Monday, March 31, 2014

Romania Central Bank Ends Easing as Inflation Set to Quicken

Bloomberg News
By Andra Timu

Romania left its benchmark interest rate at a record low, ending an easing cycle after almost nine months with inflation poised to accelerate from a post-communist low in the second half of the year.

The Banca Nationala a Romaniei held the rate at 3.5 percent, according to an e-mailed statement today, matching the estimate of all 16 economists in a Bloomberg survey. Reserve requirements were kept at 12 percent for leu liabilities and 18 percent for those denominated in foreign currency.

Policy makers are pivoting to a focus on inflation after reductions at every meeting since July shaved 1.75 percentage points off the main rate in a bid to reverse a lending contraction and boost economic growth. With the regulator predicting that tax increases will fan inflation after June, the benchmark is now “well positioned,” central bank Governor Mugur Isarescu said after a quarter-point cut on Feb. 4.

“We maintain our objective to lower minimum reserve requirements and bring them closer to EU levels but we couldn’t do that now because there is surplus liquidity in the money market and we are also seeing intensified deleveraging,” Isarescu told reporters in Bucharest after the rate announcement. “Commercial banks still have room to lower loan rates and I think credit growth will return to positive territory in the coming months.”

The leu headed for the highest level since Feb. 5 on a closing basis, trading 0.1 percent stronger at 4.4624 per euro at 4:12 p.m. in Bucharest, according to data compiled by Bloomberg.

The central bank is seeking to keep consumer-price growth between 1.5 percent to 3.5 percent this year. It forecasts a year-end inflation rate of 3.5 percent after a drop to about 1 percent in the first quarter following February’s 1.1 percent.

“The remaining easing will probably be limited to reserve-requirements cuts,” Vlad Muscalu, an economist at ING Groep NV’s local unit, said in a note before the decision.

The economy grew 5.2 percent from a year earlier in the fourth quarter, the fastest since 2008, boosted by industry and agriculture. Lending fell to 218 billion lei ($67 billion) in February, down 2 percent from a year earlier, according to central bank data.

The crisis in Crimea is having limited impact on Romania, according to Isarescu.

“The deterioration in the inflation outlook and concerns about triggering a sell-off in the currency caused the National Bank of Romania to bring its easing cycle to an end,” William Jackson, an emerging-markets economist at Capital Economics Ltd. in London, said by e-mail. “But, barring a sharp fall in the leu, we don’t think policy makers will start to raise interest rates any time soon.”

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

To contact the editors responsible for this story: Balazs Penz at Paul Abelsky, Michael Winfrey

Thursday, March 27, 2014

Romania caps green energy quota to help large industrial firms

BUCHAREST (Reuters) - Romania's government capped the amount of renewable energy that large industrial consumers must buy this year in a move to help offset their high energy costs and stave off the threat of job cuts ahead of elections later this year.

The cap is part of a wider set of measures the leftist government plans to enforce this year to help industrial consumers, who have repeatedly warned that high power and gas prices could lead to production cuts, layoffs and even plant relocations.

However, the measure also boosts uncertainty for private investors in the electricity and gas sectors, which could scare off badly needed investment. The government has already lowered its support scheme for renewable energy projects.

The support scheme gives developers green certificates for each megawatt generated and forces power suppliers and large industrial users to buy them based on a gradually increasing annual quota set by the country's energy regulator.

Green energy investors gain once by selling certificates and again when they sell their electricity.

On Wednesday, the government said it capped the annual quota at the 2013 level of 11.1 percent of gross power consumption.

The incentives, which have been in place since 2012, were once deemed too generous by the European Commission. But they have also brought droves of foreign investors to Romania, particularly to wind energy, including Czech energy company CEZ, Italy's Enel or Energias de Portugal.

The renewable support scheme is not the only factor pushing energy prices higher. The government is also in the process of deregulating its gas and power markets in stages, as agreed under an aid deal from the International Monetary Fund and the European Commission.

Romania has put off deregulation for years to protect voters in a country where the average individual income is roughly $500 a month. For millions of Romanians and some industrial consumers tariffs are capped below market prices.

World Bank to Approve 250 Million-Euro Romania Health-Care Loan

By Andra Timu Mar 27, 2014

March 27 (Bloomberg) --The World Bank’s board will probably approve a 250 million-euro ($345 million) loan to Romaniatomorrow to improve the country’s health care infrastructure, said Elisabetta Capannelli, the lender’s country manager.

The Washington-based lender is working with the Romanian government on a new country partnership strategy for 2014-2017 that may include funding of 1 billion euros a year, Capannelli said in an interview in Bucharest yesterday. It may take as much as six months for lawmakers to ratify a program, allowing for disbursement to start, she said.

“This is only a first step and a lot remains to be done as there is an important gap between the quality of Romania’s health care system compared with the rest of the European Union,” Capannelli said.

Romania, the European Union’s second poorest nation has obtained three consecutive loan accords from the International Monetary Fund, the EU and the World Bank in the past five years to help it stay afloat and push through measures to streamline its economy. The government cut the budget deficit to about 2.5 percent of economic output last year from 7.2 percent in 2009.

It stopped drawing bailout funds in 2011, and now has a 4-billion euro precautionary accord with the lenders that ends next year.

The 250 million euros from the World Bank will be used to modernize hospitals, improve health governance and help fight different diseases, such as cancer, Capannelli said.

Romania will probably also tap another 300 million euros from the World Bank this year as part of a 1 billion-euro loan approved last year, from which it has used 700 million euros, to help fund itsbudget deficit, according to Capannelli.

“The money is at the disposal of Romania and we expect it to be drawn either by the end of the current fiscal year or next,” Capannelli said.

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

To contact the editors responsible for this story: Balazs Penz Michael Winfrey

IMF signs off on latest review of Romania aid program

(Reuters) - The International Monetary Fund on Wednesday signed off on their first and second reviews of Romania's aid program, releasing their next tranche of aid to Bucharest.

The IMF board's sign-off means Romania is on track with the conditions of its 4-billion-euro ($5.5 billion) aid deal from the Fund. Romania will now get an immediate disbursement of 436 million euros.

