Wednesday, July 30, 2014

Romania's leftist PM launches candidacy in presidential election

(Reuters) - Romania's ruling leftist alliance endorsed Prime Minister Victor Ponta's candidacy in a Nov. 2 presidential election on Tuesday, with opinion polls showing him leading but not by enough to avoid a runoff ballot.

Ponta, 41, the leader of the leftist Social Democrat Party, came to power in May 2012 in an alliance with the Liberal Party, toppling a centre-right government that undertook painful wage cuts and tax hikes at the height of the financial crisis.

His liberal allies split from the coalition earlier this year to support their own presidential candidate. They then decided to merge with the Democrat Liberals, another centre-right opposition party.

Analysts widely believe Liberal Party head Klaus Iohannis, 55, an ethnic German mayor of the Transylvanian city of Sibiu will emerge as the right's candidate to face off with Ponta on Nov. 2.

A survey by pollster INSCOP ordered by daily Adevarul earlier this month, showed Ponta had 43.6 percent support, leading Iohannis by more than 12 points. But neither contender would garner enough votes to avoid a Nov. 16 runoff ballot.

"I am convinced that come November we will win," Ponta told thousands of party members gathered in the southern Romanian city of Craiova on Tuesday, after they had voted to back his candidacy. Ponta also visited nearby villages hit by floods this week.

"I am also convinced that my presidential mandate will resemble today, with me standing by people in trouble, with problems." Beethoven's Ode to Joy marked the ceremony.

Helped by successive IMF-backed aid deals since 2009 and by austerity policies, Romania has slowly emerged from recession to record one of the highest economic growth rates in the region.

Since 2012, Ponta's government has reversed wage cuts and undone various austerity measures. It now aims to cut a social security tax that will leave a gap in the budget, and the International Monetary Fund has postponed a review of a precautionary aid deal pending the election, which has raised concerns about fiscal discipline.

The government is also struggling to benefit from higher economic growth, with tax evasion reaching 16.2 percent of GDP last year.

Ponta, a former prosecutor and amateur motor rally driver, has been hit by calls to resign after charges of plagiarism surfaced, which he refused to do, and by the jailing of former Prime Minister Adrian Nastase, his mentor, for corruption.

In 2012, he received a severe dressing down from the European Union over his efforts to ensure President Traian Basescu, a political rival, was impeached in a national referendum, a row which raised concerns over the rule of law.

The next president will play a pivotal role in appointing a new prime minister and a government line-up to oversee IMF-backed reforms under the standby 4 billion euro aid deal it secured last year.

Romania’s online advertising to value 141 mln dollars in 2018: PwC

BUCHAREST, July 29 (Xinhua) -- The online advertising in Romania will have an annual increase of 14.6 percent in the coming four years, with its value reaching 141 million U.S. dollars in 2018, showed the latest study of the PwC Entertainment and Media Outlook.

The online advertising will therefore become the fastest growing sector in the Romanian media and entertainment market in the analyzed period.

Another segment to record a growth of the market is the payments for the Internet access, with an average annual plus of 9.9 percent, up to 1.18 billion dollars in 2018, from 841 million dollars this year.

Thus, the Internet access and the online advertising will count for over 40 percent of the country's media and entertainment market in 2018, followed at a big distance by the TV subscriptions with an estimated value of 612 million dollars in 2018.

The Romanian media and entertainment market will record an average annual increase by 5.2 percent, reaching 3.1 billion dollars until 2018, according to PwC’Global entertainment and media outlook 2014-2018.

The Romanian market, despite of its increase, will remain the smallest market in the region in terms of overall value, with 3.1 billion dollars, compared with Poland (12.6 billion dollars), Czech Republic (6.5 billion), and Hungary (3.2 billion).

Monday, July 28, 2014

Romania opposition centre-right parties merge before presidential vote

BUCHAREST (Reuters) – Romania’s two largest opposition centre-right parties voted unanimously to merge on Saturday, combining their forces ahead of a Nov. 2 presidential election that will pit them against the ruling leftist alliance.

The Liberal (PNL) and Democrat Liberal (PD-L) parties will support a single presidential candidate, hoping to boost their chances against the left’s likely candidate, Prime Minister Victor Ponta.

Analysts expect the centre-right’s candidate will be Klaus Iohannis, 55, the head of the Liberals and the ethnic German mayor of a city in Transylvania in northern Romania.

With less than four months before the election to replace President Traian Basescu, neither Iohannis nor Ponta have announced their bids, but opinion polls show they are the most likely candidates.

“Together we are stronger and we have the chance not only to win the future election but also to change Romania,” Iohannis told his colleagues who had gathered for the Saturday vote.

Both the leftist and centre-right alliances are expected to announce their candidates in August.

The next president will play a pivotal role in appointing a new prime minister and a government line-up to oversee IMF-backed reforms under a 4 billion euro standby deal. The president also appoints judges and prosecutors, important in a country deemed one of the most corrupt in the European Union.

The International Monetary Fund has postponed a review of the aid deal pending the presidential election, which has raised concerns about fiscal discipline.

Thursday, July 24, 2014

Romania's president asks parliament to reassess tax cut

(Reuters) - Romania's President Traian Basescu sent back to parliament a planned social security tax cut by the government on Wednesday which he says will hurt budget revenue.

The cut was approved by Prime Minister Victor Ponta's leftist government in June and endorsed by parliament earlier this month, going against a recommendation from the IMF which leads a 4-billion euro aid deal for Romania.

The president, who can veto bills approved by parliament only once, has warned that such a move could put the country's macro-economic stability at risk and inevitably trigger higher taxes elsewhere.

Romania is the European Union's second poorest member and Ponta