Tuesday, December 30, 2008

FCC wins 161 mln eur Romanian road contract

MADRID, Dec 30 (Reuters) - Spanish builder FCC (FCC.MC) has won a contract to build a portion of a motorway in Romania for 161 million euros ($225.4 million), the group said on Tuesday.

FCC will construct 32.3 kilometres of the Pan-European Corridor motorway located in western Romania together with 31 bridges, 13 drainage channels and a services area in 24 months, the builder said in a statement.

The company has won two other road building contracts in Romania this year and a further three in 2007. ($1=.7141 Euro)

Bulgaria-Romania Trade Reaches Record Levels in January-August 2008

Sofia News Agency

The trade between Bulgaria and Romania in the first eight months of 2008 amounted to EUR 1,65 B, which is a record value in the history of the bilateral relations.

According to data released Tuesday by the Bulgarian-Romanian Chamber of Commerce and Industry, Bulgaria has a negative trade balance of EUR 272 M with Romania in January-August 2008.

Bulgaria's exports to Romania amounted to EUR 689 M, whereas its imports from its northern neighbor amounted to EUR 961 M.

In the first eight months of 2007, the bilateral trade amounted to a total of EUR 968 M, and Bulgaria's negative trade balance with Romania was EUR 199 M.

In January-August of 2008 Bulgaria was visited by 4,332 million foreign citizens (a 15% increase compared to the first eight months of 2007; the greatest number of these - 732 000 - came from Romania.

In the same period, Bulgarian citizens visited Romania 324 000 times, which ranks Bulgaria fourth among the countries with the highest number of visitors in Romania.

The Bulgarian-Romanian Chamber of Commerce and Industry is headquartered in Bulgaria's Danube city of Ruse.

Monday, December 29, 2008

Romanian leu falls through 4 per euro

BUCHAREST, Dec 29 (Reuters) - The Romanian leu weakened beyond a psychological level of 4 per euro on Monday, as investors fretted over the country's economic imbalances and the risk of financial crisis next year.

'There were very few bids, but some foreigners are testing the 4 level, betting on more economic trouble for Romania,' said one dealer with a foreign bank. By 1040 GMT the leu fell as low as 4.0083 per euro , down roughly 1 percent on the day.

Saturday, December 27, 2008

EU entry helps Romanians and Bulgarians understand each other

Friday, December 26, 2008

RUSE, Bulgaria: Bulgarians had grandiose expectations about joining the European Union. The arrival of many Romanians was not among them.

Before both joined the EU on Jan. 1, 2007, Bulgarians and Romanians considered each other with almost total indifference, despite being formal allies in the Warsaw Pact during the Cold War and sharing a Danube River border 470 kilometers, or 290 miles, long.

Even for residents of Ruse, at the Bulgarian end of the only bridge connecting the two nations, the people on the opposite river bank might as well have been on another continent. When they thought of Romanians at all, it was usually to dismiss them as "mamaligari," roughly "polenta-makers," after the Romanians' national dish mamaliga.

Romanians, for their part, would put down Bulgarians as "castravetari" or "cucumber-growers," for their perennial vegetable-gardening.

But shortly after the border between them formally dissolved because of EU membership, a tidal wave of bargain-seeking Romanians crashed over northern Bulgaria.

That initial wave has receded, leaving a multitude of unexpected and enduring relationships in its wake.

Many residents of Ruse are now embarrassed that they were close-minded for so long.

"The new relations with Romania have opened a new world," said Ivelina Belcheva, 40, a television journalist born and raised in Ruse, whose motorcycle club, "Spirit of Freedom," has since started riding with new friends from Romania. "It has always been close by, but always very closed."

Before 2007, Ruse was known for its faded glory, depopulation and rusting behemoths of Soviet-era heavy industry. The birthplace of the Nobel laureate Elias Canetti, it grew wealthy in the 19th century from trade along the Danube. Neo-Baroque and neo-Rococo architecture grace its center, an echo of Central European Habsburg glory far upstream in Vienna and Budapest. Until the early 20th century, when it was eclipsed by Sofia, this was the economic and cultural capital of Bulgaria.

In the past two years, this city of 175,000 has undergone a marked revitalization, fueled by a Romanian spending spree. Romania, which with 22 million people versus 7.5 million in Bulgaria has a far larger economy, boasts average salaries of €450 a month, compared with about €265 for Bulgaria - the lowest in the EU.

Seven separate new shopping malls are planned - five of them already under construction. The biggest, the €100 million Grand Plaza slated for completion in 2010, is to boast a 90,000-square-meter, or 970,000-square-foot, mall; a 5,000-seat arena for sports and cultural events; a 115-room luxury hotel; and 11,000 square meters of offices.

And while the global economic slowdown is starting to be felt here, it did not diminish extra-large holiday crowds from Romania, and so far has not affected construction of the malls.

Romanians come in large numbers on weekend shopping trips. They buy property and start businesses. Restaurants in the city center offer Romanian menus. And Romanian language courses have sprouted, with the tiny supply of translators unable to meet new and growing demand.

Sofia is more than 300 kilometers away, while Bucharest, the Romanian capital, is not 70 kilometers distant, and Ruse is sucked into its economic orbit. Since EU membership has eliminated long waits at the border, people from Ruse now regularly use Bucharest Airport. Traffic congestion in Bucharest means the drive from southern Bucharest to Ruse is often shorter than driving to the northern part of the Romanian capital.

"They say it's good to know Romanian because someday Ruse will be a neighborhood of Bucharest," said Anka Staneva, a long-time Romanian teacher and translator. The six students in her classroom work in the medical profession; many of their clinics participate in exchanges of staff members and patients with Giurgiu, the Romanian town across the bridge.

"Speaking Romanian will be helpful in the future, and I'm looking ahead,"

said Nona Ignatieva, 24, a kinesiotherapist at a private spa.

Several students recalled their shock in the first days of EU membership, when Ruse was so flooded with visitors that cars with Romanian license plates outnumbered Bulgarian ones. The municipalities of Ruse and Giurgiu organized three days of free city bus rides between the towns. Many lifelong residents of both communities crossed the bridge for the first time; up to 1,500 people waited for the buses.

"It made a big impression on me," said Daniela Nikolaeva, a travel agent. It was her first visit to Giurgiu, and she was surprised at how well groomed the town was after years of hearing horror stories. Streets were litter-free, and each tree in the center was fenced and neatly tended. "There isn't any of that kind of thing in Ruse," she said.

In general, traffic between the two countries is helping to dispel negative stereotypes on each side - a tendency shared by many neighbors in the Balkans, long separated by Communist borders and centuries of prejudice.

"I was expecting the worst: poverty, crime and filth," said Sorin Ropotan, 30, a Romanian who works in sales at a communications company.

"But then last year we saw that Ruse is actually very nice," he continued, finding the streets cleaner than Bucharest. "The old architecture is very beautiful. And the waiters are very professional and even speak Romanian."

Romania's new centre-left govt slashes state wages

BUCHAREST, Dec 23 (Reuters) - Romania's new centre-left government approved a series of pay cuts in public administration on Tuesday, its first day in office, aiming to save some 1 billion euros from next year's budget.

Prime Minister Emil Boc's cabinet faces the tough task of slashing state spending to keep the budget deficit in check next year when the economy is expected to slow sharply, and reassure jittery markets.

Without fiscal discipline, Romania risks a financing crisis because of its heavy reliance on foreign cash to fund a vast trade deficit, economists warn.

But political commentators say with divisions running deep between Boc's coalition of the centrist Democrat-Liberals (PD-L) and leftist Social Democrats (PSD), austerity measures may be hard to implement.

Boc said that starting next year, wages of heads of agencies and state-owned companies will be capped at the level of deputy ministers, or pre-tax 4,800 lei ($1,700).

