Thursday, May 31, 2007

Romania rate cuts premature, increase needed-IMF

WASHINGTON, May 31 (Reuters) - The International Monetary Fund said on Thursday Romania's interest rate cuts of 150 basis points this year were "premature", and urged the authorities to reverse the trend and raise rates.

"Given the need to firmly anchor inflationary expectations and the credibility of the inflation targeting framework, (IMF) directors considered the recent interest rate cuts to be premature," the IMF said in its 2007 economic review of the Romanian economy.

"They urged the authorities to increase interest rates as needed to attain the inflation targets," the IMF added.

The rate increase may pressure the Romanian currency to rise, the IMF said, but added the exchange rate was competitive and a stronger currency will help contain inflation.

"(IMF) directors also considered it important to avoid any deviation between the policy and effective interest rates, and to reduce reserve requirements cautiously," the fund said.

Romania's central bank has cut its benchmark rate by 150 basis points this year, with the last quarter point cut on May 2, after price growth slowed more than expected.

Romania's central bank deputy governor Eugen Dijmarescu told Reuters on Thursday the current level of interest rates served the country's current economic needs and the central bank would meet its inflation goal this year.

The IMF said Romania's growing current account gap and the possibility that inflationary pressures could be reignited were clouding the economic outlook.

"The economic outlook is clouded by a widening current account imbalance and the risk of a resurgence of inflationary pressures, as a result of strong domestic demand that is being fueled by rapid credit growth and procyclical fiscal and incomes policies," the IMF said.

'Growing sympathy' for Romania secured Cannes prize: director

BUCHAREST (AFP) - "If I had presented the same film in 2002, the likelihood that I would have received the Palme d'or would have been almost nil," Mungiu told his first press conference since returning to Romania.

"But I capitalised on the growing sympathy for Romanian cinema," he said, thanking those who had made films before him.

The 39-year-old director cited Cristi Puiu, who received the "Un Certain Regard" award at the Cannes Film Festival in 2005 with his feature "The Death of Mr Lazarescu", and Corneliu Porumboiu, whose "12:08 East of Bucharest" won the Golden Camera, awarded to first-time filmmakers, last year.

Mungiu stressed that his movie, with its powerful story of an abortion banned under the Communist regime, was not meant to be a chronicle of the time.

"It is based on an actual experience and it has a moral sense that goes beyond the historical context and that, I hope, everyone will understand," he said.

Romanian cinema is seeing a heyday with several directors, aged between 30 and 40, making their mark on the international stage in recent years. Life under Communism was an important asset for them, Mungiu said.

"We exploited that experience -- the fact that we lived under Communism -- to dilute all that was unpleasant."

Mungiu said he will need time to come up with his next project but said he hoped it would "come out more quickly" than "4 Months, 3 weeks and 2 days", which he completed five years after finishing his first feature film, "Occident".

"But it's the result that matters," he said, adding that he hoped the film's success would help provide more funding for Romanian cinema.

"4 Months, 3 weeks and 2 days" cost a little over 600,000 euros (806,000 dollars) to make.

"We have become used to cutting all 'invisible' expenses, by not hiring actors but using friends to reduce costs, and that is not normal, it cannot last forever," Mungiu said

Bulgarian NGO Demands Release of Bulgarian Businessman Detained in Romania

Sofia News Agency

31 May 2007, Thursday

Bulgarian non-governmental organisation Justice-Bulgaria Foundation demanded on Thursday the release of controversial Bulgarian businessman Stamen Stanchev, detained in Romania on corruption charges.

The NGO outlined its demands in an open letter addressed to Bulgarian President Georgi Parvanov, the Foreign Ministry and the Parliament, as well as European Commissioner for justice Franco Frattini and former European Parliament rapporteur for Bulgaria Geoffrey van Orden.

"Because of the rapidly deteriorating political climate in Romania in 2006 and the business interests of certain Romanian politicians, a malicious investigation against cabinet ministers and several employees of the government was started, which included Stamen Stanchev and several other foreign businessmen," the statement read.

"The reasons are absurd and are not based on any facts, because Stanchev did nothing except offer his services as a consultant, which resulted in serious benefits for the Bulgarian state," the letter goes on to say.

The appeal, which describes Stanchev as a Bulgarian businessman specializing in consulting energy sector privatisations, demands that Romanian authorities remove the travel restrictions imposed on him

Romanian investigators arrested Stanchev in November, but later released him on condition that he would not leave Bucharest.

Prosecutors see him as the brains behind the industrial espionage network, whose goal was to obtain key documentation pertaining to the privatisation of strategic industrial assets in order to win consultancy contracts.

The letter goes on to accuse Romania of breaching Stanchev's human rights by refusing him the right to exit the country and claims his family, including a seriously sick child, are severely distressed by his absence.

"If the ghost of Ceausescu can divide a functioning democracy [in Romania], then it is our civic duty to defend democracy with its only tools - free speech and intolerance to injustice," the appeal concludes.

The letter is signed by the NGO's chairman, Sezgin Mumun, known for his fight against the perpetrators of the so-called "regeneration process", when ethnic Turks in Bulgaria had to change their names forcibly with Bulgarian ones.

The process was part of the communist party's policy in the mid 1980s, which led to a massive exodus of ethnic Turks from Bulgaria to Turkey, while others, including Mumun, were jailed.

Mumun is a harsh critic of Bulgaria's ethnic Turk Movement for Rights and Freedoms (MRF) party and its leader Ahmed Dogan, and has recently allied himself to Sofia mayor Boyko Borissov.

Justice-Bulgaria Foundation was created last month from the merger of seven smaller NGOs.

Romanian president demands early elections

BUCHAREST, Romania, May 31 (UPI) -- Romania's president, after surviving an impeachment referendum, is demanding the government's resignation and early elections.

Romanian President Traian Basescu said Prime Minister Calin Popescu Tariceanu should step down, the Serbian news agency Beta reported Thursday.

In his first address to the Romanian parliament since he was reinstated as head of state by the May 19 public referendum, Basescu said the government's resignation and early parliamentary elections are the only fair and just solution to the political crisis.

Basescu said the referendum, in which 75 percent of voters who cast ballots didn't support his impeachment, showed the will of the sovereign people was in contradiction with a parliamentary majority that doesn't represents the interests of citizens.

On April 19, the parliament suspended Basescu as president at the request of the opposition Social-Democratic Party. Opponents claimed he was trying to grab more power than the constitution grants the president. Lawmakers also alleged Basescu's long-standing power struggle with Tariceanu was blocking judiciary and economic reforms.

Romania's Basescu seeks cabinet's resignation, early elections

Southeast European Times

BUCHAREST, Romania -- In an address to the two chambers of Parliament on Wednesday (May 30th), President Traian Basescu asked for the cabinet's resignation as the first step to early elections. Noting that a referendum to impeach him failed earlier this month, he said that the coalition opposing him had failed as well. "In a country governed by true democracy, the result of the referendum would have automatically caused the cabinet's resignation and calling of early elections," the president said.

The main opposition Social Democratic Party was quick to respond. Leader Mircea Geoana described Basescu's speech as one of "revenge and political vendetta", a theme echoed by the party of ethnic Hungarians, UDMR. Basescu's rival, Prime Minister Calin Popescu Tariceanu, said such presidential intervention is not at all democratic.

Franco Frattini: I'll recommend triggering safeguard clauses if Bulgaria and Romania do not speed up reforms

Focus News Agency

Brussels. Franco Frattini, the European commissioner for justice, freedom and security, has insisted that he will recommend triggering safeguard clauses against Romania and Bulgaria if they do not introduce enough judicial reforms and clamp down on corruption and organised crime. But he said both states must be treated like all other member states during this process.

“I will be ready to trigger the clause in case of no consolidation seen, if no consolidation is shown by the Romanian or Bulgarian authorities,” he said in an interview with European Voice.

The European Commission will publish a report on 27 June on both countries’ progress since joining the EU in January in the area of justice and home affairs. The Commission can recommend sanctions against Romania and Bulgaria if they do not show enough progress.

But the British, French, Dutch and Swedish ambassadors voiced concerns to the Commission in April about its scrutiny of progress in both countries. Frattini said that he understood the ambassadors’ concern but cautioned that Romania and Bulgaria should not be treated any differently. “To those ambassadors I told them, also directly, they have to consider Romania and Bulgaria as a new member state, as they are, deserving equal treatment,” he said.

