Friday, September 30, 2011

IMF Probably Will Cut Romanian 2012 Growth Forecast, Franks Says

The International Monetary Fund probably will cut its 2012 growth forecast for Romania’s export- reliant economy as the euro-area debt crisis crimps growth in the Balkan country’s main trading partners.

The IMF, which approved a 675 million-euro ($913 billion) precautionary loan yesterday, may lower its outlook to as low as 2 percent from 3.5 percent, IMF mission chief to Romania Jeffrey Franks said in a phone interview from Washington last night.

“The prospects for next year are certainly worsening due to the situation elsewhere in Europe and so we would definitely be looking at a downward revision in our forecast,” Franks said. “It would certainly be below 3.5 percent but I would be surprised if it was below 2 percent.”

Europe’s economy is showing increasing signs of a slowdown as governments struggle to contain the fiscal crisis and avert a Greek default. Romania, which counted on an IMF-led bailout from 2009 through early 2011 as its economy shrank, exited a recession this year as surging exports mainly to the European Union helped offset weak domestic demand.

Gross domestic product expanded 1.7 percent from a year earlier in the first quarter and 1.4 percent in the second, after shrinking 1.3 percent last year and 7.1 percent in 2009. GDP probably will grow 1.5 percent this year, according to Franks.

Romanian inflation has slowed more than the IMF had anticipated and the central bank might meet its inflation target of 2 percent to 4 percent for this year, Franks said. The inflation rate fell to 4.25 percent in August, the lowest in 17 months, from 4.85 percent in July, as a bumper harvest boosted food stocks.
Sustained Inflation Slowdown

“What I think we would like to see on the IMF side is some sustained trend in downward inflation,” Franks said. “We need to make sure that this is not just a cyclical volatility due to a very good harvest, but that there is some underlying trend towards reducing inflation that is sustainable in 2012, before our recommendation on a tightening bias would change.”

Romania’s central bank should also refrain from “aggressively” reducing the amount of foreign currencies banks are required to hold to keep a “buffer in the financial system against banking sector problems elsewhere in Europe,” Franks said.

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

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romanian Granted $675 Million Under IMF Precautionary Loan

The International Monetary Fund agreed to unlock $675 million in funds from Romania’s crisis- prevention loan after the government trimmed its budget deficit and sought to sell state assets.

The funds can be tapped under the eastern European nation’s 5 billion-euro ($6.8 billion) precautionary arrangement with the Washington-based lender and the European Union, aimed at providing a safety net during the euro-area debt crisis. This is the third installment of the program, following a 480 million- euro tranche made available in August.

“Romania has made good progress under the new Stand-by arrangement,” the fund said in a statement. “The authorities’ commitment to continued reform has helped restore market confidence and economic stability.”

Romania, which counted on an IMF-led bailout from 2009 through early 2011 as its economy shrank, exited recession this year, with gross domestic product expanding 1.7 percent from a year earlier in the first quarter and 1.4 percent in the second. It doesn’t plan to draw the precautionary funds as it has sufficient reserves. The IMF will store the available installments inWashington for emergency withdrawal.

Romania has pledged to narrow its budget deficit to 4.4 percent of GDP this year from 6.5 percent in 2010 and sell stakes in energy and transport companies including utilitiesTranselectrica SA (TEL) and Transgaz SA to raise revenue.

The government has cut public wages, frozen pensions and increased tax revenue, helping it meet a first-half budget- deficit target set by its lenders. The January-June shortfall was 11.3 billion lei ($3.6 billion), or 2.1 percent of GDP, below the 18.1 billion-lei gap in the year-earlier period and within its 12.6 billion-lei goal.
Budget Deficit

The deficit, which the government plans to reduce to within 3 percent in 2012, was 2.4 percent at the end of August, the Finance Ministry said Sept. 26.

Romania is seeking to finance the shortfall through domestic and international debt markets and is still trying to sell energy assets this year and next after failing to find a buyer for a minority stake in OMV Petrom SA (SNP), the country’s biggest oil company, in July.

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

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romania Inflation to Be Within Target Range This Year, Popa Says

Sept. 29 (Bloomberg) -- Romanian inflation will “very likely” fall within the central bank’s target range of 2 percent to 4 percent this year, Deputy Governor Cristian Popa said.

The country’s currency, the leu, is among the most stable in the region, with recent moves “not dramatic,” he told reporters in the capital, Bucharest, today.

The central bank may lower its 2012 economic-growth forecast because of slower global output, Popa said.

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

To contact the editor responsible for this story: Andrew Langley at alangley1@bloomberg.net

Thursday, September 29, 2011

Romania to Leave Rates Unchanged on Threats to Growth, Currency

Sept. 29 (Bloomberg) -- Romania’s central bank will probably leave interest rates unchanged for an 11th meeting today as the euro-area debt crisis clouds the economic outlook and weakens the currency.

The Banca Nationala a Romaniei will leave its monetary policy rate at 6.25 percent, according to all 13 economists in a Bloomberg survey. The bank will announce its decision after 11 a.m. in Bucharest.

Romanian policy makers have kept borrowing costs steady since last June as they assess the fading effect of a tax increase on prices. Central banks across the region are seeking to balance the risks of slower growth in western Europe, the main importer of goods from its eastern neighbors, and weaker currencies as investors cut exposure to emerging-market assets.

“We think the central bank will keep its cautious approach because of the uncertain situation on financial markets,” said Gaelle Blanchard, a London-based emerging-market analyst at Societe Generale SA, who expects a rate cut early next year. It “doesn’t want to see the leu weaken too much due to the risk to inflation and financial stability, so cutting rates now would be quite risky for the currency.”

Inflation Slows

Poland’s central bank left borrowing costs unchanged in September on expectations inflation will slow and the economy will weaken. Hungary kept its benchmark interest rate steady for an eighth month Sept. 20, while the Czech central bank followed suit two days later.

Romanian policy makers left rates on hold after an increase in the value-added tax rate to meet international bailout pledges boosted inflation to the fastest in two years. Before that, the bank lowered borrowing costs four times to combat the worst recession in two decades.

Romania’s inflation rate fell to the lowest in 17 months in August, dropping more than economists forecast as a bumper harvest boosted food stocks. It declined to 4.25 percent from 4.85 percent in July, the lowest since March 2010, the National Statistics Institute said on Sept. 12.

Inflation should fall within policy makers’ target range of 2 percent to 4 percent in 2012, with price growth to slow to 3.3 percent in the first quarter before accelerating to 3.5 percent by the end of the year, according to a central bank forecast.

Economic growth slowed to 1.4 percent from a year earlier in the second quarter compared with 1.7 percent in the first. Romania is on track to meet a forecast of 1.5 percent growth for this year, Prime Minister Emil Boc said on Aug. 17.

--With assistance from Barbara Sladkowska in Warsaw. Editors: Andrew Langley, Douglas Lytle

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

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Tuesday, September 27, 2011

In Romania, refugees from Libya find oasis of peace

By Mihaela Rodina (AFP)

TIMISOARA, Romania — Western Romania has turned into a harbour of peace for nearly 200 refugees who fled persecution, abuse or violence -- many in Libya -- and dream only of "living freely", once resettled in a western country.

"We suffered terribly in Libya. Now, what we want more than anything else is freedom," Mussie, a 31-year-old Eritrean refugee who declined to give his last name for safety reasons, told AFP.

He is one of the scores of residents in the Emergency Transit Centre (ETC) in the western city of Timisoara, some of whom have spent months in the facility.

One of these was a Libyan woman who accused soldiers loyal to Moamer Kadhafi of raping her in an incident that grabbed international attention. In March, Iman Al-Obeidi, 29, burst into the Rixos hotel in Tripoli, a base for journalists covering the conflict, screaming that Kadhafi loyalists had abused her at a Tripoli checkpoint -- all caught on press video that quickly went viral.

A UN official in Bucharest said she spent nearly two months in the Timisoara center before arriving in the United States in July, though gave no further details.

Mussie, a former teacher, fled Eritrea like many other countrymen to avoid an open-ended military conscription imposed by the autocratic, isolated and impoverished government of the Red Sea state. But Libya was not quite the refuge he expected.

"The Libyans were not tender" to illegal African immigrants, he said, saying he was imprisoned for two-and-a-half years, tortured and deprived of even basic medical assistance.

In February, when the revolt erupted in the North African state things got even worse for African nationals. Many were targeted, physically abused or even killed by Libyans angered over Moamer Kadhafi's reported use of sub-Saharan mercenaries to quash the uprising, according to the office of UN High Commissioner for Refugees (UNHCR).

Mussie and a dozen other men managed to flee to Tunisia, finding shelter in a camp in Shousha from where the UNHCR evacuated them to Timisoara in June.

"When they remember the past, they sometimes cry," Mussie said, referring to his friends. "I pray for those still suffering."

Like several other Eritreans here, Mussie is hoping he will be transferred soon to the United States, where some of them have relatives.

"I want to continue my studies and get a job, maybe in education," he said.

Set up in 2008 jointly by the UNHCR, the International Organization for Migration (IOM) and the Romanian government, the ETC has so far hosted more than 650 refugees. Of the 200 people now housed there, 125 have fled Libya.