"In these difficult times, dignitaries must be the first ones to send a signal of austerity," Boc told reporters.

"(There is) a problem of 'luxury' public employees, with salaries of ... 30,000-40,000 euros a month."

The government has also frozen hiring in 2009 for 145,000 vacant jobs in the public system, he said.

Boc said Romania could save at least 1 billion euros, or roughly 1 percent of next year's estimated gross domestic product, but it was unclear whether he referred to all measures approved on Tuesday or just the salary cut.

This year's budget deficit is already expected to top plans and reach some 4 percent of GDP, largely due to lower tax receipts and poor fiscal planning by the former centrist government.
Boc's government has announced plans to cut it to 1.7 percent in 2009 but analysts say this is unrealistic.

In Romania, unsustainable double-digit wage growth, particularly in the public sector, is seen as a key threat to long-term economic stability, as the country has seen breathless consumption that has bloated its external cash deficit.

Tuesday, December 23, 2008

Romanian Lawmakers Approve Cabinet to Tackle Crisis

By Irina Savu

Dec. 22 (Bloomberg) -- Romania’s parliament approved a 21- member Cabinet headed by Prime Minister Emil Boc after the coalition government pledged to address the effects of the global economic crisis with spending cuts and increased investments.

Parliament voted 324-115 in favor of a coalition government of the Liberal Democratic Party and the Social Democratic Party, Parliament Spokesman Valeriu Zgonea said in Bucharest today.

The coalition holds 329 seats in Romania’s 471-seat Parliament, after a close vote in Nov. 30 parliamentary elections forced the two rival parties to seek allies.

“This vote places a heavy burden on our shoulders, but I trust my team; it’s the team that will ensure the country’s stability,” Boc said after the vote.

His government pledged to cut spending in all ministries next year to trim a deficit that will stand at 4 percent of gross domestic product, exceeding the European Union limit of 3 percent.

The new government plans to narrow the deficit by cutting public-sector spending on goods and services by 20 percent, placing a ban on public procurement for a year and keeping the value-added tax unchanged at 19 percent and the flat tax at 16 percent, Boc said in a speech in Parliament before the vote.


“Their plan to narrow the budget deficit seems unrealistic,” said Nicolaie Alexandru-Chidesciuc, senior economist for ING Bank Romania, in an e-mailed note today. “The expected economic slowdown won’t leave room for a budget deficit below 3 percent next year.”

After years of growing prosperity that lured fresh investments from companies including Carrefour SA, Ikea, Starbucks Corp., Nokia Oyj, and Ford Motor Co., the outgoing government predicts economic growth will slow next year by as much as half, as the global crisis is hammering Europe’s emerging markets.

In the past two months, companies including carmaker Dacia SA, food processor Kraft Romania SA and steel manufacturer Arcelor Mittal Romania announced cutbacks or dismissals totaling 4,000 in October alone, meaning unemployment will keep rising from the current 4 percent.

Romania’s leu has weakened more than 12 percent against the euro and more than 16 percent against the dollar in the past year as international investors withdraw money from countries seen as carrying a higher investment risk. The benchmark BET stock market index has declined about 71 percent at the same time.

Credit Ratings

Standard & Poor’s and Fitch Ratings have downgraded Romania’s debt rating to junk in the past two months, citing in part increased government spending. Fitch lowered Romania two notches to BB+ from BBB while S&P cut its rating on the country to BB+ from BBB-.

The program doesn’t say anything about the fate of a 10 billion-euro ($14 billion) economic stimulus proposed last month by the outgoing government. The new government can change or scrap the stimulus plan, which was meant to take effect in January.

The outgoing Prime Minister Calin Tariceanu urged the coalition to endorse his stimulus plan and renounce the program, which he said “doesn’t bring real solutions to stimulate growth.”

“It’s a train ticket to an economic disaster,” Tariceanu, who heads the largest opposition party, said in Parliament today.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net.

Romania indicts ex-labour minister on graft charges

Paul Pacuraru lost his job in the Liberal cabinet of former Prime Minister Calin Tariceanu last year after the country's president suspended him from office pending a criminal inquiry.

Anti-graft prosecutors said in a statement the indictment comes four months after the Senate approved a request from prosecutors to launch an investigation into allegations Pacuraru sought state contracts for his son's construction company.

Pacuraru has denied any wrongdoing and said the case was a result of political feuds between Tariceanu and President Traian Basescu ahead of the Nov. 30 parliamentary election.

High-level graft cases in Romania have faced obstacles in courts and parliament since 2007, but Romania has so far escaped EU sanctions even though its fellow new member state Bulgaria saw aid cut because of poor results in fighting crime.

Bucharest's new centre-left government, sworn in on Monday, pledged to continue fighting graft and strengthening anti-crime institutions but political observers say the uneasy coalition will struggle to vigorously revive reforms.

Tariceanu's government introduced justice system reforms in the run-up to EU accession in 2007 but these lost momentum amid political bickering.


Monday, December 22, 2008

Romania's Dacia fights sales slump with Serie A sponsorship contract

Sofia Echo
Mon 22 Dec 2008 - Alex Bivol

Romanian carmaker Dacia, owned by France's Renault, is the new shirt sponsor of Italian Seria A side Udinese, Romanian media reported on December 22.

The deal, a break-through for a company from South-East Europe in one of the continent's top three leagues, comes despite the recent trouble Dacia has experienced - forced to shut down production in November and then again in December because of slumping sales, while also asking for state guarantees on a loan of 100 million euro.

But its sales in Europe continued growing stronly in the first nine months of the year, recording an increase of 38.1 per cent in a market that shrunk by 4.4 per cent, broadcaster Realitatea TV reported.

"This contract is an important opportunity for us, expanding the reach of our brand through a very strong league. It is an opportunity to raise the profile of the Dacia brand on the Iatlian market, to make known a young brand that has scored important commercial success," the broadcaster quoted Renault Italia communication director, Andrea Baracco, as saying.

Bought by Renault in 2000 as the future assembly site for its no-frills Logan model that the French carmaker was developing, Dacia has been a major success for Renault since 2004. Although Logan was originally developed as a car for the emerging markets, it has proven successful in Western Europe as well, even if it is far from competing with the leading models in the budget segment.

Udinese currently lie 12th in the Serie A table, collecting only two points from their last eight matches. Their first match with the new shirt sponsor was a 5-1 thrashing at the hands of AC Milan.

The sponsorship, whose financial details have not been disclosed, will also raise Dacia's profile across the continent, with Udinese reaching the first knockout stage of the Uefa Cup, where it will play Polish side Lech.

Former Romanian president jeered, pelted with eggs


BUCHAREST, Romania — Crowds have thrown eggs, coins and jostled a former Romanian president at ceremonies marking the anniversary of the 1989 anti-communist revolt.

Demonstrators accuse Ion Iliescu of doing too little to investigate the deaths of more than 1,000 people in clashes 20 years ago.

The revolt resulted in the overthrow and execution of dictator Nicolae Ceausescu. Iliescu came to power following Ceausescu's ouster and was elected president three times.

Police spokesman Christian Ciocan said that authorities briefly detained a 79-year-old man who was suspected of hurling eggs and swearing at Iliescu at a ceremony on Monday. The man's son had died in the revolt.

Crowds also threw coins and shoved Iliescu as he laid a wreath for the victims on Sunday.

Romania sells 405 mln lei in 1-year T-bills

BUCHAREST, Dec 22 (Reuters) - Romania sold 405 million lei ($144 million) in 1-year treasury bills at its last 2008 debt auction on Monday, bringing the total sold to 12.4 billion lei as yields jumped because of worries about the economy.

The average accepted yield on Monday was 14.23 percent, compared with 9.29 percent in January, even though inflation declined slightly to just under 7 percent so far this year.

Earlier in the fourth quarter, the finance and economy ministry revised its 2008 issuance plans to 12.7 billion lei, from 11 billion.