A split in Romania's ruling coalition threatened the IMF deal and worried investors. But the country's president threw his weight behind the latest review last month after a weeks-long standoff with the government. The deal is seen as key to the credibility of one of the European Union's poorest states. ($1 = 0.7254 Euros) (Reporting by Anna Yukhananov; Editing by Paul Simao)

Wednesday, March 19, 2014

Albania, Romania to deepen ties

Baku-APA. Albanian Foreign Minister Ditmir Bushati and his Romanian counterpart Titus Corlatean stressed the need to intensify political dialogue and relations between the two countries in the future, APA reports quoting local media.

Two Foreign Ministers held on Tuesday a meeting in Tirana within the official visit of the Romanian Prime Minister, Ponta to Albania.

Bushati said that the advancement of relations with the regional countries in all areas of cooperation constitutes an important element of Albania's regional policy. He also pointed to the deepening of economic cooperation and intensification of political dialogue with Romania.

Minister Corlatean said that his visit to Albania is an indicator of the strengthening of relations between the two countries and activation of political dialogue, which serve to a positive regional approach. He said that Romania will continue to support Albania in its path towards European integration.

On the same day, Albanian Minister of Economic Development, Trade and Entrepreneurship Arben Ahmetaj said that Albania should be regarded as an open market for implementation of significant regional projects in the interest of overall economic development, during the business forum Albania - Romania held in Tirana.

Ahmetaj stated that the improvement of the business climate and investments in Albania is the most important reform. Therefore, a series of actions have been taken to facilitate absorption of foreign capital beginning with tax incentives, legal framework, etc, aimed at improving business climate in the country and guaranteeing foreign investors.

Minister of Economic Development appreciated the trade relations between the two countries pointing out that "Romanian investments are important for Albania and are increasing in the last couple of years."

Ahmetaj also cited the successful cooperation in the financial area, customs, etc as well as the abundant opportunities Albania provides for enterprises in the sector of garment and footwear industry.

Film festival explores post-communism in eastern Europe


Bucharest — The One World Romania international human rights documentary film festival which opened in Bucharest on Monday reviews the struggles of eastern Europe since the collapse of communism 25 years ago.

A quarter century after the fall of the Iron Curtain, "we still have to fight against corruption and prejudices but we are free," the Czech ambassador to Romania Jiri Sitler said at the opening ceremony.

"Others must still fight for their basic freedom and their state, as we have seen recently in the case of the aggression against Ukraine and the so-called referendum in Crimea," Sitler added to hearty applause.

One World Romania, among the most important festivals of its kind in eastern Europe, was created under the patronage of late Czech president Vaclav Havel, the icon of the anticommunist movement in the region.

Its seventh edition comes as "for the first time since 1989, a wind of solidarity" is blowing over the region, with thousands of protesters taking to the streets last year in Ukraine, Bulgaria, Bosnia and Romania against a political class accused of nepotism, organisers said.

A highlight of the "25 Years Later" category, "The Family", a documentary by German filmmaker Stefan Weinert, explores the damage inflicted by the communist dictatorial regime on human beings.

Members of the audience will be encouraged to tell their own stories of life under communism on camera, to be compiled and shown at the closing ceremony on Sunday.

The "Rules of Corruption" section focuses on one of the common plagues of post-communist societies.

"Free Smetana" (Czech Republic) and "Putin's Games" (Israel-Germany-Austria) portray administrations crumbling under the weight of graft.

The festival also invites moviegoers to leave cinema halls and learn more about the topics firsthand, such as on guided tours in Bucharest of sites related to major Romanian graft cases.

Another section, "Rebels with a Cause", will feature "Ukraine Is not a Brothel" focusing on the Femen women's rights group, and "Pussy Versus Putin", about the Russian punk group Pussy Riot.

"Rebels are very creative, otherwise they would probably stand no chance of asserting themselves in repressive regimes," festival director Alexandru Solomon told AFP.

"After getting together on social networks, art and rebellion now mingle in the street," he added.

N.Korea kidnap victim's brother wants Pyongyang to come clean

By Jonathan Fowler (AFP)

Geneva — The elegant brunette gazes out from a black and white photograph, her shoulder-length hair tumbling onto a floral print dress.

The ageing picture is a heartrending trace of Doina Bumbea, a 28-year-old Romanian who was ensnared by North Korea's regime in 1978 and who never saw her family again.

It is a chilling reminder of the global reach of North Korea's programme of abducting foreign women allegedly to breed a pool of spies for the secretive Stalinist state.

"More than words, I want the facts," her brother Gabriel Bumbea, 47, said Monday as the UN Human Rights Council threw the spotlight on shocking violations by Pyongyang.

"My father died many years ago, in 1989. My mother is almost dead right now. My brother died nearly three months ago. So I'm the only one who has the will to fight, all alone," he told AFP.

A UN-mandate commission of inquiry estimates that 200,000 people from other countries have over the decades been abducted by the secretive Stalinist state or disappeared after going there willingly.

"These international enforced disappearances are unique in their intensity, scale and nature," the commission said in a no-holds-barred report released last month.

The overwhelming majority of the victims were South Koreans denied the right to return home after the 1950-1953 Korean War, or ethnic Koreans lured from Japan after 1959.

The regime's agents also grabbed Japanese -- around 100, according to the commission -- pressganging them as accent and culture teachers for its spies.

- Little-known story -

The fate of the Japanese has been a constant thorn in relations between Tokyo and Pyongyang, which has acknowledged 13 cases but has never disavowed the abductions.

Yet the story of Bumbea and kidnap victims of other nationalities was little known until Charles Jenkins, a 1965 US Army deserter who ended up stuck in North Korea, was allowed to leave with his Japanese abductee wife and their adult children in 2002.

Jenkins exposed a "spouse-sourcing" programme for at least four US deserters, in what the UN commission said was an attempt to avoid the birth of mixed-race Koreans, anathema to the regime.

Couples were also said to be forcibly paired in order to breed a pool of potential non-Korean agents.

