Friday, March 30, 2012

FT: Romanian rate cuts: running out road

Romania’s central bank cut interest rates on Thursday for the fourth time in as many policy meetings, taking rates down to a record low of 5.25 per cent.

The whole 1-percentage-point reduction has been achieved with a barely a twitch in the leu, which has moved little from the 4.35 level against the euro where it when the central bank swung into action in early November.

But this has been achieved against the global rally in emerging market currencies this year. Life will be much harder for the Romanian National Bank if there’s another sudden sell-off, as there was last spring.

The bank said in a short statement:

The NBR will continue to closely monitor domestic and global economic developments in order to, by accordingly adjusting its available instruments, to ensure the fulfilment of its objectives of achieving price stability, as well as financial stability.

Romania, which saw GDP plunge 7 per cent in 2009, is struggling to recover from that crisis. The central bank faces the challenge of encouraging growth in an economy expected to grow by just 1.5-2 per cent this year without jeopardising the inflation target or the currency.

With consumer prices rising by just 2.6 per cent in February, inflation isn’t a big worry right now. But the currency is. While it’s only fallen by around 1 per cent against the euro since early November, it is at 4.37 close to the top of its post-2008 range.

Mugur Isarescu, central bank governor, told reporters aftetr the policy meeting that the leu was in an “equilibrium zone,” which moved when fundamentals changed.

The centre-right government of new prime minister Mihai Razvan Ungureanu is trying to keep the public finances stable in the hope of an economic recovery that would boost employment, tax revenues, and its own political support.

An International Monetary Fund precautionary programme is in place as a backstop, allowing the central bank to cut rates without scaring investors (in contrast to neighbouring Hungary).

Economists expect perhaps one further cut. But they warn that Romania is getting close to the limit in taking risks with the currency. As Capital Economics said in a report on Thursday:

We expect one further cut this year, but the threat of financial contagion from the euro-crisis is a formidable barrier to more aggressive easing. …With around two-thirds of household debt and one-third of corporate debt denominated in FX, Romania is extremely vulnerable to swings in the leu.

As such, the IMF programme acts as a backstop, shoring up investor
confidence – this allowed Romania to escape last year’s emerging market sell-off relatively unscathed.

The IMF programme is still there. But would it pass the test again if it came under pressure from investors in 2012?

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Romanian Central Bank to Cut Main Rate Fourth Time, Survey Shows

Romania’s central bank probably will lower its main interest rate to a record low for a fourth consecutive meeting as inflation slows and the economy threatens to slip into a second recession.

The Banca Nationala a Romaniei will cut its monetary policy rate to 5.25 percent from 5.5 percent after dropping it a quarter of a percentage point in each of the past three sessions, according to the median estimate in a Bloomberg survey of 18 economists. Thirteen predicted the quarter-point cut and five forecast no change. A decision is expected after 11 a.m. in Bucharest today and a briefing start at 3:30 p.m.

Romanian central bankers have been cutting borrowing costs since November to shore up faltering growth and fend off the effect of the European Union’s debt crisis, which reduced demand for exports from eastern Europe’s main trading partners.

“We believe that real interest rates are too high for the feeble economic outlook and a too-restrictive monetary policy will depress domestic demand, the main growth driver after exports were hit by falling orders from the EU,” UniCredit Romania Chief Economist Dan Bucsa said in a note to clients yesterday. “We believe that this easing cycle should take the rate below 5 percent, but the National Bank is unlikely to cut further if and when headline inflation rises towards 4 percent.”

Romania’s economy may contract for a second quarter at the end of March and enter a technical recession for a second time in two years after cold weather disrupted output, Finance Minister Bogdan Dragoi said on March 9.
GDP Forecast

Gross domestic product may grow 1.5 percent in 2012 from a year earlier, when the country exited its worst recession on record, according to government forecasts.

The inflation rate dropped to 2.6 percent, a post-communism low, in February from 2.7 percent in January, less than economists estimated, as heavy snow and freezing temperatures disrupted transport and supplies, limiting price decreases, the National Statistics Institute said on March 12.

The central bank raised its 2012 inflation forecast on Feb. 7 to 3.2 percent this year, within its target range, compared with a November forecast of 3 percent, because of potentially higher food and energy prices, Governor Mugur Isarescu.

The bank met its inflation target for the first time in five years in 2011, with the rate falling to a record-low 3.14 percent in December. The target range for this year is the same as last year at between 2 percent and 4 percent.

-- With assistance from Barbara Sladkowska in Warsaw. Editors: James M. Gomez, Alan Crosby

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

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

Friday, March 23, 2012

Romania sees shale gas as boon despite controversy

By Mihaela Rodina (AFP)

BUCHAREST — Romania is looking to exploit shale gas reserves in a drive for energy self-sufficiency, but critics organising demonstrations on Thursday warn of big risks for the environment.

The US oil group Chevron is one of the firms interested in the opportunity but targeted by protesters who point to controversy in other countries where the so-called "fracking" process of cracking rock at the risk of polluting water has been held up.

"Shale gas definitely represents the future and Romania must determine if such deposits do exist on its territory," Alexandru Patruti, the head of the national agency for mineral resources (NAMR), told AFP.

NAMR is in the early stages of a survey to assess reserves but a study in the United States has estimated joint reserves in Romania, Bulgaria and Hungary at about 538 billion cubic metres.

This puts the reserves among the biggest in eastern Europe and big enough to give Romanian officials ambitions of freeing the country from costly imports from Russian giant Gazprom.

Canadian group Sterling Resources and Hungary's MOL are also interested in exploiting shale gas.

Chevron which has a concession covering 600,000 hectares in the eastern Barlad region plans to drill the first exploration well in the second half of 2012, depending on licensing.