“I have to be in touch, I cannot treat them as I have to treat a neighbour country like Serbia. They are full member states, they sit around the same table of the Council [of Ministers], they vote as France, as Italy and Spain [do].”

Frattini said that he had recently met the Bulgarian Prosecutor-General Boris Velchev, the Bulgarian Interior Minister Rumen Petkov and the Romanian Justice Minister Tudor Chiuariu to ask them to explain progress to date. On Tuesday (29 May) he met the Romanian Interior Minister Cristian David.

Frattini said he had highlighted “good points and points of weakness” in a new Romanian law setting up an “integrity agency” - which will tackle conflicts of interest for public officials. After the meeting, David said: “The activation of the safeguard clause is out of the question.”

Romania modernises its highway infrastructure

By Paul Ciocoiu for Southeast European Times in Bucharest – 31/05/07

Expanding and modernising its road infrastructure has become a top priority for Romania. Economic growth demands faster and easier cross-country transit. Moreover, as a new EU member, Romania needs better connections with state-of-the-art European highways.

Several major foreign investors have expressed interest in building Romania's new, modern road infrastructure. Among them are Lena from Portugal, Aktor from Greece, Vegyepszer from Hungary, and several consortiums.

Of the projects initiated by the government so far, one of the boldest is the Transylvanian Highway -- a four-lane, 415km long motorway stretching northwest from Brasov in central Romania to Oradea, on the border with Hungary. It is currently the largest highway project in Europe.

Upon completion, expected in 2013, the motorway will form an important section of the Romanian national highway system, providing a vital connection with the rest of the continent, and linking major European market centres with those in Central Asia.

Work on the Transylvanian motorway began in 2004, under a 2.2 billion-euro contract with the US-based firm Bechtel. The Romanian government provided around 184m euros in funding for this project this year.

Another project -- to build a highway linking Bucharest with the harbour city of Constanta on the Black Sea -- is continuing.

The first 18km of this highway, out of the planned 225km, were completed under former dictator, Nicolae Ceausescu, in 1987. Some 173km of this highway, spanning the capital and the town of Cernavoda on the banks of the Danube, is already in use. The project should be completed by 2010.

Also under construction is the 1.6 billion-euro Bucharest-Brasov highway, initiated last year. It is a 73.3km, two-lane motorway that will link the capital to the western border by joining up with the Transylvanian Highway. The Bucharest-Brasov project will provide a long-awaited alternative to National Road 1, the most congested road in the country.

Future projects under consideration include a highway linking the western border checkpoint of Nadlac to Bucharest, via the city of Timisoara. There are also plans for a route linking the northern town of Suceava to the Ukrainian city of Cernauti, connecting the 4th and the 5th pan-European highways.

Romanian director who won Palme d'Or praises country's movies

BUCHAREST, Romania (AP) - The Romanian director who won the Palme d'Or at the Cannes film festival has credited his country's recent film output with helping him win the festival's top prize.

«I don't know why this (success) is happening here and now,» said Cristi Mungiu, who added that if it had not been for the success of other Romanian films, the chances of him winning were extremely limited.

«If it had been presented in 2001 or 2002 I think there would have been a tiny chance it would have won,» he told reporters.

Mungiu's movie «4 months, 3 weeks, 2 days» took the top prize over 21 other movies at the festival, just ended. Another Romanian film «California Dreamin»' by filmmaker Cristian Nemescu, who died in a car crash last year at age 27, won honors in a secondary competition called «Un Certain Regard.»

Mungiu has said that his film, a grim portrayal of a girl seeking to have an illegal abortion, shows how people's choices are affected by the political system, indoctrination and stereotyping. The film had a budget of just ¤500,000 (US$671,000)

In 2005, «The Death of Mr. Lazarescu» by another Romanian movie maker Cristi Puiu won the «Un Certain Regard» honors and was Romania's official selection for the U.S. Academy Awards for Best Foreign Film.

In his first appearance in Romania since he won the Palme d'Or, Mungiu said that Romanian film making had improved.

«We are going back to the simplicity of the story. Before the story was told in a twisted and complicated way. Cinema audiences want the story,» he said.

Mungiu also revealed how he did not have tickets for the party at the end of the festival on the French Riviera. He finally showed up at the bash and showed his award. «Is this good enough?» he asked.

Reforms waning in EU's newest members: World Bank

By Alan Crosby

PRAGUE (Reuters) - The pace of reforms in the EU's east European members has slowed and most countries in the region are not taking advantage of strong growth to improve public finances, the World Bank said in a report on Thursday.

It predicted the pace of growth in the EU-8 plus two -- the 8 east European countries that joined the bloc in 2004 plus Bulgaria and Romania, which joined this year -- would generally "slow somewhat" in 2007, except in Poland, Slovakia and Bulgaria.

But given their recent strong economic performance, driven mainly by domestic demand, the World Bank chided governments for not using the opportunity to finish reforms needed to converge with richer European Union members and to cut public deficits.

"Reform momentum in the region has generally waned owing to post-accession reform fatigue, unstable political situations, and weak administrative capacity," the report said.

"Although small steps are taken now and then to improve the business environment, more complex public administration, legal, and labor market reforms are proving elusive and renewed momentum is needed to sustain the process of rapid real convergence."

In May 2004, the Czech Republic, Slovakia, Poland, Hungary, Slovenia, Latvia, Lithuania, and Estonia joined the EU as part of a massive expansion plan that also included Cyprus and Malta. Romania and Bulgaria followed this January. The 10 east European members are covered in the report.


Public finance reforms have been a hot topic in east Europe, where governments have been trying to balance political considerations with fiscal reality.

Bloated deficits have forced some to change euro adoption plans. New EU members are required as part of the accession agreement to adopt the single currency. Though no strict timetable is set out, most want to join the euro zone as quickly as possible to increase efficiency in trade and business.

The report said only Bulgaria and Estonia tightened their fiscal stance "significantly" in 2006.

It added the picture is unlikely to change markedly in 2007, "although Hungary will make an important dent in the very large deficit recorded in 2006 and Poland will continue its very gradual adjustment process".

Slovakia is aiming to bring its deficit just below the 3 percent of GDP threshold which would be needed to adopt the euro from 2009 as planned, but the World Bank said "there is very little margin for slippage".

"The need for a more ambitious fiscal policy is particularly acute in Latvia, but Bulgaria and Romania also can hardly afford the fiscal easing envisaged this year," the report said.

The report said monetary policy in the Czech Republic and Poland is likely to follow the tightening cycle of the ECB, while better inflation prospects -- and higher interest rates -- may allow for some easing in Hungary and Slovakia.

In Romania, where inflation is below expectations, the central bank appears to be focused on reducing interest rate differentials between Romania and the euro zone after three cuts in the base interest rate by a total of 150 basis points this year, the report said.

Switzerland lifts labour market restrictions for Bulgaria, Romanie

Sofia News Agency

Switzerland's government has decided to gradually lift labour restrictions on Bulgarians and Romanians, Sofia News Agency reports. However, the new measures will not provide Bulgarian and Romanian job seekers with unfettered access to Switzerland's labour market and their stay in the country will also be limited.

At the beginning of May, Swiss authorities decided to make it easier for western Europeans to work in the federation, expanding the reach of regulations first introduced in 2002.

A similar plan to gradually lift restrictions by 2011 is in place for the Eastern European countries that joined the EU in 2004.

Out of the back room

A tough Romanian abortion story has won this year's Palme d'Or. Nick Roddick hears why the director was never going to end up in monster movies

Nick Roddick
Thursday May 31, 2007


The film world's collective jaw may have dropped on Sunday night when 4 Months, 3 Weeks and 2 Days - a Romanian film about abortion with no stars and costing under half a million pounds - walked off with the Palme d'Or in Cannes. Less surprised, probably, was its director, Cristian Mungiu. He was confident enough of his chances when we met, 10 days before the prize-giving, to tell me that he wasn't going home when his free, festival-provided hotel room ran out: "I'm going to stick around for the awards."

By then, of course, the world's press had seen the film, and the rumour-mill was already at work, identifying it as the discovery of the year. Mungiu knows a thing or two about rumours. He screened a rough cut of the film at the Rotterdam Film festival in February just three days after finishing shooting, and that was when word of mouth got going in earnest. Within days, he had several offers from sales agents.