Allegedly launched in 1977, according to testimony from Jenkins and others who managed to get out of North Korea, the programme is believed to have involved more than two dozen women.

All told, citizens of 12 countries and territories are thought to have been swept up, including Japan, Thailand, Malaysia, Singapore, Macao, as well as Lebanon, Jordan, Romania, France, Italy and The Netherlands.

- 'Given' to a deserter -

In a bitter twist of fate, Doina Bumbea had already managed to get out of one tightly-controlled communist country, her homeland Romania.

She married an Italian in 1970, and they left for Rome, before divorcing in 1972, her brother said.

Living alone, she studied fine art and became a painter. She met an Italian who claimed to be an art dealer and who proposed a job as a gallery curator in Tokyo, provided she put on an exhibit in Pyongyang first.

"In 1978, there was no Internet like there is today, and she was very relaxed, an artist, so she was easy to fool," Bumbea said.

Thanks to information from Jenkins it emerged that she was "given" to another US Army deserter James Joseph Dresnock, who fathered her two boys.

"In 1997, my sister got sick with lung cancer and died. But I have two nephews there, the oldest is Ricardo Dresnock, and the youngest is James Gabriel Dresnock. She named him after me. They are 33 and 31," said Bumbea.

"I've never had any contact with them. It's impossible," he said.

Given North Korea's record of throwing generations of the same family into its prison camps on guilt-by-association grounds, Bumbea said he fears for his nephews because he speaks regularly at abductee family events in Asia.

He has managed to see James Gabriel's face, at least, thanks to a 2006 BBC documentary about defectors, "Cross the Line".

"The other abductees' families have nothing. I have a little. It's something," he said emotionally.

Romania: Putin is creating a Black Sea barrier

By Associated Press, Published: March 17

BUCHAREST, Romania — Romania’s president said Monday that Russia has created a chain of conflicts around the Black Sea to further President Vladimir Putin’s goal of rebuilding the former Soviet Union along its former border with the West.

Romanian President Traian Basescu, who spoke to The Associated Press in an interview Monday, said he fears that neighboring Moldova is “in great danger.”

“If you look at the map, you will see this chain of frozen conflicts” around the Black Sea “that can be set off at any time,” he said, referring to conflicts in Georgia, Ukraine and Moldova.

Basescu said Putin’s priorities “seem to be connected to the point of contact between the European Union and NATO.” He said Ukraine and Moldova were “a priority for Vladimir Putin, who wants to rebuild the Soviet Union.”

Russia has 1,500 troops stationed in the separatist republic of Trans-Dniester since 1990, when it broke away from Moldova, fearing that country would reunite with Romania. Trans-Dniester is not internationally recognized but is supported by Russia.

The European Union on Monday slapped a travel ban on 21 Russian and Crimean officials after Crimea voted to split from Ukraine and join Russia. Basescu said the EU was planning further sanctions later this week — ones he called “extremely severe” — that would freeze the assets of Russian business people in the EU, stop financial exchanges and energy trades and halt arms sales to Russia.

Romania is one of the EU’s 28 nations.

The Romanian leader, who leaves office after 10 years this year, ruled out a wider war in Europe, saying that neither Russia nor NATO wanted a full-scale conflict. He said there was still a risk of political instability in the region because of possible fallout from the sanctions.

“Many regional governments and European governments have to see whether they themselves can put up with the (EU) sanctions (on Russia),” he said.

There was nobody available at the Russian Foreign Ministry late Monday to comment on the statements by Basescu.

Monday, March 17, 2014

Romania bars Hungarian 'extremists' on eve of national day

BUCHAREST (Reuters) - Romania has barred what it says are Hungarian extremists from four different organizations from entering the country, moving to prevent possible clashes when ethnic Hungarians celebrate their national day in Romania on Saturday.

Those barred include supporters of Jobbik, a far-right Hungarian party whose popularity has surged in the run-up to a parliamentary election due to take place in Hungary on April 6, according to a recent poll.

Conflicting territorial claims over parts of Romania have sparked tensions and violence between ethnic Hungarians and Romanians in the past, and earlier this week clashes between Hungarians and police broke out in northeast Romania.

Hungary's Prime Minister Viktor Orban has courted the support of ethnic Hungarians across the border, including by giving them dual citizenship and the right to vote in Hungarian elections. That has given him a growing power base of voters.

In turn, Romania's Prime Minister Victor Ponta rebuilt his coalition and won a confidence vote with new allies from the country's main ethnic Hungarian party, after his government splintered amid a series of rows in February.

Thousands of Hungarians are expected to celebrate Hungary's National Day on March 15 in several towns across Romania, which has 1.3 million ethnic Hungarians in a population of 20 million. In a possible sign of trouble, a far-right Romanian group said earlier this week it would stage a rival rally in protest against Hungarian demands for greater autonomy.

"Romanian authorities took precautionary measures to avoid events of a kind that affect public order and national security," Monica Dajbog, a spokeswoman for the interior ministry, said on Friday, explaining the entry restrictions.

"We adopted measures to block access to Romania and asked the court to declare as persona non grata a number of Hungarian citizens who are running extremist actions in our country."

Dajbog did not specify the exact number of Hungarians that have been blocked from entering, nor the nature of their "extremist actions" on Romanian soil.

Romania will deploy about 1,000 policemen across the country to oversee the celebrations, which mark the 166th anniversary of Hungary's 1848 revolution against the Austrian Habsburgs.

Ethnic Hungarians in Romania live mostly in three counties in central Transylvania, a territory at the foot of the Carpathian mountains that was run by Budapest until 1918 but is now far from the Hungarian border.

The community in Transylvania has been a frequent bone of contention between the countries. Tensions rose last year in a dispute over the use of ethnic minority flags.

Many ethnic Hungarians would like Romania to grant them their own specific region, where they would have a greater say over local administration and education.

(Editing by Matthias Williams and Mark Trevelyan)

Wednesday, March 12, 2014

AFP: Romania forecasts steady 3.0% growth through 2016

Romanian Prime Minister Victor Ponta called on lawmakers on Tuesday to back his new left-wing government's programme, promising three-percent yearly growth until 2016, and improved use of EU funds.

