Tuesday, November 18, 2008

Romania to sign nuclear power deal Nov 20-GDF Suez

SOFIA, Nov 18 (Reuters) - Romania is due to sign a deal with selected foreign bidders to build two more reactors at its nuclear power plant in Cernavoda on Nov. 20, one of the investors, GDF Suez (GSZ.PA: Quote, Profile, Research, Stock Buzz), said on Tuesday. Earlier this year, the Balkan country decided to retain a 51 percent stake in the planned reactors and leave the remaining 49 percent for the six bidders it chose last year as partners.

The partners are Belgian Electrabel, owned by French power giant GDF Suez, German power giant RWE (RWEG.DE: Quote, Profile, Research, Stock Buzz), Czech utility CEZ (CEZPsp.PR: Quote, Profile, Research, Stock Buzz), Italy's Enel (ENEI.MI: Quote, Profile, Research, Stock Buzz), Spain's Iberdrola (IBE.MC: Quote, Profile, Research, Stock Buzz) and a Romanian unit of steel giant ArcelorMittal (MTP.PA: Quote, Profile, Research, Stock Buzz).

"We will sign the first stage of an investor agreement on the 20th (of November)," Paul Rorive, group senior vice-president nuclear activities at GDF Suez, told Reuters on the sidelines of a nuclear conference in Sofia.

"The idea is to have a first step, a so-called baby project company in order to finalise the development of the project."

Asked whether all six selected bidders will take part, Rorive said: "Everybody is welcome. We will see in two days who will sign."

Rorive said among the things that had to be completed were selecting a supplier, receiving authorisation from the European Commission and achieving agreement among the many investors on the various aspects of the project.

Romania's Prime Minister, Calin Tariceanu, has estimated the investment in the two new units at Cernavoda, which has two existing reactors, at around 4 billion euros ($5.05 billion).

Work at the Cernavoda plant began 30 years ago. The plant's first unit went on stream in 1996 and the second in 2007. The two new units, planned at 706 megawatts each, should be completed by 2015.

Romania, along with many fellow ex-communist countries in central and eastern Europe, sees nuclear energy as part of the solution to climate change and the need to meet growing electricity demand. (Reporting by Anna Mudeva; editing by Simon Jessop)

Monday, November 17, 2008

Romania proposes measures to fight economic crisis

BUCHAREST, Romania (AP) — Romania's Prime minister Calin Popescu Tariceanu on Monday proposed lowering taxes and injecting over $12.6 billion (10 billion euros) in the economy over the next four years to support the country through the financial crisis.

Tariceanu, facing elections on Nov. 30, urged his cabinet to prepare for "a quick implementation of anti-crisis measures" starting Jan. 1, 2009.

His center-right Liberal Party is running third in election polls but hopes to be in a coalition government to implement the measures.

Romania has seen about 8 percent annual growth in recent years, but companies said last week they are preparing for a long and deep economic downturn.

Tariceanu also proposed a bonus of $1,260 (euro 1,000) for each job created for unemployed people and state aid to new investments generating jobs.

The announcements come after company announcement of hefty job cuts in Romania.

Firms in the chemical and fertilizer industry said last week they would lay off some 800 workers due to a drop in orders. Carmaker Dacia said it would halt production from Nov. 20 to Dec. 7 because of the financial crisis, which has led to a 30 percent drop in cars sales in October compared to a year ago.

Dacia's 14,400 workers will get 85 percent of their salaries during the production halt.

Steelmaker Arcelor Mittal said last week its factory in Hunedoara, in western Romania, will close in November and December as demand for steel dropped sharply on international markets.

EU cuts agriculture funds for Romania over treating animals inhumanly

17 November 2008 | 11:53 | FOCUS News Agency

Bucharest. Though EU standards provide for Christmas pigs to be stunned before slaughter, Romanians intend to stick to traditions this Christmas too, the Romanian Gardianul informs in its electronic edition.

This situation, which is mainly due to the lack of interest on behalf of the Romanian national veterinary service and the animal protection service, would cost expensive to Romania in 2009 when the EU would reduce the financing, says Liviu Harbuz, the chairman of the union of veterinaries in Romania.

Romanian representatives had discussions with European Commission officials as early as in December 2007 so that they could be given and extension of the deadline for sticking to the new standards, so that people could slaughter animals before Christmas and Easter without stunning them, which to be in force for the next three years. At that time the Commission accepted to consider this under the condition that Romania develops a program to teach the population in the European standards related to humane treatment of animals. The national veterinary service failed to develop such an information program, which means that the deadline would not be extended.

Last year residents of villages around Romania were threatened with fines of over 2000 Romanians leis if they slaughter a pig without stunning it beforehand, as the warning was cancelled in the spring.

EU law stipulates that animals must be killed in a way which avoids unnecessary suffering.

IHT: Corruption in Bulgaria and Romania

Sunday, November 16, 2008

When the European Commission decided in September 2006 to admit Bulgaria and Romania into the European Union, nobody pretended they were really ready.

The thinking was that EU membership would keep them safely out of Russia's orbit. There were also hopes that joining the European political mainstream would accelerate their efforts to rein in organized crime and corruption. The latter was a fairly astounding miscalculation.

What actually happened, as Doreen Carvajal and Stephen Castle have reported in detail in the IHT, was that the prospect of billions in EU subsidies only encouraged the criminals to diversify from smuggling and extortion and to burrow into the political and judicial systems - the better to siphon off EU money.

Today, Bulgaria is rated by Transparency International as the most corrupt nation in the 27-nation EU. The country could lose almost half a billion euros in aid that was frozen in July because of fears that it was vulnerable. Romania is also a cause of serious concern.

This state of affairs is devastating at all levels. The Bulgarian and Romanian people badly need the EU's development aid. And the shocking reports of corruption are hardening the resistance of other Europeans to further expanding the EU, thus lessening the chances of Turkey or Ukraine to ever join.

Perhaps most grievously, the spread of corruption through all levels of government and society, as in Russia and some other Balkan countries, makes it far more difficult to eradicate everywhere.

The IHT articles chronicled how those who tried to expose or combat the criminals in Bulgaria were regularly threatened, maimed or killed, and how these crimes routinely go unsolved. The result, the reporters were told, was that people have come to accept corruption as an unavoidable fact of life and have become apathetic about fighting it.

The wrong conclusion would be to close the EU door forever. The right one would be to ensure that those who pass through it are ready and get all the support they need to be full and healthy members.

Romania also has “EULEX condition”

15 November 2008 | 19:34 | Source: B92, Tanjug

BELGRADE -- Romanian Ambassador to Serbia Ion Makovei today commented on his country’s position regarding the deployment of EULEX.

Makovei stated that Romania will not take part in the European Union mission in Kosovo if the mission intends to implement the plan drawn up by former UN envoy Martti Ahtisaari.

In an interview with International Radio of Serbia, the ambassador said that Bucharest supports Serbia's stands on the need for EULEX to be status-neutral.

“Romania believes that EULEX should assume the obligations that the UN mission in Kosovo has had so far,” Makovei said.

Romania is one of the EU countries that have not recognized Kosovo Albanians’ unilateral declaration of independence.

Romania: The anniversary of 130 years of diplomatic relations with the Republic of Turkey

The Ministry of the Foreign Affairs and the Embassy of the Republic of Turkey in Bucharest organises an event to celebrate 130 years of diplomatic relations between Romania and Turkey. The event will be organised on November 12, 11.00 a.m. hours, at MFA headquarters, Gafencu Room.

Raduta Matache, State Secretary, H.E. Ayse Sinirlioglu, Ambassador of the Republic of Turkey in Bucharest, Academician Dan Berindei and PhD. Gheorghe Zbuchea will take the floor at this ceremony.

Members of the diplomatic body, members of the academic and university community, civil societies, representatives of the Turkish community and the mass-media will be invited to the event.