Given the bleakness of the film's subject matter, it is reassuring to discover that its 39-year-old director, while serious about his art, views the Ceausescu era with a dry sense of humour. "Jokes are what kept our spirits up," he explains. "You were always standing in line waiting for things to happen, and people started telling jokes. Everybody had a joke: it was a way of surviving."

But Romania's history of illegal abortions was no joke. Abortion was banned in Romania in 1966, resulting (as was presumably intended) in an alarming surge in the birth rate. Class sizes increased by a third, and extra classrooms had to be built. "There were seven Cristians in my class," recalls Mungiu. "There were not enough names to go round." Illegal abortions also rose, killing a reported 500,000 women in the last two decades of communism. "In that context, abortion stopped being a moral issue: it was an act of rebellion."

The film is set in 1987, in the last winter but two of the Romanian People's Republic. It is about two young women, Otilia and Gabita, who share a room in a university dorm in a small provincial town. Gabita is pregnant and Otilia puts her considerable energy into arranging an abortion. They meet up with the sinister - and ironically named - Mr Bebe. After some unpleasant haggling, the procedure is carried out.

The film's story is, Mungiu says, taken not just from the period but from the experience of one of his friends. "I'm very close to it. It came from a girl I met in my early 20s, and it had happened to her. I shaped my film directly around her experience."

Given that several recent Romanian films have told stories which look to be as much social history as individual experience, Mungiu counters any suggestion that he is concerned with the bigger picture rather than his characters.

"I was never planning to make a film which would be primarily the chronicle of those times. I didn't want to use all the cliches about late communism. I never mention Ceausescu or communists or party activists."

Back then, he explains, no one knew they were trapped in (after Albania) Europe's second most repressive society, and even less that they were seeing out 'the last days' of the communist era. "We were never aware that we belonged to a strange world." Mungiu insists. "We were just living like normal people under a particular set of circumstances, and that's how I wanted to tell things in the film."

Mungiu trained at the film school in Bucharest, but says he learned most by working as an assistant director on several of the American and western European films that flooded into Romania in the 1990s, attracted by low labour costs and stunning locations. "I worked on a lot of monster films," he says. "But it's a job, and you learn something - much more than at film school."

He wrote the screenplay for the film last summer and only decided he was going to make it in September. By then, it was too late to tap into western Europe's film-funding honeypot, "because the decision process takes too long". Fortunately, he had been involved in redrafting Romania's cinema law the previous year, so knew just where to turn on the home front.

Casting was more difficult. One of the girls, Gabita, is played by relative newcomer Laura Vasiliu and Otilia is played by Anamaria Marinca, one of the stars of the 2004 Channel 4 series Sex Traffic, who now lives in London. It cost him more than he could afford to fly her home for a test, and he was devastated to find that she wasn't at all how he had imagined Otilia. Vocally, however, she was ideal. And, for Mungiu, that's what really counts: vocal realism.

"Sound recordists hate me," he says, "because I think people express their feelings more easily if" - he drops his voice to a whisper - "they talk like this than if they speak loud and clear. I'm not a fan of loud and clear."

Mungiu is now back in Bucharest and is determined to keep working in his native country - and on his own terms. "I had the experience of working on a film for somebody else, on a foreign production," he says. "They were very nice people, but I discovered it is very difficult for me to have somebody else interfere with my film. I wouldn't like to work on anything unless I have complete control."

Having a Palme d'Or on the mantelpiece generally makes that easier to achieve.

Romania Central Bank Gov Not Comfortable With Leu Appreciation

Dow Jones Newswires

Ongoing disinflation in Romania has allowed Romania's central bank to cut its main policy interest rate sharply this year, with 150 basis points of cuts since February. That has taken the benchmark rate down to 7.25% from 8.75% at the beginning of the year.

Earlier this week, the International Monetary Fund called those rate cuts premature.

But Isarescu noted that the IMF's outlook on the prospects for inflation in Romania are more pessimistic than the central bank's own projections. At the same time, the IMF is more comfortable with the leu's appreciating trend than the central bank, he said.

"I'm not" so comfortable, Isarescu said. The strong leu poses a challenge in terms of the competitiveness of Romanian companies as well as the sustainable financing of the country's double-digit current account deficit, he noted.

But his real concern, he added, is "this appreciation is inducing huge temptation from banks and their clients to lend and borrow in forex."

Increasingly, Romanian households are taking out mortgages in euros to take advantage of lower interest rates than those available in the local currency. Companies are doing the same.

"Forex credits for unhedged borrowers in my view (are) a clear risk for financial stability," he said.

He said he expects inflation to remain around target. That could be achieved even with a moderate uptick in current inflation rates.

Risks to that outcome are present and due to local conditions, Isarescu acknowledged.

Recent wage deals, especially in the public sector, have far outstripped productivity gains and actual inflation rates, and are likely to spur increasingly high demands in the private sector.

"Wage growth trends are a worry," Isarescu said.

So is the government's apparent willingness to run a higher budget deficit.

"Fiscal conditions should remain prudent," the central bank governor said.

Romania's government has committed to keeping its budget deficit below 3.0% of gross domestic product. But that is almost twice the scale of the deficit in 2006, which also marked an increase from the year before.

With the economy growing robustly, loosening fiscal policy now could lead to overheating of the economy and eventually trigger higher inflation, analysts say.

"They are playing with fire," Ciprian Dascalu, an economist for ING in Bucharest, said of the government's policy. He noted that administered price hikes are being end-loaded into 2008, suggesting price stability is effectively being paid for with tomorrow's inflation.

Any depreciation of the leu would "immediately be seen in the current inflation figures," Dascalu added.

Romania reaps benefits of U.S. support

By Paul Radu - The Center for Public Integrity

BUCHAREST, Romania -- There are only a few hundred Muslim immigrants in Iasi, a city of 350,000 that is Romania's second-largest metropolis, and few of them seem eager to talk about what happened in January 2005.

That's when Romanian security forces converged on an Iasi mosque and arrested five North African and Middle Eastern students enrolled at the local University of Medicine and Pharmacy on suspicion of being terrorists.

The suspects were a Saudi, Musaab Ahmed Mohamed Mujalli; Yousuf Ali Mohamed Al Balushi, of Oman; Sudanese citizen Aymen Ahmed Fouad Jadkareem; Pakistani Asad Abrar Qureshi; and Khaldoon Walid Monir Nabham, whose citizenship wasn't disclosed. The students -- along with a Saudi medical student from Bucharest and a Syrian doctor, both also accused of terrorism -- were deported in February 2005 without legal proceedings. They haven't been seen in Iasi since.

In a story in the Romanian newspaper Jurnalul National, officials from the SRI, Romania's domestic intelligence agency, depicted the group as an al-Qaida cell, preparing to brainwash recruits and mount suicide attacks not previously seen in the Eastern European country.

What the SRI did not explain was why such supposedly dangerous terrorists were simply kicked out of Romania instead of being held and tried on terrorism charges. Later, the local prosecutor said he couldn't pursue a case against the students because of insufficient evidence. And the Romanian government denied a request from the International Consortium of Investigative Journalists for the exact dates and flight details of their deportations, citing national security concerns.

Zeal to be a partner

The case was just one indication of Romania's zeal to be an integral partner in America's global war on terror, a commitment that would bring the country significant financial and political benefits -- and gain the United States a new ally strategically located not far from the continuing tensions of the Middle East and Central Asia.

Since the Sept. 11, 2001, attacks, Romania has made a concerted effort to align itself with the Bush administration's get-tough anti-terror policies by:

u Signing on as one of a few European nations to agree not to extradite American military personnel to the International Criminal Court, a body that probes allegations of war crimes and human rights violations -- and is staunchly opposed by the U.S.

u Making an air base available as a staging area for the U.S. invasion of Iraq.

u Sending several hundred troops to fight in Iraq, buttressing the Bush administration's "coalition of the willing."

u Serving as a transit point, according to investigations by the European Union and the Council of Europe, for CIA-operated aircraft that transported terrorism suspects from Europe and the Middle East to the U.S. naval base at Guantanamo Bay, Cuba, and other, more secretive foreign facilities, where they have been held without trial and subjected to what human rights groups decry as torture.

u Positioning itself to become the most important U.S. ally in the Black Sea region by agreeing to host a rotating contingent of up to 2,000 U.S. troops.

