Friday, December 30, 2011

In Romania, Opinion Polls Show Nostalgia for Communism

http://www.balkanalysis.com

December 27, 2011
At the end of 2011, some 22 years after the fall of the communist regime, Romania seems to be going through what is probably the deepest economic and social crisis of its post-communist existence. In this context, many Romanians seem to be displaying a certain appreciation for different attributes related to the communist regime or ideology. This appreciation is always interpreted as nostalgia for the communist past and/or regime.
This article reviews the results of different public opinion surveys, which have been cited by different analysts and commentators who have identified a new communist nostalgia among certain portions of the population.  On the one hand, the positive views Romanians are expressing sometimes with regard to communism seem to be related to an acute sentiment of social insecurity; on the other, they appear to be the results of insufficient (if any) public policies addressing the problem of dealing with the legacy of the country’s recent past.
The most incredible result was registered in a July 2010 IRES (Romanian Institute for Evaluation and Strategy) poll, according to which 41% of the respondents would have voted for Ceausescu, had he run for the position of president. And 63% of the survey participants said their life was better during communism, while only 23% attested that their life was worse then. Some 68% declared that communism was a good idea, just one that had been poorly applied.[1]
It seems that as the economic and social crisis deepens, people’s nostalgia for the communist period’s perceived safeguards increases.
According to a 2006 Public Opinion Barometer of The Soros Foundation Romania, 53% of the Romanian population considered communism to be ‘a good idea.’[2]Three types of explanations were advanced in this poll: economic, ideological and experiential. According to this interpretation, from the economic point of view, it was those who suffered ‘absolute or relative losses’ due to the collapse of the communist regime that allegedly felt nostalgia for communism, and they were the poor, peasants, workers and/or low-educated.
From the ideological point of view, those who supported communism were those people who appreciated the socialist spirit of social justice that registered in the 2006 poll’s nostalgia for the past. Therefore, they positively appreciated the past communist regime because ‘they understood better something they had known.’
As far as the experiential explanation is concerned, those who have not suffered oppression during the communist regime allegedly felt in 2006 nostalgia for communism.  However, it must be emphasized that, according to the same survey, while 53% of the respondents considered communism a good idea, only 6% of them declared that they personally suffered persecutions under communism.[3]
The Public Opinion Barometer from 2007 showed that 32% of the Romanians surveyed considered at the time that ‘life was better in Romania before 1989’, a fact that was again interpreted as nostalgia for communism.[4]
Analyzing these results, Dumitru Sandu concluded that those who have felt communist nostalgia were neither older nor less educated, nor poorer, arguing instead that it was those who had lived a privileged life during the communist regime that felt in 2007 nostalgia for communism.
Sandu identified two categories of nostalgic people: approximately two-thirds (those who were not pleased with their standard of living) and the other one-third (those who were content with their lives, but were not pleased at all with the government’s accomplishments).[5]
According to a survey conducted by The Centre for Urban and Rural Sociology (CURS) in 2009, 86% of the Romanian population considered that ‘the state should provide all with a decent standard of living’, while 84% considered that ‘the state should provide all with a decent job.’
