Tuesday, January 31, 2012

Romania sentences ex-PM Nastase to jail for graft

BUCHAREST (Reuters) - Romania's top court gave former Prime Minister Adrian Nastase a two year jail sentence for corruption on Monday, a landmark conviction in the graft-prone European Union country that has prosecuted few senior officials.

Nastase would be the first former prime minister to be sent to jail since the fall of communism in 1989. He remains free pending an appeal.

Prosecutors had said the state budget lost $2 million in 2004 when profits from an event organized by a state construction watchdog were used to finance Nastase's campaign for the presidency. Nastase lost the election to Traian Basescu, who is still Romania's president.

Nastase has denied any wrongdoing and blamed the prosecution on politics.

"In time it will be shown that this entire process had political motivations behind it," Nastase told a news conference. "It is an attempt to keep me sidelined from the public life."

The EU has repeatedly raised concerns about a failure to tackle corruption in Romania and neighboring Bulgaria, its two newest and poorest members which have been blocked from joining the passport-free Schengen zone over the issue.

Romania is perceived as the third most corrupt EU country after Greece and Bulgaria, according to corruption watchdog Transparency International.


A keen hunter and fisherman, Nastase, 61, was a prime minister in a leftist government in 2000-2004 and remains a senior politician in the opposition USL alliance, which would stand a good chance of winning a parliamentary majority in an election, an opinion poll showed on Monday. A parliamentary election is expected in November.

Nastase was acquitted on a separate charge last month and has been indicted in a third corruption case. He denies wrongdoing in all the cases.

Romanians have staged nationwide demonstrations against the government and its austerity measures this month in protest against perceived corruption among politicians.

Some analysts say putting a senior politician behind bars sends an important signal that Romania is cracking down. But while prosecutors have convicted some lawmakers, sentences are suspended or they remain free pending a long appeal process.

"Frankly I didn't expect a former prime minister would ever be convicted in Romania. From the point of view of reforming the judiciary such moves are good signals, steps in the right direction," said political commentator Mircea Marian.

(Reporting by Radu Marinas; Editing by Sam Cage)

Romanian Ex-PM Gets Prison Time in Corruption Case

Associated Press

Romania's highest court on Monday sentenced former Prime Minister Adrian Nastase to two years in prison after convicting him of illegally raising funds for a failed presidential campaign.

The ruling is the first time a former Romanian premier has been sentenced to prison since communism ended in the country in 1989.

Four others in the case received six-year prison sentences. The sentences can be appealed.

Nastase, who was prime minister from 2000 to 2004, insists he is innocent and that the case is politically motivated. He said he would appeal.

Prosecutors alleged that companies and state agencies were forced to pay fees to attend a conference in 2004, and the money was then used to pay for Nastase's unsuccessful run for the presidency in 2004. He lost the runoff to President Traian Basescu.

"The one that won the elections wanted to take revenge on the one that lost," Nastase said Monday.

Romania is under pressure from the European Union, which it joined in 2007, to crack down on endemic corruption.

Romania will hold local and parliamentary elections later this year. Observers expect these to be the most bitterly contested polls of recent years.

Thousands of Romanians who have staged anti-government demonstrations for the past two weeks say they are sick of corruption and cronyism as well as falling living standards which they blame on the government's austerity measures.

Nastase, a key member of the opposition Social Democracy Party, was cleared in December of corruption charges in another trial where he was accused of paying a bribe to a government official in charge of preventing money laundering to destroy documents regarding a bank deposit of $400,000 (euro308,000) by Nastase's wife.

Nastase has always claimed the money deposited in his wife's account came from her aunt's sales of paintings and rare books.

Bloomberg: Romanian GDP Probably Grew 2.5% in 2011, Exceeding Forecasts

Romania’s economy probably expanded at a faster pace than the International Monetary Fund’s estimates for 2011 after growing in the fourth quarter, said Jeffrey Franks, the fund’s mission chief to the country.

Gross domestic product probably grew about 2.5 percent in 2011, surpassing the Washington-based lender’s forecast of 1.5 percent, Franks said in a televised speech from Bucharest today. The fund expects output to continue to grow this year and next, Franks said, without giving estimates.

“We estimate economic growth at about 2.5 percent last year, so more than we had forecast, which is certainly good news,” Franks said during a meeting with Romanian trade unions in Bucharest. “The bad news is that we’re going to face very strong challenges which might be impeding the recovery of growth over the coming period.”

Romania, which exited a two-year recession in 2011, saw economic growth accelerating to the fastest in three years in the third quarter, sparked by a bumper harvest and a recovery in domestic consumption. The country suffered its worst contraction on record from 2009 until 2011.
Pension, Wage Increases

Prime Minister Emil Boc has been mandated by the ruling governing coalition to hold talks with the IMF and the European Union over pension and wages increases from April, Liberal Democrat Vice-President Gheorghe Flutur told reporters in Bucharest today.

A joint IMF and EU mission is currently in Bucharest to conduct a two-week review of the country’s progress under a 5 billion-euro ($6.5 billion) precautionary loan.

Export-driven growth will probably slow in 2012 to between 1.8 percent to 2.3 percent, compared with a previous forecast of 3.5 percent as Europe’s debt crisis slows growth in Romania’s major trading partners, Franks said on Nov. 7.

The IMF may lower its estimate for Romania this year to as low as 1 percent, Ziarul Financiarreported today, citing unidentified people. The economy may expand between 1 percent and 1.5 percent in 2012, slower than a previous forecast of 1.8 percent to 2.3 percent, the newspaper 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

IMF official tells Romania it should limit public sector wage increases to help growth

By Associated Press, Monday, January 30

BUCHAREST, Romania — An International Monetary Fund official says Romania’s economy will grow slightly this year.

However, Jeffrey Franks told Prime Minister Emil Boc on Monday that his government should beware increasing public sector wages as it could hurt growth.

In 2010, the government cut public workers salaries by one-fourth and raised the sales tax to 24 percent to reduce the budget deficit. That caused discontent which erupted this year in two weeks of protesters around Romania.

Romania signed up for a €20-billion ($26 billion) loan with the IMF, European Union and World Bank in 2009 to help pay salaries and pensions as economy shrank by more than 7 percent.

The country holds elections in the fall and some analysts fear the government could raise salaries too much in order to gain popularity.

Monday, January 30, 2012

Romania must recognize role in Holocaust, says president Traian Basescu

BUCHAREST (AFP)---Romanian President Traian Basescu on Friday stressed the importance for his country to recognize its role in the Holocaust, on the occasion of International Holocaust Remembrance Day.

"Acknowledging the tragedy of the Holocaust which made millions of victims among Jews throughout the world and the tragic events for the Jewish community in Romania represents an essential element for the evolution and the maturity of a democratic nation", he said.

Between 280,000 and 380,000 Romanian and Ukrainian Jews died during the Holocaust in Romania and the territories under its control, according to a study by a commission of historians headed by Nobel peace prize winner Elie Wiesel.

About 25,000 Romanian Roma were also victims of deportation and persecution under marshal Ion Antonescu's pro-Nazi regime, of whom 11,000 died.

"I express my solidarity with the Jewish people and my compassion for those who were sacrificed by a regime that legitimised, in Romania too, the exclusion and the persecution of Jews and Roma", Basescu stressed.

Bucharest had long denied its participation in the Holocaust until it set up in 2003 an international commission of historians led by Elie Wiesel and tasked with bringing to light this dark period of its history

World Bank in Talks With Romania on EU1 Billion Credit Line

By Andra Timu

Jan. 26 (Bloomberg) -- Romania and the World Bank are in talks over a 1 billion-euro ($1.3 billion) credit line to support the Balkan nation’s budget, the bank’s country manager Francois Rantrua said.

Prime Minister Emil Boc’s government, which is carrying out an austerity program, is negotiating with the Washington-based lender the terms of the precautionary accord, which will let it to decide at a later stage whether to draw from the funds or not, Rantrua said in an interview in Bucharest today.

The World Bank will join the International Monetary Fund and the European Union in a precautionary agreement with Romania, signed in March, once the credit line is approved. The IMF and the EU set aside 5 billion euros for the government to access on in case of market turmoil. Romania hasn’t drawn any money so far.

“Romania will have to meet certain mutually agreed measures, which are currently being discussed,” Rantrua said. “The duration of the credit line can be as long as three years.”

The bank completed disbursement in December of another 1 billion-euro loan to Romania as part of a 20 billion-euro international bailout, which was signed in 2009 and ended in May 2011.

