was not aimed at Russia, but against "the emerging threat coming to the region from Iran."

Romanian Central Bank Raises 2010 Inflation Forecast on Tobacco

By Irina Savu and Adam Brown

Feb. 3 (Bloomberg) -- Romania’s central bank raised its inflation forecast for 2010 after a tobacco tax increase prompted a “very high” annual rate in January.

Year-end inflation may be 3.6 percent, rather than a previous forecast of 2.6 percent, Banca Nationala a Romaniei Governor Mugur Isarescu told reporters in Bucharest today.

“January inflation will prove to be higher than expected and that will affect the consumer price index for the entire year,” Isarescu said. “2011 inflation will no longer be affected by the tobacco tax increases.”

Policy makers this week cut the benchmark interest rate to 7 percent from 7.5 percent after the nation’s credit rating outlook was raised and optimism increased that its bailout will be resumed. The International Monetary Fund, which leads the 20 billion-euro ($28 billion) loan for Romania, predicts 1.3 percent economic growth this year will add inflation pressure.

The inflation rate was 4.7 percent at the end of last year, when the economy contracted about 7 percent. Early tobacco price increases pushed the rate above the 4.5 percent target agreed with the IMF. The central bank targets inflation of between 2.5 percent and 4.5 percent this year and between 2 percent and 4 percent in 2011.

The price of tobacco, which accounts for 4.6 percent of the basket of goods in the index, rose 38.6 percent on the year in December and was expected to rise faster in January.


Leu Effect


Depreciation pressure will lesson on the leu this year as government measures improve investor sentiment, Isarescu said at the same press conference. The currency was little changed at 4.1375 to the euro as of 11:40 a.m. in Bucharest. It rallied this week to its strongest in more than a year, and has gained 2.9 percent this year.

Fitch Ratings on Feb. 2 raised its credit rating outlook on Romania and Standard & Poor’s said it may do the same after the IMF signaled it will unlock the country’s bailout loan.

The Washington-based lender froze the loan last November after the government collapsed amid infighting. A fund mission last month recommended resumption of the loan after Prime Minister Emil Boc put together a Cabinet on Dec. 23 and lawmakers on Jan. 14 approved the spending and revenue plan that seeks to narrow the 2010 gap to 5.9 percent of gross domestic product from an estimated gap of 7.3 percent last year.

Isarescu warned, that of a “great danger in the coming period of a state of euphoria” as the economy resumes growth.

Romania: Construction Contraction

Oxford Business Group Latest Briefing

4 February 2010
While the Romanian economy contracted by some 7% last year, the withering of the construction sector was far more dramatic. According to data released in late January by Eurostat, the statistical office of theEuropean Union (EU), output in the Romanian construction sector fell by 24.4% for the 12 months ending November 30, the steepest fall across the EU zone.

In part, the reversal of the sector's fortunes is due to the sharp fall off in demand for new business space, with investments in non-residential developments such as office and retail construction all but drying up in 2009. There was also a steep decline in housing construction, largely due to banks' reluctancy to give out credit for much of last year.

According to a report issued by the National Institute of Statistics at the beginning of January, the number of construction permits for residential buildings dropped by 20.8% year-on-year in the first 11 months of 2009. In November, the number of permits for new residential building dropped by 15.6% compared to the previous month, with 3463 licences being issued, the report said, while just 37% of housing projects started in Bucharestbetween 2006 and 2008 had been completed by the end of July 2009.

Though keen to promote a return to growth, Romania's government has been limited in its options, having little room to maneuver when drafting the 2010 budget as it sought to ease concerns of the IMF and the EU over excessive spending.

In its budget, passed by the parliament in late January, the government of Prime Minister Emil Boc had to commit to reducing the state deficit to 5.9% of GDP, down on the 7.3% posted for 2009, put a freeze on increasing wages and state pensions, and reduce public servant numbers by up to 100,000 so as to meet IMF and EU requirements for the release of loan funding.

The EU and the IMF had demanded Romania curb spending before resuming payments from a $27.8bn support package, suspended in October after the government failed to implement promised austerity measures.

However, though being restricted in the budgetary largesse it could distribute, the government was able to throw a bone to the hard-hit building sector, making a 5% cut to the value-added tax (VAT) applicable to construction costs.

The reduction in the tax will be felt by the Treasury, with Gheorghe Gherghina, the state secretary at theFinance Ministry, saying on January 10 that the lowering of the VAT rate would reduce revenue by $328m.

The budget also factored a return to growth in 2010, with GDP forecast to expand by 1.3%. Though at least some of this recovery will depend on the speedy release of funds by international lenders.