Moreover, 50% of the respondents stated that ‘the state should intervene for limiting the income of individuals’. These answers were generally interpreted as people’s attachment to ‘socialist principles’, as ‘communist mentality’ and as ‘communist nostalgia.’ Analyzing these results, Septimiu Chelcea concluded that more high-educated and young people felt nostalgia for the past in 2009 than had felt this way previously.
The survey showed that the difference between young and old, low-educated and highly-educated, active and inactive population groups have decreased in regard to people’s positive appreciation of different communist and socialist social principles.[6] Those who still find ‘some good aspects in communism’ underscored their opinions with elements that are specific to the social policies of the communist regime.
Moreover, those who still consider ‘communism a good idea’ refer to the social policies of the Communist rule. According to a CURS 1999 survey, intellectuals mostly did not support the idea of the ‘benefits’ of Communism while, according to the 2009 surveys, many had changed their minds in this regard.
The explanation for this contradiction could be that, in recent times, people have felt increasing social and economic pressures and therefore their desire for social security guarantees has increased, regardless of education levels, age or social status. In Romania social policies are currently addressing the needs of the disadvantaged social groups: the unemployed, elderly, sick etc., while the middle class is not considered as subject for social policies.
Thus, social security is not addressed from the universalistic post-war perspective, but from the limited, interwar perspective. However, in Romania, only 23 percent of the people belong to the middle class (according to a 2006 study), if the criterion taken into consideration is the level of income.[7] Therefore, the need for social security is acute in Romania nowadays, and this is the need that brings together low- and high-educated, elderly and young in ‘remembering’ – that is, reconstructing or re-imagining – the benefits of communist social policies.
A 2008 study conducted by the Agency for Governmental Strategies foresaw the results of the 2009 CURS survey in regard to the positive appreciation of the young for aspects related to the communist past. The study showed that over 30% of Romanian students considered that ‘life was better before 1989 in Romania’ because, in their opinion, the educational system and the standard of living were qualitatively superior.
This type of an answer was immediately interpreted as ‘communist nostalgia’. Sociologists, professors and journalists explained it as student ignorance: ‘they did not live during the communist period,’ or, ‘they do not know anything about the communist period;’ or, ‘they and their parents did not live the traumas of the 1950s.’[8]
Recent Surveys and Results
In 2010 and 2011, the Centre for the Study of Market and Opinion (CSOP), commissioned by the Institute for the Investigation of the Communist Crimes and the Memory of the Romanian Exile (IICCMER) conducted three opinion polls with regard to the Romanian public perception of communism.[9] The surveys were taken in:
26 August-2 September 2010 2011, from a sample of 1.133 people over 15 years old (error margin of plus/minus 2.9%);
22 October-1 November 2010, 2011from a sample of 1.123 people over 15 years old (error margin of plus/minus 2.9%);
26 April-2 May 2011from a sample of 1.125 people over 15 years old (error margin of plus/minus 2.9%
According to these surveys, about 60% of the Romanian population believes that communism was a good idea, and only 25-29% believes that it was a bad idea.
Communism was a good idea, poorly applied %Communism was a good idea, correctly applied %Communism was a bad idea %Don’t know/Don’t answer %
August 201047142712
October 201044182912
April 201143182514