Romania needs the World Bank’s “guidance on policies and reforming the state,” Finance Minister Gheorghe Ialomitianu said on Dec. 27.

Boc’s cabinet pledged to cut the budget deficit to 1.9 percent of gross domestic product this year from 4.4 percent of GDP in 2011.

--Editors: Elizabeth Konstantinova, Zoe Schneeweiss

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

Bloomberg: Romanian Opposition Gains Support After Protests, Poll Shows

Romania’s two main opposition parties gained increased public support over the current ruling party, according to a survey conducted by pollster IMAS during the most violent anti-government protests in more than a decade.

The opposition Social-Liberal Union, formed by the Social Democrats and the Liberals, would win 53.4 percent of the vote in a general election, an increase from 48 percent in a December poll, showed the IMAS poll published by the Bucharest-based newspaper Adevarul today.

The ruling Liberal Democratic Party would get 15.8 percent of the vote from 21 percent last month, the survey showed. The People’s Party, newly-founded by media owner Dan Diaconescu, would garner 13.9 percent, compared with 12 percent in the previous poll, while the Democratic Union of Hungarians in Romania, an ethnic minority party which is part of the current governing coalition, would win about 6 percent of the votes.

Romanian Prime Minister Emil Boc’s government, supported by a governing coalition, has been grappling with widespread protests for some two weeks in January ahead of general elections scheduled later this year. People took to the streets across the country to protest against an austerity budget, demanding early elections. The protests turned violent on Jan. 14 and Jan. 15, injuring 60 people.

The survey of 1,039 people was taken from Jan. 11 to Jan. 17 and had a margin of error of plus or minus 3 percentage points.

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

Gabriel’s Gold Mine Triggers Protests in Romania, Bursa Reports

Gabriel Resources Ltd (GBU).’s Rosia Montana gold-mine project triggered protests in Romania during the weekend, both in support of the project and opposition to it, Bursa newspaper reported today.

Hundreds of Romanians took to the streets on Saturday in the Rosia Montana village, in the center of the country, to support the Canadian company’s project, saying it will create jobs in the region, according to the Bucharest-based newspaper. Another few hundred people protested in the capital Bucharest and in Cluj-Napoca city against the project because of the use of cyanide to extract the gold.

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: Boc snowed under

January 27, 2012 5:41 pm
by Stefan Wagstyl
The Financial Times

Wherever it turns, the Romanian government seems to run into trouble. On Friday, it was the constitutional court rejecting plans to delay local elections by a few months and hold them on the same day as parliamentary polls due in November.

Prime minister Emil Boc hoped postponing the local elections might win a bit more time for the benefits of his tough IMF-backed austerity programme to come through, and recent public protests to lose momentum.

But the judges said no. So Boc’s only relief is the distraction generated by the snowstorms that have this week swept Romania, taking the edge off the anti-government demonstrations. But the snows will melt – the anti-government sentiment probably won’t.

These are the stormiest protests in Romania for more than a decade, inviting comparison with the violent demonstrations that repeatedly hit Bucharest after the overthrow of the communist dictator Nicolae Ceausescu.

In place of the tens of thousands that marched in the 1990s, this year’s demonstrators are generally numbered in the thousands. They do not – yet – threaten to overturn the government or force it to change tack on economic policy.

Boc’s government remains committed to its policies, including a VAT hike and swingeing public spending cuts that have brought cuts in the state payroll, pay levels and pensions.

But the demonstrations show that central and eastern Europe (CEE) isn’t immune to the anti-austerity protests that have been seen in the older members of the European Union, including Greece, Spain and Italy. Even though Romanians went through an even more serious economic crisis after 1989, the current slow down is bad enough to make them angry.

Catalina Molnar, a Bucharest-based economist with RBS, told beyondbrics that educated people accepted that the government had little alternative but to stick to its programme but other people did not.

Like other people in Europe we have to face the crisis as well as possible. Romanian people can see that everybody else is in a mess too.

Investors have taken note. The Romanian leu is up this year by less than 1 per cent aginast the euro, compared with much bigger gains in other emerging market currencies, including, in CEE, the Polish zloty (+7 per cent) and the Hungarian forint (+7 per cent).

Boc’s difficulties were triggered by the 2008-9 crisis which plunged Romania deep into recession and forced it to promise fiscal reforms in return for a €20bn rescue loan from the IMF/EU.

This month’s demonstrations were triggered by a public row between Raed Arafat, a popular health official, and president Trajan Basescu, Boc’s close ally, over plans to privatise a medical emergency service.

Arafat quit after he was publicly criticised by Basescu, but reinstated a few days later in response to public protests. However, with the wind in their sails the demonstrators widened their campaign, and won increasing support from the opposition USL, the leftist alliance.

Boc’s efforts at conciliation were stymied this week by comments from foreign minister Teodor Baconschi, who called the protesters “inept and violent slum-dwellers”.

Baconschi was sacked on Monday and replaced by Cristian Diaconescu, an experienced ex-minister. But the episode did nothing to dispel the impression that the government is struggling to stay in control.

A lot will now depend on the economy. The European Bank for Reconstruction and Development this week cut its forecasts for the region and did not spare Romania, reducing its 2012 GDP number from 1.8 per cent to 1.5 per cent.

That’s in line with its 1.7 per cent forecast for south east Europe. But Romania is coming out of the deepest recession in the region – and Romanians had been hoping for a faster recovery.

The EBRD said:

Until recently, Romania’s economy was on track to record robust growth in 2012, after a modest recovery in 2011. However, the slowdown in the eurozone is already having a significant dampening effect on Romania’s exports, and further weakening is likely in the coming months. The Greek crisis has a dampening effect mainly through crossborder banking relationships. Continued IMF support provides an important buffer.

Worse, as the EBRD warned, a new eurozone shock could wipe 4 percentage points off CEE growth, which would plunge Romania (and many other states) back into recession.

The government is doing what it can, keeping the economy stable by signing a new precautionary IMF deal for €5bn. But its 2012 budget plan depends on 2 per cent GDP growth.

The central bank is helping to stimulate growth. Having cut interest rates by a total of 50 basis points at the last two monetary policy meetings (in November and January), the National Bank of Romania could cut the key rate by another 25 basis points at its next meeting on February 2.

But there are limits to what can be done in Bucharest. A fragile economy on the edge of the European Union faces some very cold winds blowing from the west. They could do far more damage than this week’s snowstorms.

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Romania's winter of discontent

The Economist
Jan 28th 2012

THEY have been called "worms", "violent and inept slum-dwellers", and "suckers". And yet hundreds of them, exasperated about austerity measures, political incompetence and lack of public consultation over laws, keep coming out on to the freezing winter streets of Bucharest and other Romanian cities to urge the president and government to resign.

"Now is the winter of our discontent—Suckerspeare" read one banner in Bucharest's University Square—the same spot where anti-Communist protesters were beaten and killed in the early 1990s in clashes with government-controlled miners. Now the demands are more diverse: no to shale-gas exploration and gold-mining with cyanide, yes to the return of the long-defunct monarchy, higher pensions, lower taxes, more bicycle paths.

Others are simply asking for politicians to respect them. And after two weeks of protests, it seems that the politicians have started to listen. Or at least to find some scapegoats.

On Monday Teodor Baconschi, the foreign minister, was sacked after writing about the "violent and inept slums" that were home to the protestors, to be compared with the rest of "hard-working Romania." Then Iulian Urban, a deputy from the ruling Democratic Liberal Party (PDL), resigned after calling the protesters "worms".

On Wednesday President Traian Băsescu finally broke his silence with a televised speech in which he admitted there was a "rupture" between him and part of the population. He said that austerity was needed to restore Romania's economic health, and complained that it was "unfair" to be labelled as a "dictator", as some protestors have done.

Yet Mr Băsescu conceded that he needs to "reduce the blunders I sometimes make in public", such as the one that sparked the protests—his row with a respected doctor who opposed the government's plan to partially privatise the health-care system.

The opposition, meanwhile, is trying to capitalise on the anger movement, by organising parallel demonstrations. General elections are due in November, and the Social-Liberal Union is riding high in the polls with about 60% support, while the PDL languishes at around 11%.

This week Romania's constitutional court gave the opposition another boost by ruling against a government plan to hold local elections at the same time as parliamentary ones. The unpopular PDL had wanted to merge the two so as to postpone the local campaign by a few months.

