Wednesday, April 20, 2011

Romania to close half of its power plants by 2035

BUCHAREST, April 20 (Reuters) - Romania needs up to 40 billion euros of investment in new electricity generation, while it is forced to close a third of its outdated power capacity by 2020 and more than half by 2035, the economy ministry said.

A draft of the ministry's energy strategy by 2035 released on Wednesday estimates the European Union state will need 30-40 billion euros ($43.2-$57.6 billion) to create new production capacity of some 14,800 megawatts to replace aging units.

Successive government haves held back energy investment for years, stalling reforms, sell-offs and public-private partnerships, and almost all of the country's coal, gas, nuclear and large hydro-power plants are state-owned.

A government plan to restructure producers into two state-owned energy generators, currently on hold due to legal challenges, has also discouraged foreign investment and has been criticised as lacking transparency.

In the draft energy strategy, investment priorities include upgrades to three large lignite-fired power holdings by 2015 and the addition of two 720 MW units at the country's sole nuclear power plant in Cernavoda by 2020.

It also envisions a new 1,000 MW hydro power plant and a second nuclear power plant of up to 3,200 MW by 2035 and continued support for renewable energy, particularly wind power.

That is the one sector in which Romania has drawn strong interest from the likes of Czech CEZ (CEZPsp.PR: Quote), Italy's Enel (ENEI.MI: Quote) and Energias de Portugal (EDP.LS: Quote).

But the strategy does not outline specific measures to secure funding, and it comes at a time when more and more energy investors are leaving Romania.

Earlier this year, four major foreign firms pulled out of a partnership with the state to build two nuclear power units. [ID:nLDE71M18J]

The strategy also said renewable energy, including hydro power, should account for 38 percent of all electricity by 2020. It sees power consumption growing by just under 3 percent on average each year until then.

(Editing by Jane Baird)

IBM to build center of excellence in Romania


BUCHAREST — US computing giant IBM and the municipality of Targu-Mures on Wednesday signed an agreement on the construction of a center of excellence in the central Romanian city.

The agreement stipulates that Romanian researchers coming from universities in the Transylvania region will attend post-graduate courses in IBM centers around the world. They will then be employed by the center in Targu Mures.

IBM researchers will meet Romanian professors and local authorities to decide on the activities and the funding of the site.

The center is part of a strategy called "Digital Mures" aimed at setting up a "scientific, research and medical IT city," the Romanian government said.

Tuesday, April 19, 2011

World Bank sees Romania leading E.Europe growth

By Luiza Ilie

BUCHAREST, April 19 (Reuters) - Romania's economy will lead growth among the European Union's 10 emerging eastern states next year as its public finances improve and domestic demand recovers, the World Bank said on Tuesday.

In a report, the World Bank said growth in the bloc's 10 ex-communist states would rise by 1 percentage point on the year to 3.1 percent in 2011, and reach 3.8 percent next year, narrowing the gap to its western economies.

However, risks to growth were notable across the region, stemming from weak government and private investment and feeble consumption, dragged down by low household income, higher unemployment and tight lending, the report said.

The Bank said Slovakia and Poland -- where consumption levels are already strong -- would benefit from low imbalances before the financial crisis and good EU fund absorption.

Estonia, Lithuania and Latvia would benefit from better exports, while demand in their domestic markets slowly builds.

Growth in the Czech Republic and Hungary would advance at a slower pace as their economies are already more developed.

Meanwhile, Romania and Bulgaria -- the EU's two poorest states, which were hit later but harder by the financial crisis -- would grow slightly faster than their neighbours in 2012.

Romania, which suffered two years of deep recession as it struggled to hold on to a 20 billion euro aid package led by the International Monetary Fund, will post growth of 1.5 percent in 2011 and 4.4 percent next year, the Bank said.


The report also said it expected monetary policy to remain growth-supportive across the region, despite continued pressure on inflation from surging global food and energy prices.

"Monetary policy is set to remain accommodative for the recovery, although policy rates could increase from low levels at a moderate pace," the Bank said.

Eastern European economies would also get a shot in the arm from the May opening of German and Austrian labour markets to all but Romania and Bulgaria, which joined the EU later.

Up to 140,000 workers, mostly Polish, are expected to migrate to Germany each year, getting jobs mostly in hotels and restaurants. Cash sent home by eastern European migrants working abroad has been an important growth factor for years. [ID:nLDE72S0PL]

The report also said the 10 states needed to ensure their largely foreign-owned banking systems remained stable, and to continue fiscal tightening.

It said banks' funding pressures persisted. While non-performing loans had peaked in Latvia, they were still at more than 18 percent of the overall loan portfolio, with Romania a close second.

(Editing by John Stonestreet)

Monday, April 18, 2011

Romania Cancels Highway Contract After Companies Stop Work

Romania canceled a contract with four local companies for the construction of 43 kilometers of highway, the Transport Ministry’s road department said in an e- mailed statement today.

The ministry ended the contract with Spedition UMB SRL, Pa&Co International SRL, Euroconstruct Trading 98 SRL and Tehnostrade SRL, for building a highway between Bucharest and the southern city of Ploiesti, after the companies failed to carry out any work on the road for 16 months, according to the statement.

The ministry plans to revise the project and prepare a new tender for selecting a constructor in the next month.

To contact the reporter on this story: Andra Timu in Bucharest at

To contact the editor responsible for this story: James M. Gomez in Prague

Friday, April 15, 2011

Victory for activists fighting to save historic Bucharest

BUCHAREST — A Romanian court has declared illegal a document used as the basis for the demolition of historic buildings in Bucharest, a court said on Thursday.

The court on Tuesday said that the document issued by local authorities in 2006 delimiting the public area to be altered by the construction of a four-lane boulevard was invalid. The municipality said it would file an appeal against this decision.

A number of groups have called on the municipality to stop the construction works. But 75 buildings have already been demolished and 1,000 people evicted for the project.

"All documents subsequently issued by the municipality are based on the one that was declared illegal. This means that all demolition, eviction, delisting and construction operations are illegal", Nicusor Dan, chairman of the Save Bucharest Association, told reporters.