In 2011, some 38 % of respondents considered that the installation of communism in Romania after WWII was a good thing, while another 38% said that it was a bad thing. Half of the respondents believe that they were better off under communism. 74% of those older than 60, and 64% of those aged 40-59 consider communism a good idea, compared to 49% of those aged 20-39, and 31% of those younger than 20.
In August 2010, 72% of the respondents considered that the state should provide people with jobs and 44% with housing. About 25% consider that Ceausescu was good for the country, while only 15% argue that he harmed the country. Despite these figures, 42% of the respondents considered that the communist regime was not legitimate, and 41% believed that it was a ‘criminal. About 50% acknowledged the oppression pursued by the communist regime.
While the differences in results between August 2010 and April 2011 are not big, they are significant if compared with the 2007 or 2009 polls. For instance, in 2007 some 32% of the respondents considered that ‘life was better in Romania before 1989,’ while in 2011, 50% gave the same answer. In 2006, some 53% of the respondents considered that communism was a good idea compared to 61% in 2011.[10]
According to most of the media analyses, these results attest to Romanians’ nostalgia for communism.[11]  However, the IICCMER argues that the positive perceptions of the population with regard to communism have complex explanations and are related to the people’s present experiences and personal experiences concerning the relationships between individual, state and society. To a great extent these results are explained, according to the IICCMER, by the fact that there is no organized effort for educating and informing the population with regard to the realities of communist times.
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[1] http://www.gandul.info/politica/ceausescu-reales-41-la-suta-dintre-romani-ar-vota-cu-el-daca-ar-fi-azi-alegeri-prezidentiale-6730837
[2] Fundaţia Soros Romania, Perceptia actuala asupra comunismului. Comunicat de presă/ [Soros Foundation Romania, Actual perception on communism. Press release], December 19, 2006,http://www.sfos.ro/ro/comunicate_detaliu.php?comunicat=21 (accessed July 25, 2009)
[3] Fundaţia Soros Romania, Perceptia actuala asupra comunismului. Comunicat de presă/ [Soros Foundation Romania, Actual perception on communism. Press release], December 19, 2006,http://www.sfos.ro/ro/comunicate_detaliu.php?comunicat=21 (accessed July 25, 2009)
[4] Sandra Scarlat, “Partizanii lui ‘inainte era mai bine’” [The supporters of ‘before it was better’]Adevarul, January 29, 2009
[5] Sandra Scarlat, “Partizanii lui ‘inainte era mai bine’” [The supporters of ‘before it was better’]Adevarul, January 29, 2009
[6] The survey did not focus on the communist past, but some of the survey’s questions asked people to evaluate communism as an ideology, and many Romanians continue to consider it ‘a good’ idea. Ionela Sufaru, “Romanii nu regreta comunismul” [The Romanians do not regret communism] Jurnalul National, November 7, 2009, http://www.jurnalul.ro/stire-special/romanii-nu-regreta-comunismul-526525.html (accessed November 7, 2009)
[7] Gabriela Neagu, Din ce clasă socială faceti parte? [To What Social Class Do You Belong?], http://www.business-adviser.ro/analize_din_ce_clasa_sociala_faceti_parte.html.
[8] Alina Gavrilă, “Studenţii regretă perioada comunistă” [Students regret the communist period], Adevărul, August 13, 2008
[9] http://www.crimelecomunismului.ro/en/iiccmer_csop_opinion_polls/
[10] Fundaţia Soros Romania, Perceptia actuala asupra comunismului. Comunicat de presă/ [Soros Foundation Romania, Actual perception on communism. Press release], December 19, 2006,http://www.sfos.ro/ro/comunicate_detaliu.php?comunicat=21 (accessed July 25, 2009)
[11] http://www.globalresearch.ca/index.php?context=va&aid=23616