But the advent of a centre-left government later this year is unlikely to save Romanians from more austerity. The country has contracted another $5 billion loan from the IMF, on top of a $27 billion rescue package agreed in 2009 with the IMF and the EU. And with growth forecasts being slashed all around the region as the euro-zone crisis bites, Romania's winter of discontent has few chances of turning into a glorious summer.

Romanians protest against gold mine plan

(Reuters) - Hundreds of Romanians protested on Saturday against a plan to set up Europe's biggest open-cast gold mine in a small Carpathian town, joining a wave of anti-government rallies.

For the past two weeks, thousands of citizens have gathered in cities across Romania to demand the resignation of President Traian Basescu and his close ally, Prime Minister Emil Boc, as anger over austerity measures and falling living conditions have spread.

The protesters have also criticised Basescu and the centrist coalition government for backing the gold mine project in the western town of Rosia Montana. However, most town residents support it, and also held a rally on Saturday.

The project, which aims to use cyanide to mine 314 tonnes of gold and 1,500 tonnes of silver, has drawn fierce opposition from civic rights groups and environmentalists, who say it would destroy ancient Roman gold mines and villages.

It is led by Rosia Montana Gold Corporation, majority-owned by Canada's Gabriel Resources Ltd with the Romanian government holding 19 percent.

Waving Romanian flags and banners saying "United for Rosia Montana," about 300 protesters gathered outside parliament in Bucharest. They called on the government to deny Gold Corporation an environmental permit it needs to open the mine.

"Never mind that this project is an utter environmental catastrophe waiting to happen, but it is also the worst possible business from a financial point of view for the Romanian state," said Vlad Rogati, a 61-year-old retired engineer at the rally. "We are being misled. The promised jobs for miners are an illusion."

Most of the 2,800 residents of Rosia Montana hope the project will bring jobs and money to their impoverished town, which took a hit when a state-owned gold mine closed in 2006. Only a small group of residents refuse to sell their property to make way for the mine.

Television footage showed hundreds of people at the rally. "We are standing on gold but dying of hunger," said one banner.

Gold Corporation has valued the mine at $7.5 billion, of which it said Romania would get about $4 billion in direct taxes, dividends, service providers and jobs.

The Environment Ministry said on Saturday it was still evaluating Gold Corporation's permit request, and that it would propose that the government grant it "only if there is certainty the investor will respect the best mining practices so that it will not harm the environment," according to local news agency Mediafax.

The company proposes four gold quarries over the mine's lifespan, which would destroy four mountaintops and wipe out three villages of the 16 that make up Rosia Montana, while preserving the historical centre.

Romanians, Bulgarians Still Face Some EU Work Restrictions

January 28, 2012
By Paul Ciocoiu

A Belgian official is accusing Romanians and Bulgarians working in his country of undercutting local workers, according to reports.

John Crombez, Belgian state Secretary for Repression of Fiscal and Social Fraud, said some Bulgarians and Romanians are working for less money than normal pay rates, according to reports in De Standaard and Het Nieuwsblad on January 18th.

Belgium and eight other EU member states — Germany, Ireland, France, Luxembourg, Holland, Austria, the UK and Malta — agreed in December with the European Commission (EC) to prolong work restrictions for Romania and Bulgaria until January 2014.

Italy and the Czech Republic lifted all restrictions, while Spain initially kept its market open for the two countries’ workers, but decided last summer to restrict their access.

“The Commission has clearly asked the countries that want to keep the restrictions to also present the grounds, include in their notifications concrete data and pertinent arguments,” Michael Jennings, the EC spokesperson said.

The nine countries cited high unemployment rate to justify continued restrictions for Romanians and Bulgarians.

By 2014, all EU member states must lift restrictions for the citizens of the two countries that joined the EU in 2007. A total of 16 EU member states have liberalised their work market for Romanians and Bulgarians to date.

The Romanian authorities say they regret the nine states’ decision, but the measure does not have an economic impact.

“Maintaining these restrictions cannot negatively affect the Romanian economy unless we look at it as lost opportunities, namely what Romanians could have won if they had free access to those markets,” blogger Cristian Orgonas, who runs a popular economics blog, Businessday.ro, told SETimes.

An estimated three million Romanians work abroad, mostly in Italy and Spain. In 2010, they sent about 3.8 billion euros in remittances to Romania and 4.3 billion the year before, while 2008 saw a record 6.6 billion euros in remittances.

Alin Mihalache, a carpenter, has worked in several EU countries.

“The nine countries’ decision to keep their markets closed to us comes in a time of crisis which would have made our search for a job difficult enough anyway, so I don’t really see any loss here,” he told SETimes.

In Italy, the liberalisation of the market is expected to pay off. The leaders of the Romanian community in Italy saluted the government’s decision to fully open the internal work market for Romanians, pointing out the benefits of such a measure.

“The decision is good news for qualified Romanians who, until now, were restricted from accessing jobs matching their professional training, such as accountants, teachers and agronomists. We hope that as, many as possible, Romanians will have access to these jobs,” Marian Mocanu, the president of the League of Romanians in Italy, told SETimes.


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Romanian Court Rules Against Same Day General and Local Election

By Andra Timu

Jan. 25 (Bloomberg) -- Romania’s Constitutional Court rejected a law that merged holding local and parliamentary elections on the same day after it was challenged by the opposition.

The nine-judge court panel ruled against the law on grounds it is unconstitutional, Acsinte Gaspar, a judge, said in a phone interview in Bucharest today. The opposition Social Democratic Party and the Liberal Party challenged the law in court after Prime Minister Emil Boc survived a no-confidence vote in Parliament on Dec. 22, which was tied to the new election law. Winning the vote helped Boc push it through the assembly.

“The government will respect the court’s ruling,” Boc said today, according to Mediafax news service, adding that he will say more after the court publishes its motivation for the decision.

Boc’s government sought to hold the elections at the same time this year to cut spending as part of its pledges to narrow the country’s budget gap to 1.9 percent of gross domestic product from an estimated 4.4 percent in 2011. Merging the elections next year would save the state some 20 million euros ($26 million), according to the government’s estimates.

Victor Ponta, the head of the social-democrats, demanded Boc’s resignation at a press conference in Bucharest today on grounds he won a confidence vote on “a law that is unconstitutional,” he said.

Boc has embarked on an austerity program this year to reassure investors that his government will maintain fiscal discipline before the elections, after signing a new two-year 5 billion-euro precautionary agreement with its international lenders this year. No election date has been set yet.

--Editors: Elizabeth Konstantinova, Douglas Lytle

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

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

Romanian president defends his government, despite the protests against it

By Associated Press, Published: January 25

BUCHAREST, Romania — After nearly two weeks of anti-government protests, Romania’s leader acknowledged on Wednesday that some citizens have lost faith in his leadership but insisted that the austerity measures he has introduced have pulled the country out of a recession.

But as President Traian Basescu gave his nationally televised speech hundreds of people gathered in Bucharest for another demonstration, despite a heavy snowfall.

“I know what needs to be done,” Basescu said in a 35-minute speech at the presidential palace. He said his government must “continue the fight against corruption and tax evasion,” and create more jobs.

Basescu said that after 13 straight days of protests around the country it is clear that many citizens are unhappy with his government, but he insisted it has a good record and has passed laws to reform the nation’s criminal, justice and education systems.

“We are where we should be. Romania has come out of a recession,” and we will have economic growth this year, the president said. The International Monetary Fund says the economically struggling country is expected to have about 2 percent growth this year.

Basescu denied allegations that he is meddling in state institutions. “I am not a dictator,” he said.

Many Romanians have become disenchanted with their once-popular president, saying he is too outspoken and has grown increasingly confrontational. Basescu compared running Romania to his previous career as a ship captain and said he would not abandon the country “in the middle of a crisis.”

Romania signed up for a €20-billion ($26 billion) loan with the IMF, European Union and World Bank in 2009 to help pay salaries and pensions, when the economy shrunk by more than 7 percent. In 2010, the government increased the sales tax from 19 to 24 percent and cut public workers salaries by one-fourth to reduce the budget deficit. Romanians also are angry over cronyism and a perception that the government is not interested in the problems of ordinary people in this nation of 22 million.

The demonstrations — some containing thousands of people — are being held against very low living standards, widespread corruption, and the passage of some laws without a parliamentary debate.

Earlier Wednesday, Romania’s Constitutional Court ruled that a new law allowing simultaneous local and parliamentary elections is unconstitutional. Such local and parliamentary elections have previously been held several months apart in the same year.