In Europe, only Romania and Slovakia have such UNHCR emergency transit centres, where refugees spend a maximum of six months before being transferred to third countries to start a new life, notably the US, Britain, the Netherlands and Sweden.

Last year, Romania itself joined the list of potential host countries and accepted to take in 40 refugees per year on a permanent basis.

Asanthe, a 27-year-old Sri Lankan, is a former TV journalist who fled his country after making a documentary criticising the regime.

"I was hunted down and received death threats. My wife who is still in Sri Lanka has to move from place to place," he said, not giving his last name out of fear.

The young Sri Lankan will be transferred to the Netherlands next month. But he said he still feels his life is in danger and vowed to continue "to tell the truth about the corrupt regime".

"I have no idea what my life will be like in the Netherlands but I will have total freedom and will be able to talk freely," he said.

The courtyard of the centre, a former farm that once belonged to the border police, is swarming with children, running, shouting, rocking on seesaws or flying paper airplanes.

Be they Eritrean, Somalian, Ethiopian, Sri Lankan or Iraqi, "they all play together and go to kindergarten together, where they mainly learn English," said Adina Gogeoman of Save the Children association.

If psychologists strive to help the young ones move beyond their recent horrific experiences, the children still bring them up.

"One day a boy told me that in the refugee camp where he was before, soldiers used to threaten children with their machine guns if they were too naughty," she said.

"This centre is an oasis of peace and quiet for people who have gone through life without really living," said Camelia Nitu, the head of the UNHCR in Timisoara. Her office walls are covered with pictures of refugees, some smiling, some still showing the signs of trauma.

"People who had no identity and no hope, who did not even feel like human beings anymore, have found respect and safety here," she said.

Romania 8-month budget gap rises to 2.4 pct/GDP

(Reuters) - Romania's consolidated budget deficit rose to 2.4 percent of gross domestic product in the first eight months of the year, from 2.1 percent in January-July, the finance ministry said on Monday.

Romania, which has a 5 billion euro aid deal led by the International Monetary Fund, targets a deficit of 4.4 percent of GDP overall this year.

In nominal terms, the shortfall stood at roughly 13 billion lei ($4.09 billion). The eight-month shortfall compares with a gap of 4.1 percent in the same period of last year.

Revenues stood at roughly 116 billion lei, or 21.4 percent of GDP, up some 9.5 percent on the year, bolstered mainly by higher VAT and excise tax receipts. Budget spending stood at 129.3 billion lei.

While analysts see the government reaching its end-year deficit target, worries have risen in recent months that market turmoil and a deteriorating economic growth forecast for 2012 would hurt the country's tax revenue.

Analysts have said the centrist coalition government would need additional measures to boost revenue and cut spending in order to reach an ambitious deficit target of 3 percent of GDP next year. ($1 = 3.181 Romanian Lei) (Reporting by Luiza Ilie; Editing by Sam Cage)

Friday, September 23, 2011

NYT: Europe Denies 2 Nations Entry to Travel Zone

By STEPHEN CASTLE


BRUSSELS — Preoccupied with fears of increased migration from the south, the European Union told its two newest members, Romania and Bulgaria, on Thursday that they would have to wait to join the bloc’s passport-free travel zone.

Finland and the Netherlands objected to admitting Romania and Bulgaria to an offshoot of the bloc known as the Schengen zone, whose members agree to trust one another’s border security and to allow travelers to cross their mutual frontiers without having to show a passport, like moving from state to state within the United States.

Romania and Bulgaria, which joined the European Union in 2007, say they have met the technical standards for joining the Schengen zone, but the two objectors said that was not enough.

“It is also a matter of trust and confidence that our collective external borders will be safe and secure,” said Gerd Leers, the Dutch immigration minister. “At the moment, it is clear that there are still significant shortcomings in the field of anticorruption and the fight against organized crime.”

Tsvetan Tsvetanov, the Bulgarian interior minister, said in a televised interview that his country was in a “Catch-22,” with new requirements put in its way each time it satisfies the old ones.

The two excluded countries plan to appeal the decision at a summit meeting of European Union leaders next month, but no change is likely before a report is published next February on the progress of the two countries on law enforcement issues.

Increasing public friction over immigration in Europe is starting to fray support for the Schengen zone in countries that already belong. Denmark said it planned to restart passport checks at its borders, and the refugees fleeing unrest in North Africa set off a dispute between France and Italy this year.

While the refusal to admit Romania and Bulgaria will make little or no practical difference to most of their people, who can still travel easily within the European Union, it is a political blow for the two governments, which are sensitive about being seen as second-class member nations.

AP: Romania, Bulgaria denied entry to Schengen zone

BRUSSELS—Romania and Bulgaria, the European Union's two newest members, were denied entry into Europe's borderless free-travel zone Thursday when EU interior ministers could not reach the necessary unanimity and decided not to hold a vote.

Poland's interior minister, Jerzy Miller, said angrily that both countries had been promised entry and had met the requirements.

"Today, the promise has been broken," Miller said. "Today, we were not confident enough to say we want to act together, not separately." Poland currently holds the rotating presidency of the European Union.

"This leads me to rather sad conclusions about the trust between member states," Miller said.

The Bulgarian interior minister was harsher still, saying the refusal to admit the new countries undermined the EU project.

The outcome had been virtually certain before the meeting began. The Netherlands and Finland had publicly opposed admitting Romania and Bulgaria, both of which joined the European Union in 2007, saying they needed to do more to fight corruption and organized crime. Within the Schengen free-travel zone, there are no checks performed or papers required when people cross national borders.

The French and Germans had proposed a compromise: drop border checks at airports and seaports in October, but continue them on land crossings until summer 2013, based on a report to be completed by July. But that was rejected.

The free movement of people has been one of the EU's most cherished achievements. And the dispute over it comes just as the EU's other most-cherished achievement, the euro common currency, is also under severe stress.

The borderless travel dispute threatens to turn bitter. After the Dutch announced their opposition to Romania and Bulgaria joining, Romania began blocking all flower imports from the Netherlands, saying the paperwork was not in order and the plants might contain "dangerous bacteria."

Esther de Lange, a Dutch member of the European Parliament called the move "old-school blackmail."

Raf Casert in Brussels, Alison Mutler in Bucharest, Matti Huuhtanen in Helsinki, and Veselin Toshkov in Sofia, Bulgaria, contributed to this report. Don Melvin can be reached at http://twitter.com/Don--Melvin

Romania’s SIF4 Holders Approve Sale of BCR Stake to Erste

The shareholders of SIF Muntenia SA, a Romanian investment fund, gave the management clearance today to continue talks on selling a minority stake in Banca Comerciala Romana SA to Austria’s Erste Group Bank AG (EBS), Muntenia Chief Executive Officer Petre Pavel Szel said.

The fund, also called SIF4, is party to an agreement in principle by four investment funds, known as SIFs, to sell 24.1 percent of BCR to Erste for cash and shares worth a total of 435 million euros ($584 million). SIF4 won’t request a listing of the Romanian lender on the Bucharest Stock Exchange, Szel said in a phone interview today after the shareholders meeting.

“We received the green light from our shareholders to continue negotiations with Erste,” Szel said. “From now on, the management can continue the process to dispose of the BCR stake and we hope that we can sell the first part of our stake by December.”

The four SIFs that signed the agreement in principle are SIF Banat-Crisana SA, SIF Transilvania SA, SIF Muntenia and SIF Oltenia SA. Erste, eastern Europe’s second-biggest lender, will buy their shares for a total of 453.9 million lei ($141 million) in cash. The funds will also get stakes in Erste of as much as 1 percent each through a share swap, once the transaction is completed. That will raise Erste’s BCR stake to 93.5 percent.
Moldova Yet to Decide

SIF Moldova SA, which was left out of the accord, may also consider selling its stake in BCR if shareholders agree, CEO Costel Ceocea said on Sept. 15. A vote on this is scheduled for tomorrow or Saturday.

The five SIFs together would become one of the biggest shareholders in the Vienna-based bank, with a combined stake of about 5 percent.

“SIF4 shareholders have mandated the board to solicit a BCR listing only if negotiations with Erste Group Bank are not finalized by Oct. 13,” EFG Eurobank Ergasias SA’s Romanian brokerage unit wrote in a note to clients today. “In other words, the disposal of the BCR interest received the green light.”

When it agreed to buy a 61.9 percent stake in BCR in 2005 for 3.75 billion euros, Erste promised to list BCR’s shares within three years, to give the SIFs an exit option. It agreed with the funds to delay that target date to October this year because of adverse market conditions. Earlier this year, Erste Chief Executive Officer Andreas Treichl said he would now rather add to the stake -- which has been raised in the meantime to 69.4 percent -- than list.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Thursday, September 22, 2011

AFP: Finns, Dutch block Bulgaria, Romania Schengen entry

21 September 2011

(BRUSSELS) - Finland and the Netherlands are resisting Bulgarian and Romanian bids to join Europe's passport-free travel zone, kicking the hot-button issue to an EU summit next month, diplomats said Wednesday.