"It is important that the steps we take towards spurring growth and fighting tax evasion lead to higher revenues for all, be it pensioners, civil servants or the private sector," Ponta told lawmakers.

Last year, the Romanian economy expanded by 3.5 percent, the highest rate in the 28-member European Union, while the public deficit was brought down to 2.5 percent of output.

The coalition government, in which Ponta's Social Democrats are the main component, pledged to respect a deal signed in July 2013 with the International Monetary Fund to introduce structural reforms aimed at making the economy more competitive.

The agreement on a 4.0-billion-euro ($5.5 billion) precautionary credit line, which the government intends to tap only in the case of a crisis, was the third accord signed with international lenders since 2009, when Romania obtained a 20-billion-euro bailout package in exchange for austerity measures.

Romania lags behind in the use of European Union funds aimed at helping it catch up with more advanced EU members.

The government promised to spend up to 80 percent of the 20 billion euros made available by the EU before the end of 2015.

This would mark a huge increase in the country's ability to use the funds. At the end of December, the absorbtion rate was barely 26.5 percent.

The government also pledged to crack down on tax evasion, hoping that this will enable it to reduce VAT sales tax on some food products from 24 percent to 9.0 percent.

Ponta's government won parliamentary approval last week after former allies of the National Liberal Party walked out over disagreements about cabinet appointments, eight months ahead of a presidential election.

The Liberals were replaced in the new coalition by the Democratic Union of Hungarians in Romania, which represents the roughly 1.4 million Hungarians in the country of 21.3 million people.

The previous coalition had been in power since December 2012 in the country, Europe's second-poorest nation after Bulgaria.

Romanian MPs block corruption investigation of ex-finance minister

Radu Marinas
March 11, 2014

BUCHAREST (Reuters) - Romania's lower house of parliament on Tuesday overwhelmingly voted to block an investigation by state prosecutors of former Finance Minister Daniel Chitoiu who they suspect abused his power to further the interests of a private insurance company.

The European Union has repeatedly raised concerns about a failure to tackle rampant high-level corruption in Romania and Bulgaria, its two poorest members, which have been kept outside the passport-free Schengen zone over the issue since their 2007 entry to the bloc.

Deputies voted 248 to 108 to let Chitoiu, a deputy for the opposition Liberal party, keep the immunity to which he is entitled as a sitting MP.

Anti-corruption prosecutors asked parliament last month to waive his immunity so that they could investigate suspicions that in October 2013, Chitoiu pushed through an emergency decree to protect insurer Carpatica Asig from regulatory controls.

Prosecutors said the decree was aimed to rid the board of Romania's financial supervisory body (ASF) of a particular member who was tasked with supervising the insurance sector.

Dan Radu Rusanu, then head of ASF, has already been removed from office over the affair. Prosecutors believe he masterminded the ruse under which the government issued a decree reducing the size of the ASF board and raising the qualification requirements of its members, all with the aim of forcing the exit of the targeted member.

Under Romanian law, deputies cannot be prosecuted unless their immunity is lifted by a vote. Chitoiu, who resigned from his ministerial position on February 6, denies any wrongdoing and told his colleagues shortly before the vote: "I find myself in an embarrassing situation in front of you."

His resignation earlier this month was not ostensibly linked to the allegations against him. Liberal party sources told Reuters at the time that Chitoiu had to quit after losing the party's support for failing to keep them informed about a government plan to reschedule bank debts of low-income borrowers.

"This is a terribly embarrassing score. This is shameful," said political commentator Mircea Marian of Tuesday's result. "It shows clearly that there's a functioning majority in parliament capable of undermining prosecutors' efforts and curb their work."

Romania ranks only behind Greece and Bulgaria in terms of corruption in the 28-nation EU, according to Transparency International, and the European Commission has its justice system under special monitoring.

A European Commission spokesman declined to comment on Tuesday's vote, saying the commission did not comment on individual cases.

Last year, more than 1,000 people were convicted on corruption charges in Romania, a 41-percent annual rise.

Those tried included six ministers, five county council heads, 34 mayors and deputy mayors, as well as judges, lawyers and managers of state-owned firms.

Romania's chief anti-corruption prosecutor said last month her team had seen a sharp rise in political pressure to drop cases while they were investigating high-ranking officials.

There has been growing concern about respect for the rule of law in Romania, one of the European Union's poorest and most corrupt states, whose parliament tried to pass a law last year shielding lawmakers from graft investigations.

(Additional reporting by Adrian Croft in Brussels; Editing by Matthias Williams and Raissa Kasolowsky)

Tuesday, March 11, 2014

Romanian elite's relatives and friends run as MEPs

BUCHAREST - Clientism, nepotism and corruption scandals among Romanian MEPs are set to contribute to a predicted record low turnout for the nation’s European elections.

Romania’s leading parties are drawing up lists of MEP candidates which, with some exceptions, provide a route for the relatives, friends and spouses of the Bucharest political elite to secure a cushy job in the west. 

Current MEPs likely to be re-elected include Romanian Prime Minister Victor Ponta’s wife Daciana Sarbu, the National Liberal Party (PNL) President Crin Antonescu’s wife Adina Valean and, possibly, Romanian President Traian Basescu’s daughter Elena.

Other MEPs include ex-Presidential candidates, former ministers and councillors who have declared loyalty to their leaders.

“Eligible positions on the lists are given as rewards to old, deserving soldiers of the party or [are considered] just as another resource that should be kept in the family,” says Claudiu Tufis, professor at the School of Political Science, Bucharest. 

There have been two major scandals from among the MEPs who were elected in 2009.

George Becali, now ex-MEP, the financier of the Steaua Bucharest football club who made millions in shady deals with government entities, represented the extremist Greater Romania Party as an MEP, with the hope that this would shield him from ongoing criminal investigations.

He later switched parties to join the more influential National Liberal Party, winning a seat in the Romanian Parliament at the end of 2012.