It sold mostly short-term paper, with maturities ranging between 3 months and 5 years, as the global cash squeeze has pushed yields upwards.

Meanwhile, a growing need for cash to deal with a gaping budget deficit left the ministry unable to resist.

In November, a ministry official said Romania would need at least 16 billion lei next year to cover a deficit target of 2 percent of GDP.

However, fiscal plans for 2009 are unclear as the centre-left coalition that has emerged after Romania's parliamentary election has yet to clear a budget plan.

The government which is facing parliament's vote of confidence on Monday, will face tough decisions regarding public finances because electoral giveaways this year are likely to leave state coffers deep in the red.

This will exacerbate threats posed by Romania's vast current account deficit, which economists say makes the European Union member one of the most vulnerable emerging markets in Europe.

Romania's PM designate pledges to cut spending

BUCHAREST, Romania (AP) — Romania's parliament approved a new government on Monday after the prime minister designate vowed to cut public spending by 20 percent to try to deal with a looming economic crisis.

Emil Boc's center-left government was approved in a 324-115 vote by parliament, after the two main coalition partners won 70 percent of seats in Nov. 30 elections.

"The crisis is not an excuse to not have reforms," Boc said before the vote. "We will have a measured government that will reduce costs by 20 percent." The new government "has two messages," he said: "More work and (we will use) the same cars, same offices and the same sofas."

The government was sworn in late Monday by President Traian Basescu.

Boc, 42, heads the Democratic Liberal Party, which will control the economy, defense and finance ministries.

The other main coalition party is the Social Democratic Party. Its leader, Mircea Geoana, is the new head of the Senate. The new head of the lower chamber of deputies is a former Miss Romania, Roberta Anastase of the Democratic Liberal Party.

Romania, which joined the European Union in 2007, has enjoyed 8 percent annual economic growth over the last three years, but thousands of layoffs have been announced in recent weeks and growth is expected to be 4 percent at best in 2009.

New Santa record set in Romania

BBC News

Almost 4,000 people in the Romanian capital have set a new record for the most people dressed as Santa Claus and giving out gifts at the same time.

A total of 3,939 red and white clad people gathered in front of the parliament building in Bucharest.

Watched by a representative of Guinness World Records, they paraded through the city handing out gifts.

Romania hopes to break other records after Christmas, including the world's largest sausage and the longest cake.

"It's Christmas spirit, we're all better and more generous this time of year," the Bucharest Herald quoted Mayor Sorin Oprescu as saying.

Speaking as the volunteers donned their outfits, Guinness representative Lucia Sinigagliesi said the minimum requirement for the record to be judged was a "very challenging" 3,000.

"We never know what really is going to happen with mass participation records but it looks very good."

"There are a lot of people already, so we are hoping for the best," she said.

When the record was confirmed, Ms Sinigagliesi presented a certificate to the mayor, to delight of the massed Santas.

The event easily broke a previous record of 3,618 simultaneously gift-giving Santas, set in Taiwan, in 2003.

Kim Il Sung floated U.S. contacts in 1974

WASHINGTON, Dec. 21 (UPI) -- Former North Korean leader Kim Il Sung proposed setting up secret contacts with the United States through Romania in 1974, declassified documents show.

The documents say an aide to Romanian President Nicolae Ceausescu told U.S. President Gerald Ford that Kim wanted to have confidential contacts with the United States in the wake of President Richard Nixon's historic Cold War visit to China in 1972, the South Korean news agency Yonhap reported Sunday.

The declassified Ford administration memo said the Ceausescu aide told Ford on Aug. 27, 1974, "The North Korean leadership wants to have confidential contacts with the United States for discussions" and Ceausescu "has offered to help if you want to do it."

The document showed Ford's response to the proposal was lukewarm, quoting him as saying, "Certain things must precede such contacts. We don't want to go in without a firm understanding." He said he would discuss the matter with U.S. Secretary of State Henry Kissinger, who was at the meeting.

Yonhap reported the document saying Ceausescu met with Ford at the White House in 1975 and told him he had delivered Washington's position to Kim Il Sung.

Romanian FM point of view concerning the London authorities decision on the prolongation of the labour force restrictions for Romania and Bulgaria

The Ministry of Foreign Affairs took note of the London authorities' decision to maintain the restrictions concerning the access of Romanian and Bulgarian labour force on Great Britain's labour market and expresses its deep disappointment with respect to this measure.

The MFA considers that the prolongation of restrictions opposes the principle of the Lisbon Strategy, whose objectives, approved both by Great Britain and by Romania, are intended to create a greater number of working places and the removal of obstructions that restrict even now the workers mobility within the Union.

In the MFA's approach, no Romanian pressure on Great Britain's labour market is estimated, which should justify the undertaking of protection measures.

This morning, the state secretary Raduta Matache has also presented the Romanian authorities' point of view during a meeting at MFA with Great Britain's ambassador in Bucharest, Robin Barnett, a meeting during which the latter gave information concerning the decision of British authorities. The British ambassador declared that the next reassessment of the decision would be on December 2009 and informed that the number of working places annually provided for the Romanian citizens in the plan of agricultural casual labourers would increase from 16,250 to 21,250.

Great Britain's ambassador mentioned that the decision was not aimed against Romanian citizens, strictly originating in the internal economic situation, related to the worldwide economic and financial crisis, and emphasized the exceptional Romanian-British cooperation in all domains, including the police and juridical ones.

The Romanian state secretary showed that statistics indicate that there was a small number of Romanian citizens in Great Britain, approximately 1% of the total amount of foreign citizens in this country and drew attention to the positive contribution that such citizens bring to the economic development of the country of residence.

At the same time, Raduta Matache mentioned the Romanian citizens' increasing tendency of returning in Romania, as well as the governmental policies of encouraging such a process.

Both parties agreed that the common objective of Romania and Great Britain, both bilaterally and within the EU and NATO, is still the promotion of a close partnership. The two parties will act together with the purpose of maximizing the multiple cooperation opportunities, so that the decision concerning the access on the labour market should not affect the development of Romanian-British relationship.

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45th anniversary of establishment of diplomatic relations between Tunisia and Romania

On the celebration of the 45th anniversary of the establishment of diplomatic relations between Tunisia and Romania, Tunisia's embassy in Bucharest held a conference on the history of diplomatic relations and the development of co-operation between the two countries.

Romanian Secretary of State to Foreign Affairs Raduta Matache, who chaired the conference, underlined that the friendship relations between Tunisia and Romania are exemplary.

He also pointed out that Romania's adherence to the European Union and the privileged partnership binding Tunisia and the Union are factors that create more opportunities for co-operation and complementarity between the two countries.

She highlighted Romania's determination to strengthen the co-operation and partnership ties with Tunisia which, she said, "is an important partner at the political and economic levels, as part of the European neighbourhood policy and also the Union For the Mediterranean and other multilateral projects involving the Mediterranean and the African continent."

For her part, Tunisia's ambassador to Romania Saloua Bahri underscored the excellent and strong and long-standing friendship and co-operation relations binding the two countries, and the two sides' political will to further develop them at the bilateral, regional and international levels.

The event was held in association with the Romanian Foreign Ministry and the Romanian Diplomatic Institute.

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Saturday, December 20, 2008

Romania finmin pledges to cut public spending

By Marius Zaharia BUCHAREST, Dec 20 (Reuters) - Romania's finance minister designate pledged on Saturday to cut spending on public administration, freeze hiring of state employees and 'rationalise' welfare to boost confidence in the economy.

The leu has been battered in recent weeks by political uncertainty and worries over the fiscal policies of the new government coalition which emerged from a Nov. 30 election and its ability to address the global financial crisis. 'The signal I want to send (to the currency market) is that ... I intend to create the premises so the deficits will not widen and to reduce them and the primary instrument we have for this is to cut spending,' Gheorghe Pogea told reporters.