While payments to Romania under the United States' Foreign Military Financing program have increased substantially since Sept. 11, the country's decision to align itself closely with the U.S. has hurt its reputation with much of Europe and dismayed some of its own citizens.

Taps on phones

As for the deported students, court documents examined by the International Consortium of Investigative Journalists show that Romanian authorities had tapped both their landline and mobile phones, intercepted their text messages and tracked them to a public Internet cafe in Iasi. But despite the intense surveillance, Romanian prosecutor Gheorghe Muscalu told ICIJ in an interview that the government had to drop the case because it had been unable to find evidence linking the students to terrorism.

The students were deported anyway under new, controversial powers adopted after the Sept. 11 attacks that gave the Romanian government broad authority to deport terrorism suspects.

"It seems to me that it's all been a fraud," Dr. Mohamed Daoud, an Egyptian physician who graduated from medical school in Iasi, told ICIJ. Daoud, who knew the deported students, is one of the few Muslims immigrants willing to speak out.

"These guys were not terrorists," he said. "They might have been a little bit more faithful (to Islam) than the others." He said he suspected that the SRI staged the arrests to justify the need for strict new national security laws that President Traian Basescu wanted the Romanian Parliament to enact. "They can say now, 'Look -- we have terrorists, too,' " Daoud said.

Since 1998, Romania has received more than $100 million in U.S. military aid, the bulk of it coming from the Foreign Military Financing program, which provides grants to buy U.S. military equipment and services.

After the Sept. 11 attacks, U.S. and Romanian military and intelligence interests became more closely intertwined.

As President Basescu revealed last year in an interview with The Washington Post, within months of the attacks Romania and the U.S. opened a joint anti-terrorism center where personnel from the CIA and other U.S. agencies worked alongside their Romanian counterparts, including the SRI, which handles domestic intelligence.

In the summer of 2002, when Romania was the first country to say yes to the Bush administration's request that allies agree not to extradite Americans to the International Criminal Court, the European Union chided Romania for acting unilaterally without Brussels' blessing.

But the Romanian government apparently saw support for the U.S. position as a quid pro quo for military aid and for U.S. support for Romania's bid to join NATO.

EBRD to invest €500 mln in Romania in 2007

The European Bank for Reconstruction and Development is to invest some €500 million ($672 million) in Romania in 2007, Deputy Director of EBRD in Romania Serban Ghinescu said on Wednesday.

Main investment fields include roads, energy, waste disposal and waste water treatment, Ghinescu said. EBRD has so far invested €3.5 billion ($4.7 billion) in Romania since 1992. (

Getting rid of Romania's government?

NOTE: The story below is from a personal blog and not from a media outfit. Although we do not publish stories from other blogs, this is an exception as it is an insightful analysis of the Romanian political situation.

Frank's RamPage blog by Frank Sellin.

Romania's Democratic Party (PD) claims it has the 116 signatures of parliamentarians necessary to submit a motion of censure against the minority government of Călin Popescu Tăriceanu (PNL).

That's mildly impressive, given that PD only has 74 members across both the House of Deputies and the Senate.

Submitting such a motion is one thing, but getting a majority of both houses to vote for it is probably an insurmountable hurdle, considering 322 parliamentarians (out of 469) voted for President Traian Băsescu's suspension from office, and considering that no rebels in PSD have yet succeeded in obtaining the resignations of Geoana, Iliescu, or Hrebenciuc, let alone leadership of the party.

Given the continuing embarrassing and adolescent behavior of many parliamentarians (and keeping in mind that PRM had boycotted the session) during Băsescu's presidential address to Parliament, it is highly unlikely that such a motion of censure, or Băsescu's call for the government's resignation, will succeed in dethroning the government, let alone trigger early elections for failure to form another government.

Interestingly, at least part of the PSD's benches, including Geoana, kept quiet and reasonably respectful during the president's address. And, these same parliamentarians did manage to vote 240-20 to pursue another referendum, this time on changing the electoral system from proportional representation to a "uninominal" vote. (The 20 votes against largely belonged to the Hungarian party, or UDMR, which depends as an existential matter on closed list proportional representation.)

However, the censure motion will, as PD president Emil Boc suggested, clarify exactly what the basis of support for the PNL-UDMR government is. Individual parliamentarians and party leaderships will have to decide how closely they want to be seen as tied to a government whose prime minister assumed a vague responsibility for the failure of the May 19 suspension referendum (though without specifying any tangible consequences), or as contributing to the lingering political crisis. PSD in particular will have to resolve its internal party debate about choosing between PD and PNL as potential governing partners. That's Romanian chess for you!

Romania always harbors some potential for vertiginous surprises, but the bottom line is that -- barring a sudden capitulation by the present group of MPs in favor of early elections, or a party-line desertion of the present government by the entire PSD -- institutional and constitutional dysfunction in Romania has no clear exit before 2008.

Lost in Transylvania

Guardian Unlimited

Once, most of Europe looked like this. Gavin Bell visits deepest Romania where low-key tourism is helping to preserve an increasingly threatened way of life

Mati the blacksmith was worried. A Romanian gypsy, he was usually in lively good humour, but today he was distraught. Recently men from a television company had come to his village, offering to install satellite dishes for free, and his daughter had taken one. Now he had been sent a bill for renting it, and he didn't have the money - or a television. His daughter had gone to work in Hungary and taken it with her. So he feared the worst. Would the police take him to prison?

His neighbour, a local councillor, read the contract and reassured him. All he had to do was tell the company he didn't want the satellite dish, and they would take it away. Mati beamed. Life was simple again.

The incident a couple of weeks ago highlighted a clash of cultures deep in the rural heart of Romania, where a way of life that has been virtually unchanged for centuries is struggling to adapt to the demands of a new age.

In Mati's village, five miles from the nearest paved road, rush hour begins soon after dawn when people lead cows and horses from cobbled yards outside their kitchens, past gaggles of geese, ducks and chickens, to where a herdsman waits to take them to communal pastures for the day. At dusk the process is reversed, to the tinkling of bells and shuffling of hooves, as the animals are led back to their byres and stalls for the night.

In between, not much happens in the village. Depending on the season, most people are in the fields tilling or harvesting small plots of hay, oats and potatoes with horse-drawn implements handed down through generations. The most common form of transport is the horse and cart, designed to carry crops, logs, people, sheep, tools, and pretty much anything else that needs to be moved.

Like England before the land enclosures of the 18th century, there are no walls or fences, and the hillsides are common land. The scene is reminiscent of a Thomas Hardy novel, and in truth it lays fair claim to being a fragment of a rural idyll lost in most of modern Europe.

This is southern Transylvania, a high plateau of wooded hills and valleys shielded by the Carpathian mountains, where Saxon settlers and their descendants have farmed, traded and fought to preserve their land and traditions for more than 800 years.

They came in the 12th century from Flanders, Luxembourg and the Moselle valley at the invitation of a Hungarian king, to defend the mountain passes from marauding hordes from the east, and they built fortified towns and more than 200 villages that safeguarded their communities until the second world war.

Then the Russians came, 30,000 German-speaking Saxon men and women were bundled off to Siberian labour camps, and barely half returned. Another exodus followed in the 1990s with repatriation to newly unified Germany, and today about 50,000 remain in villages with Romanian and gypsy neighbours.

Now their polyglot communities face fresh challenges with Romania's entry into the EU earlier this year. In hamlets where women still draw water from wells and shepherds guard their flocks by night from wolves, there is confusion and concern over impending rules and regulations that threaten their livelihoods.

Subsistence farmers with a couple of cows are worried by reports that they must buy milking machines, they may not sell their home-made (and highly prized) cheeses beyond a 20-mile radius, and they may no longer keep livestock in their back yards. One bizarre suggestion was that shepherds be issued with GPS devices to ensure they kept flocks away from planned new highways. When a local journalist showed one to a shepherd, he was told: "Go away with this thing. You are scaring my sheep."

None of this is apparent to the few visitors who ignore the over-hyped Dracula myth and explore genuine vestiges of an older Europe, far from the madding crowds of Bran Castle. The road to Mati's village, Viscri, is a rough track that passes through a gypsy settlement and then meanders through countryside that those of us of a certain age remember from childhood, when wildflowers brightened meadows untainted by chemicals.

Over a hill the red tiled roofs of Viscri appear in a valley beneath the distinctive towers and ramparts of a fortified church, a common feature in a land exposed for centuries to the slings and arrows of outrageous neighbours.