Bucharest's mayor Sorin Oprescu has argued that the road will relieve traffic congestion and that the historic buildings were in a bad state.

For many residents the project recalled the bulldozing of entire districts by the late dictator Nicolae Ceausescu to build a huge palace in the 1980s.

The Union of Architects in Romania and NGOs have called on several EU commissioners for help, saying the project "was continuing the urbanistic moves of Ceausescu's dictatorial regime" and was "brutally violating the principles of an integrated city development."

Thursday, April 14, 2011

Romania must take steps to better harness energy: experts

By Mihaela Rodina (AFP)

BUCHAREST — Romania boasts gas, oil and wind resources that can make it a major European player but it needs large-scale reforms and investment in order to fully harness this potential, experts said Wednesday.

"Romania has a capacity for self-sufficiency in gas, as well as an important nuclear and wind-power potential ... but the network must be modernized and this calls for substantial investment in the coming years," Yvonnick David, the coordinator of a study drawn up by French and Romanian experts, told AFP.

In 2010, the gas production of the two major local companies Romgaz and OMV-Petrom accounted for 83 percent of consumption. Imports of Russian gas were halved compared to 2008.

The hydro-electricity output rose by a quarter while wind power for the first time became an important source of energy following the commissionning of Czech group CEZ's first turbines of what is expected to become Europe's largest wind farm.

Romania's decision to open up its wind-power market has triggered fierce competition among investors, several of whom target the Dobroudja region, described by experts as one of the best sites in Europe.

Thanks to these natural riches, energy prices are among the lowest in the European Union. But experts and investors warn that this may turn out to be a poisoned chalice.

"Keeping prices low may seem to be beneficial to consumers," a report by the Romanian Center for European Policies (CRPE) said.

"But in the long run this poses a major threat to the country's energy safety because investors are no longer willing to spend money, not knowing if they will recover their investment, while the state-owned Romanian companies register sky-high losses," it added.

The experts' study, entitled "Energy, an Opportunity for Romania," set forth ten proposals on improving energy efficiency as well as implementing European standards into Romanian legislation.

The experts propose such measures as saving energy by improving the thermal insulation of apartment blocs built during the communist regime, updating plants, defining the rules for wind-power generation and guaranteeing access to local gas supplies.

Last week, the European Commission formally requested Romania, alongside Italy and Poland, to bring its national legislation on regulated end-user energy prices in line with EU rules.

The request was welcomed by David who said Romania will have a hard time "pursuing this low-price policy and raise the necessary funds for modernizing its ageing plants."

He stressed that the lack of predictability had made three energy groups - GDF Suez (France), RWE (Germany) and Iberdrola (Spain) - pull out of the Cernavoda nuclear project.

The three companies had been partners, since 2008, with Romania's Nuclearelectrica for the development of units 3 and 4 of Cernavoda.

But in January "they said: we cannot take that risk," David, who is the CEO of GDF Suez Energy Romania, stressed.

Uncertainties related to the profitability of the project, expected to cost four billion euros, and the government's plan to set up two energy champions underlay their decision.

The US ambassador to Romania Mark Gitenstein has also criticized the authorities' efforts to reorganize state-owned energy companies into two "national energy champions".

"It's like rearranging the deck chairs on the Titanic," he said recently.

The move "is not only an inefficient use of valuable resources" but also a policy that would significantly impede competition, he stressed.

Gitenstein said Romania needed around 10 billion euros to modernize the energy sector and "thereby unleash its most important strategic assets."

Wednesday, April 13, 2011

AP:Poll: Many Romanian teens rampantly intolerant

BUCHAREST, Romania – Teenagers in Romania are widely intolerant of Gypsies, gays and people with AIDS, according to a new poll that called the results "extremely worrisome."

The findings published late Tuesday came from a poll paid for by the Soros Foundation and conducted in November. The report says the results show a large number of Romanian teenagers could be described as racist and anti-Semitic.

Homosexuals were rated as the least preferred neighbors, with three-quarters of those questioned saying they would not want gays living next door. That was followed by Gypsies and people with AIDS, which some two-thirds of respondents would not like to have as neighbors.

Romania decriminalized homosexuality in 2001 but prejudice remains, with the dominant Romanian Orthodox Church strongly opposing homosexuality. In 2007, police used tear gas and clashed with more than 100 protesters who attacked an annual gay rights parade with stones and fireworks.

The poll also showed that 42 percent are opposed to having a Muslim neighbor, and 34 percent opposed to a Jewish neighbor.

The findings showed that while children from more educated families were generally less intolerant, they were more intolerant of Gypsies, or Roma. In Romania, home to an estimated 1.5 million Roma, there is widespread prejudice against the minority.

About 5,860 students aged 14 to 18 were questioned and the poll had a 2 percent margin of error.

George Soros' Open Society Foundations have put almost $150 million (€110 million) into groups helping Romas

Monday, April 11, 2011

FT: Romania: lurking stagflation

April 11, 2011

Stagflation is not as far away as you may think. The Dracula of economic threats is alive and well inside the European Union – in Romania. Bucharest on Monday announced a jump in annual inflation to 8 per cent in an economy which was in recession last year and will struggle to pull out of negative territory in 2011.

The country’s challenges lack the immediacy of the debt crises facing Greece, Ireland and Portugal, but it faces deep-rooted difficulties which won’t fade in six or 12 months. And as a EU member, it can hardly be ignored in Brussels.

Romania’s inflation rate rose in March to 8 percent, the highest since August 2008, from 7.6 percent in February, the National Statistics Institute reported. The increase was driven by rising food prices, particularly for fruit and vegetables, which are in short supply locally following last year’s poor harvests. Rising oil prices also had an effect, driving up the costs of fuels and petrochemical products.

While the whole world is vulnerable to global commodity price hikes, Romania is particularly exposed among EU members because food accounts for an especially high percentage of the consumer price basket (33 per cent, compared with just 17 per cent in neighbouring Bulgaria).