Pogea's comments came after a meeting with parliament's budget and finance committee which gave its approval for his nomination ahead of a final parliament vote on Monday. Pogea said he planned to cut spending on goods and services by public institutions by 15 percent, to block about 140,000 vacant jobs in administration, to 'rationalise' social spending and to cut bonuses for state employees.

He targets a budget deficit of 1.7 percent of GDP next year, based on a revenues projection of 32.5 percent of GDP and a spending plan of 34.2 percent of GDP. Pogea also said public spending cuts would help Romania reduce its current account deficit to 10.5 percent of GDP next year, from about 13 percent in 2008, as imports will slow due to lower domestic demand. 'My priority is to stimulate gross capital formation, not consumption,' he said. Pogea did not comment on whether Romania would ask for help from the IMF like its neighbours Hungary, Ukraine and Serbia, but he said he was willing to discuss the issue with other policymakers.

Romania outgoing justice minister asked to return

By Justyna Pawlak

BUCHAREST, Dec 20 (Reuters) - Romania's new centre-left governing coalition has asked outgoing Justice Minister Catalin Predoiu to stay in his post, adding to concerns that it may fail to vigorously revive anti-corruption efforts.

Endemic graft in the new European Union member is a key worry in Brussels since judiciary reforms stalled under the outgoing Prime Minister Calin Tariceanu after EU entry in 2007.

Political observers hoped November's election would boost efforts to combat abuse, particularly among senior officials.

But Predoiu's nomination, following intense talks late on Friday ahead of Monday's parliamentary vote of confidence in the new cabinet, underlines divisions between the centrist and leftist former arch-rivals on how to tackle graft, they said.

Predoiu, 40, took up his job in February after his predecessor left amid sleaze allegations. He drew criticism from civil rights groups for his decision not to extend the appointment of chief anti-corruption prosecutor Daniel Morar.

"Predoiu was a bit disappointing," Laura Stefan of the Romanian Academic Society think tank said. "He should have reappointed Morar and he should have held serious consultations on the criminal codes."

If his cabinet is approved on Monday, as widely expected, Predoiu will face the challenge of pushing through parliament a replacement for Romania's criminal code whose current version dates back to the 1960s, a time of brutal communist repression.

He has struggled to get the legislation approved as many parliamentarians tried to blunt anti-graft measures.

Predoiu also faces the daunting task of ensuring the independence of judiciary in Romania, which was introduced in the run-up to EU accession but faced threats as many politicians fought to protect corrupt practices.

"He should defend prosecutors and the justice system publicly. When you have non-stop talk shows on television with politicians yelling at prosecutors, I would like to see Predoiu come out against that," Stefan said.


The minister said he was confident he would meet Brussels' demands and avoid sanctions, imposed on Romania's southern neighbour Bulgaria for abuse in using EU funds this year. The European Commission will continue monitoring progress in 2009.

"My main goal as justice minister will be to make sure that Brussels monitoring on Romania is lifted," he said during parliamentary hearings on his appointment on Saturday.

But political observers say he may face opposition from within the coalition, particularly from politicians of the Social Democrat Party (PSD), once tainted by sleaze scandals.

Romanian aluminum plant plans 1,200 layoffs

BUCHAREST, Romania (AP) — A Dutch-owned aluminum plant in southern Romania plans to lay off up to 1,200 people — more than a third of its work force — as the economic crisis grips Romania.

Union leaders said the figure could be even higher.

A statement from Vimetco blamed a 50 percent drop in world aluminum prices for the planned layoffs at the Alro Slatina plant. Vimetco owns 84 percent of Alro Slatina.

The statement on Friday said that up to 1,200 people would be laid off and production halved. It added that a final decision regarding numbers would be made next week. Union leaders quoted by Hotnews news agency said that 1,800 of the 3,500 work force would be made redundant.

Some 400 workers on Friday protested the plans outside the factory in the southern town of Slatina. It is the biggest aluminum smelter in central and eastern Europe.

Alro Slatina's profits fell by more than 20 percent in the first nine months of 2009.

Romanian tycoon to acquire Fabian, eyes new buys

LONDON, Dec 19 (Reuters) - The family wealth fund of Romanian tycoon Dan "Dinu" Patriciu has offered to acquire Fabian Romania, and said it will make further buys in the eastern European country through the property firm. Black Sea Global Properties, a unit of Patriciu's Rompetrol Holding (RPH), announced on Friday a 1 euro per share cash offer for London-listed Fabian, valuing the Romanian property fund at 50.8 million euros ($71 million). "Real estate is an area that we would like to grow in. Dinu started out in real estate and this is what he's familiar with," Obie Moore, chief executive of RPH and a director of Black Sea told Reuters in an interview following the announcement. "This is quite different from investing in hedge funds, as we've found out in the last several months.

The opportunity in Romania is compelling given its growing economy and high demand for real estate," said Moore. At 1627 GMT, shares of Fabian were up 78.7 percent to 0.9 euros, from a closing price of 0.52 euro on Thursday. Patriciu, a politician and former architect, was ranked No. 462 on Forbes magazine's rich-list in March 2008, with an estimated net worth of $2.5 billion. The 57-year-old billionaire sold his stake in Rompetrol SA, the Romania-based oil firm he founded, to the Kazakhstan government in 2007 for an undisclosed sum. Rompetrol SA was valued at $3.6 billion by its auditors at the time.

The Fabian acquisition comes as much of Europe's property markets are hammered by the ongoing credit crisis, raising concerns of failures among real estate firms. In Romania, a newly elected government has exacerbated the political and economic uncertainties, while ratings firms Fitch and Standards & Poors have cut Romania's credit rating to "junk", citing the risks of a severe financial and economic crisis. Fabian, which owns offices and apartments in Romanian capital Bucharest, marked down the value of its office portfolio by 2.6 percent, or 1.8 million euros, as of end-Sept. 2008, to account for falling capital values.

"The real estate boom in Romania was driven by the very active lending of commercial banks, which were funding up to 80 percent of project values. But that has changed dramatically right now," said Moore. He said values in Romania are likely to fall further next year, but expects more deals involving cash-rich private equity players like RPH, which are in the market to pick up bargains. Moore said RPH plans to keep Fabian listed in London and intends to inject more cash in the firm to fund new acquisitions in Romania. "Commercial assets are our first priority. We would like to focus on good locations in Bucharest, and really follow what Fabian has already done and do more of it," Moore said. "There's a good bit of residential properties coming on to the Romanian market right now so we are bit more cautious about that segment," he said. ($1=.7164 Euro) (Reporting by Daryl Loo; editing by Simon Jessop)

Spain lifts ban on Bulgarian, Romanian workers

The Sofia Echo

The Spanish government decided to lift the restrictions on Bulgarian and Romanian workers taking jobs in Spain, Bulgarian-language Dnevnik daily quoted Spanish media on December 19 2008.

The Spanish cabinet concluded that letting Bulgarians and Romanians work freely in Spain would not affect the local labour market. The reason was that the ongoing financial crisis has made Bulgarian and Romanian expats start going home instead of staying in Spain. The tendency, according to the Spanish government, was for fewer and fewer workers from the two Balkan countries to come to Spain.

Spanish media quoted numbers from Spanish NGOs, which claimed that there were about 300 000 Bulgarians and Romanians currently residing in Spain, most of whom did not have work permits.

As Dnevnik noted, Spain is the first European Union country to lift the ban on Bulgarian and Romanian workers out of 15 EU countries who imposed such restrictions when the two countries joined the EU in 2007.

On December 18 2008, Britain announced that migrants from Bulgaria and Romania will continue to be barred from taking most unskilled jobs in the UK. The only exception to this was that 5000 more workers from the two countries will be allowed to undertake seasonal agricultural work. Restrictions will be reviewed again in 2009.