The ceremony will be followed by the inauguration of a joint exhibition of Romanian and Turkish diplomatic documents.

A resembling event will be organised on November 20, 2008, in Ankara.

Background information

The diplomatic relations between Romania and Turkey were established on November 4/16, 1878, at the level of legations lead by extraordinary envoys and plenipotentiary ministries, following the Ottoman Empire recognition of the independence and sovereignty of Romania.

The first representative of Romania in the Ottoman Empire was Dumitru Bratianu, who, on November 4/16, 1878, presented the Sultan Abdul Hamid II the letter of accreditation as extraordinary envoy and plenipotentiary ministry of Romania to Constantinople. On December 3/15, base on the mutuality principle, Suleiman Sadit Bey was accredited for the same position, in Bucharest.

view original source

Eight killed in Romanian coal mine accident

BUCHAREST (Reuters) - At least eight miners were killed and others were trapped underground in an accident in a coal mine in southwest Romania on Saturday, local authorities said.

"Out of the 11 miners trapped, eight are dead," Ilie Paducel, mayor of the mining town of Petrila, told television station Antena 3.

"Families are at the mine's gate, waiting for information."

Another 8 miners were being treated for injuries in a local hospital.

There were no immediate details on the nature of the accident in the Petrila mine in the Jiu Valley.

In 2006, seven miners were killed and five were injured in a blast at Anina coal mine in Caras Severin county in western Romania.

The worst accident in Romania's mining industry after the 1989 fall of communism killed 14 in 2001. Such accidents were usually not reported during communism.

Romania replaces 3-yr T-bond with short-term paper

BUCHAREST, Nov 15 (Reuters) - Romania will tender 700 million lei worth of 3-month treasury bills on Nov. 19, replacing a planned three-year bond due to banks' demand for short-term instruments, the finance ministry said on Saturday.

'We replaced it because the treasury bill meets market demand,' said Stefan Nanu, director of the finance and economy ministry's treasury department.

'Banks want short-term investment tools.'

Nanu also said the ministry could issue another 3-month treasury bill in December, replacing one of two planned bond auctions.

Market watchers have said Romanian banks, the ministry's largest clients for debt auctions, have had access to adequate liquidity despite the credit squeeze that has battered the global banking system.

But the Romanian leu currency slid to nearly four-year lows at the start of October, as regional currencies plunged and investors worried about Romania's wide economic imbalances.

The ministry, which has limited issuance to maturities ranging from 6 months to 5 years, has scaled down issue amounts, rejecting bids at tenders as yields jumped in the wake of escalating global credit market woes.

Rompetrol Rafinare Third Quarter Loss Widens on Oil Prices

By Irina Savu

Nov. 14 (Bloomberg) -- Rompetrol Rafinare SA, Romania's second-biggest oil refiner, said its loss widened in the third quarter as oil prices advanced.

Rompetrol posted a loss of $70 million compared with a loss of $25 million for the same period last year, it said late yesterday in a regulatory filing to the Bucharest Stock Exchange. Earnings before interest, taxes, depreciation and amortization was a loss of $4 million in the quarter, compared with Ebitda profit of $40 million a year ago.

``Unfavorable market conditions had an impact on our third- quarter earnings because of the record increases in raw material prices, especially the Brent crude which peaked at $144 a barrel in July,'' the company said in the statement.

The Constanta, Romania-based company also had a net loss of $119 million in the first nine months of the year compared with a loss of $12 million last year.

Rompetrol's shares fell 6.3 percent to 0.022 lei in Bucharest trading today, valuing the company at 464 million lei.

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

Transelectrica Romania Raises 2008 Pretax Profit Forecast

By Irina Savu

Nov. 14 (Bloomberg) -- Transelectrica SA, Romania's state- run power-transmission grid operator, increased its pretax profit forecast 33 percent for this year on increased distribution revenue.

The Bucharest-based company raised its pretax profit forecast to 120 million lei ($40 million) from 90 million lei, the company said today in a filing to the Bucharest Stock Exchange. It posted net profit of 78 million lei in 2007.

Transelectrica also predicted pretax profit will drop 16 percent in 2009 to 100 million lei from this year's forecast, without giving a reason.

Shareholders are expected to approve the forecast increase for 2008 and the forecast for next year on Dec. 15.

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

INTERVIEW: Romania Does Not Need IMF, Central Bank Executive Says

Fri, Nov 14 2008, 13:58 GMT

INTERVIEW: Romania Does Not Need IMF, Central Bank Executive Says
   By Natasha Brereton

SAO PAULO -(Dow Jones)- Romania does not need help from the International Monetary Fund and the recent junking of its sovereign rating was unwarranted and misguided, Romanian central bank deputy governor Eugen Dijmarescu says.

The recent downgrades of Romanian sovereign debt by Fitch and Standard & Poor's - to a notch below Bulgaria, Latvia and Kazakhstan - could spur caution among private foreign investors and put the squeeze on the country's external financing needs.

In an interview following meetings of the Bank for International Settlements in Sao Paulo, Dijmarescu said the National Bank of Romania agreed with rating agencies on the need for restraint in fiscal policy, but said he was hopeful the policy course would turn more sober after Nov. 30 elections.

"I take their decision in terms of sending a strong signal of concern for instance for the fiscal policy and wage policy," Dijmarescu told Dow Jones Newswires.

"We totally agree with them and we at the central bank have signaled this for more than three quarters repeatedly. But I don't think it is sufficient (with) just one factor to say that everything is black," he said.

He also said some of the agencies' concerns were unfounded and said it was "frustrating" they had not discussed them with the central bank before changing their view. Rating agencies should pay greater attention to conditions in individual countries, and be more thorough in their research, particularly when they're making a large change in their assessments, he added.

"I think they were probably concerned about the future looking at the situation of the region as a whole. Maybe they should have to be more attentive in depicting differences from one market to another," he said.

The major agencies have been slashing sovereign ratings around eastern Europe. Late Thursday, Standard & Poor's cut its outlook on BB-rated Turkey to negative, citing the risk of a sudden halt in the financing of Turkey's indebted private sector that could affect public finances.

Romania is the only European Union member to have a junk rating, even though its current account deficit is smaller than regional neighbors such as Bulgaria and the Baltic states and it is not hobbled by a currency peg.

Standard & Poor's downgrade followed swiftly on the heels of a 50% hike in Romanian teachers' salaries, the latest and most outlandish of a series of costly moves.

Dijmarescu said the downgrade may have a silver lining if politicians now take the issue more seriously once the general election is over.

"Maybe we will have a discussion with the new government soon after they take position, because I am sure that they are concerned," Dijmarescu said.

Romania's main political parties all support euro-zone entry, implying that their future budget policies will be much tighter in the future, he said.

Still, the NBR has rejected reports it said the next government will have to raise taxes, including the flat-rate income tax.

While Romania's budget deficits are unusual for the region, they do not pose a dramatic risk as the country's public debt is less than 12% of gross domestic product, is not rising, and is backed up by large international reserves, Dijmarescu said.

"We are not perfect, but it is important that at least we know this, and we are taking some measures to correct the imbalances," he said.

He pointed to the Leu's quick rebound from its post-downgrade fall as a sign that serious investors in Romania remain unfazed.

Romania should not be put in the class of at-risk countries such as Hungary and Ukraine, both of which are now receiving support from the IMF, Dijmarescu said.

Romania will "certainly not" have to approach the IMF for aid, he stressed when asked.

This week, Latvia said that it may have to resort to IMF help. In Turkey, the government is eager to avoid an IMF loan - which usually requires public spending to be cut - but business lobbies are increasingly calling for a new agreement to facilitate the rollover of corporate debt.

Dijmarescu strenuously rebutted the idea that Romania might see a rapid outflow of the capital from euro-zone banks that has fueled its credit-driven economic growth.