EU interior ministers will debate the candidacies of the two former communist states at a meeting in Brussels on Thursday, but the Dutch and Finnish governments have made clear they would veto the bids, the sources said.

Romania and Bulgaria are under pressure from fellow EU states to make progress in their battles against corruption and organised crime before they are welcomed into the 25-nation borderless region.

Poland, current chair of the council of EU states, has struggled to sell a "two-step" compromise in which air and sea borders would open first this year while a decision on when to open land borders would be delayed to next year.

The Dutch and Finnish governments, under pressure from their parliaments, refuse to accept even a partial opening of the borders, diplomats said. Since Schengen's enlargement requires unanimous consent, the bids will fail Thursday.

"The topic is very sensitive in certain states," said a source in the Polish presidency of the EU.

"Poland will do its utmost to find a solution before the summit of EU leaders" on October 17-18, another source said.

Several diplomats, however, said a solution was unlikely before the summit, which would force presidents and prime ministers to make a decision.

Both houses of the Romanian parliament in an all-party statement noted with concern and disapproval the "decision of parliaments and governments of certain states" to keep Romania out of the Schengen area.

It said that Bucharest had fulfilled all the technical requirements and called for a "just" decision by the EU.

Bargain coffins from Transylvania. Where else?

By ALISON MUTLER, Associated Press

SIBIU, Romania (AP) — Times are so hard in Romania that people joke they cannot afford to die. Yet in the mountains of Transylvania, carpenters are churning out cut-price coffins in a bid to beat the rising costs of death.

Ilie Troanca says he's beating the recession blues with bargain coffins that sell for around euro100 ($136) in Transylvania, home of the Dracula legend.

So far, he's sold just a few hundred, but the coffins have only been on the market for a couple of months. He has already attracted plenty of attention far beyond the Transylvanian city of Sibiu, 300 kilometers (188 miles) northwest of Bucharest.

"I saw there was an opportunity and that we had unused space," said Troanca, director of the Sibiu state timber and forest industry, which oversees 180,000 hectares (445,000 acres) of oak, beech, pine forests.

The no-frills coffins sell for 350 to 450 lei (euro82 to euro106 or $112 to $145) plus 24 percent sales tax, depending on the wood and the complexity of the design. Oak is the most expensive, while beech and pine are less pricey.

Coffins are big business in Romania, a country of 22 million, which has an aging population but where scarcely anyone is cremated. Regular coffins can sell for hundreds or thousands of euros depending on how fancy they are, and in addition to buying a plot, families often have to pay bribes to graveyard caretakers to secure a decent burial site.

Long slices of wood from the trees that cover the Carpathian Mountains were stacked outside Troanca's workshop like bread sticks.

"This would have become firewood" if we hadn't used it, he said.

It takes about one day to craft an inexpensive coffin before it is painted or lacquered. There are two designs, rectangular or hexagonal, which has a six-cornered lid.

"It's a good idea," said Sorin Ceausila, a 42-year-old carpenter who was jobless before being hired to make bargain coffins. "We all die and someone has to make the coffins."

EU Urges Romania Complete Asset-Sale Plans Amid Market Turmoil

The European Union urged Romania to push ahead with its asset-sale plans after the Balkan country signaled it may put projects aside as the deepening euro-debt crisis makes investors wary of emerging-market holdings.

Romania, which promised international lenders it would sell company stakes this year, is waiting for the right moment to offer 15 percent ofTranselectrica SA (TEL) and may postpone asking for bids for a stake in Transgaz SA until next year because of adverse market conditions, said Victor Cazana, the Economy Ministry’s director in charge of the sales.

“Increased market volatility should not be an excuse for Romania to delay structural reforms but rather an opportunity to promote them in order to safeguard market competitiveness,” Istvan Szekely, the EU’s mission chief to the country, said in an e-mailed response to questions. “The government should continue to move decisively ahead with the reform agenda.”

Romania and other east European countries including Poland and Ukraine have put asset sales, designed to bolster state coffers and finance infrastructure projects, on hold because of global market turmoil. The largest Balkan nation’s government, which may face opposition to such sales before 2012 elections, rescheduled a 9.8 percent stake sale of oil company OMV Petrom SA (SNP) for next year after failing to get enough bids in July.

“We believe that privatization proceeds this year will be negligible,” Ilker Domac and Gultekin Isiklar, analysts at Citigroup Inc., wrote in a Sept. 19 note to clients. “We believe that the government is not very likely to become aggressive in privatization ahead of the 2012 elections due to the possibility of political backlash.”
Energy Sales

Romania wants to lure investors into buying its energy assets to improve infrastructure such as roads and bridges as it cuts spending to lower the budget deficit below 3 percent of gross domestic product next year and meet pledges to the International Monetary Fund and the EU as part of a precautionary loan agreement.

Citigroup said next year’s proceeds may be almost 1 billion euros ($1.3 billion) if the government completes its sale plans, compared with a record 2.5 billion euros in 2006, mostly from the sale of the country’s largest bank, Banca Comerciala Romana SA, to Erste Group Bank AG.

“We are doing our best to sell the Transelectrica stake this year,” said the Economy Ministry’s Cazana in an interview. “It may be too late for the Transgaz stake because we need a pause between the offers.”
Polish, Russian Plans

Poland canceled a plan in August to sell a stake in PKO Bank Polski SA, the country’s largest lender, valued at as much as 6.8 billion zloty ($2.1 billion). Russia also said it plans to raise 300 billion rubles ($9.5 billion) next year by selling stakes in state companies such as OAO Rosneft, the country’s biggest oil producer, and VTB Group, its second-biggest lender, as part of 1.16 trillion-ruble asset-sale program between 2012 and 2014.

“Currently, there is a fierce competition between different countries and regions of the world to maintain existing and attract new foreign investors,” Szekely said. In Romania, “structural reforms should not be stalled next year, but rather accelerated, by creating a competitive business environment” and “prioritizing strategic investments in infrastructure facilities.”

The former communist country wants to revive the stake sale in Petrom in the first half of next year and also sell a 15 percent stake in its natural-gas producer Romgaz SA, according to the ministry’s data. It will try to sell 20 percent stakes in CFR Marfa SA, an unprofitable rail-freight company, and state- owned airline TAROM SA.
Market Difficulties

The ministry gave up a plan to sell an additional 12 percent stake in Transelectrica this year, aimed at giving the company money for investments, after the Ministry of Justice didn’t approve the proposal, Cazana said.

“It’s very hard to place any offer in the market right now and at a reasonable price,” Florin Ilie, an equity analyst at ING Groep NV’s Romanian unit, said in a phone interview. “We know that the government is not keen on accepting lower prices, but this is the market now and it should not be discouraged by temporary obstacles and continue the privatization process.”

To contact the reporters on this story: Andra Timu in Bucharest at atimu@bloomberg.net; Irina Savu in Bucharest at isavu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romania plans to sell copper mine

BUCHAREST, Sept 21 (Reuters) - Romania plans to make an announcement on the sale of state owned copper mine Cupru Min Abrud later this month via a tender, Victor Cazana, head of the industry privatisation office told Reuters.

"We are at a stage where we are about to announce it, by the end of this month. We aim to sell the state's whole stake (of 100 percent) in Cupru Min at a tender," Cazana said.

Deputy economy minister Claudiu Stafie has said he hoped the privatisation would be wrapped up by the end of this year and that the ministry has already received 10 letters of intent from investors willing to participate.

Finance ministry data showed the company, which has estimated reserves of 900,000 tonnes of copper, recorded a profit of 18.8 million lei last year. It has overall debts of about 72 million lei.

A government strategy paper showed earlier this year that Bucharest aimed originally to sell a stake in Cupru Min on the Bucharest stock exchange. (Reporting by Radu Marinas)

Monday, September 19, 2011

SIF2 May Sell BCR Stake to Erste in a $750 Million Buyout

SIF Moldova SA, which was left out of a buyout accord between Erste Group Bank AG (EBS) and four minority shareholders in a Romanian lender, may also consider selling its stake.

The fund, known as SIF2 and not part of a 435 million-euro ($598 million) agreement between Erste and four other funds in Banca Comerciala Romana SA, will continue talks with the Austrian lender by tomorrow to allow a shareholder vote on Sept. 23 or Sept. 24, Chief Executive Officer Costel Ceocea said. Adding SIF Moldova to the deal would boost the transaction’s value to 543 million euros.

“If our shareholders vote for a share sale to Erste, then we would probably enter the same agreement with this maximum level offered by Erste after further negotiations,” Ceocea said in a phone interview today. “If we have the shareholders vote, a transaction could be completed by the end of the year.”

Erste, eastern Europe’s second-biggest lender, agreed with four of the five SIFs to buy their 24.1 percent stake in its BCR unit. The funds would receive a total of 453.9 million lei ($145 million) in cash for their shares and a stake of as much as 1 percent each in Erste through a share swap once the transaction is completed.

