Friday, September 28, 2012

FT: Romania: central bank walking the growth v inflation tightrope

Romania’s central bank has opted to keep interest rates on hold despite rising price pressures, as the external and domestic economic outlook remains gloomy. But a hike could be on the cards for next year if inflation continues to oustrip target levels.

At a meeting on Thursday, the National Bank of Romania (BNR) stuck with its benchmark policy rate at 5.25 per cent, as analysts had expected.

In a statement, the bank said that “the further prudent monetary policy stance is also required by the uncertainty-ridden external environment which, together with domestic developments in the run-up to the elections [on December 9], could entail an abrupt heightening of the risks associated with the volatility of capital flows and of the exchange rate”.

These downside risks to the economy are seen as balancing the risk of rising inflation, which reached 3.88 per cent in August, driven partly by higher domestic food prices. But as the BNR noted, the 12-month consumer price growth rate to August was 2.8 per cent, not far off the EU average, while core inflation (omitting goods including fruit and vegetables) was 2.6 per cent, edging up from 2.3 per cent in July.

The BNR may not be able to keep rates on hold forever. The continued effect of food prices, plus pre-election spending, and increases in energy prices introduced at the IMF’s behest are likely to keep inflation on the upside for the remainder of the year and into 2013, according to Dumitru Dulgheru, head of fixed income research at BCR, Romania’s largest bank.

“Inflation has accelerated pretty fast recently, and risks are to the upside.” he told beyondbrics. “We will revise our initial 4 per cent forecast for the year to 4.4 per cent to 4.7 per cent.”

Dulgheru’s current forecast is for inflation of 4.5 per cent in 2013, which could force a rate hike in the first half of the year. This despite growth expected to come in at just 0.7 per cent for this year and a “meagre” 1.9 per cent next. The scope for monetary stimulus is clearly limited, as is that for fiscal loosening, with Romania’s public finances still very wobbly and dependent on international support.

The tension between Prime Minister Victor Ponta and President Traian Basescu makes life no easier for Romania. Whoever wins in December faces a number of thankless tasks, as the central bank implied in its statement:


The NBR is restating that the implementation of a balanced macroeconomic policy mix and of structural reforms, amid the fulfilment of commitments under the external financial arrangements with the European Union, the IMF and other international financial institutions, is essential to achieving price stability in the medium term as well as consolidating financial stability, both being prerequisites for lasting and sustainable economic growth.

Quite a challenge for the new administration.


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Failed power grab puts Romanian PM in tight spot

By Sam Cage and Luiza Ilie

BUCHAREST, Sept 27 (Reuters) - After four months in power and a failed attempt to oust the president, Romanian Prime Minister Victor Ponta is under fire at home and abroad, with his coalition under strain before an election in December when victory is now far from assured.

Ponta, a leftist Social Democrat, seemed to have it all when he became the European Union's youngest prime minister in May, his alliance with liberals enjoying a robust parliamentary majority and opinion poll ratings above 60 percent.

Now the man who was supposed to represent a change of guard for his party, successors to the Communists of late dictator Nicolae Ceausescu, is under strain.

Rather than tackling the many problems of the EU's second poorest country, Ponta's term so far has been dominated by his party's attempt to overthrow President Traian Basescu, which has provoked conflict with the judiciary, concern in Brussels and uncertainty among investors over a deal with the IMF.

"The governing parties have come across as trying to secure all the levers of power without regard to democratic checks, and the very negative reaction of western states has shaken confidence," said Sergiu Miscoiu, an analyst at the CESPRI political think-tank.

Five years after joining the EU, Romania has made little progress under a series of short-lived governments in reforming its state-dominated economy and fighting widespread corruption. B a s ic problems which most EU countries overcame decades ago, such as running water supplies for all, remain unsolved.

Instead, many Romanians feel sidelined within the EU. Brussels is monitoring its respect for the rule of law and its drive against corruption, and the country remains excluded from the passport-free Schengen area.

"We hope that following the elections in December, the political turmoil will end and the authorities will focus more on improving the country's economic situation," said Grzegorz Konieczny, who runs Fondul Proprietatea, a 3.4 billion euro fund that holds stakes in dozens of Romanian companies.

AUSTERITY AND CRONYISM

Ponta, a former prosecutor and amateur motor rally driver who turned 40 last week, won power in a parliamentary confidence vote which toppled the previous centre-right prime minister after just three months in office.

His Social Liberal Union (USL), a fragile alliance of social democrats and liberals, drew on discontent with austerity and cronyism to dispatch the old Basescu-allied government. Then it set its sights on the president himself.

The new government issued more than 40 emergency decrees in its first two months, allowing it to bypass parliament and limiting the powers of the Constitutional Court.

Ponta accused Basescu, a former oil tanker captain, of blocking government policies and turning a blind eye to corruption. The USL used its parliamentary majority to suspend the centre-right pr e sident and called a referendum in July on his impeachment.

Of those who voted, 88 percent backed Basescu's impeachment but the turnout was only 46 percent. The Constitutional Court, which had ruled that at least half the electorate should vote, threw out the result and the president was re-instated.

As tensions rose between the government and judiciary , the Strasbourg-based Council of Europe said the Constitutional Court had asked for help in protecting its independence from political pressure. European Commission President Jose Manuel Barroso also expressed his deep concern to Ponta about allegations of pressure being applied to judges on the court.

With Basescu back in office, Ponta has tried to portray the incidents as mere fallout from disputes at home.

"I don't like those who come to make denunciations in Brussels or Strasbourg hoping this will help them at home, but on the other hand I don't think we should battle the European Commission over our domestic wars," he said.

Ponta played down the possibility of trying again to oust the president for now. "I don't think we can take such a decision today and such a risk for the country. Romania must avoid a crisis of the same depth in the future," he added.

LOST CREDIBILITY

The rows with Basescu and the court have hurt international trust in Ponta. " Where is the guarantee it won't happen again?" said an EU diplomat. "Regaining the lost credibility with external partners will be neither easy nor quick."

The turbulence has also raised doubts among investors over how closely Romania will stick to the reforms required under its 5 billion euro aid deal, which is led by the International Monetary Fund and is needed to shore up investor confidence.

The cost of insuring Romanian debt against default rocketed and the leu currency plunged to all-time lows over the summer.

While the government has largely stuck to the headline targets of the 2011-2013 aid deal, bringing down the budget deficit, Romania has consistently failed to use EU funds fully, privatise and reform its failing state-owned companies or overhaul its outdated energy production.

The presidential dispute has an additional twist. Soon after coming to power, Ponta was accused of plagiarism in the thesis which earned him a doctorate in law.

Ponta accused Basescu of planting the charges but the row took off when former Prime Minister Adrian Nastase, a political ally who supervised Ponta's disputed doctorate, was jailed for corruption. Nastase tried to kill himself and Ponta once again blamed the president, claiming he controlled the courts and had orchestrated the conviction.

Nastase's case was an overdue signal that Bucharest was finally getting serious on graft, and anti-corruption experts say this may have prompted Ponta's rush to oust Basescu. The president has the final say on nominated judges and prosecutors.

With 19 members of parliament from Ponta's alliance and several from the opposition under investigation, both sides want to keep their people out of jail and the EU is monitoring the appointment of a new chief prosecutor and anti-corruption chief.

All the turbulence is also undermining what little faith Romanians still have in the political class.

"The issue is politicians put their well-being first rather than the country's. This is something that needs to be changed," said Madalin Teodoroiu, a 26-year old junior architect.

SHOWING THE STRAIN

The USL, formed last year, could still win an outright majority of seats in parliament in December. But failing to remove Basescu has knocked its popularity, which polls now put at just above 50 percent, and the USL is showing the strain.

"This alliance was created so that everybody would win, and at the moment they are starting to lose," said Adrian Basaraba, a political science professor at the University of Timisoara.

A gap is widening between Ponta's Social Democrats and the smaller Liberals (PNL), led by the older and gaffe-prone Crin Antonescu. Ponta has warned his party members to keep their opinions private or risk exclusion from the election race.

"Together with the PNL we have failed, so it is being considered as a joint failure - though Crin Antonescu is seen by many as the main culprit," said one senior Social Democrat.

Basescu will nominate the prime minister after the election, and if the USL falls short of a majority he could ask a conservative ally to form a coalition. Even if the USL scores an outright win, Basescu has a record of trying to split alliances and has said he will never again appoint Ponta.

"We are all aware that this close to elections we have to stick together, whether we want to or not," said one USL member of parliament.

Thursday, September 27, 2012

Romania Utility Courts Bids for Maramures Water Network Upgrades

The Romanian water utility Vital SA is seeking bids to upgrade the water and sewage network in the northwestern county of Maramures in contracts valued at 87.7 million lei ($25 million).

Vital will take bids until Nov. 21 for water and wastewater infrastructure upgrades in Baia Mare under a 24-month contract valued at 53.7 million lei, according to a European Union procurement document. The utility is also seeking bids by Nov. 20 for a 34 million-lei infrastructure contract in Maramures county and water treatment plants in Borsa and Viseu de Sus, another procurement document showed.