The court, which did not provide details on its ruling, rejected the law following a complaint from opposition parties. The government passed the law through Parliament in December, without debate.

The opposition says the law would complicate the election process, creating more confusion and making cheating easier. The government said organizing one ballot for two different elections would save money.

Following heavy criticism, lawmaker Iulian Urban resigned from the governing Democratic Liberal Party — led by Prime Minister Emil Boc — after calling the protesters “worms.”

On Wednesday, the U.S. Ambassador to Romania Mark H. Gitenstein criticized what he called high-level corruption in Romania.

“Profits from publicly owned enterprises are too often diverted back to state coffers or into the pockets of well-connected individuals,” he said in a speech alleging that public funds are sometimes illegally siphoned off.

Romania Frontloads Debt Sales to Avert Risk Appetite Change

By Andra Timu and Irina Savu

Jan. 26 (Bloomberg) -- Romania sold a record amount of leu- denominated debt in January at lower yields as it seeks to protect its finances from a possible worsening of the European sovereign-debt crisis.

The Balkan nation sold 9.94 billion lei ($3 billion) in Treasury bonds and bills on the domestic market, more than double the planned amount and the most since April 2005, according to data from the Bucharest-based central bank. The yield for six-month Treasury bills dropped to 5.87 percent on Jan. 23 from a record 11 percent in July 2009 after inflation was the slowest in two decades in December at 3.14 percent.

“It makes sense for Romania to frontload issuance as risk appetite seems to have stabilized for the moment,” Neil Shearing, senior emerging-markets analyst at Capital Economics Ltd. in London, said by phone on Jan. 24. “If risk appetite changes, which we think it will, Romania could be trapped in the turmoil because of its banks’ high dependency on funding from their international parents.”

Romania, which needs to borrow about 70 billion lei this year to fund a budget deficit and pay maturing debt ahead of elections, joined Poland and other European countries in selling more debt than planned in the first month of the year to benefit from a lull in Europe’s debt crisis. The Balkan nation needs to refinance 52.4 billion lei in maturing debt in 2012.

Polish Sales

The Polish government is also cushioning its finances against another bout of European market turmoil by selling a record amount of zloty bonds this month as well. Poland sold 6.75 billion zloty ($2 billion) of two-year securities on Jan. 19 at a yield of 4.724 percent, taking its domestic bond sales to a record of 17.1 billion zloty in January.

Yields on existing two-year notes fell to 4.72 percent, the lowest since Nov. 14, while the extra yield over similar- maturity German bunds fell to a one-month low of 449 basis points, data compiled by Bloomberg show.

With twice as much debt as Russia, Poland needs to repay a record $38 billion this year and plans to meet more than a quarter of its funding needs by the end of January, the Finance Ministry said on Jan. 14. European Central Bank loans have eased investor concern for the stability of euro-area lenders, which own 59 percent of Polish banking assets.

Romania plans to sell as much as 16 billion lei of leu- denominated debt in the first quarter, the Finance Ministry said on Dec. 23. The auction calendar for February will be published by the end of the month. Borrowing costs will probably continue to decline as inflation may slow further, Deputy Finance Minister Bogdan Dragoi said on Dec. 27.

“As a result of the crisis, it’s not going to be easy for Romania to find cheap money and that’s why reforms in the country are so important,” Mark Mobius, who manages $45 billion at Templeton Emerging Markets Group, said yesterday. “There are probably some bargains around and where these bonds will be worth much more going forward.”

‘Very Interested’

The Finance Ministry also wants to extend debt maturities and sell its first 15-year leu-denominated bonds on the domestic market in February as pension funds “are very interested in long-term debt,” according to Dragoi.

The leu, the third worst performer among the 25 emerging- market currencies tracked by Bloomberg this year, strengthen 0.14 percent to 4.3390 per euro at 11:09 a.m. in Bucharest trading today. The unit has lost 0.3 percent since the start of the year.

Policy makers, who cut the main interest rate twice in the past three months by a cumulative half-point to 5.75 percent, may have room to reduce the benchmark rate further, central bank Deputy Governor Cristian Popa said on Jan. 17.

Romania also plans to raise as much as 2.5 billion euros ($3 billion) in bonds from international markets this year as part of a 7 billion-euro medium-term note program over three years. The first sale of dollar-denominated bonds may come this year depending on market conditions, according to Dragoi.

‘Not a Surprise’

“It’s obvious that Romania doesn’t want to issue dollar bonds in the current conditions and it’s not a surprise that they are relying more on the local market,” Daniel Hewitt, a London-based analyst at Barclays Plc said by phone.

The country stopped relying on bailout funds from the International Monetary Fund and the European Union in March last year and secured a 5 billion-euro precautionary accord with the lenders. The government doesn’t plan to draw from the credit.

The Bucharest-based administration pledged to reduce the budget deficit to as low as 1.9 percent of gross domestic product this year from 4.4 percent in 2011.

The cost of insuring against a default by Romania has declined about 35 basis points this year to 413 basis points today, 173 basis points less than credit-default swaps for Hungary and 170 points more than Poland, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

--Editors: Alan Crosby, Douglas Lytle

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

European Socialists call for early elections in Romania [fr]


As protests against Romania's centre-right government and president continued for a second week, the Party of European Socialists called for a transitional government to be given the pivotal task of ensuring free and fair elections.

Protestors braved powerful snowstorms in Bucharest while Romanian President Traian Băsescu appeared on television yesterday (25 January), recognising that a fracture existed between him and some citizens.

Băsescu is the founder of the ruling Democratic Liberal Party (PDL), led at present by Prime Minister Emil Boc.

Băsescu appealed to the "civil society of good quality" which he said had been "hiding in its shell" in recent days. "It has to come back, otherwise its place will be taken up by impostors."

"I am by profession a ship captain, and I have never missed a course. I won't miss the course this time either," he said.

Băsescu, who was re-elected to a second 5-year term in 2009, served as merchant ship captain between 1981 and 1987.

Asked by journalists if he was going to resign, Băsescu replied that he never envisaged stepping down.

Romania's opposition Social-Liberal Union (USL) called Băsescu's televised appearance "hallucinatory" and "totally surrealist". The USL is a coalition of the Social Democratic Party of Victor Ponta and the centre-right alliance made up of the National Liberal Party of Crin Antonescu and the Conservative Party of Daniel Constantin.

Recent polls give show that half of Romanians back the USL while the ruling party's support stands at 18%.

Despite the fierce weather, as many as 1,000 protestors gathered in University Square - an iconic location of the Romania revolution of 1989 - chanting "Down with Băsescu" and "Boc - Instant Resignation".

Boc has made some concessions, including sacking Foreign Minister Teodor Baconschi for making insulting remarks about protestors. However, there was speculation that Boc dismissed Baconschi so he could give his seat to Cristian Diaconescu, a member of a junior coalition partner, to strengthen support for his cabinet.

'International concern'

In Brussels, the Party of European Socialists condemned what it called the attempts by the centre-right European Peoples Party (EPP) to smother debate on the deteriorating political situation in Romania.

"The recent protests in Romania have become a cause of international concern about the erosion of democratic standards by the conservative PDL government. With cases of unpunished electoral fraud, media manipulation and anti-democratic reforms, President Traian Băsescu's increasing concentration of power have prompted people to take to the streets and call for early elections," PES said in a statement.

PES President Sergei Stanishev and Romanian Social Democrat leader Victor Ponta commented on the Romanian situation in a joint article and called for early general elections.

In order to achieve this, the socialist leaders demand a transitional technocratic government be given the pivotal task of ensuring the conduct of free and fair elections. “The EU must act decisively, collectively and most importantly - it must act now”, they write.

The EPP group hit back, saying that it need no democracy lessons from PES, and was supporting the "responsible and courageous policy of Prime Minister Boc and President Băsescu".

Stanishev was scheduled to meet Commission President José Manuel Barroso this morning. A debate on the situation in Romania is due in the European Parliament on 31 January.

The President and the Secretary General of the European People’s Party (EPP), Wilfried Martens and Antonio López-Istúriz reaffirmed in a statement "their full support for the efforts undertaken by the Romanian Government and its Prime Minister, Emil Boc, in view of consolidating the significant economic progresses achieved by Romania during this past year".