During this time he was indicted for offering huge bribes, using fake documents and ordering his bodyguards to kidnap thieves who had stolen his limousine.

Becali is now spending three-and-a-half years in jail.

Meanwhile, Social Democrat MEP Adrian Severin was caught on camera by a Sunday Times journalist accepting cash for influence in 2011. Although he resigned from his party, he continues to work as a MEP. At the end of last year he was indicted by the Romanian National Anticorruption Directorate (DNA) and his case is pending in court.

Another MEP who was also exposed by the British newspaper for accepting cash was Slovenian Zoran Thaler. He resigned and last month he was sentenced to over two years in prison in his home country.

The difference in behaviour between Slovenia and Romania is a “telling indicator” of the interest in such issues at a national and European community level, says Tufis.

“For the Slovenians and their political class it was a stain and they pushed to solve it,” he says. “Not for Romanians, where [members of] Severin’s PSD party actually defended him.”

Severin’s retention of his MEP seat shows the extent to which Romanian society and its political class tolerates corruption.

Romania’s political class has been hit by a wave of corruption indictments, trials and convictions in the lead-up to this year's European elections in May and the election of a new President in November.

More high profile politicians are being imprisoned for corruption.

In January former Prime Minister Adrian Nastase, who was previously convicted of corruption, was found guilty of blackmail and of taking bribes. He was sentenced to four years in jail.

Although locking up politicians may appease a European Commission hungry to see Romania’s high level corruption punished, analysts fear this is not a golden age of transparency and justice in Romanian public life.

Tufis sees the imprisonment of ex-ministers such as Nastase as “only ammunition for the current partisan wars” between opposing political elites.

Meanwhile Ionut Tata, president of democracy watchdog and electoral observers Pro-Democracy Association (ApD), is sceptical that this will usher in a new generation of honest public representatives.

“The young politicians are still corrupt,” he says, “because they joined the youth wing of the parties ten years ago when corruption was a growing thing and some of them are attracted by corruption.”

This was clear last year when the Romanian Parliament tried to insure itself against further scrutiny.

In December it attempted to pass a law providing its members with immunity from corruption investigations – a move condemned by the EU and the US as a step back to Romania’s dark ages, when politicians were unaccountable.

Many of the new politically-engaged generation are put off joining parties due to their legacy of corruption and instead become members of civil society or teach in universities.

And this lack of an alternative to the political classes engenders cynicism amongst the population at election time.

“There is absolutely nothing on offer that people might find attractive,” says Tufis. “Parties keep on recycling old politicians, and the new ones are just copies of the old ones.”
Absenteeism 'to return with a vengeance'

The perception of clientism and corruption is likely to contribute to a lack of political engagement by voters.

Romania is among the EU’s new member states which suffer from the highest degree of absenteeism at European elections. 

In 2009, 27.4 percent of Romanians voted in European elections – the lowest after Slovakia (19.6 percent), Lithuania (20.9 percent) and Poland (24.5 percent) – compared to a European average of 43 percent.

“Absenteeism will return with a vengeance in the European elections of 2014 and will be stronger than ever,” predicts Tata.

The Romanian population do not feel that their choice of MEP will impact on their lives.

“[Electing an MEP] is not going to produce a rise in income or a decrease in unemployment,” says Tata. “The choice is almost irrelevant, unlike the election of a President or a Mayor, where you see these representatives doing something.”

He argues that Romanian MEPs do not act as the “national football team” when it comes to representing the country’s interests in the European parliament.

Instead they vote with their political families on various issues: the Liberals with Alde, the Democratic Liberals with the EPP and the Social Democrats with the Socialists and Democrats.

Another problem that has risen in Romania in the past five years is euroscepticism.

The country remains one of the most pro-EU members of the bloc, but politicians are now using rhetoric which distances them from Brussels, especially on issues related to anti-corruption and judicial independence.

Nevertheless, when it comes to European issues there are few bones of contention between the main political parties – every party is pro-Europe and therefore there is little difference in policy from one party to the next. 

This also contributes to low voter turnout. 

The major parties like it this way – nomination on a party list is a sure way to an MEP seat.

“Limited participation gives an advantage to large parties who have a higher capacity to mobilise their base,” says Remus Stefureac, director of polling company INSCOP.
Far-right's 'traditional issues' dealt with by mainstream parties

Romania’s leading coalition has split in the run-up to the European elections.

In February, the Government’s junior partner, the National Liberal Party (PNL), withdrew its ministers from the cabinet in a bust-up between the Social Democrat Prime Minister Ponta and PNL president Crin Antonescu.

The Social Democrats have chosen to run candidates in the European elections, not with the PNL, but instead in coalition with a leftist and a tiny conservative party, under the banner of the Social Democratic Union (USD). The Conservative Party is seen as accepted in this coalition because the financier of the party oversees an influential media empire.

On paper, the Romanian political landscape faces a united left-wing force, which is set to gain around 39 percent of the vote, according to polling by INSCOP in January.

Meanwhile there are six right-wing parties who are polling over 30 percent of the electorate. They are headed by the National Liberal Party (PNL) at 20.1 percent and the Democratic Liberal Party (PDL) on 17.5 percent.

From the other parties, only the Greater Romania Party (PRM) has adopted a vocal line against minorities such as Hungarians, Jews and the Roma. The party won three of 34 seats in the 2009 European elections. 

But the PRM is haemorrhaging supporters and is unlikely to pass the required five percent threshold.

“Far-right parties have failed to gain any traction because their ‘traditional’ issues are part of the active issues in most of the main parties,” says Tufis.

No major Romanian party has adopted a socially liberal line on any political issue.

“I have yet to see a Romanian political party that will come out and say they support LGBT,” says Tufis, “or a political party that comes out and supports a clear separation between the state and the church or a political party whose politicians do not use ethnicity for their own advantage.”

In the last eighty years Romania has moved from a multi-ethnic to a more monocultural society, partly due to Government policies during the Fascist and Communist regimes.

By 2011, the ethnic Romanian population had increased from 72 percent to 89 percent, while the country has not seen any major inflow of citizens from a foreign country or ethnicity.

