Friday, April 27, 2012

Romania’s Three-Month Old Cabinet Faces First No-Confidence Vote

Romanian lawmakers will hold the first no-confidence vote since Premier Mihai-Razvan Ungureanu’s Cabinet took office less than three months ago.

The opposition Social Democrats and Liberals, who formed an alliance before this year’s elections, filed the motion for today’s vote, accusing Ungureanu’s government of a lack of transparency in the sale of state-owned assets and in approving money transfers to local authorities. Coalition lawmakers said they will boycott the vote.

The vote takes place as the International Monetary Fund reviews progress under a precautionary accord. Ungureanu, who is backed by the same parties that helped former Prime Minister Emil Boc survive 10 motions, is counting on the backing of 231 lawmakers in the 460-member Parliament after defections from the coalition during the past week narrowed the majority to just one vote.

“The recent defections have boosted the ranks of the opposition alliance to 224 lawmakers, according to one of its high officials,” Vlad Muscalu, an economist at the ING Bank Romania SA, wrote in a note to clients yesterday. “This leaves the alliance seven votes short of ousting the executive, suggesting the chances of this initiative look much brighter than about a week ago, when it was filed.”
Opposition Strength

The opposition now holds 219 seats in Parliament and needs 231 votes to oust the Cabinet, according to the data from Parliament’s website. The government is backed by the Democrat- Liberal Party, the ethnic Hungarians, known as UDMR, the independents’ party and the minorities.

Voter support for the current coalition was cut by more than half in the past two years to about 18 percent after Boc’s government slashed public wages 25 percent and increased taxes to meet international pledges. Boc resigned on Feb. 6 after protests over austerity turned violent.

**6** Democrat-Liberal lawmakers switched sides to join the opposition in the past week. The country plans to hold local elections on June 10 and general elections later this year.
Public Wage Restoration

President Traian Basescu reiterated on April 25 that the government must restore public wages beginning in the middle of the year, while Ungureanu said the Cabinet will discuss the issue with the IMF and the European Union during a review that started on April 24 and will end on May 7.

“I am not nervous about the no-confidence vote, but I am nervous about finding the budgetary resources to restore public wages,” Ungureanu told reporters in Bucharest on April. 25.

The motion also criticizes a law establishing a Hungarian teaching faculty at the University of Medicine and Pharmacy in the city of Targu-Mures, citing political pressures from the junior coalition member UDMR.

“I am convinced that the motion won’t pass if the coalition remains united and all its members respect the discipline and there are no more betrayals,” Hunor Kelemen, the head of UDMR, said in a speech in Bucharest yesterday.

Romania, which secured a 5 billion-euro ($6.61 billion) precautionary loan from the IMF and the EU in 2011 to protect it from Europe’s sovereign debt crisis, is trying to reassure investors it will keep fiscal discipline and cut the budget deficit to 1.9 percent of gross domestic product this year after 4.4 percent in 2011. It hasn’t drawn any funds so far.

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

Tuesday, April 24, 2012

AFP: Romania opens national library in communist-era building

BUCHAREST — Romania's new National Library opened its doors Monday in a monumental building in the capital city, more than 20 years after its foundations were laid under the communist regime.

"This is a superb transformation of grey, communist-era ruins," Prime Minister Mihai Razvan Ungureanu said during the opening ceremony.

The library lies in a district that the late communist dictator Nicolae Ceausescu planned as a "celebration of socialism."

Shortly after Ceausescu was toppled in December 1989, works on several buildings, including the library, were halted because of the lack of funds.

But in 2009 the then centre-right government borrowed more than 100 million euros from the Council of Europe Development Bank (CEB) earmarked for completing the construction.

The concrete walls and 45-feet high columns were covered by a steel and glass structure giving the building a modern look.

"This was a tremendous financial, and not only, effort," Culture Minister Hunor Kelemen said.

"In the 21st century, the state cannot afford not to finance cultural projects," he added.

The impressive construction covering more than 160,000 square feet currently shelters some 750,000 works, 40 percent of which can be consulted.

On the long term, more than 12 million books will be stored in the library.

Monday, April 23, 2012

NYT: Shale Gas Search Divides Romania


BUCHAREST — Romania is set to start exploring its shale gas reserves in a drive for energy independence, despite local protests against the potential risks and Europe-wide concerns about the technology used to exploit unconventional gas sources.

Several oil companies have expressed interest in exploring what is believed to be the country’s significant potential. According to an assessment by the U.S. Energy Information Administration, Romania, Bulgaria and Hungary may together be sitting on top of about 538 billion cubic meters, or 19 trillion cubic feet, of technically recoverable shale gas reserves.

The U.S. energy company Chevron has, since 2010, obtained concessions in Romania, covering a combined area of 870,000 hectares, or 2.2 million acres, in the Eastern plains and the Black Sea coastal region of the country. After surface prospecting, the company is planning to start an exploratory drilling campaign this year.

“Chevron believes that Romania holds potential for a successful project,” Thomas Holst, country manager for the company, said in an interview.

“We are in the early days of activity. No wells have been drilled,” Mr. Holst said: “That is why it is critical to conduct a standard natural gas exploration.”

Chevron’s plans have resulted in protests by environmental advocate organizations and local politicians.

In Barlad, an economically depressed town near the Moldovan border, 2,000 locals gathered in March in a rare demonstration against activities planned in the area. The region’s economy, hit by the loss of heavy industries since the fall of communism in 1989, would benefit from the large investments that shale gas development would bring. According to Romania’s Mineral Resources Agency, for example, exploratory drilling in the Dobroudja region, on the Black Sea Coast, could bring more than $80 million in investment over four years.

But the Barlad protesters said they were worried about the potential effect on the local environment.

In neighboring Bulgaria, Parliament, under pressure from protesters, imposed a ban in January on hydraulic fracturing, or fracking, the technology used to extract gas from shale. The ban caused cancellation of Chevron’s Bulgarian exploration permit.

Romanian environmentalists hope to emulate the Bulgarian example. “We don’t want exploration for shale gas to go ahead, because of the method used, which is the only one available at the moment,” Miruna Ralea, executive director of the environmental group Alma-Ro in Bucharest, said in an interview.