Romanian Hidroelectrica cancels 4 power contracts

Dec 29 (Reuters) - Romanian state-owned utility Hidroelectrica cancelled four contracts under which it sells power below market prices, Economy Minister Ion Ariton said on Thursday, heralding an end for other similar deals.

The contracts - including with a local unit of steelmaker ArcelorMittal - are under investigation by the European Commission and contested in court by minority shareholder Fondul Proprietatea.

The move is part of a wider plan to reform state-owned firms under an aid deal led by the International Monetary Fund. Earlier this month, Hidroelectrica notified 15 companies it plans to cancel bilateral contracts as soon as possible.



"Four of these have been cancelled. At the same time, we have sent documentation to the competitiveness department of the European Commission with a view to identifying a legal solution to cancel all of these contracts," Ariton said in an annual report.

Hidroelectrica's output totalled 19.8 terrawatts last year and accounted for a third of the country's power production.

Ariton also said the government still plans to sell minority stakes in Petrom, Transelectrica, Transgaz , Romgaz, Hidroelectrica and Nuclearelectrica on the Bucharest stock exchange in 2012. (Reporting by Sam Cage; editing by James Jukwey)

Romania Off The Beaten Track

As countries go, Romania often gets a bad rap. What associations come to mind when you think of Romania? Maybe it's roaming gypsies or hordes of stray dogs. Hardly makes you want to book a ticket on the next plane to Bucharest. What about its tourist highlights? It seems they often revolve around medieval sights and fortified churches. But I found a different Romania, one with bucolic valleys, scenic mountain villages, fine wines, verdant parks and chic boutique hotels.
Cafes & Crafts
Just off Bucharest's broad thoroughfare, Calia Victoriei, a shaded alley beckons. On the weekend, the Green Garden, an outdoor crafts market, is in full swing. Hand-painted cotton slippers, ceramic plates with images of bay windows, felted animals, collage ceramic pendants, glass jewelry, even an origami candleholder are all for sale. As I wander among the vendors, I gaze past the clutch of shoppers to the alley's terminus where Green Hours 22 Club Jazz Cafe is situated. Sitting under an old sycamore, I ordered one of their many freshly made lemonades (one with rose syrup) and a pizza topped with red onions, corn and tuna. One resident who lives down the street tells me this is his favorite spot where all the cool people hang out -- he's seen celebs that include Keifer Sutherland and Demi Moore. The place has such a low-key but hip vibe that it wouldn't be out of place in Manhattan. I return the next day for a glass of full-bodied wine from Romania's Prahova Valley.
Green Spaces
The middle of Bucharest is coated with an expansive green space that's the second oldest park in Bucharest. Cismigiu is populated by a diverse selection of 19th- and 20th-century trees, including weeping willows, oaks, red spruce and Japanese red pines. On Saturdays and Sundays, the whole city seems to gravitate here to row on the man-made lake, stroll the network of paths and picnic on the spacious lawns. Several cafes are positioned with scenic lake views. I wander to the many petite gardens, including a peaceful Asian-landscaped plot with trickling water. Nearby, a long pedestrian way is crowded with flea market vendors selling everything from herbal tinctures to fur coats.
Ski Resorts
Sinaia is dominated by the Carpathians, which form a dramatic backdrop in this charming ski town that's also popular in the summer for its hiking. Most of the buildings in town display a mountain chalet-type architecture that is more typical of Swiss villages. Located in the Prahova Valley, the town is rimmed by thick forests. Beyond, cable cars rise up the slopes of the Bucegi Mountains. I escape the summer heat in nearby Dimitrie Ghica Park, an oasis with conifers, spruce and chestnut trees. Snuggled in the park are two hotels from another era: the Caraiman Hotel dates to the late 19th century, and the Palace Hotel has been open since 1911. 

Set at 3,000 feet above sea level, under the shadow of the massive Caraiman and Costila peaks, Busteni is a much more economical resort compared to Sinaia. Rugged heli skiing, rock climbing and extreme skiing are the prime activities here where the sawtooth mountains display their barren pinnacles. Visitors can stay in the town's few hotels and then take a quick train ride to Sinaia for more skiing options. 