Friday, December 19, 2008

Romania coalition vows tight budget, analysts wary

BUCHAREST, Dec 19 (Reuters) - Romania's centre-left coalition pledged on Friday to slash its budget deficit next year in a bid to protect the country from global crisis, but economists said its new targets were unrealistic. Fiscal discipline is seen as the key test for Bucharest's incoming government, a broad partnership between a centrist and left-wing grouping that finished almost tied in last month's parliamentary election.

Without stringent spending cuts and convincing fiscal plans, Romania may plunge into recession next year, economists warn, but the coalition of unlikely partners is expected to face deep differences over social policies and welfare expenditures. Finance minister-designate Gheorghe Pogea said his goal was to lower the fiscal deficit to 1.7 percent of gross domestic product (GDP) next year, from around 4 percent expected in 2008. "We plan to drastically reduce the budget deficit from around 4 percent this year. The crisis cannot wait any longer," Pogea told Reuters in a phone interview. "There will be dramatic cuts in public spending and we will favour only investment-related spending."

But economists said that without drastic cuts in pensions and wages, likely to be opposed by his Social Democrat (PSD) partners, this was unrealistic. "It does not seem plausible to commit to a deficit below 3 percent," said Nicolaie Alexandru-Chidesciuc, senior economist with ING Bank in Bucharest. "What they can do is to take measures that clearly show the intention of taking the deficit below 3 percent over 2-3 years." The coalition faces a parliamentary confidence vote on Monday, which it is widely expected to win.

But economists say its cabinet lineup announced on Thursday includes too few tested reformists to raise hopes of reviving economic reforms that have stalled for the last two years. Pogea's efforts to introduce fiscal restraint may face opposition from PSD-nominated politicians such as Education Minister Ecaterina Andronescu, a proponent of massive pay hikes for teachers, or Labour Minister Marian Sarbu, once a trade union leader.

Fiscal restraint will be key to ensure Romania can finance its vast current account deficit, seen around 13 percent of GDP this year. The main obstacles are slowing economic growth, likely to decline to less than half of this year's expected rate of 9 percent, and massive pre-election spending promises made by the outgoing centrist government as well as the coalition parties.

Thursday, December 18, 2008

Romania coalition names cabinet to tackle economy

By Radu Marinas

BUCHAREST, Dec 18 (Reuters) - Romania's broad centre-left coalition named a cabinet on Thursday with few tested reformists to steer the poor European Union state away from recession next year.

Still absent from the line-up was a candidate for justice minister, highlighting difficulties within the governing partnership of two former arch rivals to agree who to task with reviving anti-corruption efforts, a key worry for Brussels.

Economists warn Romania could slide into recession if fiscal policy is not restrained next year and the government fails to convince markets and foreign investors that it will continue economic reforms stalled in the last two years.

Prime minister-designate Emil Boc, who won his mandate earlier this week after last month's election, pledged to follow their warnings while protecting the poorest from economic downturn.

'The key word is responsibility,' he told reporters after presenting his centrist Democrat-Liberal Party's (PD-L) nominations for a cabinet including old hands and young newcomers.

Despite Boc's reassurances, many commentators say the PD-L's coalition with the Social Democrats (PSD) will be riven by differences on how to tackle economic problems, with the leftists expected to push for costly social measures.

Already, the new government, which faces a confirmation vote in parliament on Monday, is expected to end the year with a deficit of up to 4 percent of gross domestic product, above the EU's 3-percent ceiling and the markets' comfort zone.


The proposed finance minister, Gheorghe Pogea, 52, who has been a centrist party strategist on economic issues for several years, has in the past spoken for tighter fiscal controls.

But he is likely to face opposition from PSD-nominated politicians such as Education Minister Ecaterina Andronescu, 60, a proponent of massive pay hikes for teachers, or Labour Minister Marian Sarbu, 50, once a trade union leader.

'I can see very few decent names,' said political commentator Cristian Patrasconiu.'

'What I see clearly are many people parachuted into the government by their groups of interest. This can be anything but healthy for reforms.'

New economy minister Adriean Videanu, 46, was a controversial mayor of Bucharest until June this year, and faced harsh criticism for doing little to unlock the capital's notorious traffic jams and fix its potholed roads.

But commentators welcomed the return to government of Vasile Blaga, 56, who won praise from Brussels for his work in preparing Romania's borders for EU accession when he was centrist interior minister between 2004 and 2007.

He will oversee regional development.

Senior PSD leader Cristian Diaconesu, 49, the new foreign minister, is a former judge and diplomat, popular among centrist and leftist politicians.

Romanian finance minister designate Pogea

BUCHAREST, Dec 18 (Reuters) - Romania's centrist Democrat-Liberal Party (PD-L) on Thursday nominated Gheorghe Pogea to be finance minister in its centre-left coalition government, due to be endorsed by parliament on Dec. 22.

Here are five facts about Pogea:

-- Pogea, a 52-year-old metallurgy engineer, entered Romanian politics eight years ago as member of a centrist grouping that later became the PD-L, a party with close links to President Traian Basescu.

-- He has experience running industrial companies. In 1997 he became the head of a steel mill in Transylvania, now an unit of ArcelorMittal. He has headed a construction firm controlled by Adriean Videanu who was then Bucharest mayor and was nominated on Thursday as economy minister.

-- Pogea drafted economic programmes for the centrists ahead of the 2004 and the 2008 elections and was briefly responsible for overseeing economic reforms in 2005 and 2006 under outoing Prime Minister Calin Tariceanu.

-- In an interview with Reuters, he said the PD-L would aim to step up efforts to join the euro in 2014, saying membership would offer protection from global turbulence.

-- In a country where most politicians are frequent guests on numerous television talk shows, Pogea avoids the spotlight.

5,000 extra workers from Bulgaria and Romania allowed in to Britain as minister increases the quota by a quarter

By Daily Mail Reporter

Up to 5,000 extra more workers from Bulgaria and Romania are to be allowed in to Britain each year to do seasonal farm work, the Home Office announced today.

But immigration minister Phil Woolas confirmed that restrictions on immigration from the EU's two newest member states would not be lifted.

But the numbers allowed in to do agricultural work would be raised from from 16,250 places to 21,250, he added.The numbers accepted for food processing would remain at 3,500.

Workers queue up outside the British Embassy in Sofia, Bulgaria, for visa applications in 2006. The number of people from Bulgaria and Romania allowed into Britain to do agricultural work will rise to 21,250.

'It is essential that only those we need can come here to work and that is why we have decided to continue restricting the work that Bulgarian and Romanians can do here,' Mr Woolas said.
"This is a prudent decision that will ensure the UK continues to benefit from the positive economic contribution Bulgarian and Romanian workers make, while protecting British workers and making sure the numbers coming here are managed in the national interest.

'We have already suspended tier three of the points based system to stop low skilled migrants from outside the European Economic Area entering the UK.'Migrant workers from the eight Eastern European countries, including Poland, which joined the EU in 2004 have full working rights in Britain.

Last year ministers cited pressures on public services as part of the reason why restrictions on the two new countries joining in January 2007 were put in place.

Rising unemployment, which yesterday hit 1.86 million, is likely to have been a key factor influencing today's decision.

Earlier this year Mr Woolas said ministers would cap the population level at 70 million.
But figures released yesterday revealed the number of new arrivals would have to fall drastically to hit that target.

Projections drawn up by the National Statistician showed net migration would have to fall to 50,000 a year to stay below the 70 million mark in the long term. The current level is 237,000 a year.

With 190,000 more people coming to Britain than leaving each year, the population will reach 70 million in 2028.

The increase in seasonal worker permits was welcomed by farmers' leaders.

National Farmers' Union horticulture board chairman Richard Hirst said: 'The decision reflects the compelling evidence put by the industry that there is insufficient seasonal labour to pick and harvest crops.'