“Fracking is strongly polluting, and, in our view, the risks are by far higher than the benefits,” Ms. Ralea added, citing the dangers of polluting arable land, chemical leaks and the huge use and pollution of water resources.

Romanian activists are not fighting Chevron, they are fighting the government, Ms. Ralea said, lamenting a “lack of transparency and information” on planned exploration programs. Contracts between Chevron and the authorities have been classified as secret, she said.

Alexandru Patruti, head of the mineral resources agency, was not available to answer questions on shale gas operations, despite repeated calls: But in an interview with the local Web site HotNews earlier this month, he said unconventional gas was “a resource that not a single state or company can afford neglecting.”

“We are at the start of a period in which we will study rocks that contain unconventional reserves,” Mr. Patruti said, adding that a study conducted by Romanian researchers was looking at archival geological information to be able to determine where reserves might lie.

Concerning the effect that shale gas operations could have on the environment, Mr. Patruti said, “Exploiting any mineral resource is a process that has an impact on the environment. But this impact can be controlled and minimized by respecting good practices and further regulation of operations being carried out.”

According to Pierre Thomas, professor at the École Normale Supérieure in Lyon, hydraulic fracturing is “relatively secure,” but only if drilling is preceded by expensive studies, and the operation is monitored thoroughly.

Still, “therein lies the problem, considering the very high number of drills, and the fact that companies look to make the most savings possible,” he added.

Aside from the usual effects linked to any industrial activity, Mr. Thomas pointed to the possible contamination of deep aquifers by the chemicals used in the process and to heavy metals liberated during fracking.

In any case, “one day or another, petrol, gas and coal reserves will dry out,” Mr Thomas added. “The race for shale gas pushes this inevitable moment away, but doesn’t help avoid it.” Exploiting shale gas simply postpones the strategic shift to renewable energy, he said.

A report commissioned by the European Parliament in 2011, on the effects of shale gas and shale oil production on the environment and on human health, assessed the risks to the environment and the amount of greenhouse gas emissions, and evaluated the European regulatory framework.

“Whenever exploration and production of unconventional fossil fuels has been done at relevant scale, it has had an effect on the environment,” said Uwe Albrecht, head of the energy and environmental consulting firm Ludwig-Bölkow-Systemtechnik in Germany, one of the authors of the report. “As it generally involves processing significantly larger amounts of material, as well as higher energy and water consumption, the overall impact will be higher than for conventional oil and gas wells.”

The report also showed gaps in existing regulations, like the threshold for Environmental Impact Assessments to be carried out on hydraulic fracturing activities. “At present, the threshold is set far above any potential industrial activities of this kind, and thus they are just not covered by the corresponding regulation,” Mr. Albrecht said.

The 27-nation European Union lacks a unified stance on fracking. Attached to its energy independence from Russia, Poland, for one, has resisted calls for restrictive European legislation on shale gas.

“We understand the concerns related to gas explorations from shale formations in Romania,” said Mr. Holst, of Chevron. Still, he said, not a single case of groundwater contamination had been linked to shale gas production since fracking was first used in the United States on an industrial scale in the 1970s. “As more information will be presented, people will be able to take an informed decision,” he added.

“I believe that the citizens of Romania would want to know if those resources exist in their country,” Mr. Holst said: “It is of strategic importance for Romania to develop energy security.”

Romania has been an oil and natural gas producer since the late 19th century. One of the first refineries in the world started operating in 1856 near the town of Ploiesti, north of the capital. But today, like its neighbors, it depends heavily on imported Russian gas.

In a recent speech, the Romanian president, Traian Basescu, answered critics of shale gas. Citing the United States and Poland, with the largest estimated reserves in Europe, as examples, he urged Romania to reduce its import dependency.

With legislative and local elections coming up this year, the subject has brought heated political debate and revived arguments about other long-stymied international mining projects.

“Romania is seen from abroad as a country where everything is possible, and not without a reason,” Ms. Rulea said, pointing to what she said were blurry links between business and political leaders.

Thursday, April 19, 2012

Romania govt faces censure vote on privatisation

BUCHAREST, April 18 (Reuters) - Romania's leftist opposition filed a no-confidence motion against the new centrist coalition government on Wednesday in protest at what it said were plans to sell mineral rights to foreign companies without proper debate.

With too few parliamentary seats to pass the motion, the move is more a political swipe at the two-month-old administration of Prime Minister Mihai Razvan Ungureanu than a genuine attempt to unseat him, but adds pressure to the troubled three-party coalition.

"This is an important signal against the government's policy against citizens, which is pursued the same way as under the previous government," said Mircea Dusa, parliamentary leader of the Social Democrats, the main group in the USL opposition alliance.

Ungureanu replaced Emil Boc as prime minister in February after the latter resigned following nationwide anti-austerity protests.

Boc had initiated a privatisation drive, which includes selling rights to copper mining or minority stakes in energy companies, under an International Monetary Fund-led bailout.

Ungureanu hopes a return to economic growth in the European Union's second poorest nation, where 3 percent of the population eke out a living from $40 a month, will give his government a chance in a parliamentary election in November.

The opposition is expected to read the motion in parliament next week. A date for the vote has yet to be scheduled.

Wednesday, April 18, 2012

Romania Receives 4 Non-Binding Bids for Majority in Oltchim

Romania received four preliminary non-binding bids for a majority stake in Oltchim SA (OLT), an unprofitable state-owned chemical company.

Germany’s PCC SE, which already owns a minority stake in Oltchim, Russia’s JSC TISE and two Romanian companies, Pegamont SA and AISA Invest SA, submitted offers, the Economy Ministry said in an e-mailed statement today in Bucharest.

The ministry “will complete the presentation paperwork and will organize an auction to sell Oltchim, based on the negotiation of the preliminary, non-binding offers,” it said in the statement. Romania plans to hold the auction on May 31, said Florin Vladan, a ministry director in charge of state-asset sales, on March 27.