“Under the same terms as announced yesterday, SIF Moldova would receive a little more than 4 million Erste shares and 26 million euros in cash,” Erste said in an e-mailed response to Bloomberg questions. “The total value of the transaction with the SIFs would amount 543 million euros.”
Minority Shareholders

The agreement would raise Erste’s stake in BCR to 93.5 percent, while the five SIFs would become one of the biggest shareholders in the Vienna-based bank, with a combined stake of about 5 percent.

SIF2’s shareholders must decide next week on whether to demand a BCR listing of the bank on the stock exchange, sell the stake to Erste or develop structured products, such as derivatives or warrants, according to Ceocea.

When it agreed to buy a 61.9 percent stake in BCR in 2005 for 3.75 billion euros, Erste pledged to list BCR’s shares within three years to give the SIFs an exit option. It agreed with the funds to delay that target date to October this year because of adverse market conditions. Earlier this year, Erste Chief Executive Officer Andreas Treichl said he would now rather add to his 69.4 percent stake than list.
‘Missed Opportunity’

“We were surprised by Erste’s statement because we think there are still several technical and financial details that remain unclear, and we want them to be clarified as soon as possible,” Ceocea said. “The SIFs lost an important advantage in negotiating with Erste because they didn’t stick together and missed the opportunity to obtain a better deal.”

The SIFs will waive their rights to request a listing of BCR and to special dividends, according to the agreement. The four SIFs that signed the agreement are SIF Banat-Crisana SA, SIF Transilvania SA, SIF Muntenia SA and SIF Oltenia SA.

To contact the reporters on this story: Andra Timu in Bucharest at atimu@bloomberg.net; Irina Savu in Bucharest at isavu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

AP Interview: Romania to abstain on Palestinians

By: ALISON MUTLER | 09/16/11

Romania's foreign minister says his country will abstain on voting on Palestinian statehood if the issue arises at a U.N. General Assembly session next week.

Teodor Baconschi also says there is no consensus on the subject within the European Union's 27 member states, but if one emerges, Romania will comply.

Baconschi told The Associated Press on Friday that Romania believes "a viable Palestinian state, which is a legitimate political ideal, depends on direct negotiations between both sides," a reference to struggling Israeli-Palestinian peace efforts.

The Palestinians have said they will ask the Security Council next week to accept them as a full member of the United Nations. Washington has promised to veto the measure.

Thursday, September 15, 2011

Romania to Spend $1.3 Million to Unblock Danube River Traffic

Romania may spend about 4 million lei ($1.3 million) to unblock traffic on the Danube River as water levels have dropped in recent days, theTransport Ministry said.

The ministry asked the government to approve the allocation of funds to “remove the risk situation” from the Danube, without elaborating on the procedures, according to an e-mailed statement today from the Bucharest-based ministry. More than 250 ships are blocked in different ports, it said.

A lack of rain has reduced water levels to about 2,400 cubic meters a second, compared with the usual volume of 3,800 cubic meters at this time of year, according to the country’s water supervisory agency. Water levels are expected to continue to decline until Sept. 21, the agency said.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Russia frowns at US-Romania missile shield agreement

Romanian President Traian Basescu signed an agreement in Washington yesterday (13 September) to host elements of a US anti-missile shield on Romanian territory. Russia immediately reacted, saying the agreement was ill-timed and asking guarantees that it is not aimed at her own strategic arsenal.

The agreement was signed on the sidelines of a visit by Romanian President TraianBasescu to Washington, where he was received for 25 minutes by US President Barack Obama.

According to the text of the agreement, signed by Secretary of State Hillary RodhamClinton and Romanian Foreign Minister Teodor Baconschi, the US will place a land-based SM-3 ballistic missile defence system in southern Romania, in the village ofDeveselu, Olt county.

According to details published by EurActiv Romania, the US will have exclusive command and control of the anti-missile system. A total of 500 US military personnel could be stationed there.

Russia deplored the timing of the agreement's signature.

According to the Russian Foreign Ministry, the signing took place against the backdrop of a lack of progress between Russia and the US, as well as between Russia and NATO, on the sensitive topic of the anti-missile shield.

"The agreement with Romania on the deployment at the former Air Force baseDeveselu of the land-based SM-3 ballistic missile defence system, as well as the recent announcement of the forthcoming deployment in Turkey of the US AN/TPY-2radar, shows that US anti-missile plans are being implemented swiftly and according to schedule," the Russian Foreign Ministry said in a statement, quoted byRIA Novosti.

In an article entitled 'A sign of Things to Come', the Voice of Russia writes that Moscow wanted to build a joint system which would use NATO and Russian capabilities to defend against a potential attack, but would not be out of Moscow's control.

"However, the revised AMD plans failed to address Russia's concerns, with Moscow continuing to view the current plan for the European anti-missile system with suspicion," the website further wrote.

Anecdote from talks

According to a report by EurActiv Romania, Basescu asked Obama during their White House meeting what Romania could do for the United States. Reportedly, Obama replied: "Make sure that law is abided by, that your judiciary starts working."

The EU and the US share the same concerns about deficiencies of law enforcement in Romania and Bulgaria.

The EU's 27 Europe ministers were meeting in Brussels yesterday and decided to maintain their surveillance of Romania and Bulgaria's judiciaries until "concrete and lasting results" have been achieved (see meeting conclusions).

Erste Agrees to Increase Stake in Romania’s BCR for $599 Million

By Boris Groendahl and Irina Savu

Sept. 15 (Bloomberg) -- Erste Group Bank AG, eastern Europe’s second-biggest lender, reached an agreement with four Romanian investment funds to buy their 24.1 percent stake in its Banca Comerciala Romania SA unit for 435 million euros ($599 million).

Four out of the five minority shareholders, known as SIFs, will receive a total 453.9 million lei ($145 million) for their shares and a stake of as much as 1 percent each in Erste through a share swap, according to a statement from the Vienna-based lender yesterday after markets closed. The accord is pending approval from the funds’ shareholders.

“It has always been our strategy to hold the highest possible stake in our subsidiaries and we are glad to have now this possibility also in Romania,” Erste’s Chief Financial Officer Manfred Wimmer said in the statement.

The agreement, which when completed raises Erste’s stake in BCR to 93.5 percent, will give the lender greater access to its Romanian unit’s earnings and capital by reducing the requirement of deductions for minority shareholders, analysts including Goldman Sachs Group Inc.’s Heiner Luz and UBS AG’s Daniele Brupbacher have said. It will also streamline decision-making because the funds had veto rights for some issues, according to BCR’s statutes.

BCR Listing

Erste agreed to buy its initial 61.9 percent stake in BCR in 2005 for 3.75 billion euros, or 5.8 times book value. That made the acquisition the biggest bank purchase in eastern Europe announced that year, and the one with the highest price in relation to book value, according to data compiled by Bloomberg.

Yesterday’s accord values BCR at a multiple of 1.26 times book based on Erste’s one-month share price average, it said in the statement, adding that this was “in line with market valuations” for banks in Romania and the region.

When it agreed to buy BCR in 2005, Erste pledged to list BCR’s shares within three years to give the SIFs an exit option. It agreed with the funds to delay that target date to October because of adverse market conditions. Earlier this year, Erste Chief Executive Officer Andreas Treichl said he would now rather add to his 69.4 percent stake than list.

The SIFs will waive their rights to request a listing of Romania’s biggest bank by assets and to special dividends, according to the agreement. The four SIFs are SIF Banat-Crisana SA, SIF Transilvania SA, SIF Muntenia SA and SIF Oltenia SA. The fifth fund, SIF Moldova SA, also has the possibility to enter into the same agreement, Erste said.

Property Funds

The SIFs originate from Romania’s five Private Property Funds, established when parliament adopted the country’s first privatization law in 1990. The law split most of the state’s property among the State Ownership Fund, which had 70 percent, and Romanian citizens, who received the remaining 30 percent.

Erste bought its initial stake in BCR from the Romanian government, the European Bank for Reconstruction and Development and the World Bank, while the SIFs and BCR employees retained their shares. The Vienna-based lender bought out about 7 percent held by the employees in 2006 and started a secondary listing of Erste’s stock at the Bucharest exchange in 2008.

The cash portion of the deal will be paid from retained earnings, Erste said, adding that the deal will have a maximum negative impact on the bank’s capital ratios of 0.1 percent after it issues 16 million new shares from existing capital for the stock swap. Erste’s core Tier 1 ratio, a measure of financial strength, stood at 8 percent at the end of June.

--With assistance from Andra Timu in Bucharest. Editors: Zoe Schneeweiss, Alan Crosby

To contact the reporters on this story: Boris Groendahl in Vienna at bgroendahl@bloomberg.net; Irina Savu in Bucharest at isavu@bloomberg.net

To contact the editors responsible for this story: Angela Cullen at acullen8@bloomberg.net; James M. Gomez at jagomez@bloomberg.net

Romania seeks to speed up use of EU funds

(Reuters) - Romania is seeking to improve use of its allotted European Union development funds by creating a new ministry to oversee disbursement, the government said on Wednesday.

Funds were allotted to Romania, the bloc's second poorest country which joined in 2007, as part of a wider plan to help formerly communist new members catch up with the rest. But absorption of the funds has been hampered by bureaucracy, corruption and incompetence.