The church and most of the farmhouses around it were built by descendants of Saxons who arrived in 1142, and the lay-out is unchanged - a broad dirt road flanked by pear trees and houses in medieval half-timbered style, with gates between them wide enough to take a loaded hay wagon.

Throw in water troughs for the livestock, and wooden benches for people to sit and watch the world go by, and you have the essence of a traditional Saxon village. Viscri has a couple of small general stores that also serve as bars, one of which has wooden tables by the door. This is a perfect place to sample local cheese, and observe the owner and her friends knitting socks, a cottage industry in the village. When people have little money, barter economies flourish. The current rate for hiring someone's car for the day is three pairs of hand-knitted socks.

Before the last exodus there were 300 Saxons in Viscri, now there are 25 in a population of 450. In an old school building there is a faded photograph of a brass band, featuring 34 men posing seriously with their instruments, an image of a bygone age when the village would gather for music, dancing and revelry fuelled by home-made plum schnapps.

One of the few who remembers those days is Sara Dootz, 70, who shows tourists around the church and maintains a centuries-old tradition of ringing its bells at noon. "We had a very rich cultural life," she says in the Low German dialect of her ancestors. "The band played at concerts, tea dances, weddings that lasted for days, and even we had theatre. The actors were the ones with the big mouths."

When the Berlin Wall fell, a young priest advised the Saxons to leave for Germany, saying there was no future for them in their villages. "The old people who left regret it now, but they are too proud to come back," Sara says.

But many of them do return, once every two years, for a week-long reunion when old instruments are dusted off and played at a dancing circle around a lime tree in the grounds of the church.

That they still have a viable community to come back to is due in part to the Mihai Emenescu Trust, a British-Romanian charity dedicated to preserving the culture and traditions of Saxon villages threatened by depopulation and lack of resources. So far, it has restored hundreds of historic buildings, trained local craftsmen in traditional building skills, and helped villagers to set up small business ventures.

One of the schemes is low-key tourism, renovating decaying farm buildings for guesthouses. I slept in a room with a wood-burning stove and an antique box-bed that slid from a chest of drawers. My stay coincided with one of two nights of the year when legends warn that vampires prowl, but all that disturbed me was a crowing cock with a befuddled sense of time. The room was typical of village guest houses, clean and simply furnished, with an authentic back to basics air. Hearty soups and stews are the order of the day at most meals, and there is a farmer's wife in the village of Crit who produces arguably the world's finest pork sausages.

Caroline Fernolend, Saxon resident and a director of the trust, says Viscri can accommodate 60 French or 30 English visitors: "The French will share a room, the English prefer not to. I always have to ask."

One English visitor who had a room to himself is Prince Charles, an enthusiastic patron of the trust who has bought a property in the village to be donated as a guesthouse. Following one of his visits, he wrote: "The area represents a lost past for most of us - a past in which villages were intimately linked to their landscape."

He probably came to this conclusion after walking a seven-mile trail from Viscri, over pastures and through wondrous woods of oak and hornbeam, to the village of Mesendorf. A less strenuous alternative is to arrange for Sorin Popescu the wood-cutter to take you in his cart, and show you scars on a trees made by bears climbing to nests of honey bees, the footprints of wild boar, and dens of foxes. From a high ridge in the forest there is a panorama of green hills dotted with sheep, smoke drifting from shepherds' camp fires, and in the far distance, hazy like a mirage, the snow-capped peaks of the Transylvanian Alps filling the horizon. It is the kind of place where you want to sit in the shade of a tree, melt into fragrant grass, and not go anywhere for a long time.

Milu the shepherd knows this feeling. It is a yearning that comes on him every spring, when it is time to take the sheep of his village to summer pastures in the hills, where he remains with them until autumn. "I can't wait to come here, to hear the birds singing in the morning and the dogs barking at night," he says. So does this land make poets of shepherds.

A guide takes us to his sheepfold, a rudimentary hut of wood and corrugated iron that he shares with two other shepherds and a pack of dogs as fierce as the wolves they fight to protect the sheep.

Milu's wife has come to prepare lunch over an open fire, and her four-course meal of flavourful meats and aromatic cheese would put classy restaurants to shame. They are vaguely aware that EU regulations may soon intrude on their lives, yet it could be argued that instead of meddling with these traditional farming practices - which are as organic as they get - we might learn from them.

Patrick Holden of the Soil Association, a patron of the Mihai Eminescu Trust, suggests the old Saxon ways of Transylvania could be a model for the development of green agriculture throughout Europe.

For now Milu, looking forward to summer in the hills with his sheep and dogs, is sanguine. "We are still optimistic, life goes on," he says.

Way to go

Getting there
Sunvil Discovery (020-8758 4722, has fly-drive packages to Transylvania with B&B from £892pp for one week; tailor-made tours of rural areas from £1,028pp, including flights, accommodation in hotels and village houses, most meals, excursions by horse and cart, and visits. Add £425 per couple for an English-speaking guide and driver.

Further information
020-7224 3692

Country code: 00 40.

Flight time: 3hrs.

£1= 53.40 lei.

AP: Romanian president calls on lawmakers to dismiss government, call early elections

BUCHAREST, Romania: Romanian President Traian Basescu Wednesday called on Parliament to respect the result of a referendum that failed to impeach him and demanded the government be dismissed and early elections held.

"Only by respecting the results of the referendum does Parliament show it respects Romanians," Basescu told lawmakers in Parliament. "The only solution is the dismissal of the government and early elections."

Basescu easily won a May 19 referendum on whether he should be impeached, gaining about three-fourths of the vote.

Lawmakers suspended Basescu accusing him of violating the constitution by fueling political disputes and taking on duties that belong to the prime minister, despite a court ruling that the president did not break the law.

Basescu also called on Parliament to adopt a law allowing for lawmakers to be elected individually, rather than on party lists and to pass a law that would ban former Communists and communist-era Securitate agents from holding public office. He also called for reforms in the health system, warning the government that delays in reforms could lead to European Union funds being withheld.

Romania joined the EU on Jan. 1, and the country has been mired in political bickering since then, particularly between Basescu and Prime Minister Calin Popescu Tariceanu.

The president has limited powers, but a large informal influence, particularly after the referendum.

Mircea Geoana who heads the opposition Social Democracy Party said that Basescu's speech to Parliament was one of "revenge and political vendetta."

Most political parties do not favor early elections because they have a poor showing in the polls. The next Parliamentary elections are not due until 2008.

Wednesday, May 30, 2007

Romania aid is promised

By Ben Perrin

In the isolated rural districts of Romania there are still people who live in abject poverty, with no running water and no proper healthcare.

But a Swindon charity is doing its bit to change all that.

Reach Romania has been lending a helping hand to a Bible school in Suceava, in the northern part of the country, for the last 10 years.

A small team has been travelling to Romania every year during that time and deliver aid and medicine.

Now an auction of promises is to be held next month by Highworth Methodist Church on behalf of the charity.

And everything from an evening of babysitting and a one-hour ironing session to a full body massage and a meal for two is up for grabs, if your bid is successful.

The money raised, which is expected to be more than £500, will go towards new clothes, food parcels, medicine, and a hip replacement operation for Marcel Lelcu, who is the vice-principal at the Bible College in Suceava.

Dr Stephen Brooke, of Victoria Cross Surgery, in Victoria Road, has been part of Reach Romania from the beginning.

He said: "I have been travelling over there for the last 10 years.

"We set up medical clinics in local churches or set up tents so people can come and obtain free medication such as basic vitamins and minerals.

"We offer painkillers, antibiotics and take their blood pressure.

"The money we raise for this auction will go towards clothes and medicine for the people."

The doctor, who lives in Stratton, added: "It is important Marcel gets his hip operation as there are no lifts in the school so, if he is wheelchair-bound, he will not be able to work properly.

"It would cost £2,000 for this to be done in Romania."

Suceava Bible School has classes three evenings a week with chapel on Tuesday nights and helps provide a place for local people to learn.

GWH nurse Helen Noyce, 49, from Highworth, said: "It is important we don't just treat this as a one-off thing, we must support the charity all year round.

"We go with the Romanian aid workers to people's homes to see the aid being delivered."

The chief organiser of the auction, Val Goodwin, 62, from Nythe, said: "While at the medical centres we like to take our musical instruments and play to the people waiting to be seen by the medical team.

"I play my guitar and Val plays her violin.