Despite the numerous challenges, there are some signs that the building industry is starting to pick up, though it will have a long way to go before it returns to pre-crisis levels. According to the Eurostat report, output in the Romanian construction sector increased by 2.9% in November 2009 compared to the previous month. The result outstripped the overall performance of EU countries, where there was a seasonally adjusted fall in production of 0.6%, which itself was a sharper decline than the 0.3% drop in October.

This moderate turnaround could be a result of a slight easing of the credit squeeze imposed by many banks, with the National Bank of Romania (BNR) having reduced its key interest rates to 8% late in 2009 and making a further 0.5% cut on January 5.

Radu Gratian Ghetea, the president of the Romanian Association of Banks, believed that a further round of interest rates in lei-denominated loans could help spark a revival for the construction industry.

Romania's building sector had great potential due to the extensive infrastructure that was required, while the residential component was also significant, and would, "continue to attract investors, both local and foreign," Ghetea said in an interview with local press in late January 2010.

Although the government's VAT cut on construction work, combined with the expected improvement in the economy, is expected bolster demand for new projects in the short term, it is more likely that Romania's construction industry will build up momentum next year, when GDP is predicted to expand by a robust 5% or more.

Activist denied access to secret files in Romania

(AP:BUCHAREST, Romania) A poet who has led the way in publishing secret police files from Romania's communist past is being denied further access to the information.

The government says Mircea Dinescu will be removed from the National Council for the Study of the Archives of Romania's former Securitate secret police because his ownership of two agricultural companies makes him "incompatible" with public office.

But Dinescu told The Associated Press on Thursday that the real reason is to punish him for advocating greater transparency and democracy in Romania and strongly opposing President Traian Basescu's re-election in December.

Dinescu, who was a dissident under communism, has helped publish files that exposed public figures who had collaborated with the Securitate.

NYT: Romanians Accept Plan for Basing of Missiles

February 5, 2010
By NICHOLAS KULISH and ELLEN BARRY

MUNICH — Romania’s top defense body approved an American proposal to base missile interceptors there, the country’s president said Thursday in a hastily arranged announcement.

The president, Traian Basescu, said in a statement that Romania, a former Warsaw Pact member and now part of NATO, was prepared to negotiate with the United States to accept ground-based interceptors as part of an antiballistic missile defense system. He said it could be working by 2015.

While the participation of Poland and the Czech Republic in the missile shield had been well known, the possibility that Romania would join them was not.

Romania made its announcement as Defense Secretary Robert M. Gates was in Turkey for a NATO meeting. He was not immediately available to comment but the White House spokesman, Robert Gibbs, said the announcement was welcomed. “We’re pleased that Romania has agreed to participate in that defense shield,” he told reporters in Washington.

Political analysts in Romania said the speed of Mr. Basescu’s announcement appeared to be an attempt to capitalize on the agreement at the expense of political rivals at home, where most view a deepening of ties with the United States favorably and where Mr. Basescu narrowly won re-election in December.

“He wanted to take credit and announce, ‘In my second mandate, I’m this strong and big contributor for Romanian national security,’ ” said Radu Tudor, a correspondent in Bucharest for Jane’s Defense Weekly.

Mr. Basescu said the proposal accepted by the Supreme Defense Council came from President Obama, whose under secretary of state for arms control and international security, Ellen O. Tauscher, was in Romania.

Mr. Obama abruptly changed course on the proposed antiballistic missile shield in September, focusing on a system designed to shoot down short- and medium-range missiles from Iran.

The original system, proposed by President George W. Bush, would have put a radar installation in the Czech Republic and interceptors in Poland. Russia opposed the plans, arguing that the system, so close to its border, was a security threat. Russian criticism diminished after Mr. Obama reconfigured the proposal to use smaller interceptors.

Mr. Basescu said that with Romania’s participation, the system was not directed at Russia but rather “against other threats,” without specifying them.

Dmitri V. Trenin, director of the Carnegie Moscow Center, said the Romanian announcement would not come as a complete surprise to Russian leaders, since it “was one of the options people had in mind.” He said the Romanian site was farther from the Russian border, and — unlike the proposed Polish site — would not allow the interceptor missiles to stop a Russian missile headed to the United States over the Arctic Ocean, a possibility that had aroused anxiety in Moscow.

“Of course, people who would be interested in portraying any kind of missile system as potentially a threat will be able to use this, but I don’t think the government has much interest in playing this up,” Mr. Trenin said.

Russian leaders still complain that the missile system could upset the cold war balance of power. Prime Minister Vladimir V. Putin said in December that the plan was the main obstacle to negotiations on replacing the Strategic Arms Reduction Treaty.

But Aleksandr A. Khramchikhin, assistant director of the Institute of Political and Military Analysis, in Moscow, told the Web site gzt.ru that Russia had long suggested Romania or Bulgaria as an alternative to the Polish and Czech sites.


Nicholas Kulish reported from Munich, and Ellen Barry from Moscow. Helene Cooper contributed reporting from Washington.