Romania could guarantee EIB loans for autos

BUCHAREST, Dec 17 (Reuters) - Romania's government is offering to guarantee loans worth 500 million euros ($701 million) from the European Investment Bank for Ford and Renault, which have production units in Romania, it said on Wednesday.

Renault, which owns Romanian carmaker Dacia, needs guarantees for 100 million euros, and Ford Motor Co, which has recently bought Automobile Craiova, for 400 million euros, deputy finance and economy minister Eugen Teodorovici said.

The European Union member would guarantee 80 percent of the value of the loans from the EIB, the EU's lending arm, he said.

Romania is one of several EU states that have offered support for the car industry to avoid job losses at a time when the global credit squeeze cuts demand.

Earlier this month, its outgoing centrist minority government tripled a registration tax for second-hand cars to boost new car sales and help the country's ailing auto industry.
It has also suspended the tax on new cars for a year.

€100 Million for Romania Investment Projects


Romania's Prime Minister, Calin Popescu Tariceanu, says the government will grant state aid of over €100 million for five investment projects, most of them from the automobile industry. Tariceanu only nominated the Renault company, the majority owner of the largest car producer in Romania, Dacia Renault, but added that at least three of the five projects are connected to the car making industry.

The state aid follows the request of the two car constructors that hold production facilities in Romania – Renault and Ford – to receive loans guaranties from the European Investment Bank, EIB.

The prime minister mentioned that Renault, unlike Ford, can contract loans from EIB even without the state's guarantee.

Romania's outgoing government has already adopted some measures aimed to help its ailing car industry, including suspending a registration tax on new cars.

Furthermore, it tripled an environmental tax on newly-imported second-hand cars.

Romania's biggest car-maker, the Renault subsidiary Dacia with a plant in the southern city of Pitesti, has already closed down for a month until January 11 amid falling demand as a result of the global financial crisis. It plans further production cuts.

Romania is one of the main car producers in Eastern Europe with French Renault producing the Dacia model. Dacia sold more than 230,000 cars last year in Romania and abroad.

The outgoing government was defeated in a November 30 election, and a new government is expected to be formed by the end of the year.

‘Anti-crisis’ loan to boost eastern Europe

By Thomas Escritt in Budapest
Published: December 17 2008
The Financial Times

The European Bank for Reconstruction and Development has unveiled the first in a series of loans designed to lessen the impact of the downturn on businesses in central and eastern Europe.

The €1bn ($1.4bn) “anti-crisis” programme is on top of €5.9bn the EBRD already committed to the region for 2009.

Some of this money will be used to provide credit to banks of systemic importance, including foreign owned subsidiaries and state-backed institutions.

The EBRD is poised to help other banks in the region that it judges to be of importance, according to Nick Tesseyman, the EBRD’s director for financial institutions.

“BT [Banca Transilvania] is systemic in terms of its importance to Romania’s small businesses,” he said. “Systemic banks will have to take priority.” Such banks included Hungary’s OTP, in which the EBRD had an investment.

Although banks across the region face a scarcity of capital, he thought it unlikely that any big investors would rethink their strategies, avoiding the risk of capital being “sucked out”. “Banks who have invested in Romania as a central part of their strategy really don’t have a way back. Revisiting the decision may do more harm than good.”

The first loan is a €100m credit to BT. It is designed to provide much needed liquidity to Romania’s struggling small and medium enterprise sector, which has suffered a dramatic downturn in orders since October. The EBRD owns 15 per cent of BT, Romania’s largest independent bank, which is a dominant player in the SME sector, with over 125,000 small business clients.

Claudia Prendred, the EBRD’s country director for Romania, said: “We are very keen to support the production side of the economy in Romania, and the SME loans are very important in that context.”

The bank estimates 7,500 existing clients will benefit from the funds.

Romania could guarantee EIB loans for autos

BUCHAREST, Dec 17 (Reuters) - Romania's government is offering to guarantee loans worth 500 million euros ($701 million) from the European Investment Bank for Ford and Renault, which have production units in Romania, it said on Wednesday.

Renault (RENA.PA: Quote, Profile, Research, Stock Buzz), which owns Romanian carmaker Dacia, needs guarantees for 100 million euros, and Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz), which has recently bought Automobile Craiova, for 400 million euros, deputy finance and economy minister Eugen Teodorovici said.

The European Union member would guarantee 80 percent of the value of the loans from the EIB, the EU's lending arm, he said.

Romania is one of several EU states that have offered support for the car industry to avoid job losses at a time when the global credit squeeze cuts demand.

Earlier this month, its outgoing centrist minority government tripled a registration tax for second-hand cars to boost new car sales and help the country's ailing auto industry.

It has also suspended the tax on new cars for a year. (Reporting by Luiza Ilie; Editing by Richard Hubbard)

Wednesday, December 17, 2008

Sudanese refugees arrive in Romania after incredible journey

TIMISOARA, Romania, December 17 (UNHCR) – After an incredible journey fraught with danger and hardship, a group of 97 Sudanese refugees from Darfur arrived in Romania Wednesday en route to a new life after years stuck in a desert camp in Iraq.

The Sudanese, most of whom fled Darfur in the late 1980s, arrived in the Romanian city of Timisoara after being flown by UNHCR from the Jordanian capital, Amman. They had earlier been taken by road from the makeshift K-70 camp in IraqOnce in Romania, the group was transported in four buses to a new Emergency Transit Centre set up by the Romanian government, UNHCR and the International Organization for Migration (IOM) for people – like them – in urgent need of international protection."Our lives had been suspended while we were in Iraq," one of the refugees told a UNHCR staff member in Timisoara. "But this is a new beginning for us."

The refugees will stay in Timisoara until their applications for resettlement in other countries are processed. This first group will be followed by another 42 Sudanese refugees, who are expected to leave Iraq next month."The refugees are keen to get on with their lives. The children are playing football in the centre's courtyard," said Kahin Ismail, a UNHCR protection officer in Iraq, who accompanied them on the plane to Timisoara.

In Iraq, the refugees suffered abuse, blackmail, eviction and assault by militias following the 2003 downfall of the Saddam Hussein regime. A total of 17 Sudanese were killed between December 2004 and February 2005.Because of this targeting, the refugees tried to flee Iraq but became stranded in the Al Anbar desert in the K-70 camp outside Al Rutbah town, some 75 km east of the Jordan-Iraq border. Conditions in the camp were described by UNHCR staff as "very harsh."

The refugees lived in tents and endured desert sandstorms, soaring daytime temperatures and freezing weather at night."This is one of the most vulnerable groups of refugees in Iraq," UNHCR's Ismail said. There are some 42,000 refugees from various nationalities registered by UNHCR in Iraq.Since the group departed Sudan, conditions in Darfur have deteriorated.

The refugees said they did not want to go back to Darfur because they feared that they would end up being displaced.The Emergency Transit Centre in Timisoara is the first of its kind in Europe. It can accommodate up to 200 people and will provide a temporary safe haven for individuals or groups who need to be evacuated immediately from life-threatening situations before being resettled to other countries.

Romania finmin sees 2008 budget gap at 3-4 pct/GDP

BUCHAREST, Dec 17 (Reuters) - Romania's 2008 budget deficit is seen exceeding European Union's Maastricht ceiling of 3 percent of gross domestic product and could rise to up to 4 percent, the outgoing finance minister said on Wednesday.

'If tax collection is better in December than in November, then the deficit will be between 3 and 3.5 percent of GDP, if not, between 3.5 and 4 percent,' Varujan Vosganian said.

Romania's budget deficit target was 2.3 percent of GDP.