Economists expect the inflation rate to moderate once this summer’s harvest is collected (assuming it is not another poor year on the farm) and last summer’s VAT hike is no longer in the numbers.

But inflation won’t drop nearly enough to meet the central bank’s (recently increased) year-end targets of 3 per cent. Economists have published forecasts as high as 6 per cent. And next year won’t necessarily be much better: under the terms of its support agreement with the International Monetary Fund and the EU, Bucharest has pledged to cut heating fuel subsidies which are among the EU’s highest. The move will boost inflation by around 1 percentage point in the year that it’s implemented.

Nicolaie Alexandru-Chidesciuc, Romania chief economist at ING, says the central bank now has little chance of reducing interest rates from the current 6.25 per cent a level that has not been changed since the 2008-9 crisis. Citigroup also says that the bank is likely to keep rates on hold: it might cut if food price inflation moderates but it might have to tighten if the government runs a bigger fiscal deficit than the 4.4 per cent of GDP envisaged by the IMF/EU programme.

After two years of recession, compounded by biting public spending cuts to tame borrowing, Romania’s leaders are keen to see some economic growth to give Romanians a bit more money in their pockets and allow the government a little more wiggle-room on deficit management. After implementing one IMF-EU programme, they last month agreed another, supported by a €5bn loan package.

The government has forecast a 1.5 per cent increase in GDP for 2011 – a figure which gives little margin for avoiding another year in negative territory if events turn out even slightly worse than expected.

ING’s Alexandru-Chidesciuc says: “Yes you can describe it as stagflation. There is some recovery but it’s very very fragile. And it comes with high inflation.”

Romania deserves credit for stabilising its economy following the 2008-9 crisis with a severe austerity programme which included a 25 per cent cut in public sector pay. But without mastering inflation that stabilisation is incomplete.

Romanian Romgaz Sees Lower 2011 Gas Sales, Output

Romgaz SA, a Romanian state-run natural-gas producer, said its revenue will probably drop 6.6 percent this year as gas output falls, while its net income will rise 28 percent because of cost cuts,Mediafax reported.

Revenue will probably decrease to 3.95 billion lei ($1.4 billion) from 4.23 billion lei, while net income will probably increase to 650 million lei from 509 million lei, the news service said, citing a statement from the Medias, Romania-based company. Investments are expected to fall 24 percent to 906 million lei from 1.2 billion lei, according to the statement.

To contact the reporter on this story: Irina Savu in Bucharest at

To contact the editor responsible for this story: James M. Gomez at

Romanian March CPI Rise to 2 ½-Year High, More Than Forecast

By Irina Savu - Apr 11, 2011

Romania’s inflation rate rose to the highest in 2 1/2 years in March, more than economists had forecast, on rising food and fuel costs, bolstering forecasts that policy makers will probably keep rates steady this year.

The rate advanced to 8 percent, the highest since August 2008, from 7.6 percent in February, the Bucharest-based National Statistics Institute said today in an e-mailed statement. The annual rate exceeded the median estimate of 7.8 percent in a Bloomberg survey of eight economists. Prices increased a monthly 0.6 percent.

Central banks around the world are struggling to fight inflation threats and keep higher food and fuel prices from spreading to wages amid turmoil in the Middle East. Romanian policymakers are trying to lower domestic prices boosted by a government increase in a value-added tax rate last year and global prices, while also shoring up the recession-hit economy.

The rate was “a bit of a negative piece of news but it doesn’t change our expectation of interest rates remaining unchanged this year, and if anything it strengthens our view that there aren’t conditions for a rate cut,” said Raffaella Tenconi, a Bank of America Merrill Lynch economist inLondon.
‘Too Late’

The Banca Nationala a Romaniei left its key rate unchanged at a record-low 6.25 percent on March 31 for a seventh meeting in a row and cut foreign-exchange reserve requirements by 5 percentage points to 20 percent, leaving commercial banks more money to lend to spur the economy, which contracted for two years in a row. It kept the reserve ratio on leu deposits at 15 percent. The next rate-setting meeting is on May 3.

A reduction in reserve requirements on leu liabilities “is well possible in coming months” as “it’s too late for interest rate cuts,” Tenconi said.

Romania’s leu, the third-best performer in eastern Europe after the Hungarian forint and the Serbian dinar this year, gained 2 percent in March because of an improved economic outlook and central bank signals that it may allow further gains in an attempt to damp inflation. The leu rose 0.3 percent to 4.1048 per euro as of 11:02 p.m. in Bucharest.
‘Elevated’ Pressures

“It seems to us that as long as inflation pressures remain elevated, the central bank not only has no room to cut rates, but also has to accept leu gains - unlikely to be as fast as recent ones perhaps - in order to tame inflation,” Pasquale Diana, a London-based economist at Morgan Stanley, said in a note to clients today. “In our view, the central bank’s inflation targets of 3 percent for end-2011 and end-2012 are too ambitious and out of reach.”

Food-price inflation quickened to an annual 9.9 percent in March, compared with 8.8 percent in February, boosted by rising bread, potato and sugar prices, the institute said. Non-food prices advanced 7.4 percent, compared with 7.3 percent in the previous month, driven by higher fuel prices. Price growth for services fell to an annual 5.7 percent, compared with 6 percent in February, helped by a stronger currency.

The Bucharest-based central bank will probably increase its inflation outlook because of surging commodity prices, Governor Mugur Isarescu told the news service Mediafax in an interview on April 7. The bank raised its inflation forecast on Feb. 7 for this year to 3.6 percent from a November expectation of 3.4 percent because of rising global fuel and food prices. The rate will probably drop to 3.2 percent in 2012, according to the February forecast.

Romania’s trade deficit narrowed in February to 391.5 million euros ($566 million) from 651 million euros a year earlier as rising demand from western Europe boosted exports, the statistics institute said in a separate statement today. The deficit was a revised 191 million euros in January.