Romania and the return of property to Greek Catholics

SSJC via ENI) - In a ruling that could affect similar disputes, a European court has ordered the government of Romania to compensate a Greek Catholic parish for failing to return to the parish properties seized from it under communist rule."Legislative shortcomings have helped create a drawn-out preliminary procedure capable of hindering the applicant parish's access to a court," the European Court of Human Rights said in a January 15 judgment. The court said the Romanian government had violated articles of the 1950 European Convention on Human Rights. It ordered Romania to pay 23,000 euros to the Greek Catholic parish to cover damages and expenses.

The ruling concerned a case brought by Greek Catholics at Sambata in Romania's northern Transylvania region, whose church was placed in Orthodox hands when their community was outlawed in 1948. The Catholics said the local Orthodox parish had refused to allow them to share the building when their church was re-legalized in 1990, or to form a joint Orthodox-Catholic committee, as required by law, to discuss property issues. "Accordingly, the applicant parish was treated differently from other parishes involved in similar disputes, without any objective or reasonable justification," the Strasbourg-based European court ruled. "This was a violation of human rights regulations which prohibit discrimination."

The Greek Catholic Church is loyal to Rome but shares an eastern liturgical and spiritual heritage with Orthodox churches. In Romania, the post-war communist regime forced the church to surrender 2,588 places of worship to state institutions or Orthodox parishes.

Inter-church ties in Romania have been tense since the 1989 collapse of communist rule because the Romanian Orthodox Church, which claims the loyalty of 87 percent of the country's 22 million inhabitants, has refused to return confiscated Catholic properties. These include 1,504 parish houses, and 2,362 schools and cultural centers.Although a Catholic-Orthodox commission was set up in 1998, a year before Pope John Paul II visited Romania, it made little progress and only 160 Greek Catholic churches were returned.

In February 2009, Greek Catholic leaders protested a draft law that would confirm Orthodox ownership over still-disputed Catholic places of worship. In a letter to Romania's President Traian Basescu, the leaders said their church, "reserves the right to use all the legal means, domestic and international," to obtain redress. In an early January 2010 statement, Romania's Orthodox patriarchate said it believed concerns about Greek Catholic properties were "artificial and exaggerated.” It said it was again seeking dialogue with the Greek Catholic Church.

The Greek Catholic bishop of Oradea, Virgil Bercea (pictured left), told Ecumenical News International that ecumenical ties had deteriorated since the 2007 election of Patriarch Daniel Ciobotea. Bercea said he was worried Catholic Church members could also be denied access to Greek Catholic cemeteries, which could now be reserved for Orthodox burials. "Even now, the Orthodox are waging a psychological war against us; it seems our government leaders do not appreciate the situation's gravity," said Bercea, whose church, according to government data, currently has 654,000 members compared with 1.5 million in 1948.

Banca Transilvania 2009 Net Falls 84% on Provisions

By Irina Savu

Feb. 2 (Bloomberg) -- Banca Transilvania SA, Romania’s second-biggest publicly traded bank, said full-year profit declined 84 percent as the recession prompted increased provisions for bad loans.

Net income declined to 62 million lei ($21 million) in 2009 from 397 million lei a year earlier, the Cluj, Romania-based lender said today in a preliminary filing to the Bucharest Stock Exchange. The bank more than doubled provisions for bad loans, which represent 4.8 percent of total lending, to 533 million lei last year from 206 million lei in 2008.

Overdue private debt more than doubled last year as the recession slowed wage gains and pushed up unemployment. Romania’s economy contracted an estimated 7 percent last year, after growing 7.1 percent in 2008, the fastest pace in the European Union. Unemployment rose to 7.8 percent in December from 4.4 percent a year earlier and wage growth slowed to an annual 0.9 percent from as much as 20 percent in 2008, making it more difficult for people to meet payments.

“This year won’t be easy for anybody, we know that, especially the first half will be difficult for our customers and for the banking system as a whole,” Chief Executive Officer Robert Rekkers said in the statement. “Last year was extremely difficult and challenging and we paid full attention to the aggressive provisioning.”

Net assets grew 15 percent to 19.5 billion lei in 2009 from 17 billion lei at the end of 2008, the bank said.

To contact the reporter on this story: Irina Savu in Bucharestisavu@bloomberg.net.

Romania May Cut Benchmark Interest Rate a Second Time This Year

By Adam Brown

Feb. 2 (Bloomberg) -- Romania’s central bank will tomorrow probably cut its benchmark interest rate a second time this year after the International Monetary Fund signaled it’s ready to unfreeze a $30 billion loan to the country, a survey showed.

The Banca Nationala a Romaniei will cut its monetary policy rate to 7 percent from 7.5 percent tomorrow, according to eight of the eleven economists surveyed by Bloomberg. Two expect a quarter-point cut, while one predicts the bank will lower the benchmark to 6.75 percent. The announcement is expected after 11 a.m. local time tomorrow.