"We condemn the attempts of our Socialist and Liberal colleagues of using the protest in Romania for their own partisan ends, including by initiating an unfair and untimely motion for a resolution in the European Parliament. This serves only to further hinder a necessary dialogue between Romanian political forces across the political spectrum at a time when Romanian people expect real solutions to their problems. The EPP urges all responsible political forces in Romania to take popular discontent seriously and to seek genuine and constructive cross-partisan dialogue as a way of properly addressing their constituents’ needs. In times like these, political partisanship only leads to a fractured society", Martens and López-Istúriz conclude.

Wednesday, January 25, 2012

Romania President Swears In New Foreign Minister


Romanian President Traian Basescu has sworn in a new foreign minister, a day after Prime Minister Emil Boc sacked his predecessor over disparaging remarks about street protesters.

Small and mainly peaceful protests against austerity measures have been staged daily in the capital and several other Romanian cities for more than 12 days.

Basescu told the new foreign minister, Cristian Diaconescu, that his main mission will be to reaffirm Romania's determination to continue reforms and austerity measures meant to pull the country out of the economic crisis.

"You have a difficult mission -- and I would say, after what I saw on television, almost impossible -- to [relay the message] that Romania has the strength to continue, and this should be the main message to relay to your counterparts in the European Union, those across the Atlantic and others," Basescu said.

Diaconescu, 52, previously served as foreign minister in 2009 in a coalition government led by Boc.

Diaconescu is a former member of the ex-communist opposition Social Democratic Party (PSD) and is now a leader of the newly formed center-left National Union for the Progress of Romania.

His predecessor Teodor Baconschi was fired on January 23 after criticizing on his personal blog demonstrators who clashed with riot police during protests earlier this month in Bucharest.

Protests Continue

Larger protests were held on January 24 as Romania celebrated a national holiday -- the Day of Unity.

At least 2,000 protesters protested outside the government building in Bucharest, and some 5,000 people participated in a protest march organized by opposition parties in the northeastern city of Iasi.

Basescu, in his first public remarks about the protests, accused opposition figures and the private media outlets of indulging in what he called "the joy of destruction," and of undermining and ignoring his government's achievements.

Basescu also compared the leaders of the opposition -- PSD head Victor Ponta and National Liberal Party leader Crin Antonescu -- to Moldova's ex-President Vladimir Voronin, who is also leading the Communist opposition in the Moldovan parliament.

Romania signed up for a 20 billion euro ($26 billion) loan with the IMF, European Union, and World Bank in 2009 to help pay salaries and pensions when the economy shrunk by more than 7 percent.

In 2010, the government raised value added tax from 19 to 24 percent and cut public workers salaries by 25 percent to reduce the budget deficit.

Romanians are also protesting against cronyism and widespread corruption.

Romanians demand elections as prime minister Emil Boc urges unity

Peter Walker
guardian.co.uk, Tuesday 24 January 2012

Days of protests in Romania over government austerity measures have intensified, with thousands of demonstrators marching through Bucharest and elsewhere to demand elections.

The crowd in the capital, mainly trade unionists, teachers, nurses and retired army officers, gathered outside the main government building then marched to the HQ of the public television station, accused of being biased in its coverage of the administration of the prime minister, Emil Boc.

The protesters then moved on to University Square, where people have been assembling daily since 13 January.

Otilia Dobrica, a nursery teacher and part-time secretary, said she wanted Boc and his ally, President Traian Basescu, to resign. "I want to regain my dignity, I want this dictatorship formed by president and prime minister to fall," she said.

About 5,000 people chanted anti-government slogans in Iasi, Romania's second city, calling for the elections due in November to be brought forward.

Tuesday Boc address parliament at a special session for Romania's Day of Unity, a national holiday, and urged Romanians to work together to overcome the economic hardship facing the country during the global financial crisis.

The president also addressed the protesters. Basescu said: "I have seen a justified wave of discontent from people who … suffered wage cuts, VAT hike and a cut in certain pensions."

Romania joined the EU in 2007 (though not the eurozone), and its economy enjoyed 8% growth in 2007 and 2008. But in 2009 the economy shrank by more than 7%, leading the government to arrange a £16bn loan with the IMF, EU and World Bank to help pay salaries and pensions.

Following austerity measures imposed under the deal, the economy has limped back into growth, but at the cost of reducing incomes, which are less than half the EU's average. Romania's VAT rose from 19% to 24% in 2010, while public salaries were reduced by a quarter.

Many protesters are also angry at what they see as cronyism and corruption.

In the first weekend of protests more than 30 people were injured in University Square when demonstrators threw bricks while riot police fired teargas. A TV journalist was beaten by one group while broadcasting live.

Boc has made a few concessions in the face of the protests, such as reinstating a popular health official whose resignation prompted one demonstration.

On Monday, he fired his foreign minister, Teodor Baconschi, for having insulted protesters on his personal blog. The future of Romania, Baconschi wrote, would be decided by hard-working people and not by those from the "violent and clueless slums". Cristian Diaconescu, a member of a coalition partner party who has served in both leftist and centrist governments, was sworn in as his replacement on Tuesday.

Boc, who has been in power since December 2008, said in a speech on Monday that the protests were not just aimed at him: "Romanians protest not only because they are unhappy with the austerity measures, but because they are unhappy with the entire political class in Romania, not only with the government."

But, current opinion polls show his PDL party standing at 18% support, while the USL, a leftwing alliance also calling for early elections, has 50%.

Adding to Boc's woes has been the prominence given in the media to anti-government comments by Lt Alexandru Gheorghe, a serving officer. Members of the military are forbidden to join protests, but Gheorghe told the private Antena 3 TV station he had travelled 300 miles to Bucharest from his army base to take part. "I can no longer bear the way we are insulted," he said. "I saw old people beaten, and said to myself that we, the officers, who could die tomorrow in a mission in Afghanistan, must have the courage to fight and tell the truth here in our country."

Romania joined the Nato alliance in 2004, and 1,700 Romanian troops are in Afghanistan. The defence ministry said it was investigating what action to take against Gheorghe.

Tuesday, January 24, 2012

Unions rally, urge Romanian PM to quit

By Ioana Patran
BUCHAREST, Jan 24 (Reuters) - Thousands of Romanians rallied in Bucharest on Tuesday to demand the government resign over its tough austerity measures, the latest in a wave of protests that have led to some concessions but no change in policy.
The hardship caused by austerity measures passed in 2010 to keep a 20-billion-euro International Monetary Fund-led bailout on track has until recently provoked little of the unrest in Romania that has been witnessed in countries like Greece.
The ruling party's popularity has slumped months before a parliamentary election, expected in November, and anger at public sector pay cuts and an increase in sales tax has mounted.
At rallies last week on Bucharest's University Square, one of the scenes of the 1989 anti-communist revolution, police fired tear gas and demonstrators threw bricks and firebombs.
On Tuesday, about 2,000 trade unionists, teachers, nurses and retired army officers rallied on the broad expanse of Victory Square outside government headquarters to demand Prime Minister Emil Boc and his ally President Traian Basescu resign.
"I want to regain my dignity, I want this dictatorship formed by president and prime minister to fall," said Otilia Dobrica, a kindergarten teacher and part-time secretary who earns 1,400 lei ($420) a month.
Demonstrations bringing together students, pensioners, public sector workers and professionals have spread across the country in the past two weeks.
Boc has made some concessions, sacking his foreign minister for insulting remarks about protesters and reappointing a popular health official whose resignation brought people onto the streets, but he and Basescu remain under pressure.
Romania had the fastest growth rates in the European Union until the financial crisis of 2008, which plunged its economy into a deep recession and has left it languishing with per capita income less than half the bloc's average.
The IMF safety belt and austerity measures have maintained investor confidence and rebalanced the economy, but growth of 2.5 percent last year is far from enough to close the gap even on post-communist neighbours like Poland and the Czech Republic.
The average wage is less than 400 euros ($520) a month, some villages and even districts of Bucharest have no running water or electricity and horse-drawn carts are widely used in the countryside.
Opinion polls put support for Boc's PDL at 18 percent while backing for the USL, a fragile leftist alliance that has demanded the election be brought forward, is about 50 percent.
Analysts say the protests, the largest since the austerity measures were passed, are raising the pressure on Boc and Basescu but are unlikely to produce changes in government policy, at least for now.
"The government has made many steps back since protests erupted ... and this type of move could represent more fuel for the protesters in the square," said Bogdan Teodorescu, an independent political analyst.
"The government looks very fragile right now."

Monday, January 23, 2012

Romania PM sacks foreign minister for remarks on protest

BUCHAREST | Mon Jan 23, 2012

(Reuters) - Romanian Prime Minister Emil Boc sacked Foreign Minister Teodor Baconschi Monday for comments he made about anti-government protests, seeking to ease public anger and draw a line under more than a week of rallies.