Romania’s government pledged to the International Monetary Fund and the European Union to sell stakes in state-owned companies, mostly energy producers, to help ease the budgetary financing burden as it aims to lower the deficit to 1.9 percent of gross domestic product this year from 4.35 percent last year.

Oltchim shares rose 3 percent to close at 0.99 leu today, valuing the company at 340 million lei ($102 million).

The potential investors interested in the stake also have the option to negotiate with OMV Petrom SA (SNP) on a takeover of its Arpechim refinery to have a “fully integrated company,” according to Vladan. The government aims to sell its entire 54.8 percent stake in Oltchim, while Petrom seeks to fully close the Arpechim refinery this year as part of a cost-cutting program.

The government extended the Oltchim sale from an original date of April 30 to wait for the European Commission’s approval of a debt-to-equity swap, aimed at increasing the company’s capital before the stake sale. It received the clearing from the European Union’s competition regulator on March 9.

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

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

Saturday, April 14, 2012

FT: Romania: struggling to privatise

The abruptly cancelled privatisation of Romania’s largest copper mine is indicative of the challenges the country faces in selling off state assets. But while the process is dogged by controversy and disagreements over procedure, new momentum may be growing behind the liberalisation of state companies.

Last weekend, Reuters reported that the Romanian government had annulled the sale of Cupru Min Abrud to Canada’s Roman Copper, just a day after the Canadian company claims it had agreed to terms and conditions. Roman Copper won the tender to purchase Cupru Min for €200.8m in March. Cupru Min has estimated reserves of 900,000 tonnes of copper, 60 per cent of Romania’s total reserves, although output is low at present.

Officials said the deal foundered because agreement could not be reached on government terms added to the contract late in the process. These set conditions in three areas: transparency; swift payment; and that Roman Copper set aside more than €30m for “environmental investment”. Roman said it was willing to meet the new terms despite their late introduction. But the government said the deal was off.

Liviu Voinea, a Romanian economist, told beyondbrics the reason for cancellation was a realisation that the deal was not in Romania’s interests. He said the new terms should have been in the original tender and the country had been too willing to surrender its resources cheaply, to purchasers of dubious suitability. “The privatisation process is rotten,” he said.

The decision may also result from political pressure on an unpopular government in an election year, egged on by the economy ministry to pull the plug.

The episode has focused attention on Romania’s willingness to follow through with its privatisation programme, which has been at best intermittent over the past two decades. Backtracking on the Cupru Min deal is, as Voinea notes, further “bad marketing” for the process.

Romania pledged sell stakes in a number of state-owned companies, partly to meet loan conditions from the IMF, which has supported the cash-strapped country on the promise that it will shed some of the weight of bulky public businesses. With the Fund’s encouragement, stakes of 10 to 20 per cent in a number of enterprises, mostly in the energy and transport sectors, are due to be offered on the Bucharest Stock Exchange (BVB).

Last year, the government botched the sale of Petrom, an oil company, by overpricing its shares. But the sale of a 15 per cent stake in electricity distribution firm Transelectrica through a secondary public offering on March 27 was more than 50 per cent oversubscribed, raising around €38m.

Lucian Anghel, chief economist at BCR, the country’s biggest bank, and recently appointed chairman of the BVB – which stands to benefit from the listing of state companies – takes an upbeat view. He told beyondbrics the Cupru Min termination could even be a sign that the government is at last making the right decisions on privatisation.

“The government is giving a sign to international markets that we are moving in the right direction,” Anghel said. “From the Transelectrica offering, the first of its kind in more than four years, it is clear that Romania is learning from its experience and finding a new way to finance its economy through the stock exchange.”

Critics remain sceptical about the benefits of part-privatisation on the BVB. “A 10 per cent share sale won’t help capitalise firms as the money will be used to reduce the deficit, and it won’t bring know-how,” says Voinea.

But Anghel is confident that public offerings will now pick up pace, with energy generation firm Hidroelectrica expected to be particularly lucrative. A new listing of Petrom is also being lined up. The offerings should bring much-needed liquidity and activity to the BVB. Anghel and (more quietly) many in the government also see them as the first step towards further privatisation when the time is right.

“We need to take a gradual approach in this economic environment, and in an election year,” Anghel says.

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Thursday, April 12, 2012

IMF to start review of Romania aid deal April 24

(Reuters) - An International Monetary Fund mission will review Romania's compliance with a precautionary aid deal from April 24, the Washington-based lender said on Thursday.

Bucharest completed a 20 billion euro bailout programme last year and the new two-year IMF package, which it will only draw on if needed, provides an important emergency buffer for the European Union's second-poorest economy.

The IMF has cut Romania's 2012 economic growth estimate to 1.5-2 percent from about 2.3 percent due to fallout from the euro zone debt crisis.

Current IMF mission chief Jeffrey Franks said last month the government has limited room to ease its austerity programme by raising public sector wages or via minor tax cuts, while maintaining its fiscal deficit target.

Franks will be joined on the mission, which will spend two weeks in Bucharest, by his successor Erik De Vrijer, a regional IMF spokesman said. (Reporting by Ioana Patran; Editing by John Stonestreet)

Romania Cannot Accelerate Gold-Mine Review, Korodi Tells RFI

Romania cannot speed up the permit- application process for Gabriel Resources Ltd. (GBU)’s gold-mine, as requested by the country’s president, because the size of the project requires caution, Environment Minister Attila Korodi told radio station Radio France International.

Korodi, who took over as minister yesterday, said he will “analyze in great detail in the next few weeks” the Rosia Montana project’s environment assessment procedure, according to RFI. Rosia Montana Gold Corp., majority-owned by Gabriel Resources, needs an environmental permit to start work at the mine.

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's in Advanced Talks With World Bank, Dragoi Says

Romania is in “advanced talks” with the World Bank for a 1 billion-euro ($1.3 billion) loan to shield the nation against the sovereign debt crisis, Finance Minister Bogdan Dragoi said.

The Washington-based lender’s board of directors will probably meet in early June to discuss the precautionary loan, which Romania doesn’t plan to use, Dragoi said in an interview in Bucharest today. A pre-condition for the loan is the overhaul of the country’s tax agency, he said.