At the end of 2010, Romania had only managed to secure 8.6 percent of the 19 billion euros it had slated from the EU between 2007 and 2013, with high growth sectors such as infrastructure and energy among the weakest links.

Prime Minister Emil Boc, whose centrist coalition has a small majority, has asked parliament to approve the creation of the ministry and plans to appoint former EU commissioner Leonard Orban to run it.

"The new minister will coordinate the process of absorption of European funds, as well as the diplomacy and strategy in the area of European affairs," the government said in a statement.

Wednesday, September 14, 2011

Romanian Utilities May Get 75 Million Free 2013-2020 CO2 Permits


Romania may give about 75 million free carbon permits to energy producers in the seven years starting in 2013, with oil company OMV Petrom SA (SNP) and two state- owned power plants poised to get almost half of the allowances.

The country’s Economy Ministry will apply to the European Union regulators for the free permits before the Sept. 30 deadline, according to an e-mailed response to questions from Bloomberg. It has already started public consultations on the proposal to allocate the allowances valued at 894 million euros ($1.2 billion) at today’s prices, it said.

“Romania’s energy sector is benefiting from this waiver as power generators will be able to invest in upgrading the sector infrastructure instead of paying for the permits,” the ministry said in the statement.

Eastern and central European nations, including the Czech Republic, Poland and Romania, won an exemption in 2008 from an EU requirement that power plants purchase all their CO2 permits in the next phase of the bloc’s cap-and-trade program, the world’s largest.

The EU opt-out allows utilities to get for free in 2013 allowances corresponding to 70 percent of their average annual emissions for the period 2005 to 2007 with relation to national electricity production and consumption data. The number will decrease gradually each year and in 2020 power plants will have to buy all their permits at auction or in the market.

Romania’s largest oil company OMV Petrom, a unit of Austria’s OMV AG, will get 10.3 million free permits for its new Brazi gas-fired power plant from 2013 through 2019, according to the ministry. State-run coal-fed power plants Turceni and Rovinari will get 11.8 million and 11.6 million permits, respectively, for the seven years through 2019.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net; Ewa Krukowska in Brussels at ekrukowska@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net; Stephen Voss at sev@bloomberg.net

Obama meets Romanian President

(AFP)

WASHINGTON — US President Barack Obama Tuesday held unscheduled talks with Romania's President Traian Basescu, to seal a newly signed accord which will bring US missile interceptors to Romanian territory.

Basescu had a scheduled meeting with Vice President Joe Biden in the Roosevelt Room of the White House, but Obama stopped by and ushered him into the nearby Oval Office, the White House said.

"The President noted the close alliance between the United States and Romania, and thanked President Basescu for his strong partnership," the White House said in a statement.

"The President congratulated President Basescu on the US-Romania Ballistic Missile Defense Agreement, which exemplifies the President's commitment to strengthening NATO and ensuring allies have the capabilities to meet 21st century threats," the White House said.

The agreement, signed earlier at the State Department, allows the establishment and operation of a US land-based ballistic missile defense (BMD) system in Romania as part of NATO's efforts to build a continental missile shield.

The deployment is expected to take place in 2015 at a former airbase in southern Romania.

The United States originally planned to install its anti-missile shield in Poland and neighboring Czech Republic, aimed at countering Iran.

But that plan, which angered Russia after it saw itself as the target for the shield system, was scrapped by Obama in September 2009.

The deployment of the US European-based Phased, Adaptive Approach for Missile Defense (EPAA) system started with the presence since March in the Mediterranean of a guided missile cruiser equipped with Aegis radar.

The second phase is to include the deployment of 24 SM3-type interceptors in Romania, followed in 2018 by a similar deployment in Poland.

Obama and Basescu also discussed the "important role that Romania can play in supporting and advancing democracy, both in Europe and in the Middle East in the wake of the Arab Spring," the White House said.

During a trip to Europe in May, Obama several held up post-Soviet European states like Romania as examples for Arab states that had cast of autocratic rulers and started the long march towards democracy.

Romania appoints minister in charge of EU funds

13 September 2011

(BUCHAREST) - Romanian Prime minister Emil Boc on Tuesday said he had appointed a former EU commissioner as minister in charge of European funds in a bid to spur the use of billions of euros.

"Tomorrow (Wednesday) I will send an official letter to Parliament informing it a new ministry, in charge of European funds, has been set up," Boc told reporters.

The ministry will be headed by Leonard Orban, EU commissioner for Multilingualism between 2007 and 2010.

MPs will vote on this nomination next Tuesday.

The move is expected to help the Balkan country take advantage of the 20 billion euros placed at its disposal by the EU over 2007-2013.

By mid-2011, barely 3.4 percent of these funds, had been used, according to the spokesman for the European Commissioner for Regional Policy, Johannes Hahn.
Neighbouring Bulgaria, who joined the European bloc at the same time as Romania, in 2007, has seen a major improvement in this field since it set up such a ministry.

Monday, September 12, 2011

Romanian August Inflation Rate Declines to Lowest in 17 Months

Romania’s inflation rate fell more than economists expected in August to the lowest in 17 months as a bumper harvest boosted food stocks and the effect of a government tax increase faded.

The rate fell to 4.25 percent from 4.85 percent in July, the lowest since March 2010, the National Statistics Institute in Bucharest said today in an e-mailed statement. August inflation was estimated at 4.6 percent, according to the median forecast of nine economists surveyed by Bloomberg. Consumer prices fell 0.35 percent on the month.

Eastern European central banks including Romania have left borrowing costs unchanged in the past quarter amid concern about the economic impact of the debt crises in Europe and U.S. Romania’s central bank lowered the inflation forecast for this year and next on Aug. 8.

Romania’s central bank targets an inflation rate of 3 percent, plus or minus 1 percentage point, for this year and next and expects the rate at 4.6 percent at the end of the year. The International Monetary Fund forecasts a 5.5 percent rate for the year, the lender’s mission chief to Romania, Jeffrey Franks, said on Aug. 1.

Romanian policy makers kept the benchmark interest rate unchanged at 6.25 percent, the European Union’s highest, for a 10th meeting on Aug. 3, saying “a continued prudent stance” is needed to boost a recovery and contain medium-term inflation risks stemming from possible government-energy price increases.

Food-price growth slowed to 3.8 percent in August from a year earlier, compared with 5.7 percent in July, on falling vegetable and fruit prices, the institute said.

Non-food costs fell to 4.9 percent in August from 5 percent the previous month, while price growth for services accelerated to 3.5 percent from 3.1 percent in July on increased public transport costs and rising water bills, the institute said.

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

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Friday, September 9, 2011

Romania seeks a drink of the U.S. wine market

This year, the United States became the largest wine market in the world, and every country that makes wine wants to get its share of it.

One of the latest is Romania. Six of the country’s many wineries have banded together to secure its share of the U.S. market, and they’ve secured $3.5 million from the European Union and the government of Romania to fund the effort.

One part of the marketing effort is an upcoming visit to Napa and San Francisco; another was inviting some writers to visit recently, which I did. As pioneers, we writers did encounter some rough spots, but the visit was interesting, the people friendly and the wines good, if not spectacular.

The effort is not surprising. Romania, with nearly 500,000 acres of vineyards, is the seventh largest wine producer in the EU and in the top 10 worldwide.

Wine has been made in the Balkan country the size of Michigan for millennia; Bacchus was supposedly born in Dacia, as it was once named.

Unfortunately, during Communism and the corrupt and repressive dictatorship of Nicolae Ceausescu, the government forced the collective vineyards to plant high-yielding, low-quality varieties, often in the wrong places and with poor configurations and trellising.

Since the revolution in 1989 — the only bloody one in Eastern Europe (Ceausescu was shot) — the democratic government has sold the vineyards to private companies and individuals, many from outside the country.

These new owners have invested significantly, often with EU help, to replant vineyards and upgrade production facilities. As a result, the vineyards and wineries we visited in mid-August were mostly modern, beautifully tended and spotless with first-rate equipment.

New facilities aren’t enough to overcome outdated winemaking, however, and most of the owners have hired Western consultants — Australians are particularly popular — to improve winemaking and train Romanians to make modern wines.

At least at the six wineries we visited, the vineyards, production and even wines are more New World in character than Old World, within the boundaries of the continental climate.

Romania lies on similar latitudes to Bordeaux, Piedmont and other renowned winemaking regions. Its vineyards are planted in disparate regions, some on flat soil near the Black Sea, others on rolling foothills the impressive Carpathian Mountains inland that bisect the country

It’s hot in much of Romania in the summer, cold in the winter. Its vines receive adequate natural water and aren’t generally irrigated. As a consequence, they have relatively small and balanced canopies without excessive manipulation. Either taste or the weather results in lower sugars and alcohol than common in many New World wines.

Historically, the majority of the wine production was white, but it is now close to 50/50. Likewise, Romanian consumers have preferred sweet wines, but dry wines are becoming more popular and most exports are dry.

Many, perhaps most, recent plantings have been of popular international varieties such as pinot grigio and merlot, which seem to do particularly well, as well as chardonnay, cabernet and syrah.