The health of those banks is important, since they could refrain from renewing commitments in Romania or charge more for the privilege if they are under financial strain, he said, acknowledging that credit growth - which had been running above 50% a year - was slowing amid a new and more cautious attitude.

Many Romanian loans are in euros, creating the risk of a mismatch of the kind that caused Hungary's markets to clog up last month.

But Romania's central bank has hiked the reserve requirement for lenders in foreign-currency to 40%, more than double the local-currency reserve requirement, and that provides a "strong buffer" for the national financial system, Dijmarescu said.

"I wouldn't say we have a liquidity crisis or that we are in danger of facing one in the short term, or even in one year or two years," he said. "On the contrary, we have been criticized (for the high reserve requirements), but now even the banks feel more comfortable under the present circumstances."

The NBR has also asked banks to subject clients asking for loans in currencies other than the Leu to conduct extra stress tests.

Investors are not likely to rush to the doors in a country on course to post the fastest GDP growth rate in the 27-member E.U. this year.

Dijmarescu noted that many companies were reinvesting their profits in Romania. Investors are not likely to rush to the doors in a country on course to post the fastest GDP growth rate in the 27-member E.U. this year.

"Maybe they will invest less in future but still clearly this development shows that those investors really were interested in the market and they knew they could take advantage of developments in the market," he said.

It is "possible," but "certainly not an easy task" for Romania to join the currency union by 2014, he said.

The tougher fiscal policy required to qualify should also bring Romanian inflation, which accelerated to 7.4% in October, down to 4.5% by the end of next year, putting it just inside the NBR's target range.

That, plus slower economic growth after this year's surge, should also help to reduce the volatility of the Leu's exchange rate, which he said had declined to a "more normal" level, following strong gains last year. "I don't feel we are now in a long term depreciation stage," he said.

-By Natasha Brereton, Dow Jones Newswires; +44 20 7842 9254; natasha.brereton@dowjones.com

Friday, November 14, 2008

PSD-PC Coalition Has Small Lead in Romania

(Angus Reid Global Monitor) - A coalition that brings together the Social Democratic Party (PSD) and the Conservative Party (PC) is leading in Romania, according to a poll by CCSB released by Antena 3. 37 per cent of respondents would support the PSD-PC alliance in this month’s legislative ballot.

The Democratic Liberal Party (PD-L) is second with 34 per cent, followed by the National Liberal Party (PNL) with 18 per cent, the Hungarian Democratic Alliance of Romania (UDMR) with six per cent, the Party of Great Romania (PRM) with three per cent, and the New Generation Party (PNG) with two per cent.

In December 2006, several members of the PNL—including former prime minister Theodor Stolojan—assembled as the Liberal-Democrats (PLD) to protest the leadership of Tariceanu. In 2007, the governing alliance underwent major changes as Tariceanu dismissed the PD ministers and the coalition dissolved. Tariceanu assembled a minority administration comprising the PNL and the UDMR.

In January 2008, the PLD and the Democratic Party (PD) merged to form the PD-L. The organization joined the European People’s Party (EPP) and is led by Emil Boc, the elected mayor of Cluj-Napoca, the largest city in Transylvania.

On Nov. 10, Romanian president Traian Basescu said he would not consider nominating either Tariceanu or PSD leader Mircea Geoana to serve as head of government after the legislative election, adding, "My aim is to recommend to Parliament a prime minister I can trust."

The legislative election is scheduled for Nov. 30.

Polling Data

What party would you support in Romania’s next parliamentary election?

Oct. 2008

Sept. 2008

Social Democratic Party (PSD) / Conservative Party (PC)



Democratic Liberal Party (PD-L)



National Liberal Party (PNL)



Hungarian Democratic Alliance of Romania (UDMR)



Party of Great Romania (PRM)



New Generation Party (PNG)



National Peasant Christian-Democratic Party (PNT-CD)



Source: CCSB / Antena 3
Methodology: Interviews with 1,053 Romanian adults, conducted from Oct. 25 to Oct. 27, 2008. Margin of error is 2.8 per cent.

Romanian companies to lay off 800 workers

BUCHAREST, Romania (AP) — Romanian companies in the chemical and fertilizer industry said Thursday they will lay off some 800 workers as their businesses feel the effects of the global economic crisis.

Oltchim, located in the city of Ramnicu Valcea in central Romania, said 550 workers would be laid off in December as the company tries to shore up its finances.

The company, which has about 5,000 employees, also said in a statement it will reduce its production by 20 to 40 percent this month.

Another fertilizer company, Azomures, said Thursday it will cut up to 250 jobs due to a drop in prices and demand for its products. It is situated in the northwestern city of Targu Mures.

The announcements follow similar cuts from other companies preparing for a long and deep economic downturn.

Carmaker Dacia said earlier this week it will halt production from Nov. 20 to Dec. 7 because of the financial crisis, which has led to a 30 percent drop in cars sales in October compared to a year ago.

Dacia's 14,400 workers will get 85 percent of their salaries during the production halt.

Steelmaker Arcelor Mittal said Monday its factory in Hunedoara, in western Romania, will close in November and December as demand for steel dropped sharply on international markets.

Some 440 workers at a chocolate factory will also lose their jobs after Kraft Foods said Wednesday it would close its factory in Transylvania next year.

Romania's Petrom halts pyrolysis unit's production

BUCHAREST, Nov 13 (Reuters) - Romanian oil company Petrom, SNPP.BX owned by Austria's OMV (OMVV.VI: Quote, Profile, Research, Stock Buzz), has halted activity at the pyrolysis unit of its Arpechim refinery after a client announced plans to reduce output, it said on Thursday.

Chemical plant Oltchim OLTC.BX has said it will cut activity by 20-40 percent this month because the global financial crisis has slashed demand. It also announced plans to lay off 500 workers.

"The activity at the pyrolysis unit at Arpechim was halted temporarily after Oltchim, one of our main clients, said they will reduce activity," Petrom, the country's largest oil company, said in a statement emailed to Reuters.

The company said none of Petrom's workers would be affected by the shutdown of the unit, which produces ethylene and propylene.

Last week, Petrom reported a 5 percent fall in third-quarter net profit, due to a one-off impairment charge to the book value of the Arpechim refinery. Its net profit was 626 million lei ($218 million) while sales rose 46 percent to 4.733 billion lei.

The group's results beat market expectations as it had hedged to mitigate the impact of falling oil prices. (Reporting by Radu Marinas; Editing by Anthony Barker)

Thursday, November 13, 2008

Why Obama won

By Vivid writer: Daniel Jianu


Daniel Jianu analyses how Barack Obama overcame race, inexperience and the Republican slime machine to win the US presidential election

It is difficult to overstate the significance of Barack Obama's win in the amazing, historic presidential race. He was the right person with the right message as well as with the right narrative story and the right vision for these times to become the 44th President of the United States of America. Among many turning events and people he needs to thank for his victory, particular indebtedness must be granted to Howard Dean, Hillary Clinton, the morally bankrupt conservative majority of the last 30 years, his own campaign discipline and strategy and his own boldness of character.

His improbable rise in national politics began when Obama had accurately read the mood of the Democratic primary voters better than anyone in a very long time. Before Obama, the Democratic Party leaders had the dysfunctional habit of pandering and adjusting to the conservative Republican Party pillars of the social contract and never successfully challenged the Republicans on any major issues such as Iraq and taxes, for fear of losing at the polls. They preferred to duck and avoid taking principled stands; ironically, it showed by losing one election after another. The Democrats played on a political field delineated and established by the Republicans and ran the most recent elections on the conservative terms of debate, not their own. This way the Republicans managed to successfully set the policy agenda of the country for more than 30 years.