“We don’t plan to draw on the funds, we’ll keep the loan as a buffer amid the economic crisis considering the latest news from Spain and Italy,” Dragoi said. “It’s good to have it there, on top of the four-month financing buffer and the other loans.”

Europe’s debt woes have returned to the fore with Spanish and Italian bond yields rising after Spain announced on March 2 that it wouldn’t meet a European Union-approved deficit target. The World Bank credit would be Romania’s third backstop against the crisis after 5 billion euros were secured last year in deals with the International Monetary Fund and the EU. Romania hasn’t drawn any funds so far.

The new loan will probably have a maturity of three years, Francois Rantrua, the World Bank’s country manager, said in a Jan. 26 interview.

Dragoi also said the ministry hasn’t yet decided whether to roll over 700 million euros in euro-denominated bonds due on May 8. “We’re very flexible, considering we’ve already issued dollar bonds twice this year,” he said.

Romania’s economy probably expanded on an annual basis in the three months through March, even after disruptions from cold weather, Dragoi said. The nation is due to report gross domestic product data for the period on May 15. The minister declined to comment on quarterly economic figures.

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

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

Wednesday, April 11, 2012

Romanian Inflation to Quicken From May, After Slowing Toward 2%

Romania’s inflation will accelerate beginning next month because of a statistical base effect, though the rate won’t exceed 3 percent, Adrian Vasilescu, an adviser to central bank Governor Mugur Isarescu, wrote in an opinion column in Ziarul Financiar.

The inflation rate, which fell to a record-low 2.4 percent in March from a year earlier, will probably drop toward 2 percent in April from a year earlier, as consumer-price monthly growth may be about 0.4 percent, Vasilescu wrote in the column.

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

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

FT: Romania’s farms: rising yields but plenty of room to improve

Romania’s bumper 2011 harvest confirms the country’s position as one of Europe’s leading agricultural producers. Yields have risen impressively, thanks in part to EU funding. But productivity remains low by European standards. The slumbering giant of Romanian agriculture is still performing well below its potential.

Overall cereal grain production rose 24.3 per cent to 20.78m tonnes in 2011, the national statistics office has said, as reported in the local press. Output of maize reached 11.6m tonnes and that of wheat 7.1m tonnes, making Romania Europe’s second and fifth largest producer of the crops, respectively.

Agriculture was an important driver of the economy last year, accounting for 0.7 points of Romania’s 2.5 per cent GDP growth and making up between 8 per cent and 10 per cent of overall GDP, according to Lucian Anghel, chief economist of Banca Comerciala Romana (BCR), the country’s biggest bank. Farming took up some of the slack from other sectors that have slowed, such as real estate.

Most reports have dwelled on the effects of good weather on swelling the crop. But Anghel points out that much of Europe enjoyed favourable weather conditions in 2011 and that Romania’s output growth was considerably higher than the EU average.

Stelian Fuia, agriculture minister, told beyondbrics that rising commodity prices and more effective delivery of subsidies were important factors. He notes that Romania has reduced the area of agricultural land not under cultivation from 3m to 1m hectares over recent years partly due to these incentives.

Romania has improved its absorption of crucial EU funding, which is being used to promote farm consolidation, upgrade rural infrastructure and construct processing facilities for agricultural produce. According to Fuia, the EU’s 2007-2013 funding package can be spent up until 2015; this far, absorption stands at 40 per cent and the minister is confident that the remainder of the cash can be allocated in the next three and a half years.

It will be needed. Growth may be eye-catching but it is from a low base. Yield in kilograms per hectare terms grew by around half last year – but only from 51 per cent of the EU average to 67 per cent, says Anghel. As a report published by BCR last year noted, productivity remains low due to a lack of investment in things like machinery and irrigation, a small skills base and fragmented land, in which many still operate as subsistence farmers and more produce only small surpluses. Subsidies have helped the sector’s revival but they remain low by European standards, at around €120-140 per hectare, whereas they are as much as €460-480 in the Netherlands (where costs are also admittedly high).

Anghel sees closing the output gap as both a challenge and an opportunity.

“Romanian agriculture is currently operating at only around half of its productivity potential, compared to leaders like France,” he told beyondbrics. “But that potential is huge. Romania has good land, a major port at Constanta, access to the Danube, and EU funding absorption can increase further. Our major cereal export markets include Syria, Saudi Arabia and Egypt, so we’re less vulnerable to the eurozone crisis.”

Fuia says that effective allocation of Union funds is a priority for the coming years, particularly to encourage farmers to integrate smallholdings into more efficient and productive larger farms and to encourage the young and skilled to move back to the countryside.

To this end, the minister has floated the possibility of establishing a land bank to aid consolidation and support young farmers. Local press reports have suggested that this could be a tactic to limit land ownership by foreigners through giving priority to Romanians. Fuia denies this and says he values the capital, knowledge and technology brought by foreign investors. Non-Romanian firms already own around 8.5 per cent of land under cultivation, including major players with tens of thousands of hectares. Fuia hopes that the government’s policies will make it easier for more Romanian farmers to reach the same scale and participate in their country’s resurgent agricultural sector.

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Romanian Inflation Rate Drops to New Low on Falling Food Prices

Romania’s inflation rate fell to a record low in March as falling food prices offset service-price growth.

The annual rate dropped to 2.4 percent, the lowest in two decades, from 2.6 percent in February, the National Statistics Institute in Bucharest said today by e-mail. The rate matched the median estimate of 2.4 percent of 12 economists surveyed by Bloomberg. Consumer prices grew 0.4 percent in the month.

As inflation slowed to a post-communist low in the eastern European country, policy makers had room to cut the benchmark interest rate four times in a row since November to a record-low 5.25 percent to boost a halting recovery as the economy swings back to a recession during the European sovereign-debt crisis.

Food prices dropped 0.9 percent from a year earlier in March, compared with a 0.4 percent decline in February, the institute said. The prices grew 0.6 percent from a month, mostly because of rising vegetable, fruit and egg prices, as a cold snap disrupted supply chains across the country.