At an even higher altitude (3,400 feet), Predeal is at the border between Transylvania and Walachia provinces. The recently renovatedHotel Orizont presents a contemporary option to the typical Swiss-style architecture. In the expansive nature-themed reception-lounge space where I sipped a cappuccino, Y-shaped tree barks with gilded studs stand at attention while the floor is inset with glass portions covering river stones. Designed by architect Christian Boltres, the hotel, which retains some traditional elements, including homestyle Romanian offerings in their restaurants, boasts sun-filled suites, including my favorite: the executive apartment on the top floor. (One of its bedrooms is complete with a hot tub.) The mountain views are so captivating, particularly from the Sky Lounge, the bar that's open until 5 a.m., that I find it hard to pry myself away from the windows.
Wine
Azuga isn't just another ski town that beginner-intermediate skiers favor. It's also a center for sparkling wine production. The Rhein Wine Cellar-Rhein and Company has been in operation since the 19th century, even providing wines to the royal family -- their Brut Imperial was their preferred selection. (It's a blend of mostly Chardonnay and plus Feteasca grapes.) In their museum room, you can explore the array of vintage wine labels and wine making equipment. Their informal accommodations are named for grape varieties. But probably the most curious finding is the bear warning poster displayed prominently on the door to their restaurant. (Apparently, brown bears make occasional appearances looking for food -- not wine -- as they wander from the surrounding slopes.)
Medieval Towns Offering More Than History
Brasov is on the list of most who visit Romania. But I wander beyond the usual tourist haunts in this city that was first mentioned in the 13th century. Though located in the new part of town, the five-star Villa Prato makes for a luxe base to explore the old town that dates back to the 16th century. For those who'd rather stay at an enclave in the older part of the city, Hotel Bella Musica occupies a 400-year-old building that's dressed with vintage furnishings. (One apartment even retains part of the old fortress wall.) Veering off the Strada Republic, the main pedestrian street, I stop for dinner at Proto that specializes in homemade pasta, such as tagliatelle with porcini, shrimp and cherry tomatoes. I watch the foot traffic along this narrow walking street from an outside terrace. For dessert, I head to newly opened Deliciile Kronstdt, a quaint pastry shop where a flower motif is prominent. Ensconced at a wee table outside, I nibble on tiny Disney marzipan characters and a mascarpone cake with walnuts, peaches and white chocolate.
On the periphery of Sibiu, a village founded in the 12th century, the ASTRA National Museum in Dumbrava Park offers lessons in history in a nature-centered, open air venue. A network of walking trails wander through this museum that's snuggled in a 240-acre forest. Myriad ethnographic structures, from a pipe maker's homestead to a wooden watermill, dot the wooded landscape. I stroll the lanes, passing families and couples of all ages, to get up-close views of a paddle wheel ferry, a canoe hollowed out of a tree trunk and a windmill.
Because I have a medical background, whenever I have the opportunity, I drop into medical, surgical, dental or pharmaceutical museums. I find the Pharmacy Museum situated in a 16th-century building, to be little visited. In fact, asking my concierge for directions elicited bewilderment: He had never heard of it. More than 6,000 items spanning more than three centuries are packed into four rooms in this museum that's smack in the middle of the old quarter. Wooden jars with herbs, a bronze grinding mortar, elaborately-painted porcelain storage vessels, a pill-making press and a medicine cabinet, all from the 17th to 18th century, are just a few of the memorabilia on display.
Balea Lake
A narrow ribbon of a road curls up the densely wooded slopes on the way to Balea Lake, set at 6,700 feet. It's hard to not gape at the bucolic scenery dominated by deep valleys, tumbling waterfalls and ragged peaks. I count myself lucky to experience this road in September: It's usually only passable in July and August. (The rest of the year it's often coated with massive amounts of snow.) Near the base of the terminal of the cable car that soars up to the lake, vendors sell cheeses, sausages, pork and breads. Farther up the mountain, on one precipice, a family sets out a colorful blanket and picnic basket.
Beside the teal blue glacial lake, the Cabana Balea Lac, an accommodation and restaurant, is replete with taxidermy: Bear skin, wild boar and wolf skin rugs decorate the walls; antler chandeliers hang from the ceiling. I sit on the waterfront patio and order their specialty, trout cooked with olive oil, onion and garlic and baked in foil. While I wait for my lunch, I notice a lone hiker tackling one of the network of slim paths that course through the high peaks. Knowing it's almost five hours back to Bucharest, I forgo dessert and roll slowly down the sinuous mountain road that never fails to provide atmospheric views. A vendor sells sausage and cheese beside a small cascade where many visitors stop for photo ops, and a dense flock of sheep migrate into the road followed by the shepherd's two aggressive dogs that have no problem keeping them in line.
Follow Jeanine Barone on Twitter: www.twitter.com/jcreaturetravel

Friday, December 16, 2011

Romanian children, adults alike write a long wish-list to Santa Claus

By Associated Press
Friday, December 16, 7:06 AM

BUCHAREST, Romania — These days, Santa Claus could well feel nostalgic about the time when Romania was a Communist country and its governments frowned upon Christmas.

Why?

Because now that it’s a democracy and capitalistic, Romania is trying to set an all-time record for the world’s longest wish list for Father Christmas.

And while the gifts the kids want aren’t all that surprising, the adult requests include everything from a new husband and a 365-day holiday to a Nobel Prize.

Romania is a nation where many people still believe in witchcraft. So few were surprised when managers at a shopping mall recently conducted a survey and found that many Romanian adults believe in Santa as much as children do.

That prompted the Liberty Center mall in south Bucharest to begin trying to create the world’s longest wish-list letter to Santa, with handwritten requests from kids and grown-ups.