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

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

Hundreds Romanian Oltchim Employees Stage Protests Over Salaries

Hundreds of workers at Romanian state-owned chemical company Oltchim SA (OLT) staged a protest as the government holds talks with media entrepreneur Dan Diaconescu to keep the agreement for a majority stake from collapsing.

About 500 Oltchim employees gathered in front of the chemical company’s headquarters in the southern city of Ramnicu Valcea to demonstrate against unpaid salaries and a halt in production triggered by the lack of working capital, according to private television station Realitatea TV.

Diaconescu, 44, a politician and owner of broadcaster OTV, won an auction on Sept. 24 to buy the state’s 54.8 percent stake in Oltchim and promised to pay about 203 million lei ($58 million) in a contract that needs to be signed by Oct. 1. Prime Minister Victor Ponta said Diaconescu lacks the money.

The Cabinet will place Oltchim into special administration should Diaconescu fail to secure the funding for the stake and sign the purchase contract by the deadline.

Romania pledged to sell its holding in Oltchim and a minority stake in Transgaz SA (TGN), the country’s natural-gas grid operator, by the end of this month to get the International Monetary Fund’s approval to unlock the next tranche of its precautionary accord. The fund’s Washington-based board will meet on Sept. 28.

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

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

Romania Seen Leaving Rates Unchanged on Price-Growth Concerns

Romania’s central bank will probably leave its main interest rate unchanged for a fourth meeting today as it weighs the impact of rising food prices amid slowing economic growth.

The Banca Nationala a Romaniei will keep the monetary- policy rate at 5.25 percent, according to all 18 economists surveyed by Bloomberg. A decision will be announced after 11 a.m. in Bucharest.

Policy makers have been holding off on easing rates because of political turmoil that pushed the leu to a record low and a drought that has hit this year’s harvest, as central banks in the region cut or consider lowering borrowing costs to boost flagging economic growth.

“We expect the National Bank of Romania to keep the key rate at 5.25 percent,” said Vlad Muscalu, senior economist at ING Bank Romania in Bucharest. “Nevertheless, this is shaping up as a particularly interesting meeting given the sharp deterioration of the near-term inflation outlook.”

Inflation in the eastern European country, which has changed governments twice this year, may accelerate in 2012 more than the central bank’s 3.2 percent forecast because of political turmoil before general elections and a drought that boosted prices for imports and food, Governor Mugur Isarescu said Aug. 6. This year’s rate is likely to stay within the bank’s target of 2 percent to 4 percent, he said.
Economic Recession

The central bank lowered rates 1 percentage point before pausing on May 2 after the government collapsed and the economy entered its second recession in three years.Gross domestic product (ROGDPQOQ) will grow 0.9 percent this year compared with 2.5 percent last year, according to the International Monetary Fund.

Neighboring Hungary’s central bank lowered its two-week deposit rate to 6.5 percent for a second month yesterday and forecast further cuts to aid an ailing economy, while the Czech central bank may cut its main rate to 0.25 percent from 0.5 percent, already a record low, today, according to the median estimate of economists surveyed by Bloomberg.

The inflation rate reached 3.9 percent in August, the highest in a year, as the drought pushed up food costs.
Supply-Side Shocks

“For the moment, the National Bank of Romania could take a wait-and-see approach, in order to assess the impact of higher consumer prices on inflation expectations,” Raiffeisen Bank Romania SA analyst Nicolae Covrig said. “This view is motivated by the fact that the acceleration in consumer prices is mainly related to supply-side shocks falling outside the control of the central bank.”

A weakening currency has limited the room policy makers have to ease monetary policy, Erik de Vrijer, the head of an IMF mission to Romania, said in an interview on Aug. 14, adding that a tightening of rates may even be discussed.

The leu has dropped 1.2 percent against the euro this month, and traded late yesterday at 4.5193 to Europe’s common currency, according to data compiled Bloomberg.

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

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

The Economist: Romania's Roma

Latest Eastern approaches
Latest from all our blogs

Romania's Roma
Where is Europe’s Roma policy?

Sep 19th 2012, 11:39 by L.C. | BUCHAREST

THE Roma community is beeing chased from countries across Europe.
Romania and France have sent Roma back and forth since 2007, when
Romania joined the European Union, but it seems that the French are
now intending to pursue a harder line towards the Roma from Romania in
their country.

On September 12th, Manuel Valls, France’s interior minister, and
Bernard Cazeneuve, the minister for European Affairs, travelled to
Romania to discuss Roma integration with the country’s president and
prime minister. The visit was expected to bring some concrete
proposals on how to improve the integration of the estimated 400,000
Roma living in France (a large part of whom are from Romania). Yet
they only struck a framework agreement that allows some 80 Roma
families who wish to return to Romania to receive “financial support
for economic reinsertion” by the French authorities.

Mr Valls stressed that the countries’ joint efforts should be focused
on finding a solution for the Roma people to settle in their country
of origin. He has defended the recent police raids to break up Roma
camps in France on health grounds. "France has a policy of evacuating
illegal camps and of escorting them [the Roma immigrants] to the
border," Mr Valls added.

Traian Băsescu, the Romanian president, and Victor Ponta, the prime
minister, said they are willing to co-operate with France in order to
integrate the Roma community into Romanian society. Yet Mr Băsescu
criticised Mr Valls for a remark he made a day ahead of his visit when
he said that “France cannot accommodate all the misery in Europe." Mr
Băsescu stated that Romania is not chasing its Roma citizens out of
the country and added that Romania could send extra police to France,
if needed, to dismantle criminal Roma networks. Mr Ponta said the real
solution to the problem is education and jobs: children from Roma
communities need to attend school regularly and Roma need to find
stable jobs in Romania.

Despite European integration strategies, EU funds and political and
diplomatic efforts, Europe has so far been unable to integrate the
Roma people. Most efforts were focused on dismantling Roma criminal
groups whose activities are widely reported in the media. Yet beyond
this stereotyped image of Roma immigrants, many Europeans know very
little about Roma traditions and cultural heritage and the history of
Roma persecution. Offering Roma citizens €300 ($390) and putting them
on a plane back to Romania, as the French authorities did, is not a
solution, but only a paid vacation. A large category of Roma citizens
emigrated to western Europe because they wanted to work and offer
their children a better life then the one they had in Romania.

The European Commission’s Roma integration strategy points out four
crucial areas such as access to education, employment, health care and
housing. Only a limited number of Roma children complete primary
school and many of them are in special education and segregated
schools. Due to their poor living standards and limited access to
quality health care, Roma people live on average ten years less then
other European citizens.

When it comes to employment, full Roma integration in the labour
market could bring economic benefits estimated to be around €500m
annually for some countries, such as Romania, Bulgaria, Serbia or the
Czech Republic, according to World Bank research. Their integration
would improve productivity, reduce government payments for social
assistance and increase tax revenue.

Up to €26.5 billion of EU funding is currently available for member
states for social inclusion projects for the Roma. Yet countries like
Romania (which has the highest number of Roma in Europe, more than
1.5m) are having problems accessing these funds. In many cases, the EU
is financing only up to 80% of a project and the government needs to
pony up the rest.

Gelu Duminica, the head of the “Impreuna” Agency for Community
Development, a foundation that supports the integration and
development of the Roma community, says five of their programmes that
are financed through the EU are currently suspended because the
Romanian government didn’t make payments: “The situation is desperate.
Some of our staff had to make personal bank loans so we could continue
to finance these programmes. If the government doesn’t make the
payments by February next year, we will lose all the money and shut
down the foundation.” Mr Duminica believes corruption and bureaucracy
are the main causes for this delay. If the government does not wake up
to the need to support Roma integration much more actively and to give
the Roma a voice before elaborating integration strategies, it will
continue to be haunted by Romania’s biggest societal problem for the
foreseeable future.

Monday, September 24, 2012

Romania Gets $880 Million From Mobile Phone Licenses Extension

Romania raised 682 million euros ($880 million) from extending mobile phone licenses, the country’s telecommunications market regulator, ANCOM, said.

France Telecom SA (FTE), Vodafone Group Plc, Hellenic Telecommunications Organization SA (HTO)’s Cosmote mobile unit and two Romanian companies bought the licenses, ANCOM said in a document published on its website today.

The eastern European country was seeking to get about 700 million euros from extending the phone licenses, some of them through 2029. It managed to sell about 85 percent of the auctioned frequencies, the regulator said.

Vodafone paid 228.5 million euros for 11 frequencies, Orange bought 12 frequencies for 227 million euros and Cosmote paid about 180 million for eight frequencies.

Romania’s RCS&RDS SA paid 40 million euros for two frequencies and 2K Telecom 6.6 million euros for one frequency, ANCOM said.

The five companies will pay the amounts for the licenses in two tranches, one by the end of November and the other by the end of June 2013, according to the document.

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

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

Romania’s Ponta Says Diaconescu Lacks Oltchim Stake Money

Romanian media entrepreneur Dan Diaconescu lacks the money to buy a majority stake in Oltchim SA (OLT), Romanian Prime Minister Victor Ponta said, three days after winning an auction for the Romanian chemical company.