To contact the reporter on this story: Irina Savu in Bucharest at

To contact the editor responsible for this story: James M. Gomez at

Wednesday, April 6, 2011

Romania: Grounds for optimism

Oxford Business Group Latest Brief

Romania’s economy is set to return to growth this year, albeit tentatively, after two years of recession. While the heady days of the last decade are still some way off, the improvement is based on the sound foundations of export-led industrial recovery and healthymacroeconomic indicators.

Mugur Isarescu, the widely respected governor of the Romanian National Bank, said that the economy has pulled out of its long, deep recession and is entering a new phase of growth. He added that he expects growth to be sustainable and partly export-driven, whereas a substantial contributor to Romania’s bumper years in the last decade was a construction boom that subsequently turned to bust. Politically driven increases in public sector wages are also likely to have helped stimulate growth, but they also drove up the public deficit and inflation to unsustainable levels, particularly as the global economic climate worsened.

Having been one of the fastest-growing economies in Europe in the mid-2000s, clocking up GDP growth of 6.3% in 2007 and 7.3% in 2008, the global economic crisis exposed Romania’s structural weaknesses and imbalances. The recession of 2009 saw the economy shrink by 7.1%, a more extreme reversal than those seen in most other European countries. Even as the world pulled out of the crisis last year, with most European economies registering growth, Romania experienced a continued shrinkage of 1.9%. Investors have been wary, with the real estate market no longer seen as a sure-fire bet and the currency, the leu, somewhat volatile.

The gloom is far from entirely banished. Isarescu and the IMF alike forecast growth of 1.5% for 2011, a sluggish rate compared to previous standards, while the Vienna Institute for International Economic Studiesexpects 2%. While there are positive signs, it will be some time before the economy reaches pre-crisis levels. Romania remains vulnerable to any further global slowdown, which could constrict investment again and damage exports.

Furthermore, inflation, a bugbear for some years, is likely to remain rather high, despite low growth, leading to stagflation. Nicolae Chidesciuc, chief economist at ING Bank Romania, the local branch of Dutch financial institution ING, expects a rate of 5% in 2011 and 4.5% in 2012, while the IMF forecasts 5.2%. Inflation at this rate is likely to erode many Romanians’ wages, limiting their spending power, and have an effect on producers through higher input prices.

Nonetheless, the governor has sound reasons for optimism, with signs that Romania’s recovery will indeed be based on stronger foundations. Despite the recession, Romania has managed to cut its external debt to 5%, down from 12-14% in 2008 and 2009, according to Isarescu, who says that the country will now aim to keep it around 4-6%, a level he sees as sustainable. This makes Romania considerably more secure than many of its Eastern European neighbours that are saddled with expensive debt that weighs on national finances.

Industry – much of it export-oriented – has also recovered faster than the economy as a whole. Industrial output grew by 4.1% in 2010, having shrunk by 5.7% in 2009, and in January production grew 10.6% year-on-year, accelerating for the third consecutive month, with this the fastest rate since April 2008.

Isarescu has pointed out that Romania needs not only investment but entrepreneurs with the skills to develop ideas and see projects through. He sees non-completion of new schemes as one of the main problems for the economy, and indeed many poorly conceived projects (including some funded by the EU).

Romania has a substantial pool of skilled labour and recent years have seen many Romanians who were educated or employed abroad return, applying their skills in their home country. More start-ups and dynamic local firms could potentially bring great benefits to the economy, increasing competition and helping other firms enhance their operations, leading to gains in productivity, which remains low by European standards.

The green shoots have started to appear for Romania. While it still faces challenges, the country’s export-led industrial recovery and strengthening macroeconomic fundamentals have translated into an opportunity to nurture more sustainable long-term growth in 2011 and beyond.

Romanian prosecutors request MEP loses immunity over bribery allegations

By The Associated Press 

BUCHAREST, Romania — Anti-corruption prosecutors want the European parliament to strip immunity for a lawmaker so they can investigate him over bribery allegations.

Prosecutors said Tuesday they sent their request to the justice minister to be submitted to the parliament. London's Sunday Times newspaper reported in March that three lawmakers, including Adrian Severin, had agreed to propose legislation in return for bribes.

The other two lawmakers have resigned from the EU parliament.

Severin, who remains a legislator, denied any wrongdoing. He quit Romania's opposition Social Democratic Party after he was threatened with expulsion.

Romanian Parliament says stray dogs can be killed, angering animal rights' groups

BUCHAREST, Romania - A parliament committee has passed a draft law that says stray dogs can be killed.

Hundreds of animals rights' activists gathered outside Parliament to protest the Tuesday decision. Protesters called for stray dogs to be sterilized, saying it is cheaper and more humane.

Romania has long had a problem with stray dogs, with an estimated 30,000 of them in the capital alone.

Authorities say 1,500 people were bitten in the capital during January and February.

In 2006, a Japanese tourist was killed by a stray dog, and earlier this year, a woman was mauled to death by a pack of dogs.

Volksbank Romania Plans Return to Profit By Selling Bad Loans

Oesterreichische Volksbanken AG (VBPS)’s Romanian unit plans to return to a profit this year, after posting its first-ever loss last year, as its sells bad loans.

Volksbank Romania SA, which posted a loss of 36 million euros ($51 million) last year after doubling bad-loan costs, is aiming for an annual net income of at least 25 million euros, Chief Executive Officer Johann Lurf said in an interview in Bucharest today. The bank plans to clean up its balance sheet by selling 4,000 bad loans worth as much as 10 million euros “rather soon,” he said.

Volksbanken International AG, the eastern European unit of Oesterreichische Volksbanken, posted a loss last year on bad- loan provisions in recession-hit Romania and a write-down in Ukraine. VBI was put up for sale by its parent company in December as the Vienna-based bank was among the hardest hit by the financial crisis, and took 1 billion euros in state aid from the Austrian government.

“I have a profit estimate for this year, but I’ll just say that everything below 25 million euros would disappoint me,” Lurf said. “We don’t plan to sell running portfolios, but distressed portfolios.”