"The Romanians seem fascinated by it, especially the children, as they have probably never heard music before."

The auction, hosted by Paul Holloway, of Promises, will take place at Highworth Methodist Church on Saturday, June 9 at 7.30pm. Admission is free and all are welcome to attend.

Romania proposes to pool resources with Bulgaria in purchase of new warplanes

Bulgaria News Network

Romania has offered to Bulgaria to pool resources and buy jointly new multi-purpous jet fighters for their airforces.

Bulgaria's Minister of Defence Veselin Bliznakov made the announcement after meeting his Romanian counterpart Teodor Melescanu in Sofia on Monday.

Bliznakov said pooling efforts would help the Balkan efforts cut costs for training pilots, maintenance and repair. Both Bulgaria and Romania have to replace their aging fleets of Soviet-made MiG-29 and MiG-21 fighters. Bliznakov didn't give any indication as to what sort of aircraft they would choose.

Bulgaria, Greece, Italy, Romania to apply for funding of project for road traffic control

Bulgaria, Greece, Italy and Romania have applied to the European Commission for the funding of a regional project for road traffic control and safety. The project is called ITAKA, head of Transport Policy directorate to Bulgaria's transport ministry Dimitar Savov told journalists during the 91st European Conference of Ministers of Transport (ECMT), a journalist of FOCUS News Agency reported.

ITAKA will rival with two other regional projects. The project will involve the use of smart transport devices, such as e-call devices that will warn drivers of the road conditions, traffic and possible routes. The main problems outlined during the conference were road traffic, hard passing of border checkpoints, visa regime, road tolls and bad infrastructure.

Romania tipped by AA-rated Drinkall

Published: May 2007
By Philip Haddon, European Funds Reporter

Balkan specialist Tim Drinkall of the Swedish Gustavia boutique believes soaring domestic consumption could propel returns from Romania.

Drinkall has invested 21%of his Gustavia Balkan fund in Romanian stocks. Turkey makes up 25%, Croatia 15%, Serbia 13%, Bulgaria 10% and Bosnia 2%. He also holds small positions in Greece and Austria.

Although Drinkall, an Indiana-born American now living in Stockholm, sees himself as a bottom-up stock picker he still uses top-down macro filters to analyse particular areas.

‘Places like Bosnia, for example, are quite illiquid so we only have 2% of our portfolio there,’ he says.

With no Balkan-oriented benchmark available, Drinkall has a free rein as regards his country allocation. Gustavia Balkan’s biggest position is in Turkey but he regards that as an underweight.

‘By market cap, Turkey should really be about 70% of the Balkans’, he says.

In contrast Drinkall is enthusiastic about Romania which he regards as an up-and-coming country following a similar path to countries like Poland.

‘Romania is a play on domestic consumption. Poland developed into a strong economy by being domestically focused. Romania has the potential to do that too,’ Drinkall says. ‘If any of these countries are going to become important European economies, then it could be Romania’.

Foreign investors continue to pour money into the region, lured by the promise of low wage labour, the Gustavia manager says. And indeed, according to Drinkall, wages in Romania are only 30% of the average EU wage.

The rate of growth in the Balkans is sustainable and set to continue, Drinkall believes. ‘Economies in this region are all growing at a rate of 5-7% per annum. I think there is no reason why this cannot continue.’

On the subject of political risk in the region, Drinkall accepts it exists but is not too concerned by it.

‘There is political risk everywhere- there is even political risk investing in the USA,' he says.

'The drive of Balkan countries to enter the EU is making them more stable than they have been for a long time. All of these countries are aspirants for joining the EU. Even in places like Serbia the majority of the parties are pro-western, pro-EU and pro-reform’.

Drinkall has a great deal of experience in eastern Europe having worked for Austrian firm Creditanstalt in Hungary and Poland in the nineties. He also spent four years at Deutsche Bank as head of eastern European equity research and so is comfortable with the travel demands of his position. He generally spends two weeks of every month on the road meeting companies in the region.

‘I firmly believe in getting out and seeing the companies. I try and see our top ten to twenty companies two or three times a year,’ Drinkall says.

Having come from a company as huge as Deutsche Bank to a small Swedish boutique, Drinkall appreciates the benefits of being at a small firm. ‘We are flexible and agile, we do all the work ourselves. I think boutiques have more of an entrepreneurial spirit, we can dig up our own ideas.’

Not only does he dig up ideas for the Balkan fund on his frequent travels, but he also manages the Gustavia Greater Russia fund which invests in former CIS countries.

Drinkall, is the top ranked manager in Europe for his total returns in the equity emerging markets Europe sector. In the three years he has managed the Balkan fund it has returned 250%, far outperforming the 146% return of the sector’s average manager.

Frattini warns Bulgaria, Romania of safeguard clause

Focus News Agency

EU Justice Commissioner Franco Frattini has warned Bulgaria and Romania of the implementation of a safeguard clause if they fail to speed up reforms, the Romanian TV Realitatea reported. In an interview with the online edition European Voice, Frattini said that he was ready to trigger a safeguard clause in the sphere of justice in case he found out that the two countries had not made any progress in the fight against corruption and strengthen their judicial systems.

Meanwhile, the EU Justice Commissioner rejected critical remarks by France, Great Britain, Sweden and the Netherlands, which blame him for being “too friendly” to the two new EU members.

Iceland closed to Bulgaria and Romania

Iceland Review Online

The new coalition administration of the Icelandic government has decided to postpone until 2009 or 2014 a policy of open immigration from Bulgaria and Romania, which joined the EU on January 1.

As a member of the EEA Iceland is obligated to allow open immigration to the country from other EEA and EU member states, but may exercise a stipulation in the agreement which effectively postpones immigration from the two newcomers, Bladid reports.

“We are exercising this postponement clause but they have the rights to come here through service contracts and temporary work contracts,” said Minister of Social Welfare Jóhanna Sigurdardóttir of foreign nationals form Bulgaria and Romania.

“We have the right to postpone it even further to 2014. But we will review the situation before that time and then we will find out whether there is still reason to exercise the postponement clause,” Sigurdardóttir added.

The government plans to put a bill to amend legislation on the policy of open immigration and employment rights before parliament tomorrow.

According to Bladid, the Liberal Party (Frjálslyndi flokkurinn) campaigned on postponing immigration from Bulgaria and Romania as part of its platform before the elections, which had been criticized by other parties, including the Social Democrats (Samfylkingin), who are now in government and decided to exercise Iceland’s rights in this matter.

“There is always a reason to celebrate when people come to their senses. Everyone who wanted to talk about this issue objectively could see that it was of great importance. This shows that the Social Democrats’ talk of radicalism, injustice and racism was empty patter,” said Jón Magnússon, MP for the Liberal Party.

“I’m just waiting to hear their arguments. We will discuss this issue once it’s put before parliament,” said Steingrímur J. Sigfússon, MP for the Left Greens (Vinstri graenir).

Romania will not accept Italy's waste

BUCHAREST, May 30 (Reuters) - Romania's government has rejected Italy's attempts to deposit household waste on its territory, Environment Minister Attila Korodi said on Wednesday. The Naples "garbage crisis" has dominated news in Italy for weeks as local and national authorities have tried to end a stalemate over mountains of trash rotting on the streets because of a lack of adequate landfill sites.

Italian authorities are looking into temporary solutions, such as re-opening closed landfills and sending garbage to other areas. On Monday the Italian Environment Ministry said it had contacted the Romanian authorities about sending Italian waste to the new European Union member, but Korodi was against it. "Our stance is clear: We are not allowing Italian waste on Romanian territory," Korodi told state news agency Rompres. "Our infrastructure is not developed enough to handle our own waste."

"If someone lets garbage into Romania, they will suffer the consequences of Romanian law." Korodi said the environment chapter negotiated with Brussels allows Romania to refuse waste from other countries until 2015. A delegation from the Italian Environment Ministry and other agencies will meet Korodi in Bucharest on Thursday to discuss the issue. (Additional reporting by Deepa Babington in Rome)

Romanian opposition calls for no-confidence vote

BUCHAREST (Reuters) – The party of Romanian President Traian Basescu threatened on Monday to launch a no-confidence vote against the government after voters emphatically rejected government-backed moves to impeach him. A successful parliamentary vote against the minority government of Prime Minister Calin Tariceanu could end a policy stalemate after a May 19 referendum, aimed at bringing Basescu down, flopped. But there was no certainty the move by Basescu’s Democrats would succeed, and some analysts said the political crisis, which is paralyzing the European Union newcomer’s reform efforts, might only deepen. “The only step that will stop us from initiating a censure motion against the government would be the resignation of the government,” Democrat party head Emil Boc told Reuters in an interview.