Baconschi said last week that protesters who threw bricks and Molotov cocktails at police were "inept and violent slum-dwellers" and compared them to miners who in the 1990s repeatedly descended on Bucharest and used violence to influence political developments.

"I have taken the decision to recall Foreign Minister Teodor Baconschi and have forwarded a proposal to the Romanian president to remove him from his functions for the comments he made," Boc told parliament.

"I present apologies from the parliamentary tribune to the Romanian public for these verbal errors."

Romania has suffered little of the unrest that has been seen in other countries hit by rising economic hardship. Most of the protests against austerity measures, now in their 11th day, have been peaceful, marked only by sporadic violence.

Demonstrators have gathered in central Bucharest to protest against President Traian Basescu and his close ally Boc, who cut salaries by a quarter and raised sales taxes to cut Romania's deficit and help rebuild the economy.

Those measures helped to keep an International Monetary Fund-led aid deal on track and maintained market confidence, but delayed recovery from a deep recession and has left Boc's PDL party trailing in opinion polls on 18 percent.

A rally of some 7,000 supporters of the opposition USL last week was Bucharest's biggest since 2010 and more protests are planned for this week, notably Tuesday when teachers and nurses are organizing a rally.

The USL, a fragile leftist alliance which has also committed itself to working with the IMF, has about 50 percent support in opinion polls and is well set to win a parliamentary election late this year.

"I totally agree with this decision," said USL co-leader Victor Ponta. "But Romanians had expected much more."

(Reporting by Sam Cage, Radu Marinas and Luiza Ilie; editing by Tim Pearce)

Romanian anti-government protests enter 10th day

Sun, Jan 22 2012

BUCHAREST (Reuters) - Protests demanding the Romanian government resign over its austerity measures continued for a tenth successive day in the capital Bucharest Sunday and in some other cities around the country.

The occasionally violent demonstrations were initially sparked by the resignation of a popular deputy health minister but quickly spread to demand President Traian Basescu and Prime Minister Emil Boc resign.

Boc cut public salaries by a quarter in 2010 and raised sales tax by five percentage points, which have delayed recovery from a deep recession in the European Union's second poorest country, to maintain an International Monetary Fund-led deal.

About 600 people met again at Bucharest's central University Square, symbolic for its role in Romania's anti-communist 1989 revolution, chanting "Down with Basescu" and "Resign" in freezing temperatures and snow flurries.

The unrest in Romania is far from the size of protests in other austerity-hit European countries like Greece, Spain and France but marks the country's worst violence in more than a decade.

A rally of some 7,000 opposition supporters last week was Bucharest's biggest since 2010, when austerity measures were first passed, and more protests are planned for next week.

Opinion polls put Boc's centrist PDL at 18 percent support, compared with about 50 percent for the USL, and analysts say the protests are unlikely to affect policy or force the government out at this stage.

(Reporting by Sam Cage)

NYT: Romanian Protesters Urge Government’s Ouster

January 19, 2012


BUCHAREST, Romania — Thousands of protesters gathered in Romania’s capital on Thursday to demand the ouster of the government and new elections, as a week of demonstrations against far-reaching austerity measures and years of difficult reforms seemed to gain strength.

Economic frustrations have spilled into the streets here, as they have in Spain and Greece. Protesters in University Square downtown shouted chants calling for the resignation of President Traian Basescu and his ally, Prime Minister Emil Boc.

Around 11 p.m. several demonstrators began dragging metal barricades into the street, and some hurled bottles and other objects at the police. Hundreds of riot police officers in black ski masks moved in, clearing the square and nearby streets. Fifty-five people were arrested, and five were treated for injuries, according to Realitatea TV.

The demonstrations were reminiscent of Sunday’s protests, which turned violent, with demonstrators smashing store windows, setting newsstands on fire and throwing stones at police officers, who dispersed the crowds with tear gas and arrested dozens of people.

The wave of protests, which have spread across the country, broke out after a popular health official resigned last week over government proposals to overhaul the health-care system. The official was reinstated this week, and a controversial proposal to partly privatize the medical emergency-response system has been shelved for now, but the protests have continued.

“I want the president to resign, the prime minister to resign and the entire government to be replaced with experts who are not involved in politics,” said Mihaela Leonte, 31, a hairstylist who joined the raucous crowd in the square in Bucharest on Thursday night. The dispute over the health overhaul “was the final straw,” said Ms. Leonte, who held a picture of President Basescu with the nose of a pig superimposed on his face. “But it is more than that. People are determined.”

Protesters focused much of their anger on Mr. Basescu, a former ship captain whose leadership style has been widely criticized as increasingly authoritarian. They cited cuts to government salaries, frozen pensions and an increase in the value-added tax, as well as what they said was deep-seated corruption and a broader sense that the government served only its own interests and those of its richest constituents.

Many of the same broad themes have been voiced by demonstrators in countries as diverse as Israel and India, from the “indignados,” or outraged, in Spain to the Occupy Wall Street protests that started in New York and spread around the world.

In Romania, news media reported that the unrest had spread over the past week to about 60 cities nationwide. About 7,000 people turned up at a rally in Bucharest on Thursday organized by the opposition National Liberal Party, according to the Ministry of the Interior, and the crowd in the downtown square later was said to number about 1,500.

Romania had to turn to the International Monetary Fund, the World Bank and the European Union in 2009 for 20 billion euros in emergency loans (about $27 billion at the exchange rates then). In response the government took tough steps to rein in the budget deficit, which was 7.3 percent of gross domestic product that year. Without the spending cuts and tax increases, that could have risen to 13.7 percent in 2010, according to Andreea Paul, an economic adviser to Mr. Boc. Instead the deficit was cut to 6.9 percent in 2010 and an estimated 4.2 percent in 2011, and the economy began to grow again.

“It was not easy at all, politically speaking, but these are times when political leaders separate themselves from demagogic politicians,” said Ms. Paul, who placed blame for the protests on opposition parties trying to drum up discontent in an election year.

Laura Stefan, a senior analyst at the Expert Forum, a research institute in Bucharest, disputed the government’s characterization of the demonstrations as driven by the opposition parties. “Economically, those were sound decisions taken by the government, but that doesn’t mean people were happy with them,” Ms. Stefan said. “It’s not at all an attempt to change the government for the opposition, but people saying that all parties are just as dirty.”

Octavian Caldararu, 75, a retired construction worker, said he was not a member of any party but took part in the opposition rally at Bucharest’s triumphal arch, modeled after the Arc de Triomphe in Paris, to show his displeasure with the direction the country had taken in recent years. “I took part in the revolution in 1989” against the dictator Nicolae Ceausescu, Mr. Caldararu said, “and the ideals of the revolution have not only been forgotten, they have been broken.”

Mr. Ceausescu and his wife were executed on Dec. 25, 1989. Since then, Romania has made significant strides, joining the European Union and NATO. But the recession in the wake of the global financial crisis struck the country of 22 million particularly hard. And even as the economy has recovered here, some Romanians who used to work in other European Union countries whose economies have slowed, particularly Spain and Italy, have been forced to come home, making the search for jobs even harder for the long-term unemployed.

Alexandru Dragan, 46, an electro-technician, said he had been unemployed since 2009 despite having a lengthy résumé and work experience in Germany.

“Regular Romanian citizens who are not a part of any political party should be asked about new laws,” Mr. Dragan said. “If we look at the people, we can find smarter individuals than the ones in the current government.”

Mihai Radu contributed reporting.

Thursday, January 19, 2012

Romania’s Alro May Reduce Output on Low Electricity Supplies

Romanian aluminum smelter Alro SA (ALR) may temporarily halt some production, lowering total capacity, or restructure operations as power supplies from hydropower generator Hidroelectrica SA falter.

Alro, majority owned by Vimetco NV (VICO), is trying to avoid an output cut as Hidroelectrica is only providing about 50 percent of needed electricity, forcing the smelter to buy the rest from the overnight market at much higher costs, the company said today in a filing to Bucharest Stock Exchange.

“We are focusing now on maintaining the activity,” Alro Chief Executive Officer Gheorghe Dobra said in the statement. “We are confident that we’ll find an acceptable solution regarding the electricity supplies, and we’ll be able to implement our long-term development strategy inRomania.”