The company also has three concessions in the Dobroudja region, near the Bulgarian border.

"We believe that natural gas from shale rock represents a significant opportunity for Romania", Chevron country manager Thomas Holst told AFP, citing energy security, investment and job creation among the benefits.

"Do we believe there is a high probability that resources exist in that (Barlad) area? Yes," he stressed.

Chevron has yet to choose between three locations before it starts drilling in Barlad, but Holst said it was unwise to name them in order to avoid "undue pressure" on the local community.

The exploration technique, known as hydraulic fracturing or 'fracking', is condemned as dangerous by environmentalists and has been blocked by countries such as France and Bulgaria.

The states of New York and New Jersey have also imposed a drilling moratorium.

'Fracking' uses high pressure injections of water, sand and chemicals to crack open rock and release oil and gas trapped inside.

"There are major risks associated with it, such as ground water contamination, not to mention the high density of wells to be drilled, up to six per square kilometre," Miruna Ralea of environmental group Alma-Ro said.

Other environmental watchdogs such as Greenpeace and WWF have also voiced concerns.

Geology professor Mihai Saramet of Iasi University said that one risk was that the technique could trigger earthquakes. But "risks will gradually be eliminated as technology progresses," he added.

Patruti from NAMR said: "Tapping resources is never an environment-friendly activity but ... we will make sure that all drilling strictly observes environmental laws and EU rules."

Holst said that Chevron was committed to respecting all European Union and Romanian regulations.

"Chevron will use standard techniques to determine if there are resources," he said. If it discovered commercially viable reserves it expected to invest tens of millions of dollars.

But the mayor of Barlad, Constantin Constantinescu, does not want Chevron to drill in fields around the town, putting its 69,000 inhabitants at risk. "As far as I can tell, the negative impact this activity can trigger is far bigger than the pseudo-prosperity the company promises," he said.

Chevron should have started "by telling us 'we want to extract shale gas, this can have a negative impact on the environment, pollution can occur, but we are ready to deal with it'," he said.

Instead, in the absence of public debate, "local people now think Chevron will devastate the region," he added.

About 2,000 of them are expected to turn out at a rally organised in Barlad on Thursday by Constantinescu and his Social-Democrat Party (PSD, opposition).

Similar protests are to be staged simultaneously in several cities, including Bucharest, by environmental groups.

Holst said: "When the facts are known, the citizens will agree that, if there are commercial resources, the benefits will far outweigh the risks."

Thursday, March 22, 2012

In Romanian mountains, an ethnic group stuggles to preserve culture in modern times

By Associated Press, Published: March 21

VLADNIC, Romania — Their origins are a mystery. The most widely accepted theory is that the Csango people of Romania’s remote eastern Carpathian mountains began settling around the 13th Century, dispatched by Hungarian rulers to defend the kingdom’s easternmost frontier.

Of Roman Catholic faith and speaking a medieval Hungarian dialect, they still live in relative isolation, harvesting vegetables and nuts, some of which they exchange for oil, rice and other necessities brought in by village-to-village Romanian salesmen.

The Csangos fear that their culture and language are eroding. Since Romania joined the European Union in 2007, an entire generation of adults has been lured away by the prospect of jobs in countries like Italy and Spain.

In some homes, grandparents are looking after as many as 14 grandchildren.

A group of doctors from a Hungarian Catholic charity recently visited Vladnic and the nearby Csango villages of Ciucan and Tuta to give eye and dental tests.

For 14-year-old Tuta resident Annamaria Laura Lupo, the eye exam was long overdue. She said she’s been having headaches and it was affecting her studies at school. Now, she and her mother are awaiting glasses that will be sent from Budapest.

Dentist Renata Jaky said there was a near total lack of oral hygiene. “When I ask the kids how many times they brush their teeth, the most usual answer is ‘never,’” she said.

Children are key to the villages’ survival and many start work before sunrise.

“I get up at five in the morning and start the day by milking the goat and taking the animals out to pasture. Only after that do I go to school,” said Gyorgy Radavoi, a 14-year-old boy. “My mother died and my father works abroad all year. I’m happy when my granddad isn’t drunk, we have food to eat and it’s warm at home.”

Romania Probes Hewlett-Packard Unit for Possible Market Abuse

Romania’s competition regulator is investigating Hewlett-Packard Co. (HPQ)’s subsidiary in the country for possible abuse of its market position.

The Romanian Competition Council conducted several unannounced inspections at Hewlett-Packard Romania after receiving a complaint about a possible breach of Romanian and European Union competition rules, the regulator said in an e- mailed statement today.

“We have suspicions about a possible abuse of dominant position of HP Romania displayed through discriminatory behavior in its relationship with one of its contractual partners,” Bogdan Chiritoiu, who heads the competition council, said in the statement.

Radu Enache, HP’s Romanian country manager, declined to comment on the investigation when contacted by Bloomberg News.

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

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

Wednesday, March 21, 2012

World record bridal train displayed in Romania

The Associated Press
Tuesday, March 20, 2012

BUCHAREST, Romania — A hot air balloon floated over downtown Bucharest on Tuesday carrying a model wearing what is now regarded as the world's longest bridal train.

The 1.85-mile-long (nearly 3-kilometer) ivory train on the model's wedding gown billowed out over a main boulevard in Romania's capital.

The Guinness Book of World Records on Monday recognized the item on the silk and lace gown as the longest train, beating the previous record held by a Dutch designer.

But pedestrians didn't seem to make much of Tuesday's media event, which was organized by the artifact's creators: the Andree Salon fashion house and the organizers of this year's biannual Wedding Fair in Bucharest.

A few bystanders looked up at the balloon, but many others ignored it.