The Republicans had the most appealing - yet ultimately, misguided - story of how the United States should function as a great nation and framed all elections around values of patriotism, family and the common man. This narrative arch was successfully deployed at the beginning of the general campaign by the Republicans so much so that right after the Republican convention, McCain was actually doing well in the polls. For a short time, he was the main driving force of the campaign and the main story of the election as Obama and his campaign played defence most of the time by having to swat down one accusation after another. Still Obama understood clearly that Democratic voters wanted leadership which was sorely lacking at the time as the Democrats caved in on Iraq and on almost all other major initiatives that the Bush administration pushed through Congress. Obama's speech at the Democratic Party Convention in 2004 showed that he saw a real opening in the present dichotomy of red/blue states by appealing to something deeper than pure ideological and cultural rhetoric. Being from outside the mainstream Washington political arena, Obama's charisma and pragmatism presented an alternative to the dire situation for the American electorate.

Nevertheless, Howard Dean was actually the first major Democratic politician to spectacularly take advantage of this leadership vacuum and almost won the primary in 2004 famously with his slogan that he represents the 'Democratic wing of the Democratic Party.' Dean was also the first to build an intense and loyal following through the internet and to translate this support into amazing fundraising accomplishments for that time. Once Dean became the head of the Democratic National Committee, he challenged the Democratic Party's usual strategy of competing in only ten or so battleground states in presidential elections. He expanded the DNC operations in all 50 states and established a network of local political operatives that in the end helped Obama tremendously by giving his campaign a leg up in states that before this election has not seen a Democratic candidate ever campaign before; indirectly he pushed the Obama campaign to take the fight into safe or leaning Republican states as well. By challenging McCain in states that usually are red and safely Republican such as Virginia, North Carolina, Missouri, and Indiana, Obama enlarged the playing field and pushed McCain and the Republican National Committee to spend money, efforts and time on defending them.

The monumental and hard-fought primary campaign against Hillary Clinton was also crucial. It forced Obama to focus on a 50-state strategy as the tight primary stretched out into all states looking for votes to put one side over the other. At the beginning, Obama's strategy was to focus solely on Iowa which is the first voting state of the Democratic primary. More importantly, Iowa is a caucus state (delegates are chosen after a series of meetings and debates, not a straight vote) which meant that the Obama campaign had to mobilise and organise his voters to an unprecedented level so as to be able to compete against Hillary Clinton and John Edwards in this white, largely farming state. His main goal was to gain the attention and the necessary momentum out of Iowa to slowly build on a victory here and peel off voters from Edwards and eventually defeat Clinton. Before Iowa, Obama's appeal to black voters was minimal as most African-Americans were strongly supporting Hillary Clinton. Obama won Iowa by mobilising young, passionate and committed voters and his first victory in the primary accomplished three main goals. First of all, he showed that an African-American candidate can win a white, farming state and put aside to a large extent the doubts about his candidacy among white voters. Secondly, he also attracted the black vote from Clinton by showing that he is not just another longshot black candidate but a credible one whose candidacy has been propelled forward by the mainly white voters of Iowa. And thirdly, the experience and the intensity of organising a caucus state provided the Obama campaign with an incredibly important blueprint for how to win the rest of the caucus states during the primary campaign, without which Obama would have been unable to clinch the nomination as Hillary won bigger and more populous states.

Obama could have had no better preparation for the presidential campaign. In many ways the primary campaign was longer, harder fought and more influential in how it established Obama as a disciplined, organised, pragmatic and bold politician. He took charge of all major controversies and scandals that were thrown at him by the Clintons. He faced the race issue straight up by addressing the Reverend Jeremiah scandal with a thoughtful, powerful speech that took the race issue off the table for the general election. He also came out of the primaries with enhanced skills that were hitherto lacking. Obama is a great speaker, but not such a great debater and at the beginning of the primary campaign during the first debates he was relatively out of his depth with Hillary Clinton commanding all the attention and presidential aura. Remarkably, Obama learned quickly and adapted profoundly by the end of the primaries as he became a much better and inspired debater. It's telling that the first real opening against the early Hillary campaign juggernaut had happened during one the debates only a few weeks before the Iowa caucuses. In this debate, Hillary was asked about the New York state governor's plan to pass a law allowing illegal immigrants to obtain driving licenses. She supported this plan initially in her response and then seemed to backtrack in the same two-minute answer. Fairly or unfairly, Obama pounced on this mistake and underlined one of the major weaknesses and sticking points of the Clinton campaign - her tendency to pander to voters and not being straight and principled on issues. This gaffe gave Obama the material to attack Hillary and slowly erode her then impressive polling advantage.

'Obama luck', as his own campaign calls it, has also played an important role in his rise from Illinois state senator to the first African-American US president. His first win for electoral office in the Illinois legislature back in 1996 was based largely on technicalities as his campaign found a number of irregular signatures on petitions belonging to his main opponent and managed to knock her off the ballot. In his run for the Senate in 2004, Obama faced almost insurmountable obstacles in his campaign but a sex scandal that forced his main opponent to drop out of the race cleared the way for Obama to become Illinois's Democratic nominee for the US senate. In the general election, his main opponent was Jack Ryan, a self-funded, well-known Republican who was the hands-down favorite to win the seat. Obama trailed him in the polls but then another sex scandal forced Ryan to drop out of the campaign as well, leaving Obama poised to win again. And so he did after the Republicans had shooed in from Maryland Alan Keys as their candidate, a candidate who had been some kind of a national joke and whose only attribute and the reason he was drafted by the Republicans was that he's black.

And so, until the presidential campaign by far the most challenging race of his political career had been the primary campaign against Hillary; his was a campaign that defined him and propelled him to an enviable position as the Republicans had fielded John McCain as their nominee, a candidate with many flaws and whose many strategic and tactical bets did not pay off. And they couldn't pay off in this extremely hostile political environment for Republicans.

The Republican majority has started to unravel slowly in the last few years. The Bush administration's innumerable failures and mismanagement of so many major issues have only accelerated this trend. American voters have stopped believing in the conservative ideology and as EJ Dionne put it so clearly in the Washington Post, "the country put a definitive end to a conservative era rooted in three myths: that a party could govern successfully while constantly denigrating government's role; that Americans were divided in an irrepressible moral conflict pitting a "real America" against some pale imitation; and that market capitalism could succeed without an active government regulating it in the public interest and modestly redistributing income to temper inequalities." For more than 30 years these conservative myths held the political debate captive to the Republican ideas as most policy initiatives were constrained and shaped by conservative assumptions. Republicans rode this ideology and rhetoric to the presidency five of seven times since 1980 and eventually into the ground as the initial conservative mantle of reform had evaporated into the thick air of corruption and systemic economic failure. People who wanted change and a new direction voted for Obama almost 90 to nine per cent. Voters even rejected the Republican mantra on national security and taxes, two issues of enduring Republican strength. The financial meltdown crystallised in one big event all that had been wrong with the decades of conservative majority and all of the Bush administration's faults and misguided policies.

And then, once again, 'Obama luck' reappeared. Just as McCain had found his footing by portraying the Democrat as an elitist and an outsider who did not share American values and took a slight lead in polls at the beginning of September, Lehman Brothers, the investment firm, went bankrupt, triggering the biggest corporate collapse in US history and an international financial meltdown, which transformed the presidential race in the favour of Obama and the Democrats. But Obama's response to the crisis went beyond luck and showed Americans that a steady, self-confident and pragmatic politician is just what's needed in times of crises. His reaction was measured, reassuring and presidential and at complete odds with McCain's (initial) decision to suspend his campaign and skip the first scheduled televising debate. This was the pivotal point of the election that structurally changed the dynamic of the race and allowed Obama to regain the upper hand and take control of the campaign. His poll numbers started increasing and since that moment never allowed the Republican candidate any openings. The financial meltdown crystallised in one big event all that had been wrong with the decades of conservative majority and all of the Bush administration's faults and misguided policies. Obama's campaign rose up to this challenge and took supreme advantage of the opportunity to run away with the election. Whereas McCain looked erratic and out of his depth, Obama showed character of conviction as the three debates cemented the Obama image of competence and pragmatism. McCain's response to the financial disaster had the most consequences. While Obama drilled down on financial issues on the campaign trail, his rival kept looking around for a message - initially saying the fundamentals of the economy were strong, then announcing plans to suspend his campaign, then dropping those plans. As the economy took centre stage, Obama had also learned from Hillary how to appeal to white working class voters. He pretty much retooled her primary message and successfully attracted voters by speaking in smaller settings, with his sleeves rolled up. He had embraced the legendary Clinton message, "it's the economy, stupid."