Price growth for non-food items slowed to 3.9 percent from a year earlier, compared with 4.1 percent in February, the institute said. Service-price growth quickened to 5.4 percent from 4.8 percent the previous month, according to the institute.

Romanian industrial output fell a seasonally adjusted 0.6 percent in February, posting a drop for the first time in more than two years, as freezing temperatures and heavy snow cut electricity and disrupted transport, hampering supplies, the Statistics Institute said today in a separate release. Output fell 1.4 percent on the month.

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

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

Roman Copper hopes to rescue Romania mine deal

BUCHAREST | Tue Apr 10, 2012

(Reuters) - Canada's Roman Copper Corp sought on Tuesday to rescue a deal to buy Romania's biggest copper mine, saying it was prepared to meet conditions required by the government, which had pulled out of talks.

However, a government spokesman told Reuters the deal was still off.

Roman Copper last month won a tender to buy Cupru Min Abrud for 200.8 million euros ($262.3 million), outbidding Australia's OZ Minerals Ltd (OZL.AX), Dutch Dundee Holding and Bulgaria's Ellatzite Med Ad.

Romania's economy minister said on Saturday the deal had fallen apart and the government would relaunch the sale, dealing a blow to a sell off plan agreed with the International Monetary Fund.

The ministry said in a statement that talks to sign the deal ended on April 6 without reaching an agreement and that negotiations with Roman Copper were "irrevocably closed."

It said the government did not want to give up certain conditions, among them that all privatization contracts are made public, that payment for shares is settled within 30 days and the company sets up a collateral deposit of 32.27 million euros as a guarantee for future environment investment.

Roman Copper said on Tuesday it had accepted the terms.

"Roman Copper's team and the Romanian government's negotiators agreed on the terms and conditions of the acquisition contract in the late evening of Friday, April 6 2012. These terms included an undertaking by Roman Copper to accept additional financial and other obligations that were not required in the original tender documentation," it said.

Government spokesman Dan Suciu said Roman Copper's statement changed nothing, however.

"The process is now closed. The sale of Cupru Min to Roman Copper won't happen," he said by telephone.

Former communist countries across the European Union have sold state holdings, but Romania's persistent failure to do so has left a huge, inefficient public sector in the bloc's second-poorest nation as it struggles to emerge from deep recession.

Analysts say failure to sell Cupru Min - with estimated reserves of 900,000 metric tonnes (992,080 tons) of copper, or about 60 percent of the country's overall estimated reserves - would not bode well for a plan to cut state participation in its enterprises.

"Roman Copper unequivocally confirms its readiness to implement all the actions and investments requested by the government since the open auction for Cupru Min on March 26," the Canadian firm said in its statement.

"We look forward to continuing our relationship with the Romanian authorities in a spirit of good faith and co-operation so that this transaction can be completed as envisaged under the competitive and transparent privatization process."

(Reporting by Radu Marinas; Editing by Mark Potter)

Romania president wants rapid decision on Canadian gold mine


BUCHAREST — Romanian president Traian Basescu pressed the nation's environment ministry Tuesday to take a rapid decision on a planned Canadian-owned gold mine at Rosia Montana, warning that much was at stake.

"Since 1997, the Romanian authorities have shunned responsibility regarding Rosia Montana," Basescu said after the new environment minister Attila Korodi was sworn in.

"If you think that the mine can work and if you want to do Romania some good by creating jobs, go ahead and give the necessary permit quickly," Basecu urged Korodi.

"If not, just say no to the company, because every day that passes will cost us a lot in an upcoming lawsuit."

Basescu, a staunch supporter of the planned mine, blasted the "cowardice and demagogy" of former environment ministers who have blocked the project so far.

Last week, a Romanian court invalidated a key zoning permit, a serious setback for Rosia Montana Gold Corporation (RMGC), which is 80 percent owned by the Canadian company Gabriel Resources.

Opponents claim the ruling sent the company back to square one in the permit process. But RMGC claims to hold an earlier "valid and legal" permit.

The firm plans to use cyanide to extract 300 tonnes of gold in the village of Rosia Montana, thought to hold Europe's largest single deposit.

It promises to invest $1.7 billion (1.2 billion euros) and says the mine will respect all European standards on environmental protection.

Environmentalists, archaeologists, historians and international organisations oppose the project however, claiming the mine threatens the environment and priceless Roman-era mining galleries.

Basescu also urged Korodi to examine without delay two other controversial projects: shale gas tapping by US oil giant Chevron and the sale of Cupru Min copper mining company.

"If Romania does not need shale gas let us stop Chevron's plans, if it does not want to exploit copper, let us stop that too," he said in an ironic tone.

Romania cancelled the sale of Cupru Min to Canada's Roman Copper on Friday because it could not obtain financial and environmental commitments, the economy minister said, adding that a new auction would be held.

Monday, April 9, 2012

The Economist: AIDS in Romania

When ignorance is lethal

Apr 7th 2012, 14:58 by C.M. | IASI

HIV/AIDS wrought devastation in Romania in the 1980s and 1990s. The HIV problem was exposed after the 1989 revolution that brought communism crashing down. Romanians, who had been shielded from the truth by a tightly controlled media, were as shocked by the extent of the disease in their country as the outside world was.

The victims were mostly small children infected in hospitals. Poor sterilisation facilities and dubious medical practices, such as dodgy blood transfusions, were largely to blame.

Those that did not die were often ostracised. One HIV-positive woman, now 21, told me that her neighbours knew about her condition before she did: it was openly written on her medical documents. At school they teased her as sidoasa—a slang expression for an AIDS sufferer.

She had probably been infected in hospital as a small child, a year or two after the death of Ceauşescu. But she was only tested at around the age of ten, after she started developing strange illnesses in her lungs.

Hers is a typical story. But Romania’s treatment of HIV/AIDS has improved in the last decade, after long protests from victims’ families. Questions are still occasionally asked about some medical services, but the most dangerous practices have been eradicated. The woman is now on regular anti-retroviral treatment, and the levels of the virus in her blood are undetectable. She has a young son, who, thanks to good medical supervision during pregnancy and since, is HIV-negative.