Wizz Air airplane catches fire at Romanian airport; nobody hurt

BUCHAREST, Romania (AP) - A Wizz Air Airbus A-318 caught fire early Wednesday at a Bucharest airport, and the 76 passengers on board were evacuated, authorities and the company said. Nobody was hurt.

One of the plane's engines caught fire at about 6.20 a:m (0320 GMT) as the plane was sitting on the runway waiting to fly to Budapest, Hungary, Alin Maghiar spokesman for the General Inspectorate for Emergency Situations was quoted as saying by state news agency Rompres.

Wizz Air said in a statement there was a problem with an engine but did not elaborate.

The fire was put out by the plane's internal extinguishing system, Maghiar said.

Some 25 firefighters at the airport helped the passengers evacuate, he added.

Passengers were waiting to be boarded on another plane, and the flight will be delayed by 11 hours, the company statement said.

Wizz Air apologized for the incident and reassured its customers of the safety of its flights.

Wizz Air is a budget airline, whose main bases of operation are in Hungary, Poland and Bulgaria. It started flying from Romania in July.

IMF: Romania's economy expected to continue strong growth despite political disputes

Associated Press

BUCHAREST, Romania: Romania's economy remains attractive for foreign investors and will continue to expand strongly this year despite continuing political disputes, an International Monetary Fund official said Tuesday.

The fund's representative, Juan Fernandez-Ansola, said the IMF expects the Romanian economy to grow by 6.5 percent to 7 percent, boosted by strong direct foreign investment. He said the growth was occurring despite political disputes that led to the temporary suspension of President Traian Basescu.

Basescu was reinstated after easily winning an impeachment referendum on May 19 with about three-fourths of the vote.

Fernandez-Ansola warned, however, that imports were growing faster than exports due to consumer demand and the current account deficit could reach 11.1 percent for 2007.

He urged the government to keep a public wages under control, saying the budget deficit could reach 3 percent of gross domestic product by the end of the year. Fernandez-Ansola also called on the government to keep the deficit at 1 to 1.5 percent of GDP.

Romania had a budget surplus of 0.3 percent of GDP for the first four months of the year, but the government is scheduled to make large payments later this year for compensations for assets confiscated by the former communist regime. The government has projected a deficit of 2.8 percent of GDP for the year.

Isarescu: Romania may adopt the EUR before 2014

"Romania may adopt the European currency earlier than scheduled (2014), if things go well, National Bank of Romania (BNR) Governor Mugur Isarescu stated in a workshop on economic topics. “We have presented this programme in Brussels, with the option that, if things go well, we may be more ambitious,” Isarescu said, quoted by Mediafax. He pointed out that structural reforms must be finalised, as well as the pension and healthcare reforms, and the infrastructure must be built.

According to the Governor, the budget deficit and current account deficit are two of the major issues Romania is facing in the Euro zone accession process. Also, Isarescu emphasised that the foreign imbalance must be settled through a productivity increase. “Over the past few years, most of the deficit has been covered by FDI. Romania has been discovered, and considering the current data, investments will be carried on in the future as well,” Isarescu said. The budget deficit targeted by Romanian authorities is 2.8 per cent of GDP for this year, but according to the European methodology the value is 3.2 per cent of GDP, over the 3 per cent ceiling set for the adoption of the European single currency.

In fact, National Bank of Austria Governor Klaus Liebscher, a member of the European Central Bank Board and representing Austria in the International Monetary Fund Board, also believes that deadlines proposed by Mugur Isarescu for adoption of the Euro by Romania are realistic.

As for the inflation, according to the Governor the disinflation trend will be levelled down, as Romania is getting close to the European Union price increase rate. “Price corrections are still to be made, e.g. for natural gas. There is a dispute about what is going on with the gas price in the domestic market,” Isarescu explained. The average inflation targeted for the year is four per cent, as against 6.56 per cent last year, and the rate estimated for year-end is around 3.7-3.8 per cent, Isarescu mentioned.

“I hope that, without major political errors, the economic growth will continue after 2010 as well,” Isarescu stated. Romania has seen about eight years of continuing economic growth, the central bank chief explained. The economic growth rate last year was 7.7 per cent, up from 4.1 per cent in 2005, when the agricultural yield was affected by floods.

Official forecast indicate a 6.5 per cent growth rate this year, 6.3 per cent in 2008 and a gradual slow-down until 2013, when the economic growth rate is expected to reach 5.7 per cent. Romania has reported economic growth since 2000, after a three-year recession spell.

The rating assigned to Romania by international agencies will not decrease below the investment-grade category, which tells investors that risks are low, Mugur Isarescu also stated. He added that two matters have been definitively settled as far as the economic environment is concerned: one related to the low-risk rating, and the other to increasing currency reserves, which improved the country’s financial credibility at an international level. “Romania was affected several years by the shortage of reserves. Loans were limited and costly,” Isarescu explained.

13 % of Britons Eye Property Purchase in Bulgaria, Romania

Written by Michael Johns
Tuesday, 29 May 2007

One in seven Britons is considering purchasing property in Bulgaria or purchasing property in Romania, following the countries' EU accession at the beginning of this year, according to a new survey.

The number of foreign visitors to Bulgaria went up by 8.3 % last year, bringing the total in 2006 to 1.5 million, while visitors to Romania went up from 800,000 in 2000 to 1.4 million in 2004, the study by MRI Overseas Property found out.

"Bulgaria and Romania's official inclusion in the European Union is a key opportunity for property investment in these emerging markets," commented John Triton, a sales director at MRI Overseas Property.

"Based on the past history of other Eastern bloc countries joining the EU, where property prices have risen significantly these markets look set to become strong areas for capital growth."

Political crises deepen in Romania and Bulgaria

World Socialist Web Site
By Marcus Salzmann
30 May 2007
Six months after entering the EU

Just six months after Romania’s and Bulgaria’s entry into the European Union (EU), it is apparent that the political situation in both countries has far from stabilised, contradicting predictions made by both politicians and the media. Indeed, the entry of these countries—supported by a general consensus within their political elites—has intensified the political crisis in both countries.

In Romania, a referendum was held on May 23 to decide the fate of President Traian Basescu after he was sacked by parliament. The parliamentary action was the culmination of a sordid conflict between the country’s main political parties. The preceding months of recriminations and mudslinging among the country’s parliamentarians in Bucharest developed into a political crisis that revealed that democracy in the capital is a foreign word.

The fact that Basescu was victorious in the referendum and able to retain his post has little to do with his popularity, let alone with popular support for his political programme, but rather with the fact that his political opponents are even more hated. With a turnout of 44 percent of eligible voters, approximately three quarters voted to keep Basescu in office against the wishes of the Romanian parliament.

The cause of the referendum was a long-standing conflict between Basescu and Prime Minister Calin Popescu-Tariceanu. The latter’s National Liberal Party (PNL) had supported a motion of the Social Democratic Party (PSD) to remove the president from power.

The initiative had come from PSD President Mircea Geoana and, as it seems, from the country’s former President, Ion Iliescu. The motion was supported by an overwhelming majority in parliament, with 322 votes.

Along with the PNL and PSD, the ultra-nationalists of the Greater Romania Party and the Democratic Union of Hungarians in Romania (UDMR) all voted in favour. These parties together invested a total of some 20 million euros in the referendum.

The background to the conflict is a bitter power struggle within the ruling elite over money, power and influence. Basescu had promoted himself as someone who would fight corruption. He adopted EU demands to reform the country’s economic, political and justice systems, which are permeated with bribery and cronyism. There are currently judicial procedures underway against numerous politicians from nearly every party.

Basescu’s own attitude with regard to the issues of corruption and democracy is clear from by a cursory examination of his own political practise. In 1992, he resigned his ministerial post following allegations of corruption. He is also suspected of cooperating over many years with the former Stalinist secret police, Securitate.

His real character was demonstrated on the day of the referendum. When a reporter questioned him about the outcome of the referendum, Basescu insulted her in front of the TV cameras, calling her a “stinking gypsy.”