Most growers also plant some local varieties including busuioaca de bohotin, babeasca neagra, feteasca alba, feteasca neagra, feteasca regala, sarba and tamaioasa romaneasca. Some might appeal to ever-curious wine consumers looking for something different.

One of the six wineries in the group attacking the U.S. market, is Murfatlar, which, with 8,200 acres, is the largest in the country.

None of the other five are among the largest, however, and their progressive outlooks may not be typical. A number had female top winemakers, for example.

The winery group involved in the promotion includes:

• German-owned Carl Reh Winery — Crama Oprisor (622 acres of vines) (‘crama’ means winery or cellar; ‘cramele’ is the plural);

• Cramele Recas (1,750 acres) with a pony-tailed English co-owner Phillip Cox and his savvy Romania wife;

• Domeniul Coroanei Segarcea (750 acres) owned by a successful agriculatral businessman who also has almost 70,000 acres of corn, soybeans and other crops);

• British Halewood Romania (780 acres);

• Senator (2,250 acres), whose crew-cut managers and owners have a Western outlook. It has made Vampire and Werewolf wines.

Most of these companies have some presence in the U.S. market. Twelve percent of Romania’s total exports of 1 million cases valued at $19 million went to the U.S. in 2010, mostly to Romanian communities.

One of the most promising wineries is Cramele Recas, which is introducing new wines, including local feteasca negra and feteasca regala. It’s working with Cameron Hughes Wines to sell its merlot and pinot noir in the Sam’s Club network.

It is also supplying the $4 Unwined line to the Fresh & Easy supermarket chain, and has provided Pinot Evil to the Wine Group. It exports 40 percent of its 1.1-million case production and is the largest exporter in the country.

Recas has invested $21 million in the vineyards since 2001. The winery has just hired its second Australian winemaker; it also has a Spanish winemaker.

Liverpudlian Cox has a simple philosophy. “We give people what they want,” he said, noting that they had planted a lot of pinot grigio to meet demand.

Carl Reh Winery-Crama Oprisor also just hired an Aussie consultant. It makes about 1.3 million liters per year, and ships 875,000 liters to Germany, most in bulk.

Along with Domeniul Coroanei Segarcea and Senator Wines, Carl Reh has little presence in the U.S. market. All three are seeking importers.

Segarcea has an impressive facility set among vineyards; owner Mihai Anghel and his wife, former cardiologist turned winemaker Cornelia Anghel, seem to be shooting higher in price than most of the other companies visited.

Halewood, which exports much of its production to home base England, and Senator seem knowledgeable about the U.S. market, too.

Murfatlar, by far the largest Romania winery with production of 2.5 million cases, has several U.S. importers. But like all of the Romanian wineries, it is seeking broader distribution in the U.S. It has spent $70 million each on vineyard and cellar improvements, and has both Australian and French consultants.

Most of the producers see their biggest potential in the moderately priced international dry wines that are most popular here, but they also say there’s a market for the unique Romanian varieties.

Few seem interested in exploiting some small but hot markets here with wines in which they historically excel — off-dry white, red, rosé and muscat wines.

Visit selectwinesofeurope.com for more information.

The group will have a tasting of Romanian wines for the trade and media Sept. 29 at La Toque. Contact (Ms.) Jordan Robinson at Jordan.robinson@aboutdci.com to attend.



A quick tour of Romania

Romania has a population of 22 million people. It’s surrounded by Hungary, Serbia, Bulgaria, Ukraine and Moldova (which speaks the same Romance language).

The Danube River flows along its border with Bulgaria and across the country, draining into the Black Sea.

The country is cut in two by the Carpathian Mountains; the northwestern part is Transylvania, and there was a real Count Dracula, He’s called Vlad Tepes, Vlad the Impaler, for the technique he learned from the Turks of the Ottoman empire that ruled his land.

Vlad is a hero to Romanians, and his castle is a top tourist attraction, though we didn’t get near it or into the picturesque mountains.

Most of the country we drove through was covered with corn and sunflowers as far as you could see — Kansas without tornadoes.

Bucharest, the capital, is in the southeast though not near the sea. About 10 percent of Romanians live there. It was not badly damaged in World War II, but suffered from heavy-handed Communist redevelopment.

Still there are many attractive areas and an interesting old town filled with restaurants and clubs.

The Black Sea beaches are lovely, too.

The food is mostly a combination of tasty Mediterranean-Middle eastern Turkish, and heavy, middle-European concoctions of pork, cabbage, polenta, potatoes and such. It’s no place for a vegetarian.

The wines we tried (mostly dry ones designed for export) were fine with food, some good on their own. In U.S. markets, they’re typically inexpensive; $8 to $15 or less. The native wines are interesting, but I didn’t taste anything that might become the next big thing — a pinot grigio or malbec. Maybe it’s the complicated names.

Read more: http://napavalleyregister.com/lifestyles/food-and-cooking/wine/romania-seeks-a-drink-of-the-u-s-wine-market/article_e5a30b8e-da7f-11e0-b9e0-001cc4c002e0.html#ixzz1XSgrRBe7

Gabriel may lower Romania gold mine cyanide level

BUCHAREST, Sept 8 (Reuters) - Canada's Gabriel Resources Ltd. may lower the cyanide levels at a long-delayed Romanian gold mine project as it seeks to secure a key environmental permit, a company official said on Thursday.

Gabriel owns roughly 80 percent of Rosia Montana Gold Corporation, the company that plans to build Europe's biggest open cast gold mine in the Carpathian town of Rosia Montana, with the Romanian government holding a 19 percent stake.

The 14-year old project, which plans to use cyanide to mine 314 tonnes of gold and 1,500 tonnes of silver, faces strong opposition from rights groups, ecologists and neighbouring Hungary, which argue the mine would destroy ancient Roman gold mines in the area, the environment and nearby villages.

Romanian Environment Minister Laszlo Borbely said last month he had asked Gabriel to lower the amount of cyanide it would use in a tailing pond near the open cast mine.

The project currently envisions using a cyanide level of five parts-per-million, half the European Union's allowed ceiling and Cecilia Szentesy, a director of Rosia Montana Gold Corporation said the level could be lowered to three parts-per-million.

"It can be done for 80-85 percent of total output," Szentesy told an energy seminar. "There are several solutions."

Romanian officials, including Prime Minister Emil Boc have recently said the contract with Gabriel may need renegotiation to ensure the country gets the most out of the project.

Rosia Montana Gold Corporation has estimated the 10-ounce gold mine is worth $7.5 billion and said Romania would get a little over $4 billion of that in direct taxes, dividends, service providers and jobs.

The economy ministry said on Thursday it agreed with the assessment, based on a 2007 study that used an average price of $900 per gold ounce.

"We think the state's share is already fairly competitive, but we are willing to have any type of talks with the state," Szentesy said.

Thursday, September 8, 2011

Romania’s Government Approves License Extension for OMV Petrom

Romania’s government approved a three-year extension of OMV Petrom SA (SNP)’s exploration licenses in the country, government spokeswoman Ioana Muntean said.

The country’s biggest oil company gave up about 30 percent of the initially contracted permits for the oil and gas blocks it plans to explore, Muntean said in a phone interview today.

The Romanian licenses, which OMV AG (OMV), central Europe biggest oil company, holds via Petrom, are due to expire on Sept. 12 and were granted to Petrom before it was sold to OMV in 2004.

A failure to renew the licenses or a renewal delay would have “a material adverse effect on Petrom’s business, results of operations and its financial condition,” OMV said in May in the prospectus of a planned share sale.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romania’s Industrial Output Rebounds in July as Demand Improves

Romanian industrial output growth rebounded in July, following a slowdown in June, as demand for the country’s manufactured goods improved.

Production grew a seasonally adjusted 5 percent from a year earlier, compared with a 3.2 percent gain in June, the Bucharest-based National Statistics Institute said in an e- mailed statement today. It rose 1.2 percent on the month after a decline of 2.2 percent in June.

Output growth in the euro area, which buys more than 70 percent of Romania’s exports including Dacia cars, slowed to 0.2 percent in the second quarter, the worst performance since the region was in recession in 2009. The Balkan nation’s economic recovery weakened in the April-June period to 1.4 percent from 1.7 percent in the first quarter of the year.

Romania’s production of manufactured goods rose an annual 5.6 percent in July, compared with growth of 2.8 percent in June on the year. Mining output fell 3.4 percent from growth of 5.7 percent in the previous month. Electricity and thermal energy output increased 2.7 percent.

“Industry is already weaker and likely to post weak growth in the future as it is mainly driven by external demand,” Nicolaie Alexandru-Chidesciuc, an economist at ING Bank Romania SA wrote in a report yesterday. “We already adjusted for this slower growth in industry, but there are risks the situation can worsen even more.”

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romania denies hosting secret CIA prisons

(CNN) -- Romania insisted Wednesday there was no evidence it had hosted secret CIA prisons as part of the United States' "global war on terror" after September 11, 2001.

The country "has no information whatsoever showing that there existed secret CIA detention centers on its territory," the Foreign Ministry told CNN.