“A cut from the central bank at this stage would be interpreted by investors as increased confidence that things are improving in Romania,” Nicolaie Alexandru-Chidesciuc, chief economist at ING Bank Romania SA, said in a research note today. “At the same time, it would offer the necessary stimulus for re-entering on a growth path.”

Central banks in eastern Europe are still cutting rates to resurrect their economies after their reliance on exports and foreign credit last year plunged the region into the world’s deepest contraction. Hungary last week cut its benchmark a quarter point to 6 percent while Deutsche Bank AG estimates Russia may lower its refinance rate by as much as 1.5 percentage points this quarter.

A team from the IMF last week recommended that the fund resume disbursement to Romania after the Balkan country’s political impasse was resolved, enabling the passage of a budget bill. The mission said a payment of 2.3 billion euros ($3.2 billion) will probably arrive in mid- to late-February and a further 1 billion euros may be paid in March.

Political Turmoil

Half of the February payment will be used to build up foreign exchange reserves at the central bank while the remaining half will finance the budget deficit.

Romania’s central bank last cut its main rate on Jan. 5, by half a percentage point, after the formation of a government two weeks earlier ended months of political turmoil that had left the country without an administration and prompted the IMF to shelve its emergency loan.

Prime Minister Emil Boc put together a Cabinet on Dec. 23 and lawmakers approved the spending and revenue plan on Jan. 14.

To contact the reporter on this story: Adam Brown in Bucharest atabrown23@bloomberg.net

Fitch upgrades Romania outlook to Stable

BUCHAREST, Feb 2 (Reuters) - Fitch Ratings raised Romania's outlook to Stable from Negative on Tuesday, citing a narrowing of its external shortfall and a resumption in aid disbursements from the International Monetary Fund. 

The move is the first positive move from ratings agencies since Fitch downgraded Romania to "junk" at the height of the world crisis.

A political crisis last year heightened market jitters, but the new centrist government appointed in late December after a hotly contested presidential election has passed an austere 2010 budget which helped revive a stalled IMF deal.

"The passing of a contractionary 2010 budget and expected resumption of Romania's IMF/EU funding ... has significantly reduced fiscal and external financing risks," the agency said in a statement.

The leu currency firmed slightly after the announcement, trading at 4.0850 per euro at 1539 GMT, compared with 4.0895 before the statement release.


"The outlook improvement will raise foreign investors' confidence in the Romanian economy which will have a positive impact on the leu currency, interest rates, yields," said ING Bank Romania chief economist Nicolaie Alexandru-Chidesciuc. 

He also said he expected Standard and Poor's to mirror the move by Fitch, but added a rating improvement is much more likely to come next year once fiscal tightening measures bear fruit.

"For now, all we have is the government's promise to enforce tightening fiscal measures," he said.

Fitch has simultaneously affirmed Romania's Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'BB+' and 'BBB-' respectively. Romania's Country Ceiling and Short-term foreign currency IDR are affirmed at 'BBB' and 'B' respectively. 

Romania is rated 'BB+' with a negative outlook by S & P, while Moody's rates Romania above junk at 'Baa3' with a stable outlook. Romania and Latvia are the only European Union states rated below investment grade.

(Reporting by Marius Zaharia and Luiza Ilie; Editing by Patrick Graham)

Ceausescu's son seeks ban on play on ex-Romanian dictator

(AFP)

BUCHAREST — The son of former Romanian dictator Nicolae Ceausescu wants to ban a play on the December 1989 trial and execution of his parents in order to protect their names, his lawyer said on Tuesday.

"We are seeking a ban on the Odeon theatre performing this play in Bucharest and damages worth one leu (about 0.25 euros)," Haralambie Voicilas told AFP.

After two shows in Bucharest last December, "The Last Hours of Ceausescu" was to be performed in Berlin and then the Swiss cities of Bern, Zurich and Lucerne in February.

The lawyer said Valentin Ceausescu and his late sister's husband had registered the "Ceausescu" trademark two years ago, meaning the name could no longer be used for commercial purposes without their consent.

"The plaintiff's motive is not to get rich but to prevent that his father's name be ridiculed," Voicilas said.

He stressed however that the ban did not apply to historical works.

Nicolae and Elena Ceausescu were executed by a firing squad on December 25, 1989, following a brief trial. His communist regime was the last to crumble in Eastern Europe in 1989.

Valentin Ceausescu also went to the courts in 2006 after a mobile communications company used footage of a Ceausescu speech in a commercial.

The court dismissed the suit as the name of Ceausescu had not yet been registered as a trademark, Voicilas said.

The play is written by Milo Rau, one of the founders of the International Institute of Political Murder based in Berlin and Zurich.