Diaconescu, 44, a politician and owner of broadcaster OTV, doesn’t have the 45 million euros ($58 million) he pledged for the 54.8 percent Oltchim stake or the 100 million euros to buy the Arpechim refinery, Ponta told reporters in Bucharest today. The Cabinet will now present a plan to manage the company for the next six months, he said.

The government is struggling to keep its pledge to sell its holding in Oltchim and a minority stake in Transgaz SA (TGN), the country’s natural-gas grid operator, by the end of this month. The sales would help unlock the next tranche of a precautionary accord with the International Monetary Fund.

“We committed to have a privatization in September, but the fact that it failed is not our fault,” he said.

Diaconescu said earlier today at the Economy Ministry that he didn’t sign a purchase contract for Oltchim because the document “was incomplete and lacks certain clauses and addenda.” Under Romanian regulations, a contract must be signed within 10 days from the time of the auction.

“The privatization will fail in case Mr. Diaconescu doesn’t pay the amount in 10 days,” Economy Minister Daniel Chitoiu said.

Oltchim’s buyer will also have the option to purchase OMV Petrom SA (SNP)’s Arpechim refinery after negotiating terms with Romania’s biggest oil company, according to a share sale announcement. OMV AG (OMV), Petrom’s majority owner, signed an accord to sell the Arpechim refinery to Oltchim’s buyer, Prime Minister Victor Ponta said on Sept. 18.

Wednesday, September 19, 2012

FT: Romania: doing OK but for how long?

September 18, 2012
by Kester Eddy

They may not be celebrating on the streets of Bacau or Brasov but Romania has been doing pretty well of late. GDP grew by 1.2 per cent year-on-year in the second quarter for a start.

More fundamentally, says IHS Global Insight, there has been progress on the fiscal deficit and the country’s trade deficit, which was about 11 per cent of GDP before the global recession but has since settled around 4 per cent of GDP. Based on that progress, the US-based information provider has just upgraded Romania’s short- and medium-term sovereign credit worthiness by one notch – bringing Romania’s medium-term rating up to investment grade.

The question is, will the good times last?

This year alone Romania has gone through three governments and has seen a public row erupt between prime minister Victor Ponta and Traian Bašescu, the largely ceremonial president. But Chuck Movit, IHS Global Insight’s economist for Romania is cautiously bullish.

Sure, he downplays his own upgrade, noting that both Fitch and Moody’s also rank Romania at minimum investment grade (only Standard & Poor’s has Romania at the highest junk levels). He also stresses the need to stick to the fiscal and monetary policy paths agreed with International Monetary Fund and European Union under the terms of a €20bn standby loan granted in 2009, and is not shy about problems at Romania’s banks, many of which made loans in foreign currencies before the crisis weakened the leu.

He writes:

Romania still scores risk due to the size of its external financing needs relative to its foreign-exchange earnings, as well as on the size of its banking sector’s liabilities to BIS [Bank of International Settlement]-area banks relative to assets vis-à-vis those banks.

But, in his assessment, crucially, the country “no longer scores risk” on its current-account balance.

Throughout the first seven months of 2012, Romania’s merchandise trade deficit has been essentially unchanged from a year earlier, despite a very negative external economic environment. Although merchandise exports only edged up year-on-year (y/y) during July, the trend in merchandise imports was very similar. In that period, improvements in balances on trade in factor and non-factor services and in net current transfers trimmed the current-account deficit by more than 35% compared with a year earlier.

We project the current-account deficit on average in 2012–2014 to average no more than 2.8 per cent of GDP. If we look at only the part of the current-account deficit that we do not anticipate to be financed by inflows of foreign direct investment, the projected ratio to GDP in 2012–14 on average shrinks to just -0.8 per cent.

Movit argues the future also looks positive. Strong foreign direct investment flows through much of the previous decade have helped improve competitiveness dramatically. Hence, provided western Europe returns to growth by 2013, demand for Romanian exports and incoming FDI will again be on the rise.

Not all are quite so sanguine, however.

Peter Attard Montalto of Nomura in London notes that Romania’s economy is healthier than those of its neighbours, typically suffering negative growth of about 1 per cent. That performance is especially creditable given recent austerity measures, political rifts and Romania’s exposure to the EU periphery.

But Montalto reckons a sharp downturn is inevitable before any modest improvements can be expected next year.

Critically, export growth has dropped to near zero, causing a slowdown in industrial production and exposing “a weaker underlying picture in the economy than the headline numbers suggest”.

Rather than investment kicking in and boosting exports, Montalto sees waning exports leading to reduced disposable income and domestic consumption, plus a downturn in investment.

Employment growth has already started to turn, but as inflation remains sticky given non-core pressures and wage growth also comes under more pressure in this environment, consumption could fall back. Investments should also start to slow from such a fast pace as we reach the end of the current EU funding window.

He says growth this year will be just 0.2 per cent and, even if the government eases the fiscal consolidation brake next year to provide some stimulus, this will “ultimately be unsustainable.” As a result, growth next year may only be 1.2 per cent, he writes.

That’s still not bad in the regional context, but it may still not feel like much for the many households struggling to survive in a Romania under austerity.

As the otherwise upbeat Movit puts it in one cautionary sentence:

Should the political tensions over austerity measures result in a dysfunctional government that is unable to continue to pursue these [consolidation] policies, our view of creditworthiness would suffer considerably.

In other words, Romania needs to hang on and hang in there, or all the good achieved thus far could yet come undone.


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FT: Romania receives Schengen area setback

By James Fontanella-Khan in Brussels

Romania’s hopes of joining the EU’s Schengen passport-free zone this week were thwarted after several member states said its membership would be premature while the east European country remains in political turmoil.

A meeting of EU interior ministers scheduled for Wednesday in Brussels, during which officials were supposed to vote on Romania’s accession to the border-free zone, was postponed after Germany, the Netherlands and Belgium made it clear they were not ready to support Bucharest’s admission.

The decision on the enlargement of the Schengen area, which requires the unanimous consent of all existing EU members, may be delayed further until after Romanian parliamentary elections in November, according to EU diplomats.

The delay is the biggest blow suffered by Bucharest since a bitter power struggle between the president and prime minister provoked international concerns about the democratic stability of one of the EU’s newest members.

“The meeting had to be cancelled to avoid what would have been an embarrassing situation for all parties involved,” said an EU diplomat.

“In March [interior ministers of] all 27 countries had agreed to come up with a decision on Romania’s entry, but it became clear that following the political situation in Bucharest it was difficult for several countries to back their entry.”

A sharp political dispute – in which Victor Ponta, Romania’s centre-left prime minister, curbed the constitutional court’s independence as part of his efforts to sideline president Traian Basescu – has led several EU members states to reconsider their position.

Germany was not opposed to entry of Romania to the Schengen area – but the unexpected deterioration of the rule of law in the country led Angela Merkel, the chancellor, to say this year that it was “unacceptable when fundamental principles of the rule of law are violated in a European Union country”.

A Brussels-based diplomat said: “Berlin has realised that unless we send Bucharest a clear sign they will not get serious about addressing the concerns raised by the EU.”

The decision to postpone a vote about Romania has affected Bulgaria, which was also expecting a final verdict on the matter on Wednesday. Both countries joined the EU in 2007 hoping for a rapid accession to Schengen, which abolished internal borders across most of the bloc in 1995.


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Romania Asks Court to Annul Eldorado Mine Environment Permit

Romania filed a court request to annul an environmental permit for a gold-mine project owned by Canada’s Eldorado Gold Corp. (ELD) claiming issuance irregularities, Environment Minister Rovana Plumb said.

The ministry also wants to suspend the permit for Eldorado’s Certej mine throughout the court trial because it was issued in July by the regional agency for environmental protection in the western Timisoara county without the national agency’s knowledge, Plumb told reporters in Bucharest today.

“We are taking a step to repair an illegality,” Plumb said. “There have been several gaps and irregularities in the permitting process. The permit is illegal because it violates Romanian and European legislation since one of the neighboring countries, namely Hungary, sent us negative feedback.”

The Environment Ministry started an investigation into the Certej mine permit earlier this month after non-profit organizations, including Alburnus Maior, challenged it, citing “an extremely dangerous precedent for Romania” because of environmental issues caused by using cyanide to extract gold.

Eldorado said on Sept. 14 that the permit was granted in “full compliance” with all Romanian legislation and European Union regulations. The permitting included a “comprehensive public consultation process in Romania and with neighboring countries,” it said.

Plumb said the ministry will respect any court ruling.
Rosia Montana

The ministry is also assessing the permitting of another gold mine project owned by Canadian company Gabriel Resources Ltd. (GBU) in Rosia Montana, in the center of the country.

Plumb said there is no connection between the permitting process of the two projects and the Certej permit is not a precedent for the Rosia Montana mine.

“The Rosia Montana project is still under evaluation as it is of national interest and requests a serious and responsible approach,” Plumb said. “The technical committee for the project’s analysts will not meet again until the procedure about financial guarantees is completed.”

The permitting process may go ahead once the country translates into its legislation some European Union directives about industrial and mining waste, Plumb said.