Hungary, Romania Ties ‘To Remain Strong’


Hungary will enjoy good ties with Romania even though the ethnic Hungarian party, the UDMR, will not be part of Romania’s new government, Hungary’s Foreign Minister Kinga Goncz says. "We are determined to maintain good relations with the Romanian government even if it does not have any Hungarian ministers or deputy ministers," Goncz said on the government website.

At the same time, Goncz said it was important that the rights of ethnic Hungarian communities beyond the borders of Hungary be guaranteed not only when their parties are in the government. Legal guarantees and democratic institutional guarantees are needed for this, she added.

Goncz noted that the parliament in Bucharest will still include 22 ethnic Hungarian lawmakers and 9 senators who will represent ethnic minority issues.

Yet for the first time in 12 years, the UDMR will not be part of the ruling coalition as the Social Democrats objected to their presence in government.

Goncz said the representatives of ethnic Hungarians "appear to have been pushed out" of the governments of neighbouring countries.

"It must be noted, however, that the composition of these governments are based on democratic principles, and they are the results of parliamentary elections," she added.

UDMR leader Bela Marko said that although his party will not be in Romania’s new government his lawmakers can still support the government's reform plans in parliament and maintain dialogue with the governing and former ally Democratic-Liberal Party.

Romania Coalition Distributes Ministries


Romania's Democrat-Liberals, PD-L and the leftist Social Democrat Party, PSD, on Wednesday agreed on the distribution of 19 ministries in the future government. Both parties will have 9 ministries, each, while the future Justice Minister will be an independent, Prime Minister-designate Emil Boc said.

The main ministries are split as follows: Democrat Liberals - Finance, Economy and Defence while the Social Democrats will get Foreign Affairs, Domestic Affairs, Education and Health.

"The government’s main objectives are to ensure the country's stability, maintaining and creating new jobs, maintaining and gradually raising purchasing power," said Boc.

The government's first challenge will be to draft a budget plan for next year and convince financial markets’ fiscal policy will be restrictive enough to keep deficits and debt in check

Romanian court returns Goyas to Ceausescu heirs

BUCHAREST (Reuters) - Heirs of Romania's communist dictator Nicolae Ceausescu will get back art works, including engravings by Spanish master Francisco de Goya, that were seized by the state 19 years ago, a court ruled on Wednesday.

Ceausescu's fortune, never officially evaluated, was ordered confiscated by a military court which sentenced him and his wife Elena to death by firing squad on Christmas Day 1989, after they tried unsuccessfully to flee the revolution that toppled them.

The decision by the Bucharest Court of Appeals is final, Haralambie Voicilas, a lawyer representing Ceausescu's son Valentin, told Reuters.

"We eventually reached the right decision ... After years of court trials, property returns to the rightful owners."

He said the ruling covers 15 paintings, including by Romanian artists Nicolae Tonitza, Theodor Pallady and Gheorghe Petrascu, and two Goya engravings, kept by the National Arts Museum in a special warehouse.

Left, right agree to form Romanian coalition government

BUCHAREST (AFP) -- Romania's leftist Social Democrats and right-wing Liberal Democrats agreed to form a new coalition government under Prime Minister Theodor Stolojan, two weeks after general elections.

""We are seeing an historic moment in Romania, where political forces with apparently nothing in common, have decided to join forces at a difficult time,"" Social Democrat leader Mircea Geoana said after signing the coalition deal.

""Our only objective is to form a stable and efficient government that will allow Romania to get through this period of crisis,"" added Liberal Democrat leader Emil Boc.

As the country faces the effects of the global financial crisis, the two sides vowed in their ""Partnership for Romania"" agreement to ""ensure the country's economic stability, protect jobs, gradually increase salaries and guarantee an independent justice system.""

The Liberal Democrats and Social Democrats, who finished neck-and-neck after November 30 general elections, hold 329 seats in parliament out of a total 471.

The signing of the coalition agreement comes three days after President Traian Basescu, a close ally of the Liberal Democrats, named the party's deputy president, economist Theodor Stolojan, as the new prime minister.

An alliance between Liberal Democrats and Social Democrats, who had been bitter rivals since the 1990s, would have been unimaginable only weeks ago and some members in both parties expressed their doubts Sunday about the new coalition.

Former president Ion Iliescu noted that the fate of the government would depend on Basescu's willingness to remain neutral, as is his duty under the constitution.

Both parties have cited the global economic downturn to justify their sudden willingness to work together and overlook past differences.

Under the coalition document, however, each party will have its own candidate in the presidential election in November 2009.

With Basescu planning to seek a second term, the Social Democrats had feared they might have limited chances at the ballot box.

The two parties already governed together in the 1990s, when they made up the National Salvation Front (FSN).

That group had taken power following the anti-communist uprising of December 1989 but split in the spring of 1992.

Sudan refugees leave Iraq for Romania: UNHCR

GENEVA (AFP) — Nearly 100 Sudanese refugees mainly from Darfur have left a makeshift camp in the Iraqi desert for Romania as part of a resettlement programme, the UN refugee agency said Tuesday.

Under a deal struck between the Jordanian and Romanian governments, 97 refugees were now on route to Romania, where they will be housed in an emergency transit centre in Timisoara pending resettlement, said the UNHCR.

Another 42 Sudanese refugees in Iraq are expected to follow them next month, the UNHCR said.

They "fear returning to their country, where they would find themselves in a situation of internal displacement," it added.

The 97 refugees fled Sudan in the late 1980s, the UN High Commissioner for Refugees (UNHCR) said in a statement.

But their situation worsened dramatically in Iraq after the US-led invasion to topple Saddam Hussein in 2003, when they suffered "abuse, blackmail, eviction and assaults."

The refugees had previously tried to flee Iraq after some of them were killed in attacks by insurgent groups between December 2004 and February 2005.

But they ended up stranded in the K-70 camp, in the desert outside Al Rutbah, 75 kilometres east of the Jordanian border.

Romania c.bank seen playing tug-of-war with mkts

By Luiza Ilie
BUCHAREST, Dec 16 (Reuters) - Romania's central bank may have stepped into the market repeatedly in recent days to stop the leu from slicing through the key level of 4 per euro due to worries about fiscal policies of the new centre-left government.

Central bankers make no comments on such market talk, but dealers say they suspected covert intervention on Monday when the leu quickly retraced losses after the prime minister- designate gave up his nomination, raising fears of political instability.

Political concerns refer to the likelihood the new government, expected to be in place by the end of the month, fails to impose sufficient fiscal discipline to prevent the global cash squeeze from igniting a financing crisis.

"It has been surprising how well the leu has held up, because of all economic problems and political uncertainty it would have gone beyond 4," said one trader in London.

The leu has made swift recoveries frequently in recent weeks, even as markets struggled to get a clear reading of policy plans after an inconclusive parliamentary election last month that led to the creation of a broad coalition.

Many say commercial flows, largely related to profit repatriation and demand from importers ahead of Christmas should also have depressed the leu beyond current levels.

On Tuesday, the leu traded at 3.9575 per euro, within reach of Monday's two-month low of 3.96 and October's four-year low of 3.9860. It has lost 8 percent in six weeks.

"The leu is a difficult currency. The market is not as open as it is in Hungary or Poland, the central bank is intervening a lot," said the London trader.

The Romanian central bank last acknowledged stepping into the market in October, when it said it sold 40 million euros in direct intervention that analysts said was meant to smooth the leu's depreciation and protect its inflation goals.

Dealers say there could be more room for intervention this year as central bankers may be wary of an additional burden from a weaker leu on consumers ahead of the Christmas break.

"They're not out to reverse the depreciation trend, just avoid wild swings, but they will not let the leu go over 4 over Christmas holiday, that will upset households," one dealer said.

But some said further declines in the leu are inevitable as the Romanian economy slows sharply in 2009.

"The leu is still in the grip of the central bank but we believe ... (it) could let EUR/RON go above 4.0," said Bartosz Pawlowski of the Toronto Dominion Bank in a research note.