And he pulled it off. Amid a record voter turnout, Obama won the largest share of white support of any Democrat in a two-man race since 1976. He won 43 per cent of white voters, four percentage points below Carter's performance in 1976 and equal to what Bill Clinton won in the three-man race of 1996. Fully 96 per cent of black voters supported Obama and constituted 13 per cent of the electorate, a two per cent rise in their national turnout. As in past years, black women turned out at a higher rate than black men. A stunning 54 percent of young white voters supported Obama, compared with 44 per cent who went for McCain. It also appears youth turnout rose one per cent since 2004, to constitute 18 per cent of the electorate. Obama's victory also stretched into other key blocs won by Bush four years ago such as suburban voters, who were half of the electorate, split between Obama and McCain. Rural voters, who went for Bush by 19 points in 2004, leaned to McCain by 8 points. And married voters, who went to Bush by 15 points, leaned to McCain by 6 this year. Hispanics, who as in 2004 were 8 per cent of voters, went for Obama by more than two to one, 67 percent to 30 percent. Obama also won 84 per cent of those Democrats who backed Hillary Clinton. White independents, a fifth of voters, were roughly divided between the major party candidates, which has not occurred in a two-man race in three decades. One important swing was the Roman Catholic vote, which went 47 per cent to Sen. Kerry in 2004, compared with 53 per cent for Obama in 2008. And among voters in families earning over $200,000 a year, Senator Obama improved over Kerry by 17 points. Also helping Obama was that Democrats made up a larger share of the electorate this year than four years ago, when equal numbers of voters identified as Democrats and as Republicans. This time, 40 per cent said they were Democrats and just 32 per cent said they were Republicans.

This is Obama's base and it is a base for the future. It is a new Democratic majority of high-educated, high-income voters along with youth and minorities, reflecting forward-looking optimism and hope. It draws in new previously solid Republican suburban and ex-urban voters whose priorities are practical and economic and who got tired of old and tired cultural values and red herrings. Yes, Obama has won impressively and yes, he does inherit huge challenges that could overwhelm any leader. But the economic crisis and all its challenges afford him an opportunity granted few presidents to reshape the country's attitudes, change the terms of debate and transform American politics.

Romania Liberal govt unveils plan to boost growth

BUCHAREST, Nov 12 (Reuters) - Romania's centrist Liberal government on Wednesday unveiled measures meant to prop up economic growth but further loosen the fiscal policy it would pursue if it wins a Nov. 30 parliamentary election.

The International Monetary Fund said the measures, which consist mainly of tax cuts and subsidies, would pressure the budget deficit at a time when policy makers need to cut spending or risk destabilising the economy.

"We will continue to cut taxes," Prime Minister Calin Tariceanu, whose party ranks third in opinion polls with 17-18 percent, told reporters after a cabinet meeting.

The plan includes slashing social insurance contributions by 10 percentage points over a four-year horizon.

It also envisages a 5 percent discount in income and profit tax for households and corporations that pay dues in time and a 1,000 euro payment for every jobless person a company hires.
State aid would be up to 50 million euros for any investment of over 100 million euros that creates 500 jobs. For a smaller investment, aid could be up to 28 million euros.

The plan includes subsidies for farming and social housing and envisages the creation of a state institution to monitor implementation of projects to absorb European Union funds.

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 upcoming election, which has prompted parties across the political spectrum to make wages and pensions a key campaign issue, has also worsened investors' jitters about holding Romanian assets.

Underlining such concerns, ratings agencies Standard & Poor's and Fitch have cut Romania's status to below investment grade, citing concerns over inadequate economic policies, particularly budget spending.

"Romania does not have the space to increase the budget deficit in the current economic situation," IMF senior regional representative for Romania and Bulgaria Juan Jose Fernandez-Ansola told television station The Money Channel.

He also said Romania's budget deficit this year could go over the EU's 3 percent of gross domestic product cap if current spending plans are maintained. (Reporting by Marius Zaharia and Luiza Ilie; Editing by James Dalgleish)

Bulgaria and Romania bid to co-host Euro 2020 football championship

The Sofia Echo

Bulgaria and Romania have proposed to Uefa president Michelle Platini that they co-host the 2020 European football championship, Bulgarian-language Dnevnik daily quoted Bulgarian Football Union president Borislav Miahailov as saying on November 12 2008.

Mihailov made the statement after he met Platini in Sofia the same day.

"The year 2020 is far away but our idea needs a lot of work" Mihailov said. Platini said that the idea of the two countries had to receive strong and committed support from their governments.

The idea of two countries from the Balkans hosting the event is not a new one but it is the first time it has been officially raised and discussed publicly. Ukraine and Poland will be the first Central and Eastern European states to co-host the event in 2012 although both countries are having trouble meeting the criteria due to the poor infrastructure. The global financial crisis is not helping much either.

Infrastructure is expected to be a serious issue for the candidacy of Bulgaria and Romania too, because the two countries have only one bridge connecting them over the Danube River, linking Bulgaria's Rousse with the Romanian capital Bucharest. The two countries have a land border several hundred kilometers long, but much will depend on how fast the second Bulgarian-Romanian bridge will be constructed.

Bulgaria has a long and negative record in constantly applying to host a major world sports event. The country has been trying for several decades to be the host of a Winter Olympic Games, but as the years pass, its chances become ever smaller, mainly because of the lack of a general strategy and investment plan backed by the government.

DPA: Romania's trade deficit soars

Bucharest - Romania's current account deficit grew by nearly 15 per cent in the first nine months of the year, authorities said Wednesday, the latest sign of a possible economic crunch for the European Union newcomer.

Goods imports running far ahead of exports were the main reason for the 12.7-billion-euro (16.1-billion-dollar) shortfall in the nation's broadest measure of international trade, central bank data showed.

Medium- and long-term foreign debt grew by 25.2 per cent since the start of the year, the report said.

Romania, which joined the EU in 2007, is among the ex-communist nations that has raised concern in the global financial crisis, especially after international lenders saved neighbouring Hungary from possible default.

Romania's economy, one of the fastest-growing in the region, has depended heavily on a consumer and construction boom financed by foreign banks, but growth is now slowing.

Ratings agencies have lowered their outlook for Romania's sovereign debt in recent days as worries deepen about the global slowdown's impact on eastern Europe's emerging economies.

Fitch Ratings on Monday cut its debt ratings for Bulgaria, Hungary, Kazakhstan and Romania. While upgrading its outlook for Hungary and Bulgaria from negative to stable, Fitch kept Romania at negative.

That outlook indicates concern that Romania may not be able to 'avoid a severe economic and financial crisis,' analysts at Austria's RZB Group bank said.

The ratings are designed to measure the risk of a government's defaulting on its debt.

Defense Minister: Romania to pull out from Iraq early next year

Romania will pull out from Iraq early next year unless a decision is made by early December on a possible extension of the country's mandate in Iraq, Defense Minister Teodor Melescanu said Tuesday.

"The mandate of the multinational coalition in Iraq expires on Dec. 31. If no political decision is made in early December at the latest, it will be quite hard to presume that we continue to carry out in an efficient manner our mission in Iraq," Melescanu said.