The train, which took 100 days to create, was crafted by a team of 10 seamstresses, said salon spokeswoman Lavinia Lascae. The lace was imported from France, while taffeta and other fabrics were purchased from Italy, costing a total of 24,000 lei ($7,364.48 or €5,580), she added.

Beating a Dutch designer to the record had an added dimension for Romanians, as many are still angry after the Netherlands opposed its entry into the European Union's visa-free travel zone. Dutch Prime Minister Mark Rutte recently demanded that Romania and Bulgaria do more to reform their justice systems and combat corruption and organized crime before he would support integration.

"If the Netherlands does not allow us into Europe, we'll take them out of the world records book," said Alin Caraman, an organizer of the Wedding Fair.

Enel Plans to Invest $990 Million in Romanian Power Distribution

Enel SpA (ENEL), Italy’s largest utility, plans to invest about 750 million euros ($990 million) in Romania’s power distribution network in the next five years.

The Rome-based company, which operates Romania’s grid through a series of distribution and supply companies, will use the investment to improve the Balkan country’s network and install smart meters to improve efficiency from 2012 to2016, a company spokesman said in an e-mailed message.

Enel is investing in developing markets like Romania, Russia and Latin America to offset weaker performance in mature economies such as Italy and Spain. The company also plans to have 500 megawatts of wind power installations in Romania by 2016 through its renewable energy unit Enel Green Power SpA. (EGPW)

The completion of the Mochovce nuclear power plant in Slovakia, delayed by stress tests following last year’s nuclear accident in Fukushima, Japan, will not translate into additional costs, Enel said.

The first of the two 440-megawatt reactors will start commercial operations at the end of 2013 and the second one will follow 8 months later, according to the company, which controls 66 percent of utility Slovenske Elektrarne AS.

To contact the reporter on this story: Ladka Bauerova in Prague at

To contact the editor responsible for this story: Will Kennedy at

OMV Petrom Analyzes Romania Shale Gas Exploration Potential

OMV Petrom SA (SNP), Romania’s biggest oil company, is analyzing the potential for shale-gas exploration in the eastern European country.

Petrom, majority owned by Austria’s OMV AG (OMV), will decide on the next steps based on the results of a preliminary assessment and Romanian and European legislation, Chief Executive Officer Mariana Gheorghe said today in a live chat on OMV Petrom will update its business strategy throughout 2021 by mid- year, she said.

The government is weighing the possibility of adopting a law for shale-gas production because Romania lacks adequate regulations, Prime Minister Mihai-Razvan Ungureanu said on March 14. Chevron Corp. (CVX), which has licenses to explore three blocks in Romania to search for unconventional oil and gas reserves, plans to begin shale-gas drilling in the country later this year.

Romania may have a “significant potential” for developing shale-gas fields, according to Alexandru Patruti, head of the national Mineral Resources Agency.

Eastern Europe may hold as much as 7.1 trillion cubic meters of shale gas, according to the Energy Information Administration’s estimates. Poland, which according to the EIA, may have about 5.2 trillion cubic meters of shale gas, already granted more than 80 exploration licenses.
Fracking Ban

Neighboring Bulgaria banned hydraulic fracturing, used to exploit shale gas amid protests that it will pollute the water and soil and withdrew Chevron’s exploration license in January. France also banned the process, which uses a mixture of water, sand and chemicals to open fissures in shale rocks to release gas and oil.

OMV, central Europe’s biggest energy producer, ruled out on Jan. 23 the use of chemicals when it employs fracking techniques to tap Austrian natural-gas reserves.

Petrom’s shares were unchanged in Bucharest trading today and closed at 0.39 lei, valuing the company at 22 billion lei ($6.6 billion).

-- With assistance from Zoe Schneeweiss in Vienna. Editors: James M. Gomez, Alan Purkiss

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

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

Tuesday, March 20, 2012

EU pressure finally spurs Romania into graft action

By Radu Marinas

BUCHAREST (Reuters) – When the police came for Romanian anti-corruption judge Georgeta Buliga, she might have known that hiding the 3,000-euro bribe in her underwear drawer would not save her. Her time was up.

Buliga, involved with corruption and other cases as head of one of Romania’s 15 regional appeals courts, was sentenced to 4-1/2 years for taking bribes after prosecutors raided her house and found money she accepted in return for ruling in favour of the husband in a divorce case.

It was a minor case but after a flurry of convictions of senior politicians and even a former prime minister in the last few months, an indication Romania may finally be getting more serious about a deeply rooted corruption problem. Some might be forgiven though for remaining sceptical over a country so long mired in government and commercial corruption.

“Last year and this, we registered the first cases of convictions for ex-ministers,” Daniel Morar, head of theDNA anti-corruption prosecuting office, told Reuters.

“If we look at this rise as a reflection of corruption spreading, things are not good. But if we look at it as the reaction of state institutions to combat corruption this must be viewed as positive.”

Romania is the second-poorest and viewed as the third most corrupt member of the European Union, which it joined in 2007. Brussels has repeatedly raised concerns about a lack of progress in convicting top-level officials.

It has kept Romania outside the EU’s passport-free Schengen zone, along with neighbouring Bulgaria, and the bloc has progress on graft under special monitoring. It also undermines economic development in the most impoverished corner of the EU.

In its latest report on judicial reform, it praised Romania’s efforts in convicting senior officials but said more were needed, including further cleaning up the judiciary, tougher sentences and better recovery of proceeds of crime.

The highest profile case was a two-year jail sentence for former prime minister Adrian Nastase. He would be the first former prime minister to be sent to jail since the fall of communism in 1989, but remains free pending an appeal.

Former agriculture ministers Ioan Avram Muresan and Decebal Traian Remes and several serving lawmakers have also been convicted, though many received suspended sentences or remain free until their appeals are heard.