"Otherwise, the Romanian economy could be additionally crippled, thus losing competitive advantage against its regional peers."

After several years of strong growth that has doubled the size of the economy in the last 4 years, Romania is widely expected to lose steam in 2009, with at least a halving of this year's expansion of around 9 percent. (Editing by Stephen Nisbet)

Monday, December 15, 2008

Romania budget revenues up 26.8 pct y/y in Jan-Nov

BUCHAREST, Dec 15 (Reuters) - Romania's budget revenues rose to 139.08 billion lei ($47.6 billion) in the first 11 months of the year, up 26.8 percent from the same period last year, data from the finance and economy ministry showed on Monday.

Revenues, which stem from the consolidated budget's main five components, amounted to roughly 28 percent of the government's gross domestic product (GDP) forecast for this year. They are unconsolidated and account for about 92 percent of overall budget revenues.

The European Union's outgoing centrist minority government has said it targets total revenues at 36.2 percent of GDP in 2008, including the absorption of some 2 billion euros worth of EU funds.

Local media have quoted finance and economy minister Varujan Vosganian saying the government lost out on 3.5 billion lei worth of consolidated budget revenues in November as companies struggled to find funds needed to pay their taxes.

Since the global credit crunch intensified in recent months, concern has grown that Romania is more vulnerable to an economic downturn than some of its peers because of a vast external shortfall, high rates of hard currency borrowing and inadequate fiscal and wage policies.

The country targets a budget deficit of 2.3 percent of GDP at the end of the year, but analysts say it could widely top the EU's ceiling of 3 percent due to high social spending before a parliamentary election last month.

Romania's fiscal plans for 2009 are unclear as centrist Democrat-Liberals and leftist Social Democrats are struggling to form a coalition government.

Analysts warn the next cabinet will have to redraft a budget plan for next year, likely taking into account lower tax receipt forecasts and poor fiscal planning by the outgoing government. (Reporting by Luiza Ilie; Editing by Ron Askew)

Coalition official says Romania needs IMF deal

BUCHAREST, Dec 15 (Reuters) - Romania should seek financing from the International Monetary Fund to shore up its finances and limit the economic downturn, according to a senior strategist from the centre-left coalition likely to form the next government.

Ionut Popescu, a former finance minister who commentators say could return to the post in the new cabinet, said Bucharest may be forced to ask for at least 10 billion euros in a stand-by agreement from the Washington-based lender.

Economists have said for months that Romania should seek IMF support to reassure financial markets, similar to deals sought by neighbouring Hungary and Ukraine.

But the outgoing cabinet of Prime Minister Calin Tariceanu appeared reluctant to ask for help ahead of last month's parliament election. Tariceanu lost the vote to a centre-left coalition.
"It may be a stand-by deal worth at least 10 billion euros. It is hard now to estimate its size ... I do not say that we shall use all this amount, but this will be a buffer in case Romania needs it," Popescu said.

The Romanian economy grew 9.1 percent in the third quarter, the fastest rate in the European Union, but analysts forecast a sharp slowdown next year, including possible recession.

So far this year, the poor Black Sea state has suffered little damage from the global financial crisis, avoiding the economic pain already plaguing western Europe and many of its former Soviet bloc peers in the east.

But with European demand slowing and global cash shortages likely to curb investment, most economists predict a sharp slowdown in 2009, from this year's roughly 9-percent expansion.
"Authorities made a big mistake when they scrapped the deal with the Fund ... this (a new arrangement) will offer Romania increased safety for the tough period that will come," Popescu said.

Romania's last stand-by accord with the IMF expired in mid- 2006 and Romania did not renew it, saying its policy mix was appropriate. The Fund said at the time its deal was off-track because of weak policies to bring down stubborn inflation.

Ever since, the outgoing cabinet has been blamed by international observers and analysts for its loose fiscal and wage policies -- key threats to financial stability.

"A deal with the IMF will act like a safety net ... it will ensure rigour and advocate much-needed financial discipline at a time of needed restraint for public money, it will eventually boost investors' trust in the Romanian economy," Popescu said.

Recently, two rating agencies downgraded Romania to sub-investment grade because of government policy gridlock. Moody's Investors Service, which still sees Romania above "junk" level, said the country could slip into recession next year. (Editing by Stephen Nisbet)

Surprise nominee for Romania's PM

BBC News

The leader of Romania's centre-right Liberal Democrats, Emil Boc, is being asked to form a new government, after a previous candidate turned down the job.

Party colleague Theodor Stolojan, 65, had initially been nominated as PM, but in a surprise move stood aside, saying the job should go to a younger man.

Mr Boc, aged 42, said he now hoped his cabinet would get parliamentary approval within a week.

His party edged the rival opposition Social Democrats in last month's polls.

The Liberal Democrats (PDL) and the Social Democrat Party (PSD) were less than 1% apart in the 30 November polls, each securing about a third of the vote.

The ruling National Liberals (PNL) polled only 19%.

At the weekend, the PDL and the PSD reached a preliminary deal on forming a coalition.

Boc's pledge

Mr Stolojan, who was prime minister in 1991-92, made his surprise resignation announcement in parliament on Monday.

"With this gesture, I want to give hope to a new younger generation of politicians, who can rise to the highest positions in the state," the former World Bank economist said.

After the announcement Mr Boc, a lawyer by training, promised to put together a government to lead Romania out of the current economic crisis.

"Our objective is to give Romania a stable and competent government," he said.

President Traian Basescu said he would now formally nominate Mr Boc as PM.

Mr Basescu - who led the PDL before becoming president - said before the elections that he would prefer a centre-right government.

It was the first general election since Romania joined the European Union at the beginning of last year.

Squabbles between the PDL and the PNL, which is led by outgoing Prime Minister Calin Popescu Tariceanu, wrecked their coalition in 2007.

Since then Mr Popescu Tariceanu's minority government has been tacitly supported in parliament by the PSD and the ethnic Hungarian party (UDMR), which will also be represented in the new parliament after gaining 6% of the vote.

New nominee picked for Romanian premiership

BUCHAREST, Romania (AP) — The candidate nominated as prime minister in Romania's next government renounced the job on Monday and was replaced by the leader of the same centrist party.

President Traian Basescu had selected Theodor Stolojan, 65, last week to form a coalition government following Nov. 30 elections. But Stolojan said Monday that he was stepping aside for a younger person.

Basescu said he would now nominate 42-year-old Emil Boc, who heads the Democratic Liberal Party, which Basescu led before becoming president. The party will share power with the left-leaning Social Democrats.

"(Boc) is party leader. ... The Democratic Liberal Party does do not have anyone else as influential and credible as its party leader," Basescu said.

After the announcement, Boc said he would put together a working group to help him manage the economic crisis that has hit Romania.

"Our objective is to give Romania a stable and competent government," Boc said.

He said the working group would draw on experts from the National Bank, people from civil society and business, and from the Romanian Academy which has top experts in various fields,

Boc, a lawyer, has been mayor of the Transylvanian city of Cluj since 2004. He defeated former ultranationalist mayor Gheorghe Funar and is credited with having attracted more foreign business to the city of more than 300,000.

Boc, who speaks English and French, has headed the Democratic Liberal Party since 2003, when it was called the Democratic Party.

Basescu expressed sadness at Stolojan's decision to renounce the nomination.

"The only person who can explain why he withdrew is Mr. Stolojan. I don't want to explain the reasons he told me," said Basescu, adding "I am a bit sad."

Stolojan, who had been prime minister between 1991 and 1992, was experienced in economic issues but was accused of inflexibility in political negotiations.

He had run for president in 2000, and lost. He ran again in 2004 when he withdrew for health reasons. Basescu ran in his place and won a five-year term.

The new government had been expected to face a parliament vote on Dec. 22 but it was unclear whether this would now be possible.