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

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

Romania Still Under EU Scrutiny After Ponta Visit

Prime Minister Victor Ponta's visit to Brussels has not entirely eased EU concerns about Romania’s respect for the rule of law

Marian Chiriac 
Bucharest
Balkan Insight

Prime Minister Victor Ponta on Tuesday claimed that Romanian-EU relations, strained by the bitter political infighting between the government and the President, were back on track. They “have become normal," he said. "Furthermore, Romania is keen to stay firm on its European path," he added.

Ponta’s optimistic statement came a day after he met the President of the European Commission, Jose Manuel Barosso, and when, Ponta said, “Romania received positive feedback” regarding the country’s continuing commitment the rule of law.

But an official statement from Brussels was more reserved in tone, underlining the need for Romania to “promote all European values, the values of justice and freedom and all the features of a truly pluralistic society”.

The European Commission also told Romania to step up reforms of the civil service and its administrative rules or risk losing EU funding.

It also called on Romania's political elite “to set their focus very firmly on the urgent need to restore institutional and political stability” ahead of parliamentary elections scheduled for November.

Ponta sought the meeting in response to a decision by his political rival, President Traian Basescu, to seek meetings of his own with Barroso and Herman Van Rompuy, the European Council President. Basescu met the two EU leaders last Friday.

A harsh dispute between Ponta and Basescu included a referendum on the impeachment of President on July 29, in which most voters favoured impeaching him.

Basescu has remained in his post, however, as the turnout was only at 46 per cent, which was below the 50-per-cent threshold needed for the result to be validated by the Constitutional Court.

Ponta's leftist ruling coalition challenged the result, arguing that the lists of eligible voters was out of date. But late last month the court ruled that the referendum was not valid and Basescu returned to his post.

Since then Ponta has said that he is ready to cohabit with Basescu as long as the President “follows his constitutional powers…. Which are not very wide”.

Ponta’s battles with the President raised concerns in Brussels about Romania’s commitment to the rule of law, especially when the government used emergency decrees to limit the Constitutonal Court’s powers and replace the speakers of both houses of parliament and the national ombudsman.

Basescu accused Ponta of organising “a coup”, a point of view that enjoys some sympathy in European Commission and among some members of European Parliament.

Following the political crisis in Romania, Barroso has obliged the Ponta government to make 11 pledges of concrete action to reassure the EU that his government is committed to the rule of law and the independence of the judiciary.

It has also led the Commission to bring forward the next report on Romania's progress since EU accession in 2007 to the end of this year.

WSJ: Romanian President For Summit

By Laurence Norman

It was the catalyst that kicked off the summer war of words between Romanian Prime Minister Victor Ponta and his political nemesis President Traian Basescu.

After parliament voted to send Mr. Ponta to the June meeting of the European heads of government in Brussels, the constitutional court struck that decision down, saying it was the president who should attend. Mr. Ponta went anyway, denouncing the court as the puppet of the president and triggering a battle that culminated in the failed effort to impeach Mr. Basescu on July 29.

In Romania, there are few signs the battle between Romania’s two dominant politicians is dying down. Indeed, many fear tensions will escalate between Mr. Ponta’s center-left camp and Mr. Basescu’s center-right group ahead of parliamentary elections in December.

Still, in Brussels at least, the two men are trying to show they’ve moved on, officials say. The most concrete sign of this so far is a deal on who will represent the country at next month’s heads of government summit.

According to a senior official in Brussels, Mr. Ponta told European Commission President José Manuel Barroso during a meeting in Brussels on Monday that he is okay with Mr. Basescu coming to the summit. An official close to the Romanian government confirmed the information. Mr. Basescu was in Brussels for meetings last Friday.

At the commission, even these limited signs of cooperation come as a relief after the political trench warfare over the summer.

There was exasperation here over the fight between the two men, which rocked investor confidence in Romania, hitting the currency and domestic asset markets and leading Brussels to warn that many years of democratic progress in the country was at risk.

“There’s quite a similar pattern emerging in that both say they want to look ahead and learn from what happened,” a Brussels source said. “There’s recognition that what happened has really done damage.”

The person said the ebbing of the political conflict has allowed Brussels to put back atop the agenda efforts to improve Romania’s take-up of European Union structural funds. At the moment, Romania has absorbed just 9.7% of the €19.2 billion earmarked for it in the current 2007-13 budget period. Romania currently has the lowest take-up rate in the 27-nation bloc.

Still, real doubts remain over whether Messers Basescu and Ponta have agreed to anything more than brief and overseas-based truce.

Back home, the two men continue to attack each other vociferously in the press. Mr. Basescu recently suggested that the people who organized his impeachment – which he called a “failed coup” – should be “held responsible before state institutions.”

And while Mr. Ponta enjoys friendly chats in Brussels with Mr. Barroso, people close to him continue to fulminate against Brussels’ “extraordinarily biased approach” during the political crisis.

Even on the issue of who should attend the heads of government summit, the wounds are fresh.

“Mr. Ponta doesn’t want to create any conflicts with the president,” the Romanian official said. “However, it’s absolutely obvious from a European perspective that the person who should attend the European Council is the prime minister. It is all about economic matters. The president has absolutely no competence on that.”

Gordon Fairclough contributed to this article.

Tuesday, September 18, 2012

Romania warned over funding

By Andrew Gardner - 17.09.2012
http://www.europeanvoice.com/
Barroso calls for “immediate measures” to improve the civil service and public contracts.


The European Commission today urged Romania to step up reforms of its civil service and its administrative rules or risk losing EU funding.

The warning came in a meeting between the Commission's president, José Manuel Barroso, and Romania's Prime Minister Victor Ponta that also covered a political crisis in Romania that has forced the Commission to extend its special monitoring programme for the country.

The meeting had been instigated by Ponta, in response to a decision by his political rival, President Traian Băsescu, to ask for meetings with Barroso and Herman Van Rompuy, the European Council's president.

Băsescu met the two EU leaders on Friday (14 September) for what one diplomat described as an opportunity to “re-acquaint” himself with them following his reinstatement as president in August.

Ponta successfully manage to persuade the Romanian parliament to suspend Băsescu in July, but his attempt to impeach Băsescu failed in August when the constitutional court concluded that less than 50% of the electorate had turned out to vote in a 29 July referendum to remove the president from office.

The war between Ponta and Băsescu in July prompted an unprecedented intervention by Barroso, who obliged the Romanian government to make 11 pledges of concrete action to reassure the EU that his government was committed to the rule of law, including independence of the judiciary. It also led the Commission to bring forward, to the end of the year, the next report on Romania's progress since accession. The post-accession monitoring mechanism – the ‘co-operation and verification mechanism' – was set up specifically for Romania and Bulgaria, which joined the EU in 2007.

After his talks with Ponta, Barroso issued a statement in which he called on Romania's political elite “to set their focus very firmly on the urgent need to restore institutional and political stability” ahead of parliamentary elections scheduled for November. He indicated that the Commission is especially anxious about the possible politicisation of nominations to the country's anti-corruption body.

However, Barroso also took the opportunity to talk about the state of Romania's finances and reforms of its civil service. Romania is currently under an international programme that includes a stand-by agreement enabling it to draw on roughly €5 billion in financial support from the International Monetary Fund and the European Union. At the same time, however, the country is proving incapable of spending money already allocated to it by the EU from its normal budget.

According to the European Commission, Romania's absorption capacity – its ability to spend money effectively – is just 7.4%, a figure that Barroso has previously described as “painfully low”. On this occasion, he identified the country's public-procurement rules as a specific problem, in addition to its “administrative capacity”.

In all, Romania was allocated around €20 billion in the EU's seven-year budget, which ends in 2013.

Ponta has previously said that Romania could forfeit €100 million this year, and more than €1bn next year.

Under EU rules, money can be released only to approved projects and only if a country is able to meet its obligation to contribute to EU-funded projects – the ‘co-financing' requirement. The funds must then be spent within a specific time period. Auditors can also prevent the release of funds if they deem that a project fails to meet their criteria.

Romania has significant problems on all counts. In February, the Commission temporarily halted billions of euros of payments after Romania's audit office found irregularities.

Barroso today said that the government should take “immediate measures”.

A Romanian diplomat today said that “the Commission and Romania are working on finding solutions” and that Romania is “confident” that it will avoid losing the money allocated to it.

One possibility mentioned in the past is that the Commission would reduce the co-financing requirement. The EU has already changed the co-financing requirement to Romania's advantage as part of its effort to help EU countries whose economies are under international ‘adjustment programmes'.

Monday, September 17, 2012

Romania to Annul Eldorado’s Gold Mine Permit, Ponta Says

Romania’s government will seek to annul an environmental permit for a gold mine project owned by Canada’s Eldorado Gold Corp (ELD) because of irregularities in the use of cyanide, Prime Minister Victor Ponta said.

The cabinet started legal proceedings to cancel the permit issued by the regional agency for environmental protection in the western Timisoara county for Eldorado’s Certej mining project, Ponta said on his Facebook Inc. page today.

“The Environment Minister has informed us that this permit for the Certej area was issued without respecting the legal procedures and clearly it will be annulled,” Ponta said.

Romania’s Environment Ministry said on Sept. 3 it started an “emergency” investigation of the Certej gold mine project environmental permit. Minister Rovana Plumb also asked for the head of the local environmental agency to be fired because he failed to inform the ministry about the issuance of a permit for a project of “national and international interest.”