Volksbank Romania, VBI’s biggest unit, will probably lower its market share to as low as 3 percent this year from 5.8 percent in 2010, as it “doesn’t want to be a frontrunner” in the fight for new lending clients once the economy recovers from a two-year recession, according to Lurf.
Credit Portfolio

Volksbank has a credit portfolio of 600 million euros in Romania, 90 percent of which are euro- or Swiss franc- denominated credits, he said.

“My estimate is that the credit growth rate will be around 7 percent to 8 percent, overall in Romania this year,” Lurf said. “Volksbank should have a small increase of 2 percent to 3 percent.”

The bank is seeking to diversify its financing sources by attracting more deposits and possibly issue covered bonds and securing funds from the European Investment Bank or European Bank for Reconstruction and Development for corporate and small and medium-sized enterprises, according to Lurf.

To contact the reporters on this story: Andra Timu in Bucharest at; Irina Savu in Bucharest at;

To contact the editor responsible for this story: James M. Gomez in Prague

Splitting up is hard to do, especially in a Romanian town with a steep divorce fee

By The Associated Press

BUCHAREST, Romania — Divorce can be expensive, but in Romania you'd better hope you're not living in the town of Sangeorgiu de Mures when you decide to untie the knot.

Several months ago, a new law went into effect in Romania allowing some couples to be divorced by town hall officials. Each municipality can set the fee, and huge discrepancies have emerged.

In Sangeorgiu de Mures — a town of 8,000 people, many of them Catholic — it costs a whopping 10,000 lei (€2,380,$3,370), or nearly 60 per cent of an average annual salary.

That is 2,000 times more than what it would cost in Bucharest, the capital.

Town officials said Wednesday the goal is to discourage divorce and that it appears to be working since three unhappy couples decided to remain husband and wife after seeing the bill.

Romania Faces Monetary-Policy ‘Dilemma’ in Inflation Fight

Romania’s central bank faces a “dilemma” as policy makers can’t cut interest rates aimed at stemming capital inflows while battling accelerating inflation, an adviser to the bank said.

The bank will strictly control market liquidity and carry on fine-tuning policy “for a while,” as it tries to tame consumer prices boosted by higher global fuel and food costs, Lucian Croitoru, a monetary-policy adviser to Governor Mugur Isarescu, told reporters in Bucharest today.

The Banca Nationala a Romaniei left its key rate unchanged at a record-low 6.25 percent on March 31 for a seventh meeting in a row and cut foreign-exchange reserve requirements by 5 percentage points to 20 percent, leaving commercial banks more money to lend to spur the recession-hit economy. Romania is trying to lower the European Union’s highest inflation rate of 7.6 percent in February that sprang from a government tax increase and rising prices worldwide.

“Inflationary expectations are no longer well-anchored,” Croitoru said. “The central bank can control only demand and influence supply” through the exchange rate “but the currency appreciation is dragging down the economy, while having a limited impact on reducing the inflation rate.”
Borrowing Cycle

Policy makers stopped lowering borrowing costs in June after cutting rates four times to combat the worst recession on record. A 5 percentage-point government increase in the value- added tax in July to 24 percent helped push the inflation rate to 8 percent in December, the highest in more than two years.

Romania’s leu, the second-best performer in eastern Europe after the Hungarian forint so far this year, gained 2 percent in March because of an improved economic outlook and after the central bank signaled last month that it may allow further gains in an attempt to damp inflation. The leu rose 0.2 percent to 4.1150 per euro as of 5:41 p.m. in Bucharest.

The leu’s appreciation will have a minor impact damping inflation in March, Croitoru said. “I don’t think the bank intervened in March to support the leu,” he said.

Romania’s economy, mired in a two-year contraction, is poised to recover this year and grow 1.5 percent, according to International Monetary Fund and government forecasts. It posted a smaller annual decline than expected in the fourth quarter and 0.1 percent quarterly growth, bolstering forecasts that growing exports and industrial production will end the slump this year.

To contact the reporters on this story: Irina Savu in Bucharest at; Andra Timu in Bucharest at

To contact the editor responsible for this story: James M. Gomez at

Romania asks to lift immunity of cash-for-ammendments MEP


EUOBSERVER / BRUSSELS - Romanian anti-corruption prosecutors and the justice minister on Tuesday (5 April) asked the European Parliament to lift the immunity of Socialist MEP Adrian Severin, who invoiced €12,000 for a legislative amendment he put on behalf of Sunday Times journalists posing as lobbyists.

Romania's anti-corruption prosecutors asked that his immunity be lifted in order for them to be able to investigate "the suspicion of bribe taking and abuse of power" arising from the Sunday Times investigation, according to a statement.

Unlike two other MEPs from Slovenia and Austria, Zoran Thaler and Ernst Strasser, who promptly resigned from the Parliament after being exposed by the Sunday Times sting, Severin has refused to end step down, despite being expelled from the Socialist group and facing open booing from his colleagues.

A fourth MEP, Pablo Zalba Bidegain from Spain, is also keeping his job for now, as he claims he only talked to the alleged lobbyists, but never actually accepted their offer.

Severin, a former foreign minister in post-Communist Romania, denies any wrongdoing. During his five years as an MEP, Severin has always tried to downplay Romania's corruption problem and portray those who criticise it as the country's detractors.

Wary that Romanian anti-corruption inquiries take too long and get bogged down in courts by judges unwilling to go after high-ranking politicians, a series of campaigners have meanwhile asked the Belgian authorities to take over the case, as the deeds were committed in Brussels.

Friends of the Earth Europe and Transparency International in recent days repeated calls for the Belgian public prosecutor, Johan Delmulle, to start an official investigation.

EU's anti-fraud office Olaf is already carrying out an investigation into the matter but it relies on national authorities to take the cases to court.

"The four parliamentarians seem to be involved in corruption, which is a serious crime. This should be investigated swiftly and thoroughly and if they are found guilty there should be strong penalties. The Belgian government is best placed to ensure that all four MEPs are treated the same," Paul de Clerck from Friends of the Earth Europe said.

