Thursday, April 30, 2009

Romania presidential runner says housing top issue

* Social Democrat head calls for housing programme
* Energy distribution, farm reform also key issues
* Wary of energy over-dependence on Russia

By Adam Cox and Justyna Pawlak
BUCHAREST, April 29 (Reuters) - Leftist presidential candidate Mircea Geoana called on Wednesday for a major housing programme in Romania that could also boost jobs and bolster a country forced to rely on massive aid from the IMF.

Geoana, leader of the leftist Social Democrats (PSD), also said he would push for a dramatic shift in the country's energy distribution system, a series of social infrastructure projects and long-overdue agricultural reform.

Seven months before Romania's presidential election, Geoana is running second in opinion polls, some 10 percentage points behind popular incumbent Traian Basescu. The PSD and centrist Democrat Liberals are partners in the government coalition.

Geoana said Romania, a relatively impoverished European Union state of 22 million, would need to avoid overinvestment in housing leading to too much supply. But he believes helping young people who currently have no access to credit to buy homes would benefit the crisis-hit economy in more ways than one.
"The most important (issue) is to maintain and create jobs," Geoana told Reuters in an interview at his party headquarters.

"That's why I believe the housing programme could really revive our construction sector which has been the driver of economic growth." As global turmoil enveloped eastern Europe, Romania turned in recent months from the EU's fastest-growing economy to a trouble spot that needed a 20 billion euro aid package led by the International Monetary Fund to prevent a financing crisis.

While powering the boom of recent years, construction and real estate investment have also worsened the country's economic imbalances that are now pushing it towards recession. Many people have been priced out of the housing market.

Surveys show Romania has a housing deficit of about 1 million apartments and the shortfall may need investment worth about 100 billion euros ($132.5 billion) over 25 years.

The next most important issue, Geoana said, was energy distribution. Romania had two conflicting issues: it needed a role as one of the region's energy players but at the same time it wanted to avoid becoming overdependent on Russia.

Lastly, Romania's fragmented farming sector needed to be consolidated -- an issue that has slowed the country's economic modernisation since the early days of the post-Communist era.

Romania has some 2 million individual farms, mostly tiny subsistence plots, employing 40 percent of the population. Yet it also imports more two-thirds of its agricultural needs.

Geoana said Romania needed to provide financial incentives so that more farm-owners joined forces and leased out farmland.

Bucharest is already participating in the EU- and U.S.-backed Nabucco pipeline, a 9.7 billion euro project to pump gas from the Caspian region via Turkey, Bulgaria, Romania and Hungary to Austria to cut Europe's reliance on Russian supplies.

But Russia's gas monopoly Gazprom may want to coax Romania into joining its rival pipeline project, South Stream, which will run its gas from the Black Sea to southeastern Europe and is supported by Bulgaria and Italian firm ENI.

Bucharest has so far insisted on its support for Nabucco, though the project is wavering because of the EU's failure to line up supplies and reach political and financial agreement.

Asked whether he would be open to Romania participating in South Stream, Geoana would not be drawn but he signalled a willingness to look at a variety of options. Any decision would have to be taken not purely in terms of Romania's national interests but in a wider geopolitical context.

"It is clear the more we drag our feet, not only in Romania but on this Nabucco project, the pressure is increasing."

The country needed to see what the overall EU strategy would be with regard to gas supplies from Russia. "It's a power game."

He said that if a project rival to Nabucco included Western interests as well as Russia, Romania would be far more comfortable participating. "Nabucco is our first choice. Our second best solution would be a combination of Western and Eastern consortium (partners)... I am sensing we are getting closer to a strategic decision from Europe and from Russia." (Additional reporting by Radu Marinas) (Editing by Mark Trevelyan)

1 comment:

Rome_Census said...

Poland will NOT adopt EURO before 2015 !! URGENT for INVESTORS !!! Deficit 3,9 % of GDP, inflation close to 6 % , no Maastricht criteria catching in th next 2-3 years !!!