The majority of Romanian society has a culture of deep-rooted racism and homophobia.

Three quarters of Romanians would not vote for an MEP who is physically disabled, a Hungarian or a Roma, according to a CNCD survey in December 2013. Meanwhile 81 percent are against an MEP of another sexual orientation.

“A far-right party will become relevant for Romania when incoming migration becomes an issue,” argues Tufis. “Until then, its job is done by the existing political parties.”

Romanian voters will elect 32 MEPs to the 751-strong European Parliament on 25 May.

Michael Bird and Stefan Candea are members of the Romanian Centre for Investigative Journalism.

Wednesday, March 5, 2014

Romania: Chinese Are Coming!

Raluca Besliu
YaleGlobal, 4 March 2014

BUCHAREST: Li Keqiang visited Romania in November, the first visit by a Chinese premier in nearly two decades, in an effort to deepen cooperation between the two countries in fields such as energy, trade, investment and infrastructure. Bilateral discussions were followed by a meeting with the countries in central and eastern Europe to promote regional cooperation.

This year marks the 65th anniversary of the establishment of Romanian-Chinese diplomatic ties, as communist Romania was one of the first countries to engage with the People’s Republic of China. Li’s November visit followed the July 2013 visit of Romanian Prime Minister Victor Ponta to China to propose boosting the two countries’ strategic partnership to celebrate the anniversary.

Chinese officials have taken Ponta’s offer seriously, but on their own terms. In a joint statement issued after their meeting in Bucharest, Romania’s prime minister and his Chinese counterpart stressed that they see their countries’ partnership as exemplary for interstate relations. Lisuggested that the Romania-China cooperation could become a model of cooperation between his country and central and eastern European countries and could insert new impetus in Chinese-European relations.

Economically, Romania sold itself short, trading valuable energy and raw materials for a few infrastructure projects and a bit more trade. From a political standpoint, though, by underscoring that it has viable alternative economic partners, Romania is standing up to European Union counterparts, which have used the Romanian market for their products, but repeatedly treat the Eastern European country as a second-class member of the Union.

Chinese investmentswill focus on the Romanian energy sector, with most of
in nuclear energy.

The largest part of the Chinese investments promised will focus on the Romanian energy sector and amount to more than €7 billion. According to the Romanian prime minister, the Chinese will invest around €6 billion in nuclear energy, partly to support group 3 and 4 of an already existing power plant at Cernavoda and partly to construct a new power plant at Tarnita.

Romania should proceed with caution. In 2012, after a safety review of Chinese nuclear power plants, the chairman of China’s State Nuclear Power Technology Corporation acknowledged in passing that problems in 14 areas needed to be resolved, some of which would take three years to fix. But he was mum on the nature of these problems, where or how serious. According to a Transparency International report, Chinese companies are notoriously non-transparent, disclosing the least financial data on a country-by-country basis, in order to avoid accountability. For 2013, Romania ranked 69 and China ranked 80.

Apart from this, Romania chooses to focus on nuclear energy when many European counterparts like Germany and France are committed to reducing reliance on nuclear power, a response to the Fukushima disaster. A failure to provide close oversight of the Chinese investment could cause tension with other member states. While the United Kingdom is alsobuilding a new nuclear power plant in Somerset with two Chinese investors, the consortium will be led by France’s EDF, which has decades-long experience in nuclear energy and can ensure adequate supervision of the construction and operation phases. In response to the Fukushima accident, EDF promised to become more transparent with communities and stakeholders, by providing an open reporting culture and working closely with safety, environmental and security regulation and communities around their sites. This is not a commitment that the Chinese are likely to make for Romania.

In exchange for much needed energy, the Chinese will build a high-speed train project for Romania, starting with a pilot project of around €500 million, while also investing in Romania’s IT sector to create around 1,200 jobs.

So far, Romania is blocked from the Schengen area in Europe – citizens of 26 nations can travel freely across borders.

Another bit of good news for Romanian farmers, hurt by declining demand in European markets: Chinese officials also signed two agreements with their Romanian counterparts to import 500,000 cattle and 3 million pigs during the next years, while also showing interest in importing sheep and other food products. Over the next 10 years, China’s meat demand is expected to rise. China’s growing middle class and fast-paced urbanization havealtered the Chinese diet, with meat being increasingly present alongside rice and vegetables.

Romania is an important market and counts Germany, Italy and France among some of its key trading partners. Even so, Germany and France are currently the most vehement opponents of allowing Romania, alongside its neighbor Bulgaria, to enter the Schengen area – now limited to 26 European nations that allow citizens to travel freely across borders – despite fulfilling all technical requirements. Security concerns, as well as fears of a Romanians pursuing jobs, have been invoked as the key argument for not including these two Eastern European countries in the Schengen area, and Ponta has accused fellow EU member states of resorting to populist policies to appeal to voters during this electoral year.

During the Chinese visit, the Romanian prime minister emphasized that, while the EU’s rules of competition will be observed, Chinese companies will be chosen if their bid is strong from a technical and financial point of view. Given the notorious levels of corruption in Romania and China, this news should be received with skepticism.

When questioned whether or not Romania is becoming too close to the Asian giant, Ponta emphasized that all the key Western political leaders, including the US president, the German chancellor and French president, have established strong economic relations with China, and that Romania should take advantage of the same opportunities.

Partnering with China, competition for EU companies, underscores the concerns about EU marginalization.

Romania is not alone in forming a partnership with China. Poland also signed a strategic partnership, focused on boosting Polish imports to China and encouraging Chinese businesses to contribute to its infrastructure construction.

Likewise in September, Turkey, which has repeatedly suffered delays in its bid for EU membership, chose the state-run China Precision Machinery Import-Export Corp over US and European competitors to create missile defense systems, in order to grow its domestic arms production. Rapidly expanding bilateral trade between China and Turkey as well as the latter’s acceptance as a dialogue partner in the Shanghai Cooperation Organization mark a deepening relationship.