The European Parliament itself is currently reviewing its code of conduct. In a press conference on Tuesday, Socialist leader Martin Schulz repeated calls for Severin to "give back his mandate," and said that MEPs should not have other paid jobs on the side.

"Being an MEP is a time-consuming job and a well-paid one. Parliament has to make sure that members cannot use their position as an MEP to make money on the side," he said.

A seven-point plan intended to tackle the issue was presented last week by parliament chief Jerzy Buzek and is currently being negotiated with group leaders.

But anti-corruption campaigners warned of this "not to become a tick-box exercise".

"There is a role for civil society to verify that the changes are meaningful and lasting. Transparency International will rigorously monitor the process to ensure a true "zero tolerance" approach to corruption," Jana Mittermaier from the TI's Brussels office said in a statement.

Tuesday, April 5, 2011

Romania names advisers for Petrom stake sale

BUCHAREST, April 5 (Reuters) - Romania moved a step closer to selling part of its top oil and gas company Petrom (SNPP.BX: Quote) by choosing advisers to help with the sale of a 9.8 percent stake, the economy ministry said on Tuesday.

The listing is part of a government plan to raise some 2.9 billion lei ($1 billion) this year on the Bucharest bourse, according to the terms of agreements with the International Monetary Fund and other lenders. [ID:nLDE70I1YJ]

Romania owns a 21 percent stake in Petrom, which is majority controlled by Austria's OMV (OMVV.VI: Quote). Fondul Proprietatea (FP.BX: Quote), an investment fund set up to compensate Romanians whose assets were seized under communism, owns another 20 percent.

The group to advise on the secondary public offering of shares is made up of Renaissance Capital Limited, EFG Eurobank Securities, BT Securities and Romcapital SA.

The sale is expected to raise more than 500 million euros ($711 million), the ministry said.

Other planned sales include 15 percent stakes in state-owned power and gas utilities Transelectrica (TSEL.BX: Quote) and Transgaz (TGNM.BX:Quote) and in unlisted gas producer Romgaz. (Reporting by Ioana Patran; Editing by Will Waterman) ($1=.7031 Euro) ($1=2.901 Lei)

Renault May Produce Electric Cars in Romania, Gandul Reports

French carmaker Renault SA (RNO) is interested in producing electric cars at its Dacia plant in Mioveni, Romania, Gandul reported, citing Environment Minister Laszlo Borbely.

Borbely said he will meet Dacia officials today to discuss possible government incentives for electric cars other than the car-registration tax exemption already in place, Bucharest-based Gandul reported.

To contact the reporter on this story: Irina Savu in Bucharest at

To contact the editor responsible for this story: James M. Gomez at

Monday, April 4, 2011

Romconstruct, Ecopower Invest $88 Million in Romania Wind Parks

Romconstruct Top SRL and Ecopower Wind SRL, two privately owned Romanian companies, invested 257 million lei ($88 million) in two wind parks, the Economy Ministry said in an e-mailed statement today.

The investments in the southern county of Constanta are for a combined capacity of 35 megawatts, the ministry said.

Romconstruct, based in Constanta, spent 177 million lei to build a 25-megawatt power project, of which 70 million lei was financed with a European Union grant, according to the statement.

Ecopower completed a 10-megawatt park for 70.3 million lei, of which 39 million lei came in EU financing, the ministry said.

To contact the reporter on this story: Andra Timu in Bucharest at

To contact the editor responsible for this story: James M. Gomez in Prague

Sunday, April 3, 2011

AP: Romania appoints new manager for national airline

April 1, 2011

BUCHAREST, Romania—Romanian authorities have appointed a new general manager at the country's national airline Tarom.

The airline says Friday that Gabriela Bordea, who previously served as Tarom's marketing and sales director, will take up the position. She began working for the airline in 1973 and has been Tarom's representative in Paris, Brussels and Tel Aviv during her career.

Bordea replaces Ruxandra Brutaru who resigned in March, after the International Monetary Fund put the airline on a list of companies holding back the country's economic recovery, saying its debts are putting a brake on economic recovery.

Officially, Tarom, which flies to 57 destinations, had profits of $15 million (euro10.61 million) in 2010.

Friday, April 1, 2011

The new Mancunians

Features | Published in TES Magazine on 1 April, 2011 | By: Ciara Leeming

Since Romania joined the EU in 2007, Cedar Mount High in Manchester’s Gorton suburb has seen an influx of Roma children. Socially and economically marginalised, many are attending school for the first time - but a targeted approach is raising aspirations

The crimson badge on Samuel Filipache’s blazer is a source of tremendous pride. Like most 16-year-olds, he is full of ambition - GCSEs, college and, he hopes, a future in business or teaching. But this school prefect is on a mission to prove not just himself, but also his community.

Filipache has lived in the UK on and off for a decade, but has only been at high school for two years. His family are among up to 2,000 Romanian Roma who have settled in the terraced streets of south-east Manchester over recent years.

Now a Year 11 pupil at Gorton’s Cedar Mount High School, he begins his studies after midnight, when his parents and seven younger siblings are asleep.

“If my family had stayed in Romania, I don’t think I’d even be in education because teachers are racist against Gypsies and often don’t give us school places,” he says.

“Coming to the UK has changed my life - it’s opened my mind. I feel different from all the Roma in my community. I feel part of the UK.”

Samuel is one of around 140 Roma children who have joined his school over the past three years. About 100 of them - one in nine pupils at Cedar Mount - are Romanian. A nearby primary school has experienced a similar influx, with smaller numbers enrolled at 20 other schools around the city.

At Cedar Mount, this rapid demographic shift has posed a considerable challenge for staff. The Roma are socially and economically marginalised, and Romanians in particular face strict work restrictions in the UK.

Many parents - including Samuel’s - rely on selling The Big Issue in the North to survive, with the rest getting by in other ways such as collecting scrap metal or cleaning.

While some pupils are now coming up from junior school, few speak much English and many have never been in education before. Meeting the needs of pupils who have never held a pen is a new experience for many secondary teachers.