Identifying someone as HIV-positive without their consent can now lead to five years in prison. Doctors have learned to use cryptic medical codes rather than disease names on official documents. Mother-to-child transmission of the virus has been drastically reduced by simple measures like proper screening of pregnant mothers, delivery by Caesarian section and avoiding breastfeeding.

Antiretroviral treatment is free and available to those who need it. Death rates have plummeted. In fact, Romania is now often cited as an example to other poor countries with major HIV/AIDS problems.

Yet a substantial number of Romanians with HIV still don’t know it. The generation infected in the 1980s and 1990s is now at reproductive age, and new cases are still appearing across the country, often years after infection. Health workers say sexual transmission is now the most common method.

With Romania undergoing painful economic restructuring, campaigners say funding for public education on HIV/AIDS has largely dried up. It was always a hard sell in a country terrified of the disease. Many Romanians remain ignorant of the most basic facts.

Public-health workers say that, with Romania now an EU member, this represents a danger not just to Romanians but potentially to its neighbours. “HIV doesn’t have borders," says Angela Achitei, president of Alaturi de Voi ("Close to You"), an organisation providing work for HIV-positive people in the northeastern city of Iasi. Romanians working overseas are at particular risk, as they often cannot access local health services.

The sex industry has flourished in Romania, just as it has across the ex-communist world. Yet health workers say prostitutes are probably not the greatest risk. After all, they have a professional interest in knowing how to avoid infection. A bigger problem is a silent pool of HIV-positive people who do not realise that they and their sexual contacts are at risk.

Alaturi de Voi once handed out free condoms and organised free HIV testing in discos in Iasi, home to many students. It was a big hit. It reached the target audience and the owners got a full club to boot. But the money is no longer there.

Battling a culture of medical graft

In Romania, bribes are required for care. One doctor flies patients elsewhere for surgery.

By Alison Mutler And Vadim Ghirda

Associated PressBUCHAREST, Romania - Dr. Catalin Cirstoveanu runs a cardio unit with state-of-the-art equipment at a Bucharest children's hospital. But not a single child has been treated in the year-and-a-half since it opened.

The reason? Medical staff he needs to bring in to run the machinery would have expected bribes.

So Cirstoveanu launched a crusade to save babies who come to him for care: He flies them to Western Europe on budget flights so they can be treated by doctors who don't demand kickbacks.

That's what Cirstoveanu did last month for 13-day-old Catalin, who needed heart surgery. Cirstoveanu packed a small bag, slipped emergency breathing equipment into the baby carrier, and caught a cheap flight to Italy, where doctors were waiting to perform the surgery.

The operation was successful. Two days later, though, a 3-week-old baby whom Cirstoveanu whisked away to the same clinic in northwestern Italy, with tubes piercing her tiny frame, died before she could have lymph gland surgery.

"I was very worried it wouldn't work," said Cirstoveanu. "But in Romania, she would have died anyway."

Cirstoveanu is fighting an exhausting, largely solitary battle against a culture of corruption that's so embedded in Romania that surgeons demand bribes to save infants' lives and that patients must slip cash to a nurse to get their sheets changed.

It's one of the reasons why the country's infant mortality rate is more than double the European Union average, with one in 100 children not reaching their first birthday.

"To be honest, it's so deeply rooted into our system that it's really difficult to eliminate," Health Minister Ladislau Ritli said in an interview.

Officially, the new cardio unit that Cirstoveanu runs at the Marie Curie children's hospital isn't functioning because jobs have not been filled. The real reason appears to be that Cirstoveanu banned staff from taking bribes. That means high-tech machinery is idle because qualified experts do not apply for jobs.

The zero-tolerance policy on corruption makes for a grueling work schedule for Cirstoveanu, who must shuttle babies abroad for surgery and take care of them on the flight. During the two-hour flight with the girl who died, Cirstoveanu fixed tubes, sedated her and hand-pumped oxygen to keep her alive.

Patients in Romania routinely discuss the "stock market" rate for bribes. Surgeons can get hundreds of dollars and upward for an operation, while anesthetists get roughly a third of that, depending on what a patient can afford. Nurses get a few dollars from patients each time they administer medications or put in drips.

While the Romanian state appears unwilling to do anything, it often foots the bill.

At the Marie Curie unit, Catalin's operation would have cost $2,700 to $4,000 without bribes. Romanian state health insurance is paying 10 times that for his operation in Italy, a small fortune in a country where the average monthly salary is about $500 after tax.

Many disillusioned doctors have abandoned the country, which spends just 4 percent of its gross domestic product on health care, about half the percentage of GDP Western European countries spend.

Last year, 2,800 Romanian doctors - discouraged by the antiquated and corrupt health system and low wages - left to work in Western Europe, according to the Romanian College of Doctors.

Bribes across Romania accounted for $1 million a day in 2005, according to a World Bank report; more recent estimates are not available.

The tragic plight of Romanian children is nothing new.

In an effort to boost Romania's then-population of 23 million, Communist dictator Nicolae Ceausescu banned birth control and abortion. Thousands of infants were left in orphanages in harrowing conditions broadcast around the world after his execution in 1989.

Nearly a quarter-century later, the country's shortcomings are again on display. Yet remarkable things are happening at the Marie Curie hospital. Anca Mandache, a pediatric heart surgeon, left her career in France to offer her services to the Marie Curie hospital, making one tenth what she would have earned in France. Others also are expressing an interest in working at the clinic.

Cirstoveanu says he feels "ashamed" that he has to go to the lengths he does to save children, but talks with pride in seeing the joy of parents whose babies survive.

They are in awe of his dedication.

"Cirstoveanu is more than a hero - he is a god for us and the children," said Gheorghe Meliusoiu, 28, Catalin's woodcutter father. "If there were more like him, many lives would be saved."

Romania backs out of deal to sell copper mine

(Reuters) - Romania has backed out of a deal to sell its biggest copper mine to Canada's Roman Copper Corp, its economy minister said on Saturday, further delaying the country's long-awaited privatisation programme.