Two investigations also failed to find any evidence that the CIA used Romanian airports for "rendition," the process in which detainees in American custody are transported for questioning to other countries where prohibitions on torture are not as strict and American laws don't apply.

The Romanian denial comes in response to a plea from the human rights commissioner for the Council of Europe that countries that have hosted secret CIA prisons come clean.

Thomas Hammarberg said Romania, Poland and Lithuania were among at least seven countries that hosted "black sites" for "enhanced interrogation" during the "war on terror."

"Darkness still enshrouds those who authorized and ran the black sites on European territories," he said. "The full truth must now be established and guarantees given that such forms of co-operation will never be repeated."

CIA officials have acknowledged the rendition program, but refused to discuss details and denied violating any laws. Efforts to challenge the agency and get details about it in U.S. courts have been turned aside.

Hammarberg said the CIA had held "high-value detainees," including alleged 9/11 mastermind Khalid Sheikh Mohammed, in Poland between 2002 and 2003.

The Polish site closed and a new secret prison opened in Romania in 2003, Hammarberg charged, and existed for more than two years. Lithuania also hosted two sites, he said.

Polish prosecutors and Lithuanian lawmakers have investigated the phenomenon, but Romania has shown "little genuine will to uncover the whole truth," Hammarberg charged.

"Effective investigations are imperative and long overdue," he said.

Poland's Ministry of Foreign Affairs said it would not comment while prosecutors in the country are still investigating. Lithuania has not responded to CNN questions about the issue.

Hammarberg's statement comes as documents seized from Moammar Gadhafi's compound in Libya shed light on the program of extraordinary rendition.

CNN saw a March 6, 2004, CIA letter to Libyan officials about Abdel Hakim Belhaj, a former jihadist with the Libyan Islamic Fighting Group and now a senior commander in the anti-Gadhafi forces.

It concerned the Malaysian government's arrest of Abdullah al-Sadiq, Belhaj's nom de guerre for his rendition. A CIA officer said the man and his pregnant wife were being placed on a commercial flight from Kuala Lumpur, Malaysia, to London via Bangkok and then on to Libya.

"We are planning to arrange to take control of the pair in Bangkok and place them on our aircraft for a flight to your country," the officer wrote.

Belhaj fought for the Taliban in Afghanistan, but left after their fall in 2001 and was arrested in Malaysia in 2004. After some questioning by the CIA, he was sent back to Libya and jailed.

The Council of Europe is a 47-member group that promotes democracy and human rights on the continent.

Romania singer fined for omitting line from national anthem in protest at politicizing of song

BUCHAREST, Romania (AP) — A Romanian singer has been fined for omitting a line from the national anthem in protest at the politicizing of the song, state media reported Wednesday.

Agerpres news agency reported that the Bucharest prefect Mihai Atanasoaei on Wednesday fined singer Marcel Pavel and the Romanian Football Federation US$1,685 (5,000 lei) each. The Federation was fined for its role in managing the pre-match entertainment.

The dustup involved Pavel's performance of the anthem prior to a football match between Romania and France this week, in which Pavel left out the line "Triumphant in battle, his name was Traian."

The anthem refers to the 1st century Roman Emperor Trajan, who conquered the Dacians, the forefathers of modern-day Romanians. But the singer told Realitatea TV it could be interpreted to refer to President Traian Basescu.

Trajan and Traian are the same names. Only in the Romanian language, the name Trajan is written Traian.

Pavel initially said that he left the line out because he did not want the anthem to be seen in a political light. He has since been publicly criticized by the president's daughter, an MEP, on Twitter.

Pavel later told online publication Gandul.net that he would consult with his lawyer to determine whether he had broken the law by defiling a national symbol, such as the flag or the national anthem, and would pay the fine if he had.

Romania to Pass Renewable Law by Year End, Regulator Says

The Romanian parliament may approve a law on renewable energy by the end of this year which will give incentives for investors, said Zoltan Nagy-Bege, the head of the country’s energy regulator.

The government will amend the law, cleared by the European Commission, by the end of September and then seek approval from parliament, Nagy-Bege said today at an energy conference in the southern Romanian city of Constanta.

Romania plans to generate 24 percent of its energy from renewable sources and 42.62 percent of its gross domestic electricity consumption from renewables by 2020. The European Union has a target to get 20 percent of energy from renewables within the same timeframe.

The law change may mean consumer electricity prices increase by 10 percent next year to pay for renewable sources such as the building of wind farms, Nagy-Bege told reporters in Constanta, according to news service Mediafax.

To contact the reporter on this story: Andra Timu at atimu@bloomberg.net

Wednesday, September 7, 2011

Romania expropriation bill 'threatens democray': NGOs

(AFP)

BUCHAREST — A draft law enabling mining companies to expropriate land as they please sparked a vivid debate in Romania Tuesday, with rights groups claiming it would "spell the end of democracy".

The bill, which was adopted by the upper house of parliament in 2009 and should be soon summitted to the lower house, reads that "mining works are in the public interest".

On these grounds, it is no longer up to the state but to mining companies to expropriate land and then pay out compensatiion, it adds.

"This draft law violates the right to private property, Romania's Constitution and several international treaties signed by this country," MaiMultVerde and Alburnus Maior associations said.

"Under this bill, private companies substitute themselves to the state and abusively acquire prerogatives belonging to public authorities," they added.

According to Doru Mitrana, head of MaiMultVerde, an environmental lobby group, "allowing a private entity to unilaterally annul a citizen's rights spells the end of democracy."

A petition posted by campaign groups on the Internet has so far been signed by 16,000 people including former justice minister Monica Macovei, currently a European MP.

The bill, tabled by a lawmaker from the ruling Liberal Democrats and one from the Social-Democrat opposition, is seen as giving a helping hand to a Canadian-owned company, Rosia Montana Gold Corporation (RMGC), which plans to set up an opencast gold mine in central Romania.

The company has already garnered President Traian Basescu's support as well as a crucial archaeological permit despite opposition from environmental groups.

RMGC is now expecting to see if it obtains a permit from the environment ministry.

But Rosia Montana inhabitants have vowed to block the mine by refusing to allow their land to be expropriated.

If adopted by the MPs, the bill would remove the last obstacle to the mining project, analysts say.

Tuesday, September 6, 2011

Romania Q2 consumption down 0.7 pct y/y

(Reuters) - Romania's domestic consumption shrank by 0.7 percent year-on-year in the second quarter, compared with a revised 1.7 percent contraction in January-March, official data showed on Tuesday.

The National Statistics Board also said final data showed gross domestic product for the second quarter rose by 1.4 percent on the year, confirming a flash estimate released in August.

It revised annual GDP growth for the first quarter to 1.6 percent from an initial 1.7 percent. It also said domestic consumption shrank less than initially envisioned during January-March.

Romania, which completed a 20 billion euros aid deal led by the International Monetary Fund earlier this year and signed on for a new package, grew 0.2 percent quarter-on-quarter in the second quarter, in line with the flash estimate, the statistics board said in a statement. (Reporting by Luiza Ilie; Editing by Sam Cage)

Romania’s Antibiotice Estimates 2011 Sales at $91 Million

Antibiotice (ATB) SA, a Romanian drugmaker, said it estimates total sales for this year of 275 million lei ($91 million), according to a filling to the Bucharest Stock Exchange.

Antibiotice plans to sell drugs worth 209 million lei on the domestic market, while its exports are estimated to reach 66 million lei, it said in the statement.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romania’s Economic Growth Slowed in Second Quarter on Demand

Romania’s economic expansion slowed in the second quarter as industrial output and export growth lost pace on waning demand abroad.

Gross domestic product grew an unadjusted 1.4 percent, after an increase of 1.7 percent in the first quarter, the National Statistics Institute in Bucharest said today in an e- mailed statement. The figure matched a preliminary estimate on Aug. 16. GDP advanced an adjusted 0.2 percent from the previous three months.

Growth is slowing across the region as Europe’s sovereign- debt crisis roils markets and dents consumer confidence. Romania’s economy is counting on western European demand for its goods, such as Dacia SA cars and Nokia phones, to support a recovery from the worst recession on record.

The Balkan nation took a 5 billion-euro ($7 billion) precautionary loan from the International Monetary Fund and the European Union this year as it seeks to reassure investors it will maintain fiscal discipline ahead of elections in 2012. The government has raised taxes and cut public wages and benefits to narrow the budget deficit to below 3 percent of GDP by next year from an estimated 4.4 percent this year.

“Industry had the biggest growth in the second quarter of 4.9 percent, followed by agriculture with an increase of 3.4 percent,” the institute said in the statement. “Net exports had a negative impact on the GDP as imports grew faster than exports.”

Romanian industrial sales rose 13.5 percent in July and fell 4.2 percent on the month, the office said in a separate statement today.
Growth Estimates

The IMF and EU expect Romania’s economy to grow 1.5 percent in 2011 after shrinking 1.3 percent last year.

“Romania’s growth estimates still seem realistic for this year,” Lucian Croitoru, an adviser to central bank Governor Mugur Isarescu said in a phone interview yesterday. “Problems may occur if the slowdown continues in 2012. Then, the government may need to take additional measures because the planned reduction in the budget deficit will be much difficult to achieve.”