So far, the list is more than 60 meters (132 feet) long and growing by the day, with more than a 1,000 requests. The letter to Santa Claus started on Dec. 1 and it will close on Dec. 23.

On Thursday, giggling children paid Santa a visit in his brightly lit grotto at the Liberty Center mall and wrote their wishes on the giant letter.

Some, like 3-year-old Ana Maria Buradel, want a doll and sweets. The adults tend to be more ambitious.

One woman has asked for a new husband. “But I’m not sure whether she’s asking for a better husband or a new husband,” said John Houghton, the mall’s director.

“Another man would like a 365-day holiday. I think he needs to retire,” Houghton said.

The person seeking a Nobel Prize didn’t specify what category: physics, chemistry, medicine, literature or Peace.

Another request scrawled on the list Thursday was more specific and heartfelt.

“All I want for Christmas is for my baby boy to be operated on and for him to be OK,” said Ionela Buradel, her eyes welling up with tears.

Romania approves US missile interceptors

BUCHAREST, Romania (AP) — Romania has given final approval for the building of an anti-ballistic interceptor site in the country as part of a U.S. missile shield.

In September, Romania and the U.S. signed an accord to install the interceptors at the Deveselu air base near Romania's border with Bulgaria. Romania's Parliament approved a law earlier this month and Basescu signed it Thursday.

Basescu says the work can now begin at the base.

The Romanian site is part two of a four-part plan that the Obama administration outlined in 2009. The plan, opposed by Russia, is designed to counter the threat of short-to-medium-range missiles. The U.S. says its plan would be able to counter a threat from Iran earlier than a Bush-era proposal to use long-range interceptors based in Poland.

Romania's ex-PM cleared of corruption charges

BUCHAREST, Romania (AP) — A top court in Romania ruled Thursday that former Prime Minister Adrian Nastase is not guilty of bribery in a corruption case.

The Bucharest court dismissed the charges against Nastase, who hailed the ruling as "the right solution." Two other former government officials also were acquitted in the case.

Livia Saplacan, a spokeswoman for the anti-corruption prosecutor's office, said it will appeal the decision.

Nastase had been accused of paying a bribe to a government official in charge of preventing money laundering in order to destroy documents regarding a bank deposit of $400,000 (euro308,000) by Nastase's wife. He said the money deposited in his wife's account came from her wealthy aunt's sales of paintings and rare books.

Nastase, who was served as prime minister from 2000 to 2004, is the most senior Romanian politician to ever have been tried for corruption. He still faces two other corruption trials, but says those cases are politically motivated.

Romania Parliament Approves 2012 Budget With 1.9% of GDP Gap


The Romanian Parliament approved the government’s 2012 budget, which narrows the deficit by more than half to meet pledges to the European Union and the International Monetary Fund.

Lawmakers voted 239-168 today in Bucharest in favor of the plan to narrow the fiscal gap to 1.9 percent of gross domestic product in 2012 from a target of 4.4 percent in 2011, said Senator Vasile Blaga, who also leads the upper house.

“Today’s vote pushes through Parliament a budget that consolidates Romania’s financial position and that doesn’t have any electoral hints ahead of the general election next year,” Prime Minister Emil Boc said after approval.

The budget outlines public-spending cuts through wage and pension freezes, trimming state jobs and revamping money-losing state companies before a general election late next year. The country is under pressure to keep to its 5 billion-euro ($6.5 billion) precautionary loan agreement with the IMF and EU.

The budget is based on economic growth of 2.1 percent, less than the previous forecast of 3.5 percent, and inflation at 3.5 percent at the end of next year. The government expects the economy to grow 1.5 percent to 2 percent this year.

The leu gained 0.2 percent to 4.3415 per euro in Bucharest trading as of 12:57 p.m. today, while the Bucharest Stock Exchange’s benchmark BET Index rose 0.9 percent to 4,315.8 points.
Widening Deficit

The government may let the budget deficit widen next year to as much as 2.5 percent of GDP under Romanian accounting standards, as agreed with the IMF and the EU, as long as it keeps the gap within 3 percent under European standards. This would enable the EU to end excessive-deficit procedures against Romania.