According to the minister, the Romanian Defense Ministry is examining "all the possible scenarios that might happen, from the one the same structure will be maintained to the one implying the change of the missions or location including pull out from Iraq, unless an express request or a resolution is adopted by the UN General Assembly to offer us our necessary mandate further too."

"If the mission of the Romanian militaries continues after Jan 1, 2009, too, there is no doubt it will be less dangerous in terms of situations the troops will be put in the position to deal with," Melescanu said late last week.

Melescanu added that the UN mandate of the Romanian troops in Iraq expires on Dec. 31 with the additional presence of Romanian militaries in the country being conditioned on any requests by the Baghdad government.

"The evolutions in Iraq in the latest years are positive, no doubt about it, with the single discussions now related to the presence of the foreign military troops on the territory of this country being related to a certain symbolic presence, a presence to represent a real support for the continuation of the process of taking over by the Iraqi forces to ensure security," Melescanu said.

Political sources said that the Iraqi side agreed to conclude further agreements with only five states including Romania.

Romania has some 1,600 militaries deployed abroad, with some 600 in Iraq and the rest in Afghanistan and the Balkans.


Romania’s centrists have bought time, but not a solution

BUCHAREST (Reuters) – Romania’s minority centrist government may have won some time ahead of November 30 elections with a compromise pay offer for teachers, but the move could feed investor concern over loose budgetary policies.

After weeks of talks with trade unions threatening to go on nationwide strikes, Prime Minister Calin Tariceanu offered on Monday to raise teachers’ salaries by up to 28 percent next year, about half the amount demanded by the opposition.

In reaction, some trade unions postponed strikes planned for this month until January but economists warned any large pay increases at a time of global financial instability could damage the Romanian economy.

“It was a compromise. But regardless of the scale, this kind of increase is not what the economy needs at this point,” commented Lucy Bethell of the Royal Bank of Scotland in London.

Earlier this week, Tariceanu failed to persuade parliament to delay an opposition plan to increase teachers’ pay by 50 percent, which had been widely slammed by international economists as potentially disastrous for the economy.

Higher wages for teachers has become a key policy issue in the election campaign at a time when a global economic slowdown threatens to sap state revenues and, potentially, derail Romania’s cash-dependent economy. “He tries to buy time, negotiate, avoid strikes,” said Sorin Ionita from the Romanian Academic Society. “This is partly a delay tactic and partly a compromise. But 28 percent is still unsustainable.”

Public opinion polls show salaries and pensions are the biggest concern for voters, nearly two years after Romania joined the European Union.

Romania C/A deficit widens 14.8 pct y/y in Jan-Sept

BUCHAREST, Nov 12 (Reuters) - Romania's current account deficit widened by 14.8 percent on the year to 12.7 billion euros ($16 billion) in January-September, central bank data showed on Wednesday.

A year earlier, the deficit had expanded by roughly 65 percent on an annual basis in the first nine months after Romania's European Union accession in 2007 removed customs taxes with member states and boosted imports.

The external shortfall is a major headache for the consumption-driven economy, exposing the currency to the risk of a steep depreciation if foreign funds were to dry up.

The bank said the external shortfall was 57 percent covered by foreign direct investment, which reached 7.2 billion euros at the end of September.

The gap reached a cumulative 16.9 billion euros at the end of 2007, or around 14 percent of gross domestic product.

Statistical data showed earlier this week that Romania's January-September foreign trade deficit in CIF prices widened 12.5 percent to 17 billion euros, as exports exceeded import growth, keeping a trend recorded since last December.

Analysts have said trade balance data boosted hopes the current account gap might stabilise at last year's level of 14 percent of GDP or even below it, helped by improved exports structure and a weak leu currency.

Kraft chocolate factory to close in Romania

BUCHAREST, Romania (AP) — Hundreds of people will lose their jobs at a chocolate factory after Kraft Foods said Wednesday it would close its factory in Transylvania next year

Kraft which manufactures chocolate bars under the brands Poiana and Africana will lay off its 440 employees by the end of 2009, said Doina Cavache, corporate affairs manager.

She said the closure was because the company could not expand in Romania and not due to the global economic crisis. Some of the company's chocolate manufacturing business will move to neighboring Bulgaria, she said.

She added that brands would still be produced, but not in Romania.

Kraft Foods Romania took over the factory in the Transylvanian city of Brasov in 1994. Built in 1903, it is Romania's oldest chocolate manufacturing plant. Kraft Food Romania had a turnover of $175 million (euro137.5 million) last year.

1 400 lei – new salary of beginning teachers in Romania

12 November 2008 | 09:37 | FOCUS News Agency

Bucharest. Urgent decree, which was passed by the Romanian government on Monday provoked discontent amongst trade unions of education. Education trade unions are not agreed with the proposed rise of the salaries because in their opinion the salaries are not in conformity with the real situation, Romanian newspaper Romania Libera writes today.

Teachers should get two promotions of their salaries in 2009, which sum to reach up 28,2% depending on the normal salary. Thus the teachers with the lowest salaries and length of service should get the most serious rise of their salaries.

As an example a beginner teacher that get 1 135 lei will get 23,53% and his salary will reach up 1 400 lei (EUR 1 = 3,6 lei).

Wednesday, November 12, 2008

ArcelorMitta to shutdown one steel plant in Romania

BUCHAREST, Nov. 11 (Xinhua) -- Steelmaker ArcelorMittal Hunedoara will close its Hunedoara plant for approximately two months because of the current economic crisis, the company said Tuesday.

"The plant will cease its production in the next days. The last time this plant stopped its production was in the '30s when the economy was hit by a major crisis," said general manager Remus Patan.

ArcelorMittal, the world's leading steel company, last week said it would cut production 30 percent in the fourth quarter as a result of the gloomy international economic conditions.

Patan said the Hunedoara plant will not be shut down and that production might resume next January with a possible increase in production in the second quarter, depending on global markets.

"At the moment, we do not have a minimum number of orders," Patan said.

The shutdown will not affect the staff, trade union leader Petru Vaidos said Tuesday.

He added that company employees will take vacation in November and December and will be paid 75 percent of their wages.

The UK-based giant ArcelorMittal owns four steel plants, a harbor operator and a construction company in Romania.

ArcelorMittal's Galati plant, Romania's largest steel mill, also said last week it will reduce production and postpone investments.

Tuesday, November 11, 2008

Romanian inflation higher in Oct on weaker leu, food

BUCHAREST, Nov 11 (Reuters) - Romania's inflation surprised with a rise in October due to food costs and a currency that has fallen victim to the global financial crisis, likely pushing back expectations of cuts in interest rates.

Inflation rose to 7.4 percent from September's 7.3 percent, above expectations of 7.0 percent, and analysts said that would likely delay any possible fall in borrowing costs to bolster an economy set to slow sharply next year.

'This is a big disappointment, and it could mean the central bank may postpone the moment when they start to cut rates,' said Otilia Ciotau from Piraeus Bank in Bucharest.

Market watchers also say concerns about Romania's unclear fiscal policy in the run-up to the Nov. 30 parliamentary election and in the following weeks are likely to weigh in much on the decision.

Data showed prices rose 1.1 percent on the month in October, with food costs rising 1.1 percent, with cheese, milk and vegetables recording the steepest increases. Non-food items were 0.5 percent up while services grew 2.2 percent.

The INS said the European Union harmonised index was up 7.9 percent on the year. The indicator of prices excluding administered prices grew by 1.2 percent on the month.

Market watchers said a weaker leu currency, which has fallen in the last month as ratings agencies cut Romania's debt to junk status, would also weigh on the central bank's rate-setting decision on Jan. 6.

The leu hit a 4-year high of 3.94 early last month but has lost around 5 percent versus the euro in the past three weeks.