Alina Mungiu-Pippidi, professor at the Hertie School of Governance in Berlin, said the EU would not lift its special monitoring until it sees irreversible progress.

“Prosecutors do more than ever, but there’s lot more to be done to attack systemic graft,” said Mungiu-Pippidi. “Attacking systemic graft cannot be done only by repression.”


Graft permeates Romanian society at all levels and it is common to pay cash gifts to secure medical treatment, essential paperwork from government offices and to pass school and university exams. A climate of impunity stems from the communist era, when the country was run by nepotism and cronyism.

The perception it is not being investigated or prosecuted has encouraged such practices and though the recent convictions are starting to send a message, it is important that those found guilty are actually put behind bars, analysts and diplomats say.

According to Laura Stefan, part of an EU team overseeing anti-graft policies across the bloc, there is some concern that Romania is making only cosmetic efforts and there are still backward steps with a parliamentary election due in November.

One example is a recent initiative by a member of the ethnic Hungarian UDMR party, part of the governing coalition, to decriminalise conflict of interest for MPs.

“The first conviction court rulings in big corruption dossiers have just emerged but black clouds tend to arise to cover Romania’s anti-corruption drive,” Stefan told weekly magazine Revista 22.

“Because of this, nobody in Europe really believes that reform is irreversible and the era when powerful people were not accountable for their deeds is over.”

Nevertheless, procedures have been speeded up, there are new rules for judges at Romania’s top court – including tighter checks and reviews of previous rulings – and parliament is debating a law which would make it easier to seize assets.

As the example of Buliga and the cash in the underwear drawer shows, cleaning up the courts is still a work in progress. Prosecutor Morar said about 30 magistrates have been sentenced during his mandate, which started in 2005. Other numbers are also starting to stack up.

Romania convicted 54 officials last year for corruption-related deeds in the allotment of EU funds, from 20 in 2010. The number of final convictions and jail terms handed out to officials both nearly doubled.

Opposition leader Victor Ponta, who is favourite to become prime minister after a November election, said Romanians do not have faith in the justice system but agreed it was changing.

“There has been a clear improvement in the last year. They have convicted people in office, not just people defeated in elections,” Ponta told foreign media.


The shadowy nature of graft makes it difficult to assess its impact on the economy, but there are several indications it is a major factor holding back not only Romania but also other former communist countries in central and eastern Europe.

Tax evasion, which experts say is directly connected with graft, is worth some 10 percent of gross domestic product by the Fiscal Council, a panel of independent experts monitoring government policies.

“Without tax evasion … we would have had budget revenues equalling 44 percent of gross domestic product or quite the European average,” said its president Ionut Dumitru, who is Raiffeisen chief economist in Bucharest.

Graft is also a major deterrent to foreign investment, which was just 1.9 billion euros in 2011. More than a third of chief executives surveyed by the American Chamber of Commerce said it was one of the top three obstacles to future investment.

“There are few things more important to a foreign investor than having the confidence that disputes over contracts will be resolved swiftly and predictably by the courts,” British Ambassador Martin Harris said on his embassy blog.

(Additional reporting by Sam Cage)

Monday, March 19, 2012

FT: Romania property: A stake in Transylvania

By Teresa Levonian Cole

It is February, and snow blankets the countryside. Traffic on the icy tracks consists of horse-drawn carts laden with milk churns and hay. The scene is dominated by the magnificent medieval churches of the Saxon region. In the villages wood-smoke curls from chimneys while old women in long skirts and headscarves sweep the paths to their thresholds. It feels like stepping into a tableau by Pieter Brueghel.

Time indeed appears to have stood still in the Saxon villages of Transylvania – an area roughly the size of Belgium consisting of more than 200 villages and the seven towns of the Siebenbürgen. These lands of central Romania were first populated by Saxons in the 12th century, at the invitation of King Géza II of Hungary, and they thrived. But war and communism put paid to all that.

In 1945, many Saxons were deported to the Siberian gulags. When survivors returned in 1953, they found their homes occupied. It was the fall of communism, however, that saw the mass migration of some 95 per cent of Saxons to Germany. Many of the idyllic houses, with their pitched, fish-scale tiled roofs and stucco-decorated façades have since been left abandoned and in disrepair.

Caroline Fernolend is one of the few Saxons who stayed on in the village of Viscri, where she was born and where her ancestors lived for 800 years, pledging to fight to preserve the culture and traditions of her heritage.

“We had been trying to raise awareness of the plight of the Saxon villages and make Viscri Unesco-protected since 1991,” she says. “We finally succeeded in 1999.” Fernolend is Romanian director of the Mihai Eminescu Trust (MET), a charitable foundation that is active in 26 Saxon villages and five Saxon towns, garnering numerous awards for its work. This extends not only to restoring buildings, but also to community projects and to training local people in traditional skills before helping them set up businesses.

Prince Charles’ farmhouse in Viscri

For Britons, it is perhaps the involvement of the Prince of Wales as patron of the MET that has brought these villages to wider attention.

Along with the revitalisation of the villages there has been a growing interest from foreigners with a commitment to preserving this unusual heritage.

Giovanna Bassetti, a wealthy Italian industrialist, has invested heavily in the little village of Copsa Mare and its infrastructure, purchasing over a dozen houses since 2005, of which one has been converted into a family home and four now serve as guesthouses. The remaining houses will be offered for sale to like-minded people “with an interest in preserving the integrity of the historic architecture and willingness to invest in the future of the village”, Bassetti says.

The typical Saxon farmhouse lies behind a high wall and large wooden gateway that leads into a cobbled courtyard. Along one side runs the main house with adjoining pens and stables for animals. At right angles to this there is generally a large wooden barn, and the fourth side of the rectangle is formed by neighbouring plots.