Alro plans to build its own gas-fired power plant with a total capacity of 250 megawatts after it received financing from the European Bank for Reconstruction and Development and other commercial banks, the company said. The company completed the first step in selecting general contractor for the project.

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

Romanian riots reveal growing gloom in region

By ALISON MUTLER, Associated Press

BUCHAREST, Romania (AP) — Romanian cities are gripped by the worst street violence in over a decade. Slovaks seem poised to re-elect a confrontational and divisive populist. Hungary alarms the European Union with laws that erode democratic rights.

In former Soviet bloc nations now part of the EU, frustration is mounting due to economic stagnation and worrisome governance, encouraging street protests and unpredictability that could jeopardize growth and stability in an already troubled part of the continent.

Many of the problems are common far beyond the region: indebted states hiking taxes and slashing state spending to stay solvent. But the added burdens come to a region that was already grappling with much deeper poverty and corruption than in the West before the global financial crisis hit.

In recent days, the situation has played out most dramatically in Romania, where pent-up fury with the government and an eroding standard of living exploded into days of street protests that at times turned violent. In Bucharest over the weekend, 59 people were injured in fighting that saw riot police turn tear gas on protesters who attacked them with stones and firebombs.

"What happened last weekend is only the beginning," commentator Gabriel Bejan wrote in Tuesday's Romania Libera daily paper. "We are in an important electoral year and such confrontations will be frequent. What will they lead to when nobody seems willing to take a step back?"

Much of the frustration goes back to the way Romania transitioned to democracy after its 1989 coup against dictator Nicolae Ceausescu — with many former communists keeping control of power and resources. The results, today, are seen in entrenched cronyism, a huge gap between rich and poor and a lack of government transparency that feeds a widespread sense of injustice.

"The Mafioso government stole everything we had!" protesters declared on banners at several of the rallies that have taken place in more than a dozen Romanian cities since Thursday and appear set to go on.

Hungarians have also been taking to the streets with increased frequency in recent months over a new constitution and a blizzard of new laws that concentrate power for the right-wing Fidesz party of Prime Minister Viktor Orban.

Freedom House, a U.S. group that carries out a yearly global survey of political freedom and civil liberties, has observed "hints of re-emergent illiberalism" across central Europe, said Christopher Walker, the group's vice president for strategy and analysis.

This year's report, to be published Thursday, will highlight what it sees as a deteriorating climate for civil liberties in Hungary due to threats to the independence of the press and the judiciary.

"Hungary has shown a bent towards illiberalism which is really inconsistent with the European idea," Walker said.

The EU agrees. On Tuesday the EU Commission launched legal challenges against Budapest over its new constitution and other laws which took effect Jan. 1, saying they undermine the independence of the national central bank and the judiciary and do not respect data privacy principles.

Orban's tightening hold on many institutions comes thanks to an overwhelming 2010 victory for his party on the heels of near economic collapse by the previous, Socialist-led government.

But the mounting EU pressure appeared to have some effect: EU Commission President Jose Manuel Barroso said Wednesday that he received a letter from Orban promising to modify the legislation that raised EU concerns.

In Slovakia, meanwhile, opinion polls predict a probable return to power in March elections for Robert Fico, a former left-wing prime minister who has also worried Western diplomats with a sympathetic approach toward authoritarian states. Fico took Russia's side during its 2008 war with Georgia — bucking a trend across the former Soviet bloc to express concern over Moscow's use of power. He has also celebrated Fidel Castro's Cuban revolution.

In striking contrast to trouble in much of the region, there is one relative oasis: Poland, the largest of the 10 ex-communist states that joined the EU in recent years. Its economy has seen unusual dynamism given the difficult times, thanks in some part to massive infrastructure projects in recent years as Poland prepares to co-host this summer's European football championships with Ukraine.

But economists fear that its economy, too, could lose momentum after the Euro 2012 and with far-ranging austerity measures set to start taking effect this year in an effort to keep state debt from spiraling out of control.

But for now, anger is clearly greater in Hungary and Romania, and in both places the unfolding developments are shaped greatly by the legacy of communist rule.

In Hungary, Orban has justified his upending of the country's laws by arguing that the former communists and their way of thinking were never purged entirely from democratic Hungary.

Romania sees many of its problems exacerbated by the continued rule of some former communists, including President Traian Basescu, 60, who under Ceausescu was a ship captain for the state shipping company Navrom in Antwerp. That was a position of privilege which allowed him to earn coveted hard currency.

Feeding frustration is a sense that there is too little transparency over the doings, past and present, of Romania's leaders.

More than two decades after the overthrow of Ceausescu, authorities have opened only a handful of the files of the former dreaded Securitate secret police, which had 760,000 informers in a nation of 22 million. Former agents are believed to be active in politics, business and the media — though the public has never been given the full picture.

Also, only a handful of senior officials were ever tried for the mass shootings of unarmed civilians in the 1989 revolution, perpetuating a sense that that story, too, is being covered up.

A political analyst who has studied the revolutions of Eastern Europe, Christopher Chivvers with the RAND Corporation, sees many of today's injustices as being rooted in the overly rapid move toward a market economy in the 1990s.

When state-run industries were privatized then, it was generally only the former communist apparatchiks who knew how to maneuver the system to take hold of them and run them.

"Those who had the know-how — the former regime officials — were able to snatch up large amounts of former state property in ways that ultimately entrenched their position in society and in the state," said Chivvers, who is also a professor in European studies at Johns Hopkins University.

Many Romanians express deep frustration over this.

"We still have unanswered questions regarding shady privatization deals made in the 90s," said Cristina, a Romanian woman who asked that her last name not be published because she works for the government and fears retribution.

Vanessa Gera reported from Warsaw, Poland. Associated Press writer Karel Janicek contributed from Prague.

Romanian Media Groups Express Concern Over Police Targeting Of Journalists

BUCHAREST, Romania (AP) — Demonstrations against Romania's harsh austerity measures took place across the country again on Wednesday, with protesters demanding the government's resignation.

In Strasbourg, France, Martin Schulz, the newly elected chief of the European Parliament, said Romanian officials should take urgent economic action to improve the public's living standards. He said governments in all countries, but especially hard-hit Romania, should listen to protesters and their grievances.

A total of about 2,000 people, including 300 in Bucharest, were taking part Wednesday's peaceful demonstrations in cities across Romania — as they now have for seven days in a row.

Opposition leaders urged Prime Minister Emil Boc to fire his interior minister and begin talks on early elections to replace his government. Boc rejected both demands, saying early elections are not justified because Romania has a ballot scheduled next fall.

In 2009, Romania took a two-year euro20 billion ($27.5 billion) loan from the International Monetary Fund, the European Union and the World Bank as its economy shrank by 7.1 percent. It imposed harsh austerity measures under the agreement, reducing public wages by 25 percent and increasing taxes. Anger has mounted over the wage cuts, slashed benefits, higher taxes and widespread corruption.

In another development Wednesday, a media organization urged Romanian authorities to identify and prosecute protesters and policemen who reportedly attacked nine journalists during previous violent anti-government demonstrations.

The Vienna-based South East Europe Media Organization said that reporters were assaulted while covering protests against the austerity measures that degenerated into violence in Bucharest on Sunday and Monday. At least 59 people were injured during the disturbances.

The media organization said the exact number of attacked journalists is not known. However, it mentioned nine cases of journalists and other media employees who were either hit by stones and Molotov cocktails hurled by protesters or allegedly detained or beaten by riot police.

The Romanian Press Club, which represents journalists in Romania, expressed concern over "some excessive actions" by police who allegedly targeted journalists. Chairwoman Indira Crasnea said Wednesday the club is aware of up to five cases of journalists who were attacked in the first days of the protest when the police were "tougher" in their handling of violent demonstrators.

The opposition said it will organize another protest march on Thursday.


AP writer Alison Mutler contributed from Bucharest.

Wednesday, January 18, 2012

Viewpoint: Romania protests a warning from the street

BBC News

By Sorin IonitaAnalyst, Expert Forum

"Brutal and unthinkable in a West European country." That was the verdict on two years of Romanian austerity measures from Andreas Treichl, the president of Austria's Erste Group, the largest foreign investor in the Romanian banking sector.

But he added that "Easterners are used to brutality", placing the measures taken in response to the global crisis in the broader context of hardship as a result of post-communist transition: the job losses, 25% public salary cuts, pension freezes and harsh reductions in social security benefits.

Whether he really meant it as a praise for Romanian resilience against adversity is a good question.