'We see a high increase in vegetable prices ... but we also see other prices up due mainly to a weaker leu currency,' said Ionut Dumitru, head of research at Raiffeisen Bank.

'I had expected a rate cut at the bank's first meeting next year, but the data published today lowers (the) chances.'

The central bank countered a spike in inflation this year, driven by consumption and high energy and food prices, by raising interest rates by 325 basis points to 10.25 percent, among the highest levels in the EU.

The bank's official forecast for end-year inflation is 6.7 percent, still way above the target range of 2.8-4.8 percent.

Fitch became on Monday the second rating agency after Standard & Poor's cut Romania's status to below investment-grade, citing concerns over economic policies. The downgrades mean it is the only EU member at 'junk' level.

Romanian finance minister criticizes Fitch for rating downgrade

BUCHAREST, Nov. 10 (Xinhua) -- The decision of the Fitch international ratings agency to downgrade Romania's rating disregarded important developments in the country's economy, Minister of Economy and Finance Varujan Vosganian said on Monday in a press release.

"The decision of Fitch disregarded important developments in the Romanian economy, such as an annual rise of 9.1 percent in real terms of its Gross Domestic Product (GDP) and an estimated 6 percent rise in the GDP in 2009 and keeping government debt at a relatively low level -- just 10.6 percent of the GDP in June 2008," Vosganian said, stressing that "Romania has enough foreign exchange reserves and an external debt burden that is lighter than that of other member states of the European Union."

Ratings agency Fitch has lowered on Monday the sovereign ratings on Romania by two notches, citing vulnerabilities in the emerging markets, spurred by the global financial crisis and the countries' high account deficits.

Romania's two-notch downgrade reflects Fitch's concerns about the macroeconomic policy framework in Romania and the country's ability to deal with a severe economic and financial crisis.

Fitch highlighted the need to have a much stronger policy adjustment to avoid the currency crisis, on Romania's current account seen at 14 percent of GDP in 2008 fueled by excessive credit growth.

Fitch also warned about the risks facing Romania's economy as a result of an increase in private debt on external markets, which are increasingly shakier. It says that the political decision makers of Romania have ignored the alarms amidst the electoral campaigning for the Nov. 30 general election, which has triggered negative consequences on fiscal policy cohesion.

Romania's top carmaker to temporarily halt production

BUCHAREST, Nov. 10 (Xinhua) -- Romania's top carmaker Dacia will halt production between Nov. 20-Dec. 7, because of the "brutal slump of car markets," said the company on Monday in a release.

Dacia is forced to halt production in the aforementioned period, following the decline of international and local auto markets, the company said, specifying that the Completely Knocked Down (CKD) production will continue.

The deepening of the financial and economic crisis in October resulted in a major setback of auto markets, Romania included. Thus, in October 2008 the local car market fell 30 percent in comparison with October 2007; the shrinkage was 40 percent in Spain; 23 percent in Great Britain; 22.7 percent in Sweden; 18.9 percent in Italy; 8 percent in Germany; 6.2 percent in France; and the downward trend will probably go on in the next months.

In January 2008, the carmaker has reached a pace of 1,300 vehicles per day, a maximum level for the history of the plant.

The plant produced 224,043 cars in the first ten months of the year, more than the entire 2007 production, which was of 222,914 units. According to the previous plan, Dacia would have a total production of 310,000 units for this year.

Romania's Senate votes to keep teachers' wage hike

BUCHAREST, Nov 10 (Reuters) - The Romanian Senate rejected a government plan on Monday to delay a 50 percent increase in teachers' salaries as the country's main political parties battle over fiscal policy plans ahead of a Nov. 30 election.

The hike has become a key policy issue in the parliamentary election campaign, raising concerns about state spending at a time when many say Romania should curb expenditure to insulate its economy from the global financial crisis.

Notably, the International Monetary Fund has slammed plans for the salary increase, championed by centrist and left-wing opposition groups in parliament but opposed by the government of Prime Minister Calin Tariceanu.

The delay to the pay hike plan still has to be voted on by the lower house, but even then, Tariceanu has said he would fight deputies' efforts to overturn it.

Senators voted 79 to 12 to maintain the hike in teachers' salaries.

'We will continue to implement our reform plan designed for economic growth. I would expect that union leaders understand alarm bells coming from abroad,' Tariceanu said.

Some 170,000 teachers held a two-hour warning strike throughout Romania on Monday and dozens picketed the parliament building in Bucharest, demanding higher salaries.

Meanwhile, Tariceanu has held marathon talks with public sector trade unions in the last two weeks, as thousands of civil servants demand to go on strike later this month if their salaries are not raised by 50 percent.

Public opinion polls show salaries and pensions are the biggest concern for voters, nearly two years since Romania joined the European Union and became its second-poorest member after Bulgaria.

In response, all political groups are promising giveaways, including higher pay, subsidies for students and children and sales tax cuts.

But economists warn the parties' bidding war has hurt the country's response to the global financial crisis and threatens to destabilise the economy, which is highly dependent on foreign cash to finance domestic consumption.

Earlier on Monday, Fitch became the second rating agency after Standard & Poor's to cut Romania's status to below investment grade, citing concerns over economic policies. The downgrades mean it is the only EU member at 'junk' level.

Opinion polls show Tariceanu's Liberal Party trailing the opposition in third place with some 17-18 percent of support. The Democrat-Liberal Party (PD-L) of President Traian Basescu is the frontrunner with some 32-37 percent and the ex-communist PSD has the backing of 30-32 percent of voters.

Romania Trade Deficit Widens in September

(RTTNews) - Monday, Romania's National Institute of Statistics announced that the trade deficit stood at EUR2.33 billion in September, compared with a EUR1.71 billion deficit seen in the previous year.

In September, exports and imports increased by 16.6% and 24.5%, respectively, on an annual basis.

For the first nine months of the year, trade deficit stood at EUR16.93 billion over a year ago. During the period, exports value increased 18.3%, while imports value rose 15.9%.

Romania's BRD Jan-Sept net profit up 52 pct

BUCHAREST, Nov 10 (Reuters) - Romania's second largest bank BRD BRDX.BX reported a 52 percent increase in nine-month net profit on Monday, a similar result to a preliminary statement published a month ago.

The bank, controlled by France's Societe Generale (SOGN.PA: Quote, Profile, Research, Stock Buzz), posted net profit of 1.039 billion lei ($357.5 million), compared with a preliminary result of 1.038 billion lei reported last month.

It said in October its profit was boosted mainly by the sale of a stake in insurer Asiban to French insurer Groupama.

Total assets were at 44.5 billion lei at the end of September. The volume of loans given by BRD to its clients in the first nine months rose 32 percent on the year, while deposits rose 25 percent.

In October, it said net banking revenues, excluding the Asiban sale, were up 25 percent to 2.1 billion lei.

Bank president Patrick Gelin said in September he expected profit growth at the end of the year at a rate similar to the one registered in the second half, at around 20 percent, and a slowdown in 2009.

Monday, November 10, 2008

Fitch demotes Romania to BB plus

BUCHAREST, Nov. 10 (Xinhua) -- Fitch Credit Rating Agency on Monday lowered to BB plus, with negative prospects, from BBB, Romania's rating for long-term credits in hard currency, and dropped long-term credits in the national currency Lei, to BBB minus, also with negative prospects, Romania's Agerpres news agency reported.

Fitch explained that the two-step demotion of Romania's credit rating, which was removed from the investment grade category, (low risk for investments), mirrors its concerns for Romania's macroeconomic policy as well as for the country's ability to avoid a severe economic and financial crisis.

Romania, according to Fitch, is likely to need external financial support to prevent a credit crisis. That, Fitch said, takes into consideration that Romania has been facing a current account deficit that is expected to exceed 14 percent of the country's gross domestic product this year.