Property prices in Romania rocketed to unsustainable levels post-1990, reaching their peak in 2009 before plummeting by over 30 per cent. In the villages, however, there was little demand for houses, and property prices danced to their own tune.

Art historian Lucy Abel Smith, who leads group tours to Romania, first visited the Saxon villages under communism and fell for the charm of the village of Richis. “In 2000 I bought a wreck for $5,000,” she says, “then spent an additional $30,000 to restore it.”

In the same village today, a house consisting of around 10 rooms on some 2,000 sq m of land that includes a plum orchard and vineyards, is priced at €45,000 (negotiable). In Viscri, due to its World Heritage status, a smaller house that sold for €2,500 in 1996 would now fetch around €60,000, unrestored. Should you wish to live in thriving Malâncrav, where an unusually large 12 per cent of the 1,000-strong population is still Saxon, a large farmhouse is available for an optimistic €80,000.

The problems begin with finding such properties. The market is anything but transparent, especially in the villages, where the concept of professional estate agents is, in the words of one lawyer, “non-existent”. Properties are sold by word of mouth, particulars are vague.

“Prospective buyers should find a reliable local person to locate a property and to show them around,” advises Bogdan Burghelea, a property lawyer based in Sighisoara. “And then it is imperative to check legal title in the Land Registry.”

This is where the knowledge of the MET can prove invaluable. “In principle, we can inform interested parties about the availability of houses,” says Fernolend, “and also advise on skilled workmen, materials, and what we pay for each job ... Buyers should be aware that the purchase price represents only a fraction of the overall cost.”

Potential buyers should also factor in the time and expense of obtaining permits to do the necessary restoration (approximately €5,000), taxes (“depending on the circumstances of each case, as decided by the fiscal authorities,” according to a notary in Sighisoara), notaries’ fees, and, not least, running costs – including that of a housekeeper to deter squatters.

One final consideration is the vagaries of Romanian law. Currently, the law states that foreigners may purchase a freehold property but not the land on which it stands. “The solution is either to create a contract putting the land in the name of a Romanian – such as your housekeeper,” says Burghelea, “or become a ‘legal entity’ by registering a company in Romania.” Even here, however, matters are not that clear-cut. “Our law is open to interpretation,” he explains. “So we have a strange situation whereby the association of notaries in Sibiu county, for example, is now allowing foreigners to own their land; but in other counties, such as Mures, it is not”.

Buying property in the Saxon villages is not for the faint-hearted, and entails unspoken responsibilities. Persevere, however, and the reward is a slice of prelapsarian paradise.

Teresa Levonian Cole was a guest of the Mihai Eminescu


Buying guide


● Pristine countryside

● Low cost of historic buildings

● Sense of community


● Lack of transparency

● Evolving legislation cost and difficulty of managing restoration from abroad

● Bureaucracy

What you can buy for ...

£100,000 A Saxon village house, fully restored and renovated

£1m An early 20th-century mansion of approx 500 sq m in the historic centre of one of the Sieberbürgen, such as Sibiu, Sighisoara or Brasov – if you can find one


● Mihai Eminescu Trust

● Giovanna Bassetti Email:

● Bogdan Burghelea Email:

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Wednesday, March 14, 2012

Romania Opens Transelectrica Share Sale at 13% Price Discount

By Andra Timu and Irina Savu - Mar 14, 2012 

Romania begins selling a minority stake in power utility Transelectrica SA (TEL), offering a 13 percent discount to lure investors in eastern European assets after last year’s failed stake sale in OMV Petrom SA. (SNP)

The Balkan nation, which plans to sell minority stakes in six energy companies this year, opens the subscription period today for 15 percent of the grid operator at a minimum price of 14.9 lei ($4.50) per share, 13 percent below the last closing market price, and a maximum price of 19.2 lei, it said yesterday. Investors have until March 27 to submit bids.

Romania joins other former communist countries, including Poland and Russia, in selling state holdings to cut debts, upgrade outmoded plants and boost efficiency. Romania, which failed to complete the sale of a stake in Petrom, the country’s largest oil company, is trying to reassure investors with lower prices amid a credit crisis that continues to roil markets.

“The current higher volatility on the equity markets, could result in higher discounts claimed by investors in order to take exposure on different assets,” said Mihai Caruntu, an analyst at Erste Group Bank AG (EBS)’s Banca Comerciala Romana SA. “Additional discounts are claimed for the low visibility of the Romanian equity market and for the reduced transparency in the country’s energy sector.”

Transelectrica’s shares, which were suspended from trading yesterday for the share sale announcement, declined 1.1 percent to 17.06 lei in Bucharest on March 12. At that price, the company is valued at 1.25 billion lei.
Sale Managers

BCR, Romania’s largest bank by assets, is managing the sale together with brokerages Swiss Capital SA and Intercapital Invest SA. The government and sale managers have been holding meetings with investors across Europe and will seek to sell the stake on the Bucharest Stock Exchange.

“Given the macroeconomic uncertainties, my recommendation to potential investors is to consider subscription at a price below 15.97 lei,” Andrei Radulescu, an analyst at the brokerageSSIF Broker SA (BRK), wrote in a note to clients yesterday.

Romania pledged to the International Monetary Fund and the European Union, which it joined in 2007, to reduce its holdings in state enterprises companies this year to finance infrastructure investments and cut the budget deficit to 1.9 percent of the gross domestic product from 4.35 percent of GDP last year.