Closer Romanian-Chinese relations have just started. Next year and subsequent ones will reveal to what extent China can be a viable partner for its Eastern European counterpart, and China’s partnership with Romania might be an early attempt to tap into central and eastern Europe’s energy reserves and trade opportunities. So far, China seems determined to implement the same strategies as in Africa, where it offers infrastructure and expands trade in needed or advantageous fields, while taking over energy resources required to keep its economy prospering.

But with the move toward China, Romania has signaled a changing approach toward European counterparts. It is not afraid to explore economic alternatives. The partnership with China –creating competition for EU companies – sends a powerful message about the deep concerns felt in Romania and elsewhere in central and eastern Europe about being marginalized within the EU. European counterparts may have to reconsider their policies toward fellow member states.

Raluca Besliu is a freelance journalist focused on women's and children's rights, refugee and human rights issues, and peace and post-conflict reconstruction. She graduated from the University of Oxford with an Msc in Refugees and Forced Migration after studying international affairs at Vassar College. She founded the nonprofit organization Save South Kordofan. Follow her on Twitter: @Raluca_Besliu

Romania government wins confidence vote in parliament

(Reuters) - Romanian Prime Minister Victor Ponta won a confidence vote in parliament as expected on Tuesday, giving him a new mandate to push through a series of IMF-backed reforms aimed at speeding up growth in the European Union's second poorest country.

Ponta's Social Democrat (PSD) led government won a vote in both houses by a combined 346 votes to 192, having partially restored its majority with new allies following the departure last week of the Liberal party after a series of rows.

The Liberals' exit had sparked worries about Romania's ability to implement commitments it made under a 4 billion euro aid deal with the International Monetary Fund, including cleaning up loss making state companies, in an election year.

Having won the vote, Ponta faces a new threat to his government from his arch rival, President Traian Basescu, who has questioned Ponta's constitutional right to form a new administration and threatened to mount a challenge in court.

Monday, March 3, 2014

Romania govt split risks return of populist policies

Andrew MacDowall in Belgrade
March 3, 2014

Romania has had its fair share of political dramas in recent years, including street protests that triggered a parliamentary coup, repeated attempts to impeach the president, highly-controversial constitutional changes and ongoing infighting among political bigwigs. The latest, the breakup of the coalition, is unlikely to trigger major political or economic problems – for now at least. But in a double election year, a tendency to populist polices and measures that invigorate the left-wing government's base are likely.

On the night of February 25, Crin Antonescu, the speaker of Romania's upper house of parliament and leader of the National Liberal Party (PNL) announced that he was withdrawing his party from the government, in which it was the second-largest force. Antonescu's move leaves Prime Minister Victor Ponta and his Social Democrats (PSD) without a parliamentary majority, and has led to a scramble to find new coalition partners.

Antonescu had been threatening to join the opposition benches for some weeks due to disagreements over ministerial positions. His decision to do so should be seen in the context of European elections set for May and a presidential poll in November. The Liberal leader is his party's candidate for the presidency, and the coalition's split may now clear the way for Ponta to stand for the PSD. The role of president is a significant one, with the right to veto laws, name governments and a degree of foreign policy clout, hence the PSD's repeated attempts to oust the current incumbent, pugnacious rightist Traian Basescu, who must step down this year.

Few expect the government to fall altogether in the short term at least. Ponta has already been manoeuvring smaller parties into an electoral alliance, and is likely to restore a small majority by bringing in new partners, most probably in the shape of the ethnic-Hungarian UDMR. The UDMR has often been a kingmaker in the past, and its leaders have responded enthusiastically to Ponta's overtures.

Thus the immediate political risk is likely to be moderate, though the volatility-prone Romanian currency, the leu, did dip slightly further on the news. The leu has already been under pressure as investors back away from emerging-market currencies in anticipation of the US Federal Reserve's tapering of quantitative easing, prompting Romania's central bank to intervene to prop up its value.

The day after the PNL's withdrawal from government, President Basescu moved swiftly to approve a International Monetary Fund (IMF) and European Commission review of a loan worth €4bn. Basescu had previously refused to approve the deal review. Analysts say the IMF/EC deal should bolster investor confidence by support Romania's budget and encouraging fiscal and structural reforms, including long-delayed privatisations. "I think there won't be any major changes in the fiscal policy given the IMF deal," Romanian economic commentator Cristian Pantazi tellsbne.

However, Pantazi does expect the government to row back from some aspects of reform, due to its weaker parliamentary position and leftish slant. "We can expect the government drop plans for lowering the social contributions paid by the employers, a measure backed by the Liberals," he says. "Also, given the fact that the new government is centre-left oriented, we can expect some populist measures in this double-election year."

The government has already made one marginal move, increasing mayors' salaries – important for electoral mobilisation in the provinces. Pantazi adds that it's worth keeping an eye on the underground struggle for control of the central bank, currently headed by widely-respected technocrat Mugur Isarescu.

On the other hand, the government's loss of its large majority means that it is likely to be less able to implement authoritarian measures and policies that undermine independent institutions, as it has been accused of doing in the past. "We do not believe the short- to medium-run bullish macroeconomic story will be altered by this move and that the budget... can remain on track," Nomura Global Markets Research said in a note.

Romania has indeed been performing strongly of late, racking up a remarkable 5.2% GDP year-on-year growth in the final quarter of 2013, while clocking record-low inflation. Exports have picked up, and the success that the country has had in paring back the deficit has won plaudits. This is the largest economy in post-communist Southeast Europe, and one of the most diversified.

However, Romania seems unlikely to maintain its recent stellar performance – BCR, the country's largest bank, forecasts 2.3% growth for this year, pointing out that domestic consumer confidence remains weak. The economy's spike towards the end of last year was boosted by a strong agricultural harvest – a vulnerable factor that continues to be a major contributor of the country's performance.

Finally, Antonescu's exit from government is a reminder to investors that Romanian politics are fickle and fluid. While the PM is relatively secure for now, it is not a certainty that Ponta will serve out his full term to 2016.