Behind the veil of “reforming the political classes,” Basescu is attempting to weaken rival political forces. The conflict between Basescu and the prime minister has continued for more than two years and is symptomatic of the conflicts that have engulfed the ruling cliques in many east European states.

The conflict between Tariceanu’s PNL and Basescu’s Democratic Party (PD) was preceded by the break-up of the fragile right-wing coalition government that was formed after the last federal election in 2004. At the end of 2006, the coalition government lost its majority with the exit of the Conservative Party (PC), headed by media mogul Dan Voiculescu. Without the PD, the coalition of the PNL and UDMR retained only 20 percent of the vote in parliament, thereby invalidating any claims by the government of a democratic mandate.

Basescu represents the “free market” advocates within Romania who are striving to destroy, at any price, the old insider relationships that to a large extent have their origins in the former rule of the Stalinist Romanian Communist Party. Definite business interests are at stake. Part of the substantial EU subsidies to the country are simply disappearing and are unaccounted for. The economic consequences of such corruption are hard to quantify.

More importantly, Romania, with its border on the Black Sea, is of enormous strategic and economic importance. Recently, representatives from Romania, Serbia, Croatia, Slovenia and Italy agreed to a new “Pan-European pipeline” that will deliver oil from the Caspian Sea via the Romanian Black Sea port of Konstanza to southern Europe.

Romania’s significance has resulted in European energy companies taking a large interest in the country. The German Eon conglomerate controls more than half of the gas market in Romania. For the country’s ruling elite, political power means controlling these resources.

Foreign policy has been another point of dispute. There are massive disagreements over the occupation of Iraq, where Romanian troops are currently serving as part of the “Coalition of the Willing.”

Two months ago, the Tariceanu government approved the stationing of an additional 3,000 US troops in Romania. It is envisioned that for the next 10 years, US troops will be based in Babadag on the Black Sea coast, Smirdan on the Danube River, and Cincu in the Carpathian Mountains. The air force base in Babadag has already been used over the past few years to launch operations in Iraq.

The more the war in Iraq becomes a debacle, and the more the expectations of the Romanian elite to reap the rewards of plundering the country go unfulfilled, the more this strategy is questioned. Basescu has proposed reducing troop numbers in Iraq, which would be widely seen as a step towards a complete withdrawal. Tariceanu opposes such a move.

Basescu’s victory in the referendum could spell the imminent ousting of Tariceanu. At the moment, the fragile government is only holding on out of fear over new elections, in which the PNL would suffer heavy losses.

The fact that more than half of the electorate did not even vote in the referendum demonstrates the depth of mistrust and the general opposition of the population to the Romanian political clique.

Bulgaria: deep divisions between the population and official politics

A profound gulf between the official political elite and the masses of the population is also evident in neighbouring Bulgaria. The first elections to the EU Parliament on May 20 saw a large protest vote against the established parties and their political programmes. At the same time, only 28 percent of the electorate went to the polling booths.

The elections saw a victory for Citizens for European Development of Bulgaria (GerB), which recorded 21.7 percent of the vote, despite the fact that it was formed only six months ago. The Bulgarian Socialist Party (BSP), headed by Prime Minister Sergej Stanischew, followed closely behind with 21.41 percent. The BSP’s coalition partner came in third position. The Turkish Minority Party (DPS) recorded 20.26 percent and the NDSW party of former Prime Minister Simeon Sakskoburggotski managed only 6 percent, just enough to get representation.

The entire right-wing camp was decimated. The Democrats for a Strong Bulgaria (DSB) of former Prime Minister Iwan Kostow, the Bulgarian People’s Union (BNS) and the United Democratic Forces (ODS) did not reach the 6 percent hurdle needed for representation and are now fighting for their very existence.

The central issue of the election was again a series of corruption scandals, in which several members of government are embroiled. Judicial proceedings on corruption and intimidation charges have commenced against the BSP’s economics and energy minister, Rumen Owtscharow, as well as two state secretaries.

The resentment felt towards the BSP, the former King Simeon II and the various conservative “democrats,” who have all led the country over the last 17 years deeper into crisis, was used by GerB, a party founded by the former mayor of the capital Sofia, Bojko Borissow.

In 2005, Borissow, a former police officer, was elected as mayor of Sofia, a result of the increasing opposition to the other right-wing parties and the BSP. He was able to win the majority of his votes from the Sakskoburggotski camp.

Borissow promoted himself as an honest, down-to-earth politician, and to a certain degree was able to distance himself from the quagmire of Bulgarian politics in the eyes of voters. GerB led a populist campaign against corruption and the huge levels of social inequality. Although Borissow did not openly state opposition to entry into the EU, he repeatedly demanded that more attention be given to Bulgarian’s national interests.

However, the party of the former police officer is anything but an alternative to the existing political organisations. At the time of the collapse of the Stalinist regime in 1989, Borissow was a major in the Interior Ministry and was regarded as a true believer of the regime. In the end, he used his contacts to found his own private security firm and hired former Communist Party chief Todor Schiwkow.

After Simeon II took over as prime minister in 2001, he promoted Borissow to the post of police chief in the Interior Ministry. The pair had maintained a close relationship for years. Borissow refers to himself as a “right-wing centrist” and has recruited numerous figures from the police, the former Stalinist secret police and various fractured right-wing parties to his own organisation.

Although Borissow maintains a large base of influence in Sofia, his arch-conservative programme has mainly attracted those in rural areas. His promises to implement a hard law-and-order programme and improve the economic environment for Bulgarian capital have made his party an option as a coalition partner for other parties, although all of them have so far publicly viewed GerB with scepticism.

The ultra-nationalist party National Union Attack (Attaka) received enough votes to enable it to send three representatives to the European Parliament. The party’s chairman, Volen Siderow, received enough votes to enter the second round of the presidential election held late last year and was then defeated in run-off by the BSP candidate, Georgi Parwanow. In the EU parliamentary elections, the neo-fascists won 14 percent of the vote.

While the “Socialists” and Conservatives have painted entry into the EU in the brightest of colours, disillusionment has already set in among broad layers of the population. The vast majority have failed to see any improvement in their living standards and regard the warnings from Brussels of the necessity for budgetary discipline and the implementation of “reforms” as a threat.

Attaka was the only party that openly took a critical position to the European Union and was therefore able to canalise part of the widespread antipathy to the EU in a reactionary nationalist and neo-fascist direction.

AFP: Romania honors director for triumph

Romanian director Cristian Mungiu, whose movie "4 Months, 3 weeks and 2 days" won the top award at the Cannes film festival, will be honored by his homeland, the presidency said Monday.

Mungiu's devastating film about two women sharing the drama of a back-alley abortion and the daily despair of life under communism, won Cannes' coveted Palme d'Or on Sunday.

"President Traian Basescu has signed a decree to bestow the National Order of the Star of Romania to director Cristian Mungiu for his contribution to promoting Romanian cinema around the world," the presidency said.

Basescu also decided to honor deceased filmmaker Cristian Nemescu whose film "California dreamin'" won the festival's sidebar section Un Certain Regard, focusing on new upcoming directorial talent.

Nemescu, who died in a car accident last year aged 27 before completing the film, will receive the National Order of Merit award.

With only 10 to 15 films produced annually, Romania's new generation of film-makers, trained at the country's sole film school, are relative newcomers to the European movie scene.

But film festivals have been paying increasing attention in recent years to the eastern European country's young directors.

Tuesday, May 29, 2007

Petrom temporarily closes Arpechim refinery at Romania's instruction

VIENNA (Thomson Financial) - OMV AG's Romanian unit Petrom said it has started a procedure for the temporary closure of its Arpechim refinery after it was instructed by Romanian authorities to stop operations there.

The National Environmental Agency in Pitesti instructed the company to stop the operation of the refinery due to the failure to take two environmental measures, namely the modernization of fixed and floating cover tanks for gasoline and the shutdown of two lagoons, Petrom said.

However, Petrom also said the National Environmental Agency's decision is disproportionate and unjustified, adding it will use all legal means to contest the measure.

According to Petrom, the shutdown of the lagoons is fully completed and the documentation in this regard has already been submitted to the agency. Concerning the delay in the modernisation of the gasoline tanks the company initiated a series of discussions with the environmental authorities, it added. A spokesperson at OMV called the closure of the refinery a bureaucratic problem, which the company will solve, adding that it is too early to say when the refinery will resume its operations.