“The progress made by Romania in the recent two years under the IMF program is largely acknowledged and maintaining the pace of reforms can create good entry points,” said Ovidiu Fer, an analyst at Wood & Co Financial Services in Prague.
Shoring Up Confidence

The government must reassure investors who are concerned about state companies’ management, a historical lack of liquidity and overregulation, especially in the energy industry, said Fer.

It must also compete for investors with less cash to spend as Poland, the EU’s largest eastern nation, puts stakes in similar companies on the block.

Poland on Feb. 4 sold a stake in PGE SA (PGE), its largest power utility, for 2.52 billion zloty ($798 million), raising the most from asset sales in eight months, to help finance the deficit. The transaction was the biggest state sale since the 5.4 billion-zloty initial public offering of coal producer Jastrzebska Spolka Weglowa SA (JSW) in June.

Romania also plans to sell 15 percent stakes in gas company Romgaz SA and gas-grid operator Transgaz SA (TGN) and 10 percent stakes in Hidroelectrica SA and Nuclearelectrica this year. It will also try to revive the sale of a 9.8 percent stake in Petrom after it failed to get enough bids in July amid market turmoil triggered by Europe’s sovereign debt crisis.
‘Difficult Times’

“These are difficult times for privatizing but you must keep a door open for investments, we can’t live without them,” said Deputy Economy Minister Karoly Borbely in an interview in Bucharest. “The energy sector is in the pole position for attracting investments and we can’t afford to lose this moment, because it will be hard to catch up.”

Russia’s Energy Ministry said on Feb. 11 it may postpone the planned sale of state stakes in energy companies, such as OAO Rosneft (ROSN), OAO RusHydro (HYDR), OAO Transneft (TRNF) and OAO Zarubezhneft (ZRNFT), due to low market prices.

“Romania’s offerings must be very competitive internationally in terms of structure, management and how they are marketed,” to attract investors’ interest, said Greg Konieczny, the manager of Fondul Proprietatea SA (FP), a minority shareholder in Transelectrica.

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

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

Romanian government gives $97.5 million in state aid to Ford to help domestic production

By Associated Press, Published: March 13

BUCHAREST, Romania — The Romanian government says it will invest $97.5 million (€75 million) of state aid in Ford Motor Co. to help production at its compact van factory in southern Romania.

Government spokesman Dan Suciu says Tuesday the money is earmarked for the production of automobiles and automobile engines.

Ford launched the production of its new compact van at a factory in Craiova, southern Romania in 2009.

Suciu said it will produce some 810,000 automobiles and 1.5 million engines from 2013 to 2017.

In 2007, Ford bought a 72.4 percent stake in the state-owned Automobile Craiova, paying $88 million and vowing to invest $1 billion to upgrade and expand car production.

Tuesday, March 13, 2012

Romanian government to hike public sector wages ahead of elections

By Associated Press, Published: March 12

BUCHAREST, Romania — Romania’s ruling coalition says it will hike public sector wages that were axed almost two years ago as part of conditions for securing international rescue loans.

Mircea Toader, a lawmaker of the ruling Democratic Liberal Party, said Monday that coalition leaders agreed to raise salaries in June ahead of local elections. Toader said the government had not yet decided by how much.

The government cut public sector wages by one-fourth in June 2010 to meet the terms of a €20 billion ($26 billion) loan from the International Monetary Fund, the World Bank and the EU. The government has partly restored some public wages since then.

In January, thousands of Romanians staged two weeks of demonstrations against the government and its austerity measures.

Romanian Inflation Rate Falls Less Than Forecast on Cold Weather

Romania’s inflation rate dropped less than economists estimated in February as heavy snow and freezing temperatures disrupted transport and supplies, limiting price decreases.

The inflation rate dropped to 2.6 percent, a post-communism low, from 2.7 percent in January, the National Statistics Institute in Bucharest said today by e-mail. The median estimate of 10 economists surveyed by Bloomberg was 2.4 percent. Consumer prices rose 0.6 percent in the month.

A record-low inflation rate made room for policy makers to cut the benchmark interest rate three times since November to a record-low 5.5 percent as they seek to buoy the economy as Europe grapples with a debt crisis. The central bank is easing borrowing costs “in small steps to keep from harming the equilibrium,” Governor Mugur Isarescu said Feb. 7.

Romania’s economy may post its second quarterly contraction and “enter a technical recession” in the first quarter because of the cold weather, Finance Minister Bogdan Dragoi said on March 9.

Food prices fell 0.4 percent from a year earlier in February, compared with 0.1 percent growth in January, the institute said. The prices grew 1.2 percent from a month earlier as a cold snap cut electricity, damaged infrastructure and disrupted supply chains across the country.

Price growth for non-food items quickened to 4.1 percent from a year earlier, because of higher tobacco and fuel costs, compared with 4 percent in January, according to the institute. Service-price growth accelerated to 4.8 percent from 4.7 percent the previous month, the institute said.

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

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

Friday, March 9, 2012

Thousands of Romanian coal miners protest over pay

By Luiza Ilie

BUCHAREST, March 8 (Reuters) - Thousands of miners from Romania's mountainous Jiu valley marched through the streets of Petrosani for the fourth successive day on Thursday in a pay protest, after the collapse of talks with the economy ministry.

Local media said some 5,000 miners from all seven Jiu valley mines took part, and a police spokesman said they had threatened to block the main road from Petrosani, their company's base, to the capital Bucharest, 340 kms (210 miles) to the southeast.

"As on previous days the protest was initially static, in the courtyard of the CNH, before the miners marched through Petrosani and headed for the national road," Nicolae Raducu, spokesman of the Hunedoara county riot police, said on Thursday.

"My colleagues have tried to persuade them to turn back but failed and ... the miners have been standing peacefully at the crossroads for the past two hours."