Saturday, March 1, 2014

Ethnic Hungarians set to restore majority in Romanian government

(Reuters) - An ethnic Hungarian party is likely to join Romanian Prime Minister Victor Ponta's ruling alliance within days, partially restoring his once-comfortable majority in parliament and votes needed to implement economic reforms.

Ponta's main coalition partner quit the government earlier this week after a series of disagreements. The exit sparked worries about Romania's ability to stick to commitments it made to the International Monetary Fund in exchange for a 4 billion euro aid deal.

The split left Ponta with just over half the seats in the lower house, enough to win a confidence vote due on Tuesday but not sufficient to pass laws comfortably in a parliament where party indiscipline and lawmaker absenteeism are common.

That has prompted Ponta, who with his former Liberal party allies had commanded a more than two-thirds majority in parliament, to seek out support from ethnic Hungarian party UDMR and other minorities to get his majority up to around 60 percent.

The Hungarians have 18 out of 404 seats in the lower house and 8 out of 171 seats in the senate.

"UDMR will most likely join the cabinet," a senior party leader told Reuters. "It's insane politically not to govern, taking into account the latest opinion poll among Hungarians showing 80 percent of respondents want us in government.

"We can't help our communities from the sidelines."

The party will ask Ponta to offer the culture and environment ministry portfolios in exchange for their support, the official added. The party is due to formally announce its decision to join on Monday.

"A 70 percent government majority has just disintegrated ... UDMR has become the needle on the weighing scale, given our numbers in parliament, " UDMR leader Kelemen Hunor was quoted as saying by local media.

UDMR could also ask Ponta to back the founding of an university in the Transylvanian town of Targu Mures with tuition in Hungarian, and give Hungarians the right to raise ethnic flags on local government buildings, said media reports.

Around 1.3 million ethnic Hungarians now live in Romania, according to a 2011 census, or about 6.5 percent of population.


Both Ponta and the Romanian President Traian Basescu on Wednesday quickly moved to reassure investors that the economic programme of the European Union's second poorest country was on track after the government split.

High on the agenda for Romania this year is to speed up a process of selling off or restructuring inefficient state companies, as part of its precautionary aid deal with the IMF.

"It's going to be the same governing programme, we can add some requests to it but its main trunk stays unchanged," said Deputy Prime Minister Liviu Dragnea, a member of Ponta's Social Democrat party.

In France, an Experiment in Integrating Roma

PARIS — Last month, the European Union lifted work restrictions on citizens from Romania and Bulgaria - including the hundreds of thousands of Roma people. Europe's largest minority has not exactly been welcomed with open arms. That's particularly true in France, which has been widely criticized for its evictions and deportations of Roma. But today, a growing number of communities reject the national government's tough stance and are trying a new approach.

These rows of battered camper trailers seem like an unlikely testing ground for social integration. It's afternoon and the compound is filling up. Men and women are coming home from work. Children are coming home from school.

People come over to say hello to Marie Louise Mouket, a big woman who wears a colourful scarf. Mouket heads a local association called ALJ93. It's working to carve out a future for the Roma community here in Montreuil and other working-class suburbs of Paris.

The aim is to help families realize their goals - which may change over time. So far, Mouket believes, the association has achieved positive results.

In some ways, the goals seem modest. Learning French and sending the children to school. A job. A place to live. But for the estimated 20,000 Roma in France, they are enormous. Many live precariously in squalid camps.

At her office, Mouket points to a map of Romania. This group of Roma come from a village in the western part of the country. In 2008, a fire destroyed their squatter camp in Montreuil. That's when the city began a program to find them housing and jobs through the IPJ93 association.

Richard Zamith oversees the program for the city. Zamith says the Roma families must agree to send their children to school, get health checkups and look for jobs with the help of social workers. They can't be in trouble with the police. If they don't respect these rules, they're out of the program.

Today, about 62 families are enrolled. Of the families in the trailer park, roughly half have at least one member with a job. And some have found housing outside of the camp.

Twenty-five-year-old Gavila Cirpacie works in the hotel industry. He says he likes the program. He's treated with respect. France is better than Romania, because he can find work here.

Many of these Roma work in the hotel or restaurant business around Paris. Twenty-four-year-old Gabriella Cripasi works at a canteen in the suburb of Aubervilliers.

She says she wasn't able to find a job until now. She really likes the restaurant business. She wants to become a cook.

Canteen manager Laurent Vidaller has hired five Roma from the integration program. He says they're hard working and punctual.

Vidaller acknowledges Roma tend to be associated with illegal immigration and foreign customs. But, he says, these perceptions change once you get to know them.

Changing perceptions of this ethnic community, which has ancient roots in India, isn't easy. Many French, and other Europeans, who may see Roma scrounging in garbage cans and begging in the subway, and stereotype them as beggars and thieves.

The Roma and human rights groups say those stereotypes are false, and they face discrimination in education, jobs and public services.

France has deported thousands over the years, earning sharp criticism from the European Union. As of this year, Roma from Romania and Bulgaria no longer need work permits in Europe. Even so, they can be deported if they can't find jobs.

Nor has France changed its policy of razing squatter camps. Philippe Goossens, Roma expert for the French Human Rights League, says French authorities evicted nearly 20,000 Roma from camps last year - double the number in 2012.

"It is crazy, because this eviction[s] doesn't solve anything. They just put the people on the street, and of course they go to another place and rebuild the slum. It's ridiculous," he said.

Now, some municipalities are taking a different approach - embracing the Roma, not rejecting them. Most are in the Seine-Saint-Denis, one of the poorest areas of France, which also has one of the highest Roma populations. Bordeaux, Nantes and Lille, have similar programs.

Zamith, the Montreuil official, says once these programs are widely adopted, people will stop talking about a "Roma problem".

For now, however, they are costly and limited in scope. And unless the state changes its tough policies, says Goossens, local efforts are unlikely to work.

"Today, we have a national policy of rejection..if, at the national level, there is no real will or policy of insertion of these [Roma] communities, it's difficult to put in place action at the local level," said Goossens.

But Montreuil's Zamith believes integration is the only option.

If France deports the Roma, they'll only return - and the problems will start again. All the more reason, he says, to address them now.