Roman Copper won a tender to buy the Cupru Min Abrud mine for 200.8 million euros last month, outbidding Australia's OZ Minerals Ltd, Dutch Dundee Holding, and Bulgaria's Ellatzite Med Ad.

But Economy Minister Lucian Bode said the two sides could not conclude talks on the terms of the deal.

"The state did not want to give up three conditions," Bode was quoted as saying by state news agency Agerpres. "We will relaunch the tender but we will keep the same conditions."

Bode said under those conditions all privatisation contracts had to me made public, payment had to be settled within 30 days and the company had to set up a collateral deposit of 32.27 million euros as a guarantee for environment investment.

"We were surprised that the negotiating committee refused to accept our written signature," said Mike Curtis, partner at Bay Front Capital Partners, the Toronto-based merchant bank that owns Roman Copper.

Cuprum Min has estimated reserves of 900,000 tonnes of copper, or about 60 percent of the European Union state's estimated copper reserves.

Former communist countries across the emerging European Union have sold state holdings, but Romania's persistent failure to do so has left a huge, inefficient state sector in the bloc's second-poorest economy.

Earlier this week, a Romanian court annulled a zoning plan in a decision that may further delay a Canadian project to set up Europe's largest open-cast gold mine in the Carpathian town of Rosita Montana - near Cuprum Min's Rosia Poieni mining area.

Rosia Montana Gold Corporation, majority-owned by Canada's Gabriel Resources Ltd, aims to use cyanide to extract 314 tonnes of gold and 1,500 tonnes of silver. Its project has dragged on for 14 years and still needs an environmental permit.

Bucharest agreed to an ambitious programme of selloffs under a 5 billion euro International Monetary Fund-led deal struck in 2011 but flunked a major test last year, failing to sell a minority stake in its top oil and gas group Petrom. (Editing by Karolina Tagaris)

Friday, April 6, 2012

Romanian court ruling may delay gold mine plan

(Reuters) - A Romanian court annulled a zoning plan in a decision that may further delay a project to set up Europe's largest open-cast gold mine in the Carpathian town of Rosia Montana, opponents of the mine said on Thursday.

Rosia Montana Gold Corporation (RMGC), majority-owned by Canada's Gabriel Resources Ltd, aims to use cyanide to extract 314 tonnes of gold and 1,500 tonnes of silver in the western Romanian county of Alba. The project has dragged on for 14 years and still needs an environmental permit.

The court of appeals in Alba said on Thursday it had annulled Rosia Montana's town planning documents - including those that refer to the area RMGC needs to set up the mine - in its final decision in a trial brought by two non-government organisations that oppose the project.

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

The Romanian government holds a 19 percent stake in the project, which is valued at $7.5 billion.

"These documents are the basis on which Rosia Montana Gold Corporation got its urban planning certificate and other papers, and since it has been annulled, it will be easier to get the company's certificate cancelled as well," said Marius Liviu Harosa, the lawyer who handled the case.

If the certificate is revoked, the environment ministry will probably need to stop its environmental impact assessment, Harosa added. RMGC's certificate is an important part of its environmental impact statement filed with the ministry.

The ministry was contacted by Reuters but has not yet commented on the decision, and the company said it needed more details.

"We are not in a position to comment until after we receive the court ruling motivation and review it thoroughly," said Andreea Nastase, RMGC communications vice-president.

The gold mine has drawn fierce opposition over the years from civic rights groups, environmentalists and neighbouring Hungary, which say it would destroy ancient Roman gold mines and villages and could lead to an ecological disaster.

Most of the 2,800 residents of Rosia Montana, however, hope the project will bring jobs and money to the 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.

Wednesday, April 4, 2012

Romania leftists keep lead over ruling party-poll

BUCHAREST, April 3 (Reuters) - Romania's opposition Liberal-Social Union alliance (USL) is still more popular than the ruling Democrat-Liberal Party (PDL) but does not have quite
enough support to win an outright majority in a November parliamentary election, an opinion poll showed on Tuesday. 

Prime Minister Mihai Razvan Ungureanu replaced Emil Boc in February after Boc resigned following nationwide anti-austerity protests. Ungureanu pledged to maintain the policies needed to keep an International Monetary Fund-led international aid deal in place.
The ruling PDL won 33 percent of the vote in the last parliamentary election in 2008, but the implementation of painful austerity measures needed to conclude a 20 billion euro aid deal has since hit its support. 

The poll was conducted between March 7 and 13 by pollster IMAS and was published by daily newspaper Adevarul.

March 2012 IMAS 48.4% 18.6% 16.6% 7.0%
Feb 2012 CSOP 47.0% 20.0% 18.0% 5.0%

Romania: kindergarten seen as key to fight Roma poverty

By Isabelle Wesselingh (AFP)

ARACI, Romania — "Storks and swallows," the kindergartners in this Transylvanian village cry out when asked what birds arrive in springtime, then proudly count to 20 -- unaware they are part of an experiment to help Roma children beat the odds of a life mired in poverty.

The class might seem unremarkable but in Romania, one of the European Union's poorest members, early schooling is now seen as "an important step to fight the vicious circle of poverty-school-failure-poverty", Szilard Dullo, the director of the school in Araci, told AFP.

The idea is simple: poor children who attend kindergarten enter primary school better prepared, with the same skills as other youngsters, which reduces their chance of failing.

This central Romanian village was the first to try out the idea in 2010, developed by a non-governmental organisation, Ovidiu Rom, in partnership with the local community. It has seen kindergarten enrolment more than double in two years, from 89 children to 190 today.

Romania has the EU's highest rate of children 17 and under living in poverty -- almost 49 percent, according to figures published by the European statistical office Eurostat in February. This compares to 27 per cent in the EU as a whole, 29 percent in Britain and barely 14 percent in Finland.

Continued discrimination against this minority of two million leaves the country's Roma children vulnerable. Only three percent reach high school, the education ministry said.

"There are a lot of parallels between what happened in the US with the black Americans and what happens in Romania with the Roma", the US ambassador to Romania, Mark Gitenstein, told AFP citing the "devastating legacy of slavery".