The eastern European country is cutting the number of its public jobs to 1.1 million by the end of next year from 1.4 million in 2010, President Traian Basescu said on Nov. 24. The government has already eliminated 180,000 jobs, he said.

The country will try to push ahead with plans to sell minority stakes in state-owned companies, such as Transgaz SA (TGN), Transelectrica (TEL) SA and Romgaz SA, and majority stakes inOltchim (OLT) SA and newly formed power companies Oltenia SA and Hunedoara SA, even during a time of market turmoil that led to the failed sale of a 9.8 percent stake in OMV Petrom SA (SNP) in July.
Borrowing Plans

Romania plans to borrow about 57 billion lei ($17 billion) next year and 2.4 billion euros to finance its budget deficit and pay for maturing debt, Deputy Finance Minister Gheorghe Gherghina said on Nov. 25.

Boc’s coalition government will also face a no-confidence vote filed by the opposition Social Democrats and Liberals today over a plan to merge parliamentary and local elections next year. The vote may take place on Dec. 22, Roberta Anastase, the head of the Parliament’s lower house, said on Dec. 12.

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

FT: Romania’s swingeing budget

Romania’s swingeing budget
December 15, 2011 5:08 pm by David Keohane

Romania joined a growing pool of countries on Thursday when its parliament passed a swingeing budget which aims to more than halve its budget deficit, from 4.4 per cent of GDP in 2011 to 1.9 per cent in 2012. But those figures depend on a growth rate of over 2 per cent next year – an optimistic assumption for an economy with such close ties to the stumbling eurozone.

Romania is undertaking its austerity, in part, to placate its paymasters in the International Monetary Fund and the European Union from which it has a precautionary $5bn credit line in place. Romania’s parliament passed the budget by a vote of 239 to 168 and Emil Boc, Romania’s prime minister said, after the vote:

Today’s vote pushes through Parliament a budget that consolidates Romania’s financial position and that doesn’t have any electoral hints ahead of the general election next year.

Romania is Europe’s second poorest economy and no stranger to austerity having already completed a €20bn aid programme earlier this year. Romania’s deficit has narrowed to less than 5 per cent of GDP from almost 14 per cent three years ago when Lehman Brothers collapsed.

However, officials have said the possibility of expanding the deficit, up to a ceiling of 2.5 per cent of GDP, remains open if economic conditions worsen. This newest round of savings will be achieved through public sector wage and job cuts, pension freezes, the sale of some state-owned companies and the rejuvenation of others.

According to Bloomberg, Romania is planning to cut the number of its public jobs to 1.1m by the end of next year from 1.4m in 2010. The government has already eliminated 180,000 jobs, according to Traian Basescu, Romania’s president.

Romania’s economy is expected to expand by close to 1.8 per cent in 2011 and the budget has pencilled in economic growth of 2.1 per cent for 2012. That is less than the previous forecast of 3.5 per cent but might still prove over ambitious says Neil Shearing of Capital Economics – who forecasts a “small contraction, of near 0.5 per cent, predicated on a deep recession in the eurozone.” Not a particularly extreme scenario.

“Further austerity, will only add to the headwinds”, facing Romania’s economy, says Shearing and if the eurozone hits the rocks hard, “Romania’s domestic economy will not be in a position to drive growth.”

Romania’s economy is suffering from is proximity to the eurozone. It sends half of its exports (which make up 30 per cent of GDP) to the eurozone, according to Capital’s figures, and its banks are also massively beholden to Greek and Austrian parents. According to Fitch Ratings, Greek banks own 15.8 per cent of Romania’s bank assets while Austrian parents own 31.5 per cent.



Romania’s markets have reacted well since the budget announcement with the country’s headline Bucharest BE index closing up 1.1 per cent. The Romanian leu was up 0.1 per cent against the euro in late afternoon trading.

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