Non-profit organizations, including Alburnus Maior, issued a statement the same day challenging the permit, citing “an extremely dangerous precedent for Romania,” because of environmental issues caused by using cyanide to extract gold.

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

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

Friday, September 14, 2012

Romania to Annul Eldorado’s Gold Mine Permit, Ponta Says

Romania’s government will seek to annul an environmental permit for a gold mine project owned by Canada’s Eldorado Gold Corp (ELD) because of irregularities in the use of cyanide, Prime Minister Victor Ponta said.

The cabinet started legal proceedings to cancel the permit issued by the regional agency for environmental protection in the western Timisoara county for Eldorado’s Certej mining project, Ponta said on his Facebook Inc. page today.

“The Environment Minister has informed us that this permit for the Certej area was issued without respecting the legal procedures and clearly it will be annulled,” Ponta said.

Romania’s Environment Ministry said on Sept. 3 it started an “emergency” investigation of the Certej gold mine project environmental permit. Minister Rovana Plumb also asked for the head of the local environmental agency to be fired because he failed to inform the ministry about the issuance of a permit for a project of “national and international interest.”

Non-profit organizations, including Alburnus Maior, issued a statement the same day challenging the permit, citing “an extremely dangerous precedent for Romania,” because of environmental issues caused by using cyanide to extract gold.

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

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

Romania: How To Buy An EU Citizenship

By: Balkan Insight
September 13, 2012


By Adrian Mogos and Vitalie Calugareanu

Vladimir’s ‘grandmother’ Svetlana Alliluyeva shares a name and a birthday with Stalin’s daughter.

Stalin would not have been amused. A man named Vladimir, apparently the Soviet dictator’s great-grandson, stands at the threshold of acquiring a Romanian passport and with it, the right to work within the EU.

When he crosses that threshold, Vladimir will reverse one of Stalin’s achievements. His grandparents were citizens of Romania in the first half of the twentieth century, long before it joined the EU.

Today, Vladimir is entitled by law to acquire the citizenship that was taken from his grandparents, one of whom shares a name and a birthday with Svetlana Alliluyeva, the Soviet leader’s daughter.They lost their nationality at the end of the Second World War, when Romania ceded the territory of Moldova to Stalin’s Soviet Union.

He is among hundreds of thousands of Moldovans with Romanian ancestry who regard the border between the two countries as nothing but a bureaucratic invention.

But Vladimir is keeping a secret from the bureaucrats who are about to let him into the EU – his ancestry is also invented.

According to certificates acquired from the Moldovan state archive, his illustrious grandmother was married to one Ostap Bender, who shares a name with the con-man antihero of the Soviet novel, The Golden Calf.

The papers from the archive reveal a past rich in historical coincidence. Ostap’s Moldovan birth certificate says he was born on June 28, 1914 – the day of the assassination of Franz Ferdinand, and the start of the First World War. The marriage certificate meanwhile shows that Ostap and Svetlana tied the knot on September 2, 1945: the day Japan surrendered to the US.

It is highly unlikely that a woman named after Stalin’s daughter took a husband named after a fictitious Soviet trickster on the day the Second World War ended.

Today however, it is entirely possible for a man claiming to be their descendant to buy the right to work in the EU. All he needs are patience, cash, and the right connections among the citizenship brokers and bureaucrats of Bucharest and Chisinau.
Passport To The EU

The territory of Moldova was part of Romania between 1918 and 1940, and again between 1941 and 1944. Formerly known as Bessarabia, it was annexed by the Soviet Union during the Second World War and became an independent republic in 1991.

In the same year, Bucharest adopted a law granting foreign nationals of Romanian descent the right to become citizens of the country. Since then, Romania has processed an estimated 225,000 citizenship applications from Moldovans, according to a study published in April 2012 by the Soros Foundation in Romania.

The study was compiled from data provided by Romanian institutions, much of which is incomplete or in dispute. In the absence of exact numbers, the Soros report argues that the figure of 225,000 serves as the “most relevant approximation” of the number of people who have been granted Romanian citizenship in the last 20 years.

The Soros study shows that the annual number of citizenship applications from Moldova has been rising steadily. The rise has coincided with changes in Romanian legislation, and with Romania’s entry into the EU in 2007. Moldova is the poorest country on the bloc’s borders, and a large proportion of its youth already work in wealthier economies abroad.

The study also shows that Romania has begun processing citizenship applications faster since 2007. Of all applications processed by Bucharest since 2002, more than half – around 116,000 – have been handled in the last four years. Again, the study does not provide a breakdown of how many of these applications were successful.

Many Moldovans regard the Romanian passport as the key to the EU, according to Marian Gherman, a Bucharest prosecutor whose office has investigated a network of touts and bureaucrats who were expediting citizenship applications for money.

“Everybody knows it,” he said. “They ask for Romanian citizenship only because it gives them the freedom to travel and work within the EU.”

An official from the National Citizenship Authority, NCA, in Bucharest, speaking on condition of anonymity, confirmed that Moldovans had shown little interest in acquiring Romanian nationality until 2007.
‘Backdoor’ Fears

Moldovans may have several good reasons to seek Romanian nationality – especially where they are legitimately entitled to it. Romanian President Traian Basescu said in 2009 that up to a million Moldovans – representing more than a quarter of the population – wanted to acquire his country’s citizenship. He has repeatedly promised to help applicants by cutting red-tape.

However, this investigation, sponsored by the European Fund for Investigative Journalism, reveals that many Moldovans still prefer to acquire Romanian citizenship through unofficial channels. They frequently pay hundreds of euros to brokers in the hope of expediting their applications.

Inexperienced Moldovans risk being ripped off when they use illicit intermediaries. But the unofficial channels can also be very efficient. As this investigation shows, they can even generate proof of Romanian ancestry where none exists.

The EU does not interfere on citizenship, describing it as a sovereign matter for member states. However, Romania’s policy has long prompted accusations in the media that it is operating a “backdoor” into the EU, allowing impoverished Moldovans unlawful access to the bloc.

In 2010, France spoke out against Romanian efforts to join the EU’s border- free Schengen zone. Among other factors, the French EU affairs minister at the time, Pierre Lellouche, cited “the distribution of Romanian passports” to Moldovans as a cause for concern.

The April 2012 report by the Soros Foundation in Romania argued that many of these fears were unfounded. While criticising Bucharest for an apparent lack of transparency, the study said there was no evidence to support claims of Moldovan migrants surging unchecked into Europe. Nor did the report find any evidence to support Basescu’s statement that a million Moldovans were seeking Romanian citizenship.

The Soros foundation is one of several groups in the Open Society network that aim to promote democracy in eastern Europe.

[Disclosure: Open Society contributes to the European Fund for Investigative Journalism. Funds affiliated to the European Union and to Open Society also contribute to the Balkan Investigative Reporting Network’s programmes.]

The authors of the Soros Foundation report said Romania’s naturalisation programme – although disorderly – had created proportionately fewer citizens than similar efforts in countries such as the UK or France. The study also attributed the steep rise in citizenship awards after 2007, the year Romania joined the EU, to the simplification of the process for awarding passports.
‘Genuine Documents’

Our investigation does not confirm that Romania is operating a “backdoor” for unchecked and unlawful migration, as some within the EU fear.

Indeed, many Moldovans may use brokers because they are frustrated with the slow pace at which Romania processes citizenship applications. According to Gherman, the Bucharest prosecutor, the grey market is attractive even to legitimate applicants because it operates faster than the official process, which can take up to six years to award nationality.

Some Moldovans may also turn to intermediaries because they are already working illegally in western Europe, and cannot leave to apply for citizenship in person. “They can’t come to Romania… because they cannot go back to their jobs,” Gherman said.

However, our investigation does reveal the existence of a thriving grey market for Romanian nationality, intersecting official and unofficial channels. Above all, this calls into question assurances by Romanian officials that all citizenship applications are checked thoroughly to weed out fraud.

By working with a man posing as a citizenship hopeful, “Vladimir”, we showed that the procedure for acquiring a Romanian passport cannot distinguish genuine applicants from those whose grandparents are plucked from Soviet history and literature.

After acquiring birth and marriage certificates for Ostap Bender and Svetlana Alliluyeva, we used the same intermediary to get hold of police records from the Moldovan and Romanian authorities, confirming that Vladimir did not have any criminal convictions.

Along with the certificates from the Moldovan archive, these documents were presented at the citizenship bureau in Bucharest, where an official confirmed that they appeared genuine.

According to the official, Vladimir could apply to take the oath of citizenship once he had completed a few more formalities – namely, submitting his identity card, an application form, and a statement from a notary.

The official’s confidence was not misplaced. Vladimir’s documents have the seals and signatures of all the appropriate institutions and officials in Moldova and Romania. But while the papers may be legitimate, the means with which they were procured were not.
Fresh From The Archive

We joined Vladimir as he set off on his quest for EU citizenship in Chisinau, the capital of Moldova. The touts were easy to spot, having practically set up stall outside government ministries and the Romanian consulate. They wore pouches around the waist and carried business cards in their hands. At the gates of official buildings they huddled together, drinking coffee or speaking intently into mobile phones.