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Monday, September 5, 2011

Romania Selects Astaldi to Build $166 Million Highway Section

Romania selected Astaldi SpA (AST) and Max Boegl Romania SRL to build a 20.5 kilometer (12.7 miles) highway section from Cernavoda to Medgidia as part of a motorway linking the Bucharest to the Black Sea port of Constanta, the Transport Ministry’s road department said in an e-mailed statement today.

The value of the contract is 499 million lei ($166 million) and the road will be completed in 15 months, according to statement. The funding for the highway section will be covered by the European Investment Fund, the European Union and Romania’s state budget, the ministry said.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Sunday, September 4, 2011

NYT: New Conservatism in Europe Impedes Two of Its Nations

By SUZANNE DALEY and STEPHEN CASTLE


SVILENGRAD, Bulgaria — The infrared cameras here near Bulgaria’s borders with Greece and Turkey are high powered enough to pick up rabbits scampering across farm fields in the dead of night.

But on a recent afternoon, the men inside the border station were focused on a car — moving a bit too fast along a country road. Maybe a smuggler, they thought. They called over their radios to have the car stopped. It turned out to be a false alarm.

Bulgaria and its neighbor Romania, which has spent more than 1 billion euros, or about $1.4 billion, developing an equally high-tech border operation, are hoping to join theEuropean Union’s visa-free travel zone this month. They also hope to take over guarding some of the union’s outer borders.

A few years ago, such a move would probably have been routine, experts say, just another step in the European Union’s continuing, enthusiastic expansion. But today, there is a new conservatism at work in the bloc.

Both Bulgaria and Romania were welcomed into the European Union in 2007, despite lingering questions about organized crime, corruption and an ineffective judiciary. Now, however, as Europe faces an economic crisis, fear of more immigration from Africa and growing nationalistic fervor among member countries, it is paying more attention to these issues.

“It is nice to have a machine to check if there is an illegal person in the back of a truck,” said Karel van Kesteren, the Dutch ambassador to Bulgaria. “But if you can pay 500 euros to someone to look the other way, it makes no sense at all.

“When you give the key to your common home to someone else, you want to be sure that this person is 100 percent reliable and obeys all the rules.”

The Netherlands is one country likely to veto the entry of Bulgaria and Romania into the free-travel zone, known as the Schengen zone. But others are likely to object as well, including Finland, Germany and France, where President Nicolas Sarkozy’s re-election campaign has courted conservative voters who have been increasingly critical of the European Union’s open borders.

Signs of corruption dot both the Bulgarian and Romanian countryside along the borders in the form of lavish villas belonging to border guards and customs officers. Dozens can be found here in Svilengrad, a town of about 20,000 on Bulgaria’s southern border. So notorious is the behavior of border guards and customs officers that they are the object of popular ridicule. “What do you give a border guard for his birthday?” goes one joke. The answer: “A shift on his own.”

But a local taxi driver, who gave a tour of the villas on the condition that his name not be used, defended the border guards, saying that they brought wealth to the town. He also said that one customs officer, now the owner of a hotel and casino, had replaced the windows in the school and rebuilt the local church.

“When they have money, we have money, too,” he said.

Trying to combat corruption, Bulgaria has started using computerized scheduling to assign its border guards to different posts randomly every few hours. Romania has taken steps, too. In the past year, it arrested 248 border guards and customs officers, some of whom were accused of collecting as much as 5,800 euros, or about $8,240, in a single shift.

In the past, some experts say, the arrests might have been enough to win the European Union’s approval. But no more.

“It is a moment of extreme conservatism, and Romania and Bulgaria are suffering from that,” said Heather Grabbe, director of the Open Society Institute in Brussels. “After the end of the cold war, people were looking at the big picture. Now everyone is looking small, rather than thinking big.”

Some experts say the reluctance to admit Romania and Bulgaria is also to a degree a sense of buyer’s remorse — a feeling that neither country was ready when admitted to the European Union.

Holding out on entry to the free-travel zone is the only real lever the bloc has to force both nations to deal with multiple problems, including rampant criminal gangs and the treatment of the region’s Roma population.

Even Bulgarian and Romanian officials no longer expect to get into the Schengen zone this fall. Most experts believe that, to soften the blow, the European Union will allow both countries to open their airports to visa-free travel, as a first step. But border control will rest elsewhere for some time to come.

Bulgarian and Romanian officials make no secret of their disappointment. They complain that they have met the requirements of the European Union but are now being held to new standards. Deputy Prime Minister Simeon Djankov of Bulgaria said those standards were not even clear.

“It would be simpler if they said, ‘O.K., we have thought about it and the world has changed,’ ” he said, “ ‘and therefore we think that there should be another three criteria — and here they are.’ ”

Instead, he said, his country is facing “vague” complaints about organized crime rings and border corruption. He added that those same complaints could be made about other European countries, including Italy and Greece.

Romania’s foreign minister, Teodor Baconschi, concurs. “We are better equipped now than many of the member states.”

As far as equipment goes, visits to the border seem to bear him out. In Bulgaria, border barriers that once existed largely to stop citizens from leaving the country during the communist era are now being retooled to keep immigrants and smugglers from coming in. The old electric fences and guard towers are rusting. But a line of freshly turned soil indicates where motion sensors are to be installed in the next few weeks.

At the Vaslui border station in Romania, guards patrol the river between Romania and Moldova in new speed boats. Trucks can be X-rayed, and there are wands that can measure whether there is too much carbon dioxide in the back of a truck — an indication that people are hiding inside.

But Gabisor Tofan, the mayor of a nearby village, said that corruption at the borders has been an open secret. “Every villager that passed into Moldova knew they had to give a small amount,” he said.

There have been dozens of arrests of customs officers and border guards working at the Vaslui checkpoint, and there may yet be more, some officials said. The arrests drew attention to their fancy houses, including one belonging to a border guard, Sorin Bucur, that was pictured in several newspapers.

Mr. Bucur’s wife, Marinella, said he had been questioned but not arrested. “My husband is very correct,” she said. “They never found anything on him.”

Geography is yet another factor in the lack of enthusiasm for letting Bulgaria and Romania into the free-travel zone. The two countries are paying a price for being close to Greece, which has done a poor job of controlling the flow of immigrants and illicit goods like stolen cars and smuggled cigarettes. In recent years, officials have estimated the influx of immigrants to Greece to be around 80,000 a year.

“Some E.U. countries are saying, ‘Let us learn from the lesson of Greece,’ ” said Hugo Brady, a researcher at the Center for European Reform. “ ‘Let us be conservative with Romania and Bulgaria.’ ”

DPA: Bucharest's new cathedral to outdo Ceaucescu's palace

Bucharest - The Romanian Orthodox Church is turning a long-cherished prestige project into reality in the shape of the 'Cathedral for the Salvation of the Romanian People' in the heart of Bucharest.

When it is finished, the new cathedral will at 125 metres rise above the neighbouring Palace of the People, built by 1965-89 dictator Nicolae Ceausescu.

Not everyone is happy with the project, though there have been no loud protests against it.

It can also be asked whether bombastic religious architecture really reflects religious feeling in Romania.

Romanian Orthodox churches are in general small, with the saints on their frescoes close enough to reach out and touch. The faithful rarely sit out an entire service, which is often long, and few are interested in the sermons.

Romanians would rather make a brief visit to gaze at their favourite icon, much like dropping in on the neighbours.

Work on the cathedral's foundations began a year ago, and it is scheduled for completion by 2015. It will be able to hold 5,000 people for its services, and will also house two multi-purpose halls, each accommodating 1,000 people.

There will be soup kitchens for the poor in the basement, and the building will be served by 14 lifts. There will also be two inns for pilgrims to stay in, a cultural centre and a social centre. Parking for 700 cars is provided.

'There is this dreadful disease that causes the internal organs to keep on growing until the patient dies,' Romanian cartoonist Dan Perjovschi wrote in the liberal weekly 22, taking an ironic look at the entire cathedral project.

Writer Mircea Dinescu suggested mockingly that the patriarchate could simply have put a cross on top of Ceausescu's palace - said to be the largest civilian building in the world - thus saving themselves the bother of building a new colossus.

The cost of the cathedral is estimated at 200 million euros (285 million dollars). The patriarchate intends to raise it through loans, donations from the faithful and state subsidies, as well as putting in some of its own resources. The previous pope, John Paul II, contributed 100,000 euros during his visit to Bucharest in 1999.

The Romanian Orthodox Church is by no means poor. After Ceausescu's communist regime fell in 1989, it recovered much of its property and is active in a range of businesses.

Countering allegations of hubris, the patriarchate has always argued that Bucharest's Metropolitan Cathedral, built in 1656, is too small. It sees the new church as a 'liturgical and public necessity.'

Religious life in Romania has experienced a rapid revival since the fall of communism. In the past 20 years, more than 4,000 churches have been built across the country.

They have largely been funded by donations from nouveau riche believers, apparently keen to allay their consciences thereby.