Fitch's decision comes about two weeks after Standard & Poor's also removed Romania from the investment grade category.

Romania rejected S&P critics and said it did not need International Monetary Fund (IMF) support. The IMF in turn, denied rumors that it has been discussing a financial support package with Romania.

Fitch and S&P's comments are similar warnings that risks to the Romanian economy may increase because of growth in private debt on foreign markets

Bucharest political actors ignored the alarm signals and got more involved in the parliamentary elections due on Nov. 30, Fitch said.

Along with Romania's rating, Fitch also demoted the ratings of Bulgaria, Hungary and Kazakhstan, considering that those emerging countries are most vulnerable to the deterioration of the global financial environment because of high account deficits and large short-term foreign debt.

Romania Jan-Sept trade deficit up 12.5 pct y/y

BUCHAREST, Nov 10 (Reuters) - Romania's January-September foreign trade deficit widened by 12.5 percent on the year to 16.9 billion euros ($21.68 billion), as exports exceeded import growth.

Data from the National Statistics Board showed on Monday that CIF (cost/insurance/freight) imports rose 15.9 percent on the year to 42.5 billion euros after a 14.6 percent eight-month increase. Exports were up 18.3 percent to 25.6 billion euros.

Data showed the September gap was up 36 percent at 2.3 billion euros.

Romania's external deficit boosted by a vast trade gap is its main economic headache, sparking talk of risks to the European Union new member's economic stability in the wake of global financial crisis.

Analysts said the trade data boosted hopes the current account gap growth might stabilise at last year's level of 14 percent of GDP or even below it, helped by improved exports structure and a weaker leu currency.

'Data are not bad at all, they show the trend is good and gives high chances for a slight improvement of the balance of payments, just under 14 percent of GDP this year,' said Ionut Dumitru, head of research at Raiffeisen Bank in Bucharest.

'The big growth in imports (in September) is generated by non-EU import rises ... most probably triggered by energy imports ahead of the winter season.'

At 0820 GMT, the leu traded weaker on the day at 3.7435/24 per euro, compared with a Friday close of 3.713 and an intra-day low of 3.7533, after ratings agency Fitch cut Romania's credit rating to 'junk' status, dealers said.

IHT: Regulators in Europe fight for independence

Sunday, November 9, 2008

BERLIN: Being one of the national telecommunications regulators in Europe is not an easy job, largely because the governments they work for still own significant stakes in powerful former state phone monopolies. That can make it easy to get caught up in politics.

Consider Dan Cristian Georgescu, the former telecommunications regulator for Romania, who was fired by the Romanian prime minister, Calin Popescu-Tariceanu, in August.

At the time, the prime minister cited unspecified improprieties involving staffing in Georgescu's agency to justify his removal. Georgescu said the charges were fabricated and on Sept. 18, an appeals court in Bucharest agreed and ordered Georgescu back to work.

With court order in hand, Georgescu left the courthouse and walked straight to his old office. But hours later, he was shown the door again. The prime minister had signed an executive order abolishing the agency, replacing it with a near identical one with a slightly different name. Popescu-Tariceanu had done the same thing to relieve the previous regulator of his job.

"I don't know the real reason for my dismissal," said Georgescu, 59, in an interview, the first he has given since his removal. "But Romania's telecom regulator is no longer as independent as it was. We used to be truly independent."

Nobody claimed to believe that Georgescu had been removed because he had angered the former Romanian monopoly, the Romtelecom, and high-profile dismissals like this are rare. But his firing illustrates the fragile position many national regulators have in EU countries, where they are often caught between EU demands to maintain a fair and open market and the financial interests of government employers.

The European Parliament will soon be considering a measure proposed by the EU's telecommunications commissioner, Viviane Reding, to create a European telecommunications regulator. The proposal would also give new power to the bloc's national regulators.

In measures she has ushered through Parliament and that are before Parliament now, Reding has championed regulation as necessary to increasing competition and bringing down prices for consumers.

In eight of 27 EU countries, national governments own an outright majority in former phone monopolies, which gives them a veto over major decisions, according to the European Competitive Telecommunications Association, a group in Brussels that represents competitors to the former monopolies. In 10 other countries, including Germany, France, Austria, Sweden and Romania, the government holds a minority stake but remains the largest shareholder.

"The independence of regulators needs to be clearly defined by law," said Levi Nietvelt, an economist at The European Consumers' Organization, an advocacy group based in Brussels. "That we don't always have."

Consider Belgium, which owns 53.5 percent of Belgacom, the former fixed-line phone monopoly. Belgacom paid €300 million, or almost $400 million, in 2007 in dividends to the government. Reding asked the Belgian regulator, the Belgian Institute for Postal Services and Telecommunications, to reduce the retail prices on Belgacom's network. So far, Belgium has not done so.

Catherine Rutten, a member of the four-member council that runs the Belgian regulator, said her agency was shielded from political influence even though the government owned a majority in Belgacom. Rutten said her agency would make a recommendation soon on how to bring down Belgacom prices. So far, the agency has favored fining Belgacom, rather than imposing price ceilings, which it has never done.

"Just because the government owns a stake in Belgacom doesn't mean we are not independent," Rutten said.

A similar conflict is being challenged in Germany, where national lawmakers and the telecom regulator are letting Deutsche Telekom - still 31.7 percent owned by the German government - bar competitors from leasing space on its €3 billion high-speed fiber optic VDSL network, which it is using to sell video services.

Barring access is against EU law. The European Commission has sued Germany over what it called a "regulatory holiday" for the former national carrier but the issue will not be settled by the court for another two years. During that period, the company can take advantage of its exclusive, faster technology, gaining a market advantage over competitors and higher prices for consumers.

"The German government's stake in Deutsche Telekom creates a constant conflict of interest," said Jürgen Grützner, executive director of VATM, a group in Bonn representing 90 companies that compete with Deutsche Telekom. "The end result is a desire on the part of the government to protect Deutsche Telekom and its jobs."

Daniel Pataki, the Hungarian telecom regulator and chairman of the European Regulators Group, an advisory panel of 27 national chiefs, said regulators viewed independence as critical.

"This is, however, a national matter for each country," Pataki said. "The question is not whether a particular state holds a stake in a telecom operator. What is important is that national regulators are equipped to be able to exercise their functions independently of their respective political bodies embedded in the national legal systems."

A bill before European lawmakers in Brussels attempts to shield regulators from political influence by giving them broader authority to impose fines. The legislation would also bar regulators from leaving their jobs to work for phone companies they had just regulated. The bill would require regulators to work "independently, impartially and transparently," forcing prime ministers, for example, to state the reasons why they dismiss regulators.

Such a change would be welcome in Romania, said Varujan Pamuccian, chairman of the information, technology and communications committee in Romania's lower house, the Chamber of Deputies. "What happened to Mr. Georgescu is because the agency is directly under the government," said Pamuccian. "No one really knows why he was fired."

The conflict has a certain quality of déjà vu. In 2005, Popescu-Tariceanu removed Georgescu's predecessor, Ion Smeeianu, in similar fashion. After Smeeianu won his job back in Romanian court in 2006, the prime minister abolished the agency, reorganizing and renaming it to block Smeeianu's return.

A member of the Romanian Parliament and a phone company executive in Romania, both of whom did not want to be named for fear of political retribution, said they believed Popescu-Tariceanu had removed Georgescu to give his post to a member of the opposition party, whose support he may need in elections later this month.

Reding has sent Popescu-Tariceanu two letters asking him to explain the firing of Georgescu. So far, she said, she has not received a clear answer. Whether European lawmakers will change the rules to combat such situations remains unclear. Members of European upper house, the Council of Ministers, removed the word "independently" last month in their version of the bill from the phrase requiring regulators to work "independently, impartially and transparently." They are scheduled to vote on the bill Nov. 25.