One of the touts, identifying himself as Vadim, boasted of his contacts with Romanian officials in Bucharest and in the eastern cities of Iasi and Vaslui. He led us to a lady who introduced herself as Maria. As she could not arrange documents in under six months, we continued our search.

A tout calling himself Emil told us he was not doing anything illegal – merely using his influence. “I have a lawyer in Bucharest who can speed things up,” he said. He handed out a business card, advertising a website which promised Romanian citizenship for anyone, anywhere.

The prices quoted on the site varied according to how fast the application would be processed. For €700, all the essential citizenship documents could be arranged within 15 months. Payment of €1,000 guaranteed the documents within 10 months, while a fast-track application – completed within five months – cost €1,500. Once citizenship had been acquired, further payment of €95 and a 10-day wait would secure the applicant a Romanian passport. A Romanian ID card would cost an extra €140.

Back on the streets, another tout said he could arrange the necessary birth, marriage and death certificates for €300. A young woman, claiming to be a university student, interrupted the conversation and promised to lead us to a reliable intermediary. She introduced us to Arghira, a lady in her fifties with a bruise above her eye. She too quoted a price of €300, which was then reduced to €250. Arghira led us to a public notary, in whose presence Vladimir signed a document. But despite this promising start, Arghira proved to be unreliable, demanding more money at every meeting.

Eventually we struck gold with a middle-aged man who gave his name as Ion. He promised to procure the necessary documents for €70 each. By the end of February 2012, he had provided birth and marriage certificates for Ostap and Svetlana. The documents were freshly issued by the Moldovan state archive, and they confirmed that Vladimir’s “ancestors” had once been citizens of Romania. Shortly afterwards, Ion also provided statements from the police in Romania and Moldova, showing that Vladimir did not have any criminal convictions.

As confirmed by the official in Bucharest, Vladimir was now on the brink of taking the oath of citizenship. In the interests of timeliness, we decided to end our pursuit of Romanian nationality at this point.
Ghostly ‘Guests’

Had Vladimir gone on to receive citizenship, he would then be in a position to apply for an identity card, which is regarded as the ultimate objective of the citizenship process.

New citizens from Moldova prefer the identity card to the passport because it attracts less scrutiny at EU borders, while offering the same privileges. Recent recipients of Romanian citizenship are still regarded with suspicion at some borders. The identity card, unlike the passport, does not reveal how long its holder has held the nationality.

In order to qualify for an identity card, a citizen must show that they have been resident in Romania for a minimum specified period. Here too, the network of illicit intermediaries is ready to assist, by fabricating proof of residence.

The classified section of a newspaper in Iasi, a large city in eastern Romania, carries ads looking for locals to host Moldovans that are seeking the ID card. One such ad promises €40 per guest for anyone willing to host up to 20 people for short periods. In reality, the host is being paid to say that the “guests” are staying at a particular property. The ad asks only that anyone interested have “contacts with the police precinct”.

It is not hard to find further evidence that the intermediaries are helping applicants forge their residency. Several citizenship websites contained a picture of the same Romanian ID card, apparently a specimen advertising the final product. While key details on the card had been deliberately blurred, we were able to establish the name of the card’s owner and his place of birth – a town in Moldova. The address on the card led to a one-bedroom apartment in a run-down district of Bucharest. No one answered the door. However, a search through online registers revealed that the same address was used by several Moldovans with Romanian citizenship, as well as some Romanian and Chinese firms.

Although it is not illegal for several citizenship applicants to claim residence at the same address, some Romanian officials have tried – without success – to clamp down on the practice.

Victor Gindac, a director in the Office for Immigration, said he began receiving reports in 2009 of individuals who had been tricked by brokers and lawyers in the residence racket. He added that his employees received threats after attempting to unmask lawyers in Bucharest who had helped forge proof of residence.

The NCA has also tried to warn applicants against using unofficial brokers and lawyers to expedite their citizenship applications. However, a statement to this effect on the NCA website, posted in February 2012, provoked fierce complaints from lawyers in Bucharest. The online warning was duly amended to exclude lawyers from the category of intermediaries.
Migrants Go Legal

Romania carried out its most high-profile crackdown on the citizenship racket in March 2012. Dozens of people were arrested and thousands of euros were recovered in a series of raids. NCA employees as well as brokers holding Moldovan and Romanian nationality are among those now awaiting trial.

According to Gherman, the Bucharest prosecutor, they formed part of a network that was responsible for handling around 1,000 citizenship applications. Court documents said US investigators had helped trace the group’s financial transactions.

Moldovan officials also say they made several arrests in concert with the Romanian crackdown in March. Anastasia Mihalceanu, a spokeswoman for the anti-corruption agency in Chisinau, said some 80 people had been questioned over the citizenship racket – all of them brokers or people employed by them. “Here in Moldova, no officials were involved,” she added.

Separately, Moldovan prosecutors and anti-corruption officials say they have been making arrests throughout 2012. Of the nine people questioned over citizenship rackets since January, some have reportedly been state officials or lawyers. Only two of the nine cases have proceeded to trial so far. There have been no convictions.

Our investigation shows that the grey market has continued to thrive, despite arrests on both sides of the border. The birth and marriage certificates for Ostap and Svetlana were procured just weeks after the March crackdown.

And while Mihalceanu says state employees were not among the 80 arrested in the Moldovan sweep, our investigation suggests they are nonetheless complicit in the citizenship racket. How else could the state archive in Chisinau deliver legitimate-seeming records for fictitious individuals?

At best, the March crackdown may have succeeded in temporarily slowing down the illicit citizenship business. In April, we met a Moldovan man outside the passport directorate in Bucharest. His Romania-based broker, a lady named Oxana, was due to procure his identity card – but had been scared off by the recent arrests. “She knew somebody in a high position – but now she wants to lie low for a while,” he said. The man, who gave his name as Andrei, said it had taken him a year to acquire his Romanian citizenship through intermediaries, at a cost of almost €1,500.

Meanwhile in Chisinau, several Moldovans said they had used their new nationality to take jobs in the EU. All said they had migrated in order to support families struggling in dire poverty.

Alexandru Covas, a garage employee, said he used to work illegally in Italy and would dread being stopped by Italian police – until he received his Romanian citizenship. “The passport is a salvation but I can’t stand the Romanians,” he said. “They are selfish, treacherous people.”

Interviewed while visiting his hometown in Moldova, Veaceslav Mandis said he did not feel he had profited unfairly by becoming a Romanian national: “Nobody asked my grandfather when they took away his Romanian citizenship in 1945.” A former teacher who now works as a truck driver in Italy, Mandis said the passport meant he did not have to break any laws.

Liuba Carpineanu, a Moldovan who has worked in Italy as a carer for the elderly, said her Romanian passport spared her from using people traffickers. “The first time I left Moldova, we had to pay €4,000 to a guide who took us through swamps and forests,” she said. “I don’t want to remember what we went through.”
Disputed Figures

While the advantages of acquiring Romanian citizenship are obvious, the number of beneficiaries remains in dispute.

Efforts to draw conclusions about the process are hampered by a lack of clear data, and by dramatic discrepancies in the figures provided by various institutions.

For instance, the NCA told us it had approved around 15,000 applications in the period 2007-11. It said it had rejected around 1,000 applications in the same period. Taken together, this would mean the NCA had processed around 16,000 applications in that time.

However, this contradicts official figures quoted by the Soros Foundation’s April 2012 study, which say that the NCA had processed 116,000 applications between 2007 and August 2011.

While the study did not have exact figures for how many citizenships were granted, the authors suggested that most of the applications in the 2007-11 period would have been successful.

The NCA did not comment on the discrepancy, only saying that its figures were correct. The Soros Foundation is also standing by the figures. The study containing them was released in the presence of NCA representatives.

The NCA insists it carries out thorough checks on all citizenship applications. “If there are any suspicions over a document [such as a birth or marriage certificate], there are supplementary verifications,” NCA spokeswoman Gabriela Neagu said.

A Moldovan citizenship broker offered an alternative guarantee. “Give me a Russian from Siberia,” he boasted, “and I will make him a Romanian citizen.”

Additional reporting by Vitalie Selaru in Chisinau and Lina Vdovii in Bucharest. Editing by Neil Arun for the Balkan Investigative Reporting Network.

This article was produced with support from the European Fund for Investigative Journalism.

French minister: France will continue to expel Roma in illegal camps; Roma arrive in Romania

By Associated Press, Published: September 13

BUCHAREST, Romania — A French minister said Thursday authorities will continue to expel Roma who camp illegally in France as more than 100 were flown back to Romania from the central town of Lyon.

The Roma, bedraggled-looking women, men and babies, landed at the city’s Henri Coanda airport, saying they had lived in camps, slept rough in the woods or in other accommodation. Some refused to talk with reporters and concealed their faces.

“We stayed in France to earn our daily bread. We begged, we searched through the garbage,”35-year-old Marin Lican said. “Here they must give us something to work. We need to have a place and something to do to earn some money. We have three kids.”

A 65-year-old man, who identified himself as Gindacu, said: “We didn’t have money here, the cost of living is very high ... everything is expensive, the country is in crisis.