“We’re starting from ABC, not from any point we’ve seen in a secondary school before,” says assistant head Tracey Bishop, who has taken responsibility for the Roma pupils at Cedar Mount.

“Because they haven’t been to school before, they find routines difficult - timetables, remembering PE kit - all those things we’ve instilled in our children from age four and five. So expecting them to fit in is a huge issue.”

While schools such as Cedar Mount receive some additional funding towards these pupils, they miss out in other ways.

Money from the Government’s ethnic minority achievement grant is being put towards EAL (English as an additional language) teachers, with crucial short-term support coming via a Manchester City Council team that works with travellers and international arrivals and its voluntary sector partner, the Black Health Agency, a charity that works with ethnic minorities and marginalised communities.

But many children from Romania - which joined the European Union in 2007 - do not qualify for free school meals since their parents are severely limited in the benefits they can claim. In such cases, schools miss out on extra funding allocated on the basis of this measure of need.

There are thought to be about 10 million Roma worldwide. Last year, France hit the headlines for deporting Roma migrants back to Romania and Bulgaria. Continental Roma have arrived in the UK over the past decade - coming first as refugees and later as economic migrants following EU expansion.

Ms Bishop is in regular contact with colleagues at schools in Wigan and Bury which have also grappled with influxes of Roma, in their cases mainly from Hungary and the Czech Republic.

She says some issues are common to all these schools, such as whether to aim for full integration or provide a discreet area for Roma children. The schools have to look at the content as well as the location of classes. “We are developing the curriculum for them, but it all takes time,” she adds.

Most of Cedar Mount’s Roma children start off in EAL classes, with the intention that they gradually move on to the full curriculum. The school employs two Romanian EAL teachers to ease this process and to communicate with their parents, who are often illiterate.

The approach is starting to yield results. Roma children are beginning to mix with other pupils and more girls are staying on at school. This is significant in a community where early marriage remains common.

Year 9 pupil Tabita Dumitru, 14, hopes to sit her GCSEs and thinks she might like to work with computers. The eldest of nine, she came to the UK in 2007 and spent some time at primary school before joining Cedar Mount.

“My parents came here to give us opportunities. Some of the Roma girls don’t have English friends, but I do,” she says. “I love school - PE, English, maths and science are my favourite subjects. My dad may leave Manchester if he needs work, but I’d like to complete my education.”

The sudden arrival of so many Roma children at Cedar Mount has, at times, led to friction with other pupils. And any support offered to them must be played down so as not to add to ill-feeling in the neighbourhood.

Until last year, EAL teaching took place in a single space at the heart of the school, but this began to cause problems.

“The Roma pupils started seeing it as their territory and to the rest of the pupils it looked as though they had a special room,” explains Ms Bishop. “Actually, it was an EAL room and wasn’t just for the Roma children, but it became a bit of a monster. It became clear that we needed to do away with that and spread teaching across the school.”

Given their numbers, it is perhaps inevitable that the Romanian Roma pupils tend to congregate together at school. Small incidents - a shove, for example, or insults being traded - can quickly turn into fights as children crowd around.

Special assemblies and events celebrating Roma culture are used to counter negative attitudes held by some pupils’ families - as they are for other communities within the school.

“We’ve taken a massive step in integrating Roma into this community and our children can only be commended for accepting them - not that we would expect anything different,” says Ms Bishop.

But she does not underplay the problems. “It’s been really difficult, and a year ago it did frighten us,” she adds. “We knew the Romanian children were safe at school, but we weren’t sure they were safe walking home. There was tension in the community and there were fights between Roma and non-Roma pupils, but I think we’re more settled with it all now.”

School is playing a key role in the integration of the community in Gorton. It acts as a communication channel for families, as well as giving the Roma an idea of British culture and expectations.

This is important in this deprived corner of Manchester, where anti-social behaviour is widely - and often unfairly - blamed on the Roma. These issues have led to the creation of a multi-agency strategy focusing on Roma children and the wider community. Family workers based in the city council and the Black Health Agency connect with new families and deal with immediate needs, including finding school places.

As a prefect, Samuel is unusual, but there are hopes that in time more Roma young people will aim high. And small but significant achievements take place every week.

The city’s schools have celebrated Roma culture via drama and art workshops led by Roma artists, and last year saw the first Gypsy Roma Traveller achievement event, where teachers in Salford and Manchester were invited to enter pupils for awards.

As a senior member of staff with responsibility for Roma pupils, Ms Bishop ensures they remain on the agenda at Cedar Mount. She includes them in everything, from the newsletter to the school council.

Last year, the school won funding to send 24 pupils, 12 Roma and 12 non- Roma, on a week-long residential aimed at promoting cohesion, which had a huge impact on the children involved.

Some Roma children were put in for Spanish GCSE last summer, despite it not being on the curriculum at the school, because teachers knew they could pass. And a small number of the most conscientious Roma pupils were recently made peer mentors to give them more responsibility.

This attentiveness is paying off. Cedar Mount’s Roma pupils now have an attendance rate of 91 per cent - beating the school average of 90 per cent. In 2007/08, the national average attendance for Roma secondary school pupils was 74 per cent, according to a Department for Education report, Improving the Outcomes for Gypsy, Roma and Traveller Pupils.

But there is a snag. UK law restricts the work eastern Europeans can do, even if they have been educated here. Romanians, along with Bulgarians, are largely limited to self-employment.

This term, Cedar Mount’s Roma Year 10s will go out on work experience in a programme designed especially for them by the school and the city council, in conjunction with partners such as the police.

In addition, before the Year 11s leave this summer, an outreach worker will visit their families to ensure they have the correct paperwork. If funding is approved, there could also be a short course aimed at helping them eliminate barriers to work, such as basic literacy.

“A lot of the Roma children have aspirations, but we found they were talking about leaving school and selling The Big Issue, which isn’t a sustainable income,” explains Julie Davies, an education development officer with the council and also director of healthy communities with the Black Health Agency.

“We thought they should explore other avenues, so, in consultation with them, we found areas we could help them develop.”