The miners' unions were were a potent political force in the early 1990s, when the state-owned industry employed almost half a million people, and many blamed violent miners' riots in Bucharest for the slowness of Romania's transition to democracy after the 1989 anti-communist revolution.

The miners' influence has shrunk considerably since the industry restructured in the late 1990s, leading to largescale layoffs, rampant unemployment, poverty and environmental degradation from which the Jiu valley region is still suffering.

The Jiu valley mines are managed by the state-owned National Hard Coal Company (CNH), a loss-making, highly subsidised firm that now employs just under 8,000 people. It is expected to lay off more staff under Romania's 5 billion euro aid package led by the International Monetary Fund.

The protests began on Monday when the miners demanded that the newly appointed government of Prime Minister Mihai Razvan Ungureanu enforce a pay protocol signed by the previous economy minister. The protocol included a rise in the bonus for miners working in dangerous conditions.

"We are deeply concerned over an imminent triggering of an extreme situation, which is why we are urging you to intervene and ... find solutions," the miners said in a letter to Ungureanu, according to a union leader quoted by the state news agency Agerpres.

Coal fires more than 40 percent of Romania's power plants, but most of it is lignite, which is softer than hard coal and is dug in open pits. Romania extracts about 3 million tonnes of hard coal and 33 million tonnes of lignite a year.

The government aims to merge the remaining viable hard coal mines with two generating plants that burn hard coal this year to create a new electricity holding company, and to close three outdated hard coal mines by 2017.

Romania's power sector needs reform to attract private investors as the economy ministry estimates it needs 30-40 billion euros of investment in new electricity generation. It will close one third of its outdated power capacity by 2020 and more than half by 2035. (Editing by Tim Pearce)

Thursday, March 8, 2012

Romania Should Restore Public Wages in June, President Says

Romania should restore public-sector wages to pre-crisis levels as of June 1 after a 25 percent cut two years ago, President Traian Basescu said.

The Bucharest-based government, which already granted a 15 percent wage increase last year as part of a plan to bring the incomes of public workers back to the level in June 2010, must find a solution to fully restore salaries, Basescu said in a speech in Parliament today.

Former Prime Minister Emil Boc, who resigned on Feb. 6, cut public wages and increased taxes to meet pledges to the International Monetary Fund and the European and keep funds flowing from a bailout loan to help the country exit its worst recession on record. The Balkan nation stopped relying on its international lenders last year as the economy grew 2.5 percent.

“It’s our duty to think and find solutions,” Basescu said. “The country’s budget turned to a deficit in February after a surplus in January and will probably post a minus in March too, but that’s mainly due to bad weather.”

The new government, lead by Prime Minister Mihai-Razvan Ungureanu, pledged to cut thebudget deficit to 1.9 percent of gross domestic product this year from 4.35 percent last year.

The country relied on a 20 billion-euro ($26 billion) loan from the IMF and the EU from 2009 to 2011 and secured another 5 billion-euro precautionary accord with the lenders to reassure investors it will keep fiscal discipline ahead of the elections this year.

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

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

Enel Spending on Romanian Wind Gains 4-fold to 330 Million Euros

Enel Green Power SpA (EGPW)’s spending on Romanian wind farms rose more than fourfold to 330 million euros ($434 million) last year as the country seeks to increase production of electricity from renewable sources.

The company, Italy’s largest renewable-energy company and a unit of Enel SpA, began operating 205 megawatts of Romanian wind farms in 2011, the most of any European country, it said. Enel commissioned 91 megawatts in Italy and 64 megawatts in France, it said. The company spent 75 million euros in Romania in 2010.

Enel Green Power and companies such as CEZ AS (CEZ) and Iberdrola SA (IBE) are investing in Romania because of government incentives for renewable energy. The nation approved a plan to spur investment by granting tradable green certificates for each megawatt-hour of renewable energy produced. Wind gets two per megawatt-hour.

Enel Green Power, based in Rome, spent 36 million euros to build wind farms in Greece last year and 56 million euros in France, up from 40 million euros a year earlier, according to a 2011 results statement yesterday. The company started operating the Corugea and Moldova Noua wind parks in Romania in December.

Romania is seeking to increase wind power capacity to 1,400 megawatts by the end of the year from the current 800 megawatts, Environment Minister Laszlo Borbely said in February.

To contact the reporter responsible for this story: Sally Bakewell in London

To contact the editor responsible for this story: Reed Landberg at

Wednesday, March 7, 2012

Romania’s Constitutional Court Clears Ungureanu’s Government

Romania’s Constitutional Court said the appointment of the new government is legal, rejecting a challenge by the opposition, one of the judges said.

The nine-judge court panel unanimously ruled in favor of Mihai-Razvan Ungureanu’s cabinet, which passed a vote in Parliament on Feb. 9, saying the vote was constitutional, judge Acsinte Gaspar said in a phone interview today.

The opposition Social Democratic Party and the Liberal Party challenged the appointment in court, citing illegal procedural grounds after their members boycotted the vote.

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

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

Gas discovery gives Romania prospect of full energy independence 

Romanian president Traian Basescu stated that his country could become energetically-independent and could even start exporting gas to other countries in Europe, in the next few years.

An offshore gas-drilling ship in the Romanian territory of the Black Sea found a gas field in the Neptun block of about one hundred billion cubic meters in late February 2012.

Preliminary estimates place newly-found natural gas deposit at 42 to 84 billion cubic meters, or three to six times the annual gas consumption in Romania.

“Romania has the potential of total energy independence. If the remaining five fields of the Neptune area that will be prospected indicate a similar amount, Romania could become a source of gas not only for itself but for other European countries, too,” Băsescu said, after visitng the Deepwater Champion drilling ship belonging to energy company ExxonMobil.