“It wasn’t all that nice because I was estranged from my country where I was born and raised,” as he prepared to head home, about 300 kilometers (190 miles) west of the capital, Bucharest, with some of the 27 family members who had accompanied him during his year-long stay in France.

Roma climbed on buses headed to the capital while others, including nursing mothers, squatted outside the airport terminal sitting next to scruffy luggage, waiting for later buses.

Their arrival coincided with a two-day visit by French Interior Minister Manuel Valls who said Thursday that “France has a policy of evacuating illegal camps and of escorting them to the border.” Romania has more than 1 million Roma, also known as Gypsies.

In August, French police expelled hundreds of Roma from illegal camps in the suburbs of Paris. On Monday, the U.N. High Commissioner for Human Rights, Navi Pillay, said she is worried about Roma rights.

On Wednesday, Romania and France signed a two-year deal to repatriate dozens of Roma families.

Thursday, September 13, 2012

France, Romania sign pilot deal on Roma repatriation

BUCHAREST (Reuters) – France and Romania signed a two-year deal on the voluntary repatriation of Roma people to Romania on Wednesday, part of efforts by Paris to send home hundreds of illegal immigrants living in squalid conditions near French cities.

Around 80 families will return to Romania under the pilot programme signed by French Interior Minister Manuel Valls and European Affairs Minister Bernard Cazeneuve during talks with Romanian officials in Bucharest.

Valls, a law and order Socialist who has continued the much criticised repatriation policies of the previous conservative French government, has defended police raids to break up Roma camps near Paris, Lyon and Lille on health grounds.

The Roma come mostly from Romania and Bulgaria, fellow European Union member states that human rights groups say discriminate against the minority.

An estimated 15,000 to 20,000 Roma immigrants in France live mainly in squalid camps in city outskirts. The French authorities say they lack the necessary residency permits.

“We wish to send a message to the public that … our joint efforts should be focussed on a solution in which the Roma settle in their country of origin, Romania,” Valls said after meeting Romanian Prime Minister Victor Ponta.

The Romanian leader said his country accepted its responsibility to integrate the Roma community, adding that his government needed support from the European Union and France.

Roughly 200 Roma and supporters protested earlier outside the government and president’s offices, saying Romanian officials were only pretending to care about the problems facing their minority.

France’s actions have come under close scrutiny from U.N. human rights investigators, as well as the European Union, which two years ago criticised a crackdown on illegal Roma camps launched by Nicolas Sarkozy, who lost the presidency in May.

(Reporting by Luiza Ilie; Editing by Jon Boyle)

Wednesday, September 12, 2012

Romania’s Leu Falls as Concern Over ECB Plan Outweighs Inflation

The leu weakened as concern the European Central Bank’s bond-buying plan may be derailed outweighed a rise in Romania’s inflation rate.

The leu depreciated 0.4 percent to 4.4898 per euro by 6 p.m. in Bucharest, erasing yesterday’s gains, according to data compiled by Bloomberg. Yields on the country’s 2018 euro- denominated bonds rose four basis points, or 0.04 percentage point, to 4.748 percent.

Investors’ concern over the success of the ECB’s program increased after Mariano Rajoy, Spain’s prime minister, said late yesterday he won’t allow the European Union or the ECB to stipulate how the nation narrows its budget deficit as a condition for buying the country’s bonds. Romania’s inflation rate climbed for a third month in August to the fastest in a year at 3.9 percent, exceeding the 3.7 percent median estimate of eight economists in a Bloomberg survey.

The inflation data “had no immediate impact on the leu, but might eventually prove favorable, as it could fuel expectations of tighter liquidity conditions,” Vlad Muscalu, a senior economist at ING Groep NV in Bucharest, wrote in an e- mailed note today.

Germany’s Federal Constitutional Court in Karlsruhe will decide tomorrow whether to halt the country’s participation in the 500 billion-euro ($640 billion) European stability Mechanism, the euro-area’s permanent bailout fund. Romania sends about 74 percent of its exports to the European Union countries.

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

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

Friday, September 7, 2012

Amnesty International: Romania: Scores of Roma face imminent forced eviction

More than 100 Romani adults and children will be forcibly evicted from an informal settlement in northern Romania unless local authorities back down on a pledge to demolish their homes, Amnesty International said today.

Local officials in the northern town of Baia Mare have given 26 Romani families living in the Pirita settlement until the morning of Friday, 7 September to dismantle their homes. If they fail to comply, the authorities have said they will move in and demolish the housing, leaving the community with nowhere to go.

In a particularly cruel twist, the local authorities have said they expect the evicted Romani families to reimburse the demolition costs.

“This is an unconscionable move to purge Romani families – some of whom have lived in Pirita for years – from their homes, without prior consultation and without providing adequate alternative housing in line with international standards,” said David Diaz-Jogeix, Deputy Director of Amnesty International’s Europe and Central Asia Programme.

“Evictions at Pirita or other settlements must only be carried out as a last resort, after all other feasible alternatives have been explored – forced evictions must be avoided at all costs and any resettlement must be carried out in compliance with international human rights standards.

“It seems to be part of a concerted plan to forcibly evict Romani communities around Baia Mare, which would leave hundreds of children, women and men in the streets with nowhere to go.”

A wider plan

Pirita is one of five informal settlements inhabited by Roma in Baia Mare – the others are Craica, Ferneziu, Valea Borcutului and Horea.

During several visits by Amnesty International delegates, residents expressed fears about the insecurity they face as a result of the constant threat of forced eviction, the lack of formal tenancy for their property, and the absence of adequate information about decisions taken by local authorities that impact on their lives.

Baia Mare authorities have twice in the past announced plans to evict Roma and others from the five informal settlements, in July 2010 and August 2011. But widespread domestic and international criticism led to these plans being halted.

In April 2012, municipal authorities served demolition orders to some 300 Romani families living in three informal settlements, including Pirita.

In the following months, dozens of families were relocated to three former office buildings in the chemical factory CUPROM on the town’s outskirts – an arrangement which falls far short of the criteria for adequate alternative housing.

On 7 June, Amnesty International supported the calls of over 30 Romanian NGOs protesting in the capital Bucharest over the relocation of Baia Mare’s Romani families without adequate prior consultation.

‘Pockets of poverty’

The latest threat to demolish Pirita and evict its residents was the key priority of the political platform of Baia Mare’s new mayor, Catalin Chereches, elected in June this year.

After taking office, the mayor reiterated the commitment to eliminate the “pockets of poverty” in the town. These plans include the demolition of Pirita and Craica – after viewing the Roma settlements from the air while promoting a sky-diving event, Chereches proclaimed that the communities could be razed in less than an hour.

Local authorities have justified the planned demolitions on the grounds that no formal authorization had been given for the construction of housing there. But many of the Romani families in Pirita have been living there for years, while the authorities have tolerated the settlement.

Amnesty International warned the Baia Mare municipal authorities that their plans to evict the Romani families from settlements seem to completely lack human rights safeguards.

“Baia Mare’s authorities must urgently engage in genuine consultation with Roma people across the town to develop long-term housing alternatives in line with established criteria for adequate housing,” said Diaz-Jogeix.

Thursday, September 6, 2012

Romanian Oltchim Management Resigns as Government Plans Sale

The management of Romanian Oltchim SA (OLT) including the chief executive officer resigned and employees staged a protest as the government prepares to sell a majority stake in the chemical company this month.

CEO Constantin Roibu, who has led Oltchim for two decades, and 16 other directors, quit, citing a “lack of dialog” with the head of the Economy Ministry’s industrial asset-sale office, Remus Vulpescu. Communication problems blocked financing initiatives, according to a statement sent to the Bucharest Stock Exchange today. About 200 employees demonstrated in front of the company today because of unpaid salaries over the past two months, private television station Realitatea TV said.

Prime Minister Victor Ponta said two “big” investors are interested in acquiring a majority stake in Oltchim, which the company plans to sell through an auction on Sept. 18. as part of a pledge to the International Monetary Fund. He must sell Oltchim shares and a minority stake in natural-gas grid operator Transgaz SA (TGN) this month to get IMF board approval to unlock the next tranche of its precautionary accord.

“There is no other solution for Oltchim, but to have a private investor willing to keep the jobs and secure the needed financing because the government can’t afford to pump money into the company anymore,” Ponta said today in Bucharest after a government meeting.
Funding Conditions

Vulpescu conditioned the funding needed for Oltchim’s working capital and wages on the replacement of the company’s management, Oltchim also said in the statement.

The government also needs to cut the overdue debt of local authorities and increase natural-gas prices, the fund’s Mission Chief Erik de Vrijer said on Aug. 14.

“We were concerned at one point that no company will show interest in Oltchim and now we have two big companies from two totally different geographical areas,” Ponta said.

The Economy Ministry plans to sell its 188 million Oltchim shares at an indicative price of 0.1 lei a share and will also offer the company debt to the state of about 1.8 billion lei ($502 million) after it failed to convert the debt into shares because of a disagreement with minority shareholders, according to an Aug. 27 statement.

Oltchim’s buyer will have the option to purchase OMV Petrom SA (SNP)’s Arpechim refinery after negotiating terms with Romania’s biggest oil company.