In parallel, a handful of young Roma people are benefitting from a project aimed at creating positive role models, run in conjunction with The Big Issue in the North, Manchester University and Connexions. Participants are found work in roles such as interpreting.

Two young bilingual support workers, recruited from within the Roma community by the council, have started working with new pupils in schools across the city. One, Vasile Dumitru, sold The Big Issue for his first 18 months in the UK but now spends every Friday at Cedar Mount.

“The Roma kids have more chances in this country because they are getting an education,” he says. “I was lucky - I went to school for eight years in Romania before coming to Manchester, but most didn’t.

“I’m very fortunate to have this experience of helping the Roma kids get on and understand what’s happening in the classroom. I hope to develop my own skills in time and be a positive example to the children.”

Since the project began, teachers have reported a huge impact on the Roma children, simply from having an adult who knows their culture in the classroom.

“We want these colleagues to look Roma and to dress how they do because they are role models for those young people,” says Ms Davies. “Now others are starting to look at them and see that they could do it if they had skills.”

Attitudes also appear to be changing within the Roma community. Ambivalence towards formal education among some families has now been replaced by an expectation that their children will go to school and stay on until Year 11.

Experience has shown that in order to win the support of Roma parents, they must be personally informed of what is happening and why, while young people going on trips often have to be picked up and dropped off at home. This is what will happen before Cedar Mount’s work placement pilot - staff will invite the parents into school and explain the British system and its value.

“This is just the amount of effort you have to put in,” explains Ms Davies. “People misunderstand and think we’re not empowering people but, actually, we are, it’s just what is needed because so much of this is alien to these communities.”

It remains unclear how the impending cuts will affect this work. The ethnic minority achievement grant will continue for just one more year and there may be no ring-fenced funding for minority ethnic pupils beyond 2012. Ms Davies and her colleagues are working to keep up the momentum and find ways to support this vulnerable community.

“These are uncertain times,” she says. “From here, it’s about working together, building on current partnerships, being flexible and looking for ways to develop the work, as well as seeking funding from new sources, such as grants. This is cutting-edge work and we don’t want it to end, because Manchester has come so far.”

Back at Cedar Mount, Ms Bishop’s high hopes for Samuel are mixed with concerns for his future.

“Samuel Filipache is our star Roma pupil and is an inspiration to the others,” she says. “I look at him sometimes and wonder what will become of him - will there be the right opportunities? I hope there will.”

The prefect himself is determined to succeed and hopes that by doing so he will help raise the aspirations of other young people in his community.

“I want to start a business but I also really hope when I grow up to become a really good teacher,” he says. “I want to take part in community organisations for Roma because I don’t think I’m the only one who can do this. Most of all, I want to show the world what a Romanian Gypsy is capable of achieving.”

Transylvania fetes Romania's new wave films

Retro will play pics by Puiu, Mungiu, Porumboiu

LONDON -- Romania's Transylvania Film Festival celebrates its 10th anniversary in June with a retrospective of the new wave rebirth of Romanian cinema in the last decade.

The fest, based in Cluj, will screen key films including Cristi Puiu's 2001 debut, "Stuff and Dough," during its 6th Romanian Days sidebar, which runs June 9-11.

Pic screened at Cannes in Director's Fortnight, opening the way for Romanian filmmakers and putting the country back on the map of European cinema.

Other Cannes players unspooling in the retro include Puiu's "The Death of Mr. Lazarescu" (2005) and "Aurora" (2010); Cristian Mungiu's "Occident" (2002) and "4 Months, 3 Weeks and 2 Days" (2007); Corneliu Porumboiu's "12:08 East of Bucharest" (2006) and "Police, Adjective" (2009); Catalin Mitulescu's "The Way I Spent the End of the World" (2006); Cristian Nemescu's "California Dreamin' (Endless)" (2007); Florin Serban's "If I Want to Whistle, I Whistle" (2010); Radu Muntean's "Tuesday, After Christmas" (2010); and Andrei Ujica's "The Autobiography of Nicolae Ceausescu" (2010).

The event includes master classes by Puiu.

The fest opens June 3 with a screening of Francois Ozon's "Potich," a black comedy set in France in the 1970s starring Catherine Denueve, Gerard Depardieu and Fabrice Luchini.

Contact the variety newsroom at

Romania must sell of energy sector to end corruption

BUCHAREST (AFP) – The US ambassador to Romania Mark Gitenstein on Thursday urged authorities to sell off the country’s state-owned energy companies in order to uproot corruption and cronyism.

“The energy sector here will require significant amounts of new investment if the sector is to be a driver for, and not a drag on, Romania?s recovery,” Gitenstein said during a ceremony at the Bucharest Stock Exchange.

“In the energy sector alone you need something in the range of 10 billion euros to modernize the sector and thereby unleash your most important strategic assets,” he added.

However, this “will not happen as long as these assets are tied up in inefficient state-owned enterprises run by inexperienced political cronies making decisions based not on what?s best for the company but what serves their own interests.”

Romania’s gas production covers 70 percent of its needs while its wind-power potential makes it an El Dorado for investors in renewable energy sources. The country also has oil fields in the Black Sea and in Transylvania.

Gitenstein called on Romania to follow in the footsteps of Poland, whose government announced in 2009 that it would raise over 10 billion euros ($14 billion) by selling part of its interest in state enterprises.

Unlike Romania, he stressed, “Poland did this not by giving preferential deals to political allies who bought the assets below their fair value but by using its equity markets.”

The ambassador added that instead of taking steps to deal with the real problems of this sector, Romania was “rearranging the deck chairs on the Titanic.

“The on-going effort to reorganize state-owned energy companies into two ‘national energy champions,’ instead of exploring full or partial privatization options, is not only an inefficient use of valuable resources” but also a policy that would significantly impede competition, he said.

The government’s plan to set up two energy champions, Electrica and Hidroenergetica, has been criticized by several of the companies concerned as well as by foreign experts.

Gitenstein also said he was impressed by Romania’s efforts to reform the state and end corruption but stressed that “the drive for reform should be coming from inside the country and not be imposed from the outside.”