Like blacks in the southern US, Romania's Roma were reduced to slavery and emancipated only in 1856. Many still live in dire poverty, as in Araci and the neighbouring hamlet Hetea where they occupy wooden shacks without running water or sanitation and often only a plastic sheet for roofing.

Typical are Costel, 5, and Abel, 6, who live with their two older brothers and father and mother, Aurica Koskodar, in a one-room hut she painted yellow inside and decorated with flower garlands to cheer up.

The youngsters sleep in the same bed and wash in a bucket of cold water their mother fetches at a nearby pump, sometimes waiting for an hour behind other families queuing for water.

Neither parent has a steady job and the family survives on social benefits, like 1,600 of the 4,000 people living in Araci and nearby villages.

"Twenty years ago, there was still a collective farm where lots of people worked but it closed down," said Denes Balazs, the village social worker.

"I'm happy," said Aurica, 30. "Since going to school, the boys are better behaved. They recite poetry. I hope they have a better life than ours."

A monetary incentive has helped the program, as has involving Roma parents, many of whom where forced to leave school early and remain illiterate.

A food coupon of about 12 euros a month ($15) is given to families living below the poverty level for each child who attends kindergarten daily -- a measure that has led to average 89 percent attendance records.

The expenses are covered by donations from corporations and private persons.

"You cannot build a house without foundations. As far as education is concerned, kindergarten is the foundation," said Maria Gheorghiu, a Romanian education specialist who founded Ovidiu Rom with American Leslie Hawke, the mother of actor Ethan Hawke, who came to Romania as a US Peace Corps volunteer in 2001 and stayed on.

"If all children get the same opportunity from the beginning, the chances to succeed in school will grow," Gheorghiu told AFP.

She and Hawke launched "Every kid in the kindergarten", as the program is called, in 2010 and have vowed to keep it going for 20 years to try to effect real social change.

"You need only 440 euros to maintain one child a whole year in the kindergarten," Hawke and Gheorghiu said.

Today, 1,400 poor children in 20 villages across the country take part in the program, which the founders hope can be implemented elsewhere.

In addition to special teacher training, Ovidiu Rom asks parents to attend a lesson and a school activity or meeting at least once a month.

"Some parents were afraid of school ...Now we have a better relation with them. They see what their children are doing and they come with ideas and proposals," said Dullo, who has taught in Araci for two decades.

Teacher Iuliana Pargaru agreed. "Before coming here, I was told by a colleague that Roma parents do not care about school, but on the contrary they do everything they can to help."

Roma children in Araci had a 50 percent failure rate prior to the program's start, but Dullo said fewer problems are already seen in elementary school.

"In the south of the United States where I come from, we also heard things like, 'blacks do not want to go to school'," but today we have an Afro-American president who went to Harvard," said Ambassador Gitenstein.

"I believe that one day there will a be a Roma president in Romania. It might take time but this can happen", he said.

Romanian Cabinet Approves $1.2 Billion CFR Debt-to-Equity Swap

Romania’s government approved a debt-to-equity swap for state-owned railway company CFR SA to meet pledges to the International Monetary Fund and the European Union.

The Bucharest-based Cabinet wants to convert a 4 billion- lei ($1.2 billion) debt into CFR shares and boost the company’s capital, said government spokesman Dan Suciu in a phone interview today. CFR accumulated the debt from unpaid bills and penalties, Suciu said.

The Balkan nation, which secured a 5 billion-euro ($6.7 billion) precautionary loan from the IMF and the EU, is seeking to lower its budget deficit to 1.9 percent of gross domestic product this year from 4.35 percent last year and cut the costs of running state-owned companies.

The government pledged to the lenders to sell a majority stake in CFR’s unprofitable freight unit, CFR Marfa.

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

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

Chevron promises care in developing Romania shale gas

(Reuters) - Chevron Corp, responding to environmental fears over its shale gas plans in Romania, said on Tuesday it had yet to start exploration and would keep to seismic data surveys for 12 months while persuading local people the technology is safe.

It would then consider beginning actual gas exploitation on the Black Sea coast only after a further five years of exploration.

So far protests against the major U.S. energy company's plans have involved only some thousands of people in Romania, where the centrist government has awarded Chevron exploration rights for three blocks of 670,000 acres in Constanta province by the Black Sea last month.

It has a separate license in the eastern county of Vaslui to explore 1.6 million acres.

But neighboring Bulgaria as well as France have halted all exploration for shale deposits due to environmental concerns, while Britain stopped drilling last year after exploration caused a minor tremor in northwest England.

"We understand the concerns related to natural gas exploitation from shale formations in Romania," said Tom Holst, Country Manager Chevron for Romania.

"We believe that by presenting factual information on how these technologies are conducted, Romanians will understand that this natural gas is a clean source of energy and that it can be produced safely and responsibly," Holst said in a statement.

Europe is keen to find ways to diversify its gas supplies away from reliance on Russia but is divided on shale gas - natural gas locked in rock formations that have been found in abundance around the world in the past decade.

The gas is extracted by hydraulic fracturing, known as fracking, which involves injecting water mixed with sand and chemicals into shale at high pressures, a technique some critics fear pollutes underground acquifiers and harms the environment.

Bulgaria banned fracking for shale oil and gas following widespread protests and cancelled an exploration permit it had granted to Chevron.

Holst said the planned survey in Romania would provide safeguards.

"Such a survey will be designed and permitted to avoid areas of high cultural value, cities and villages and sensitive environmental habitats," Holst said.

"Only after such a survey is completed would consideration be made to locate and permit a standard exploration well," Holst said about Chevron's operations in Constanta.

Holst said that an exploitation project on the Black Sea shore "would be a consideration after the exploration activity, which is to be conducted over a five-year period."

Holst said Chevron was in the initial permitting process for a conventional exploration well in the eastern county of Vaslui on the border with Moldova.

Specific estimates of the size of shale gas reserves in Romania do not exist yet, but the U.S. Energy Information Administration (EIA) has said the joint reserves for Romanian, Bulgarian and Hungarian shale gas was around 538 billion cubic meters (bcm).

This would be around half of Ukraine's estimated resources.

(Reporting by Radu Marinas; Editing by Anthony Barker)