Petrom’s majority owner, OMV AG (OMV), and Exxon Mobil Corp. (XOM) plan to invest about $1 billion in the country, Ponta said after meeting with representatives of the two companies yesterday.

Petrom and Exxon are prospecting the Neptun Block, located 170 kilometers (106 miles) off the Romanian Black Sea shore in water about 1,000 meters deep, which holds a potentially “big discovery” of natural gas.

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

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

Wednesday, September 5, 2012

Romania government support slips but set to win election

(Reuters) - Romania's leftist government has lost support following its failed attempt to impeach the country's president but would still win an outright majority in a parliamentary election later this year, an opinion poll suggested on Tuesday.

The ruling Social Liberal Union (USL) of Prime Minister Victor Ponta was backed by 57.1 percent of voters, the survey conducted by pollster IMAS during August 9-14, showed.

That was down from 66.6 percent recorded in June, before the government took the divisive decision to suspend its right-wing rival President Traian Basescu and call an impeachment referendum.

The USL's ultimately unsuccessful push to dismiss Basescu slowed policy-making, battered the leu currency and raised questions about the fate of an International Monetary Fund-led 5 billion euro aid deal.

The European Commission and the United States criticized the methods used by the government, saying they were a threat to democracy and the rule of law.

If the USL fails to win an outright parliamentary majority in the December vote, Basescu would be in a strong position because the president appoints the prime minister after an election.

The poll, published in newspaper Adevarul, showed the opposition Democrat-Liberal Party (PDL), which has close ties to Basescu, would win 17.8 percent of votes. The party is still unpopular following the wage cuts and tax hikes it imposed while in government earlier this year.

Populist Dan Diaconescu, whose new party advocates steep tax cuts, had 14.1 percent support.

An overwhelming majority of voters chose to impeach Basescu in the impeachment referendum but Romania's Constitutional Court struck down the vote because turnout was less than the required half the electorate.

Analysts said the attempt to remove Basescu reflected a broader struggle for power and control of the judicial system in the EU's second poorest state where corruption is rampant.

DATE POLLSTER USL PDL PPDD UDMR

Aug 2012 IMAS 57.1% 17.8% 14.1% 5.8%

Aug 2012 IRES 54.0% 23.0% 10.0% 5.0%

July 2012 CURS 63.0% 19.0% 9.0% 6.0%

June 2012 IMAS 66.6% 12.7% 9.8% 4.3%

March 2012 IMAS 48.4% 18.6% 16.6% 7.0%

Feb 2012 CSOP 47.0% 20.0% 18.0% 5.0%

Feb 2012 CCSB 57.0% 18.0% 12.0% 4.0%

Jan 2012 IMAS 53.4% 15.8% 13.9% 5.8%

Notes:

USL - The ruling Social-Liberal Union alliance

PDL - the rightist opposition Democrat-Liberal Party

PPDD - Populist People's Party of media tycoon Dan Diaconescu

UDMR - Ethnic Hungarian party, junior ruling coalition party

(Reporting by Luiza Ilie; Editing by Andrew Heavens)

Tuesday, September 4, 2012

In Romania, bride stealing is all part of the wedding fun _ and the party’s getting wilder

By Associated Press, Published: September 3

BUCHAREST, Romania — A white limousine screeches to a halt and a bride, resplendent in frothy gown and veil, is hauled outside by her abductors.

It’s one of Romania’s more colorful customs: bride-napping. And the tradition of snatching the bride from under the nose of groom and guests with the wedding party in full swing is getting bigger, brasher and an increasingly common sight in the Romanian capital, the Balkans’ undisputed party town.

Every Saturday night, brides from Bucharest and beyond are dragged away in a mock abduction by friends and driven to a top tourist spot where they are “held hostage” — all the while pouting, dancing and striking provocative poses for the cameras.

The ransom: a few bottles of whisky or perhaps something more romantic, like a public declaration of love from the abandoned groom. The kidnappers negotiate by phone, working out the details of the payoff. It’s all harmless theatrics meant to add a whiff of risque fun to the nuptials.

Mock abductions of brides are part of marriage ceremonies across the former Soviet Union. In some countries, guests lock up a bride or have her hide in a backroom during celebrations, demanding that the bridegroom delivers a “ransom” — like singing a song, dancing or sometimes paying real money.

In Romania, the custom took off a few years ago when a top football player rented Bucharest’s Arch of Triumph, a major monument modeled after its iconic namesake in Paris, and proposed there to his girlfriend. There was no kidnapping involved but the scene stuck in the popular imagination as a symbol of marriage — and soon the monument became a sort of midnight mecca for bride-napping.

This past Saturday, about 20 brides were held hostage at the Arch of Triumph, which was built in 1922 to honor Romanian soldiers who died during World War I and to celebrate the reunification of Transylvania with the rest of Romania.

One bride was driven in from her wedding in a town an hour east of Bucharest with a gaggle of guests in tow. Another grabbed the toy machine gun of her kidnappers, dressed up as Taliban, and pretending to use it in front of the monument.

Authorities turn a blind eye to the partying under the monument, technically illegal because it’s a historic landmark. Motorists cruise around the square honking, waving and cheering. The outdoor party is one way for Romanians, frustrated with austerity measures and feuding politicians, to let off steam.

One bride, 25-year-old Alisar Dragne, says her abduction was scripted from start to finish.

“Everything was staged and ready in my case. The limousine was waiting for me in front of the restaurant, I was given the ‘leave’ signal by my friends and together we came here to have some fun,” she said. “Now everyone’s thinking what ransom to ask the groom.”

George Neascu, a Roma musician, who plays at the monument every week for small change, said the bride-stealing custom is as old as living memory.

“All sorts of people come here,” said Neascu, “both those who have lots of money and those who have less.”

Monday, September 3, 2012

Journalists under fire

Press freedom in Romania
Journalists under fire

Sep 1st 2012, by The Economist Online

TIMES are tough for some journalists in Romania working for the international media. They are victims of a fierce campaign initiated by government officials and Cotidianul, a news website. The allegations of ethical and other violations are widely reported in other media too.

Der Spiegel, El País, Deutsche Welle, CNN, The Economist, Le Monde, USA Today and France 24 are some of the media outlets involved. Their journalists have been accused of being “anti-Romanian agents”, paid by Traian Băsescu, the president, to misinform international audiences.

The furore erupted during a period of political turmoil in Romania, in which Mr Băsescu was suspended from office amid attacks by the government of Victor Ponta. The presidential camp says the government is attacking democracy and the rule of law. The government camp says they are defending it against abuse of power by the president.

Raúl Sánchez , a correspondent of El País, a Spanish daily, was accused in July by Cotidianul of working as an undercover agent for the Romanian Cultural Institute and Mr Basescu. These accusations follow an interview he conducted with the prime minister, in which Mr Ponta said for the first time that he was willing to resign if allegations of plagiarism against him turned out to be true. An ethics committee subsequently ruled that he had plagiarised his doctoral thesis, but he did not resign.

Cotidianul also accused Keno Verseck, a freelance who reports for Der Spiegel, a German weekly, and Deutsche Welle, the German public-funded external broadcasting service, of lying and misinforming his audience about Romania’s political crisis. In a report for Deutsche Welle he had criticised the government for “violating laws and rulings by the Constitutional Court” in an attempt to remove Mr Băsescu from office.

The site also accused Liliana Ciobanu, a freelancer who reports for The Economist, CNN and France 24 English, of being an “undercover agent” paid by Mr Băsescu to write articles against the government. Ms Ciobanu denies the allegations and has asked Cotidianul to show evidence for them; none has so far been forthcoming.

For his part, Mr Ponta during the recent upheavals said in a television interview of anarticle in Le Monde: “the person who wrote it was either paid to do it or simply has no clue about what is going on in Romania”. After a few days, Mr Ponta said he did not intend to offend any journalist, not even the ones from Le Monde, and assured the media of his friendship and support.

Yet during a press conference shortly after the Constitutional Court decided to invalidate the impeachment referendum against Mr Băsescu, Mr Ponta again attacked a journalist, this time Mihaela Rodina of Agence France–Presse. He accused her of ”misinformation”, being “unprofessional” and having “a strange and revolting attitude”. Ms Rodina had asked Mr Ponta questions about a controversy involving the Constitutional Court, which has been heavily involved in a recent (unsuccessful) referendum that sought to impeach Mr Băsescu.

Reporters Without Borders has condemned what it calls a climate of intimidation that has developed in recent weeks in Romania towards critical journalists. It urged other EU countries to note “the renewed use of paranoid, hate-filled rhetoric towards many journalists”.

The Foreign Press Association in Romania also urged the Romanian authorities to ensure “a civilised and responsible attitude towards journalists who are working for the international media”. But Crin Antonescu, the leader of the National Liberal Party and a Ponta ally (who served as interim president while Mr Băsescu was suspended pending the referendum result), said he wants the external intelligence services to “understand the mechanism by which the country’s image has been demolished in two weeks as part of an organised, coordinated and funded action”.

Whether or not the government truly believes it is fighting a global media conspiracy, its verbal onslaught against journalists has done little to promote its desired image of moderation and strict regard for political niceties.