In any case, it is no longer true. A wave of spontaneous protests began last week, directed against the centre-right coalition government, and especially against President Traian Basescu, who since early 2010 has played the role of main communicator and driving force behind the austerity package.TV spat

The trigger was a live, televised spat between President Basescu and junior health minister Dr Raed Arafat, a physician who is well-known and respected for reforming almost single-handedly, largely against the wish of the old medical establishment, the ambulance-paramedics system.

When the president blamed Dr Arafat for blocking an important health care reform law because "he was a leftie who didn't like privatisation and competition", the public instinctively stood with the austere doctor against the rude and flamboyant politician.

Their response was even more remarkable in a Latin nation with little experience of immigration and occasional inclinations towards jingoism, since Dr Arafat is a Palestinian, born in the West Bank city of Nablus, who came to Romania for the first time in the 1980s as a medical student.

When he resigned from the Ministry of Health, crowds began to gather in the streets of Bucharest and Targu Mures, the Transylvanian city where he studied and began his career.

In the capital, demonstrators used Facebook to co-ordinate and marched around the presidential residence with Dr Arafat's portrait.

Sensing trouble, the president asked the government the next day to withdraw the controversial draft law.Riot police

But it was too late: the protests had taken on a life of their own.

On Saturday, Bucharest saw clashes between riot police and a few radical groups - apparently organised football fans, who had infiltrated the meetings with their usual arsenal of pyrotechnics.

By starting a gratuitous war with a popular figure, President Basescu merely popped a bubble of social tensions which had been accumulating since the beginning of the crisis.

From the second day of the protests, few people in the street were mentioning the health care law or Dr Arafat any more. The government has now humbly asked him to return, and he has agreed.

Older people are complaining about pensions, salaries and prices.

Students and professionals are unhappy about corruption or the coupling of local and parliamentary elections later this year (a tactical move by the government thought to increase their chances).

Eco-activists are fighting a large, open-pit mining project believed to be favoured by the president and the ruling party. And nastier fringes are grumbling about foreigners and the freemasonry which they see as trying to enslave the country through global financial machinations.

On the other hand, it is also true that there have been relatively few protesters all along: on one day the police put the total at about 13,000, spread around 50 Romanian cities and towns, with a maximum of 1,500 in Bucharest.

It is unlikely that the government will be unseated by such small crowds, and the numbers are falling.Mistrust of politicians

The opposition Social Democrats and Liberals are trying hard to capitalise on the street events: there are signs that in many locations that their youth organisations have played a part in organising the demonstrations.

But open involvement for them is risky: senior opposition figures were booed by the genuine protesters on a par with the government. And the same has happened to other marginal, populist would-be leaders, in a sign that the political class in general is distrusted, not just the ruling power.

Their use of excessive language - "dictatorship", "tyranny" - when most commercial media are harshly critical of the government and public TV has broadcast live the protests for four to five hours a day - may play well with the hardcore activists but is likely to alienate the silent majority, who are otherwise not necessarily sympathetic to the president.

In short, Romanian society has risen up against its political leaders - but not very high.

There is still a long way to go before the protests reach the critical mass and coherence of the Spanish "indignados" or other "Occupy" movements.

Nevertheless, President Basescu and the ruling coalition would be ill advised to ignore the message of the street.

Sorin Ionita is an analyst with independent Bucharest think tank Expert Forum

Romania to sell 10 pct stakes in power producers

Wed Jan 18, 2012

BUCHAREST Jan 18 (Reuters) - Romania's government approved a plan to sell 10 percent stakes in state-owned power producers Hidroelectrica and Nuclearelectrica, it said on Wednesday.

Romania completed a 20 billion euro bailout led by the International Monetary Fund earlier this year and has a new deal, under which it pledged to sell small stakes in transport and energy firms to increase efficiency and raise revenues.

But the failure to sell a 10 percent stake in oil and gas group Petrom last year raised doubts over whether it could sell other holdings, particularly as markets have since fallen due to the euro zone debt crisis.

An IMF mission will be in Bucharest on Jan. 25 to review Romania's progress in meeting conditions of its aid deal and it is likely it will recommend steady progress with selloff plans.

(Reporting by Sam Cage; Editing by Luiza Ilie)

Romania Opposition Union Would Win General Election, Poll Shows

Jan. 18 (Bloomberg) -- Romania’s two main opposition parties, which are cooperating in an alliance, would take most votes in a general election, followed by the ruling Democrat Liberals, a poll showed.

The opposition Social-Liberal Union, formed by the Social Democrats and Liberals, would get 48 percent of the vote, while the ruling Liberal Democrats would garner 21 percent, according to a poll conducted between Dec. 20 and Dec. 30 by Bucharest- based pollster CSOP.

The People’s Party, newly-founded by media owner Dan Diaconescu, would also get 12 percent, while the Democratic Union of Hungarians in Romania, an ethnic minority party which is part of the current governing coalition, would win 6 percent, according to the poll published by the Romanian newspaper Evenimentul Zilei today.

Prime Minister Emil Boc’s coalition government faces growing opposition to its austerity budget ahead of a general election scheduled for later this year, as it froze wages and pensions and plans to trim state jobs. Thousands have protested across the country over the past six days against the government and President Traian Basescu, who is backed by the Liberal Democrats.

The poll is based on interviews with 1,033 people across the country. No margin of error was released.

--Editors: Douglas Lytle, Alan Crosby

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

In Romania, protesters find voice after years of apathy


On Tuesday, Romania's government moved to reinstate a popular minister whose resignation triggered days of protests. Frustration over corruption and austerity has been building.

By Andrew MacDowall / January 17, 2012
The Christian Science Monitor

Protests drawing thousands to the streets and leading to violent clashes in Romania have brought years of anger about economic stagnation and official corruption to the surface. On Tuesday night, the future of the government remained uncertain as demonstrators continued to call for the president’s resignation.

The country of 22 million people, one of the newest, most populous, and poorest EU members, is undertaking a long haul out of its economic crisis, and austerity measures are cutting deep. The perception of a remote, authoritarian, and corrupt political and economic elite that has changed little since the days of Communism has exacerbated public frustration.

But the protests have added a new dynamic to Romania’s political and social scene. After some years of apathy, public anger and a desire for change are being expressed on Romanian streets again. The demonstrations forced the government Tuesday to reinstate popular deputy health minister Raed Arafat, whose departure triggered the protests last week.

“The Arafat affair could just be the tip of the iceberg,” says political analyst Dorel Sandor. “It’s opened a [Pandora’s] box, revealing a lot of sensitive issues – this is very new for Romanian society. While the protests have not been that large, they are a very important signal.”

Mr. Arafat is viewed as a rare example of efficiency and transparency in modern Romania. He resigned last week after an acrimonious public dispute with President Traian Basescu over a new health bill that would generate greater private participation in emergency health services. In a live television program where viewers can call in, a favorite Basescu platform, the president attacked Arafat in personal terms.

Ongoing austerity measures is one of the many issues being protested. Following several years of high growth and rising government spending, in 2009 Romania accepted a €20 billion loan from the IMF, and in turn imposed a 25 percent cut in public sector salaries and a 5 percent increase in value-added taxes. Many state jobs were also eliminated. During this time, Romanians have grown less tolerant of Basescu, seeing him as increasingly aloof and authoritarian.

But while the demonstrators have focused on the president, leading Romanian journalist Ovidiu Nahoi says he believes the root cause of dissatisfaction is more complex and dates back to before 2009.
Corruption looms large

“The protests aren’t just against one person,” he said. “Pensions, prices, poverty, injustice, and corruption are all major issues that have been amplified by austerity. People are protesting not just against austerity, but against a political system seen to be corrupt and unjust. They want a new structure of society.”

The demonstrations, which entered their sixth day on Tuesday, have been predominantly peaceful and relatively small, but several hundred people have been arrested and dozens wounded. Protesters have set fire to cars and buildings and have hurled bricks and chunks of concrete at police, who in turn have been accused of violent response.

Despite Arafat’s return this week, and the rapid scrapping of the president's controversial health bill, protesters have threatened to continue rallying until the embattled Basescu resigns. Many believe it is unlikely the protesters, who are portraying themselves as the European equivalent of the Arab Spring, will topple the Basescu government before this year's election.

Furthermore, the president is strongly allied with Prime Minister Emil Boc, who has a small but sustainable majority in parliament. Though the current government is expected to hold its ground, if there is a split, it is far from certain the opposition, which is divided and tainted by previous stints in power, will be able to answer protesters' calls for change.