ExxonMobil and OMV unit Petrom were the ones that detected natural gas as they were drilling about 1,000 m deep in the Romanian part of the Black Sea. The Deepwater Champion ship has the capacity to drill as deep as 3,000 meters with an equipment described by Băsescu as “something out of the Star Trek movie”.

The exploitation of the newly-found gas resource will start around 2015, after more examinations, such as seismic data have been carried out. “From that moment on, probably, Romania will be fully energy-independent,” Băsescu said.

The Domino-1 well started drilling at the end of 2011 and it is the first deep-sea well installed in the Romanian perimeter of the Black Sea, in waters 930 m deep.

This first field of gas was discovered 170 km offshore, on a sea land that was fiercely disputed just three ago between Romania and Ukraine. In 2009, the European Court of Justice ruled that 70,34% of a 12,000 km² territory belonged to Romania, despite the Ukrainian parts' arguments that the nearest and biggest island in the area, Insula Şerpilor is not Romanian. This prompted energy companies Total, Royal Dutch Shell, BP and OMV to announce their intention to put up a bid for drilling in the sea area within days.

Petrom said it was too early in the evaluation and exploration process to determine whether the Neptun block will prove to be commercially viable or not.

“If subsequent operations will confirm the technical feasibility and the commercial gas production from the block Neptune, the cumulative value needed for investment in the exploration and development phases could be several billion U.S. dollars and the first production can be obtained in about 10 years at the earliest,” Mariana Gheorghe, executive chairman of Petrom said in a statement.

Tuesday, March 6, 2012

Romanian Economic Growth Slowed in Fourth Quarter on Exports

Romania’s economic growth slowed in the fourth quarter for the first time since June, as European austerity measures hindered export demand, final figures show.

Gross domestic product grew a seasonally unadjusted 1.9 percent from a year earlier, matching a preliminary report on Feb. 15 and compared with 4.4 percent in the third quarter, the National Statistics Institute in Bucharest said today. GDP shrank a seasonally adjusted 0.2 percent from the previous quarter for the first time in five quarters.

Romania’s output growth will probably slow this year, after exiting its worst recession on record last year, as the European sovereign-debt crisis cuts demand for eastern European industry exports. The economy will probably grow as slow as 1.5 percent this year, less than an initial forecast of 1.8 percent, according to International Monetary Fund forecasts.

The economy grew 2.5 percent in 2011 from a year earlier, after contracting 1.3 percent in 2010, the statistics office said, confirming the Feb. 15 release.

Agriculture and industrial output, the main growth drivers in 2011, rose 3.1 percent in the fourth quarter and 2 percent, while final household consumption grew 1.4 percent, the second consecutive quarter of growth since 2008, according to the institute.

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

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

Romania: 2 dead, 6 wounded in hair salon shooting

By ALINA WOLFE MURRAY, Associated Press

BUCHAREST, Romania (AP) — A gunman opened fire Monday in a hair salon in the Romanian capital, killing two people and wounding six, officials said. The suspected shooter was identified as an ambulance driver who was married to a woman killed in the attack.

The shooting occurred in the late afternoon in downtown Bucharest at a state-owned hair salon located on one of the capital's busiest streets.

Witnesses interviewed by television stations said that after the shots were fired the gunman left the salon and took refuge in a nearby building owned by an electricity company. He was later detained by police.

Senior prosecutor Marius Iacob identified the suspect as Gheorghe Vladan and said he had a "tense relationship" with his wife, an employee at the Igiena salon. He said the second victim also worked there. Iacob said Vladan had a firearms permit.

Three of the wounded were taken to Floreasca Emergency Hospital and were expected to undergo surgery to remove the bullets, according to emergency official Bogdan Oprita.

Interior Minister Gabriel Berca said the suspect drove an ambulance for his ministry.

Mediafax news agency reported that Vladan was said to be angry with his wife because she had filed for divorce.

Riot police cordoned off the area following the shooting and police vehicles took forensic scientists dressed in white coats to the scene of the shooting.

Alison Mutler in Bucharest also contributed to this report.

Friday, March 2, 2012

Romanian opposition leader pledges to block Canadian mine


BUCHAREST — The leader of Romania's main opposition party, Victor Ponta, on Thursday pledged to block a Canadian gold mine project in the northwest of the country if he becomes prime minister.

Ponta's Social-Democrat Party (PSD) and its Liberal allies (PNL) are likely to win power in the next election, expected in November, according to opinion polls.

"I will overturn (approval)" if the current government pushs through the Rosia Montana gold mine project, Ponta told foreign reporters in Bucharest.

Rosia Montana Gold Corp., 80 percent owned by Canadian firm Gabriel Resources and 20 percent by the Romanian state, plans to use cyanide to extract some 300 tonnes of gold in the village of Rosia Montana, thought to hold Europe's largest single deposit.

The company still needs the go-ahead from the environment ministry to start digging.

The project has been attacked by environmentalists, archaeologists, historians and international organisations who claim the mine would threaten the environment and priceless Roman-era mining galleries.

The Canadian company plans to invest $1.7 billion (1.2 billion euros) to extract 300 tonnes of gold and 1,700 tonnes of silver over 16 years and says the mine will respect all European standards on environmental protection.

Ponta said he thought the whole project is "about speculation on the stock exchange," adding that he had tabled an amendment to a controversial draft law allowing private mining companies to expropriate land.

The draft law, proposed by an MP belonging to Ponta's own party, has been denounced by rights groups as a helping hand for RMGC, which still needs to buy the land.

"I have put an amendment stipulating that this law will only apply to coal extraction," Ponta said. The bill still awaits parliament's approval.

Ponta charged that the RMGC "has supporters in every political party in Romania because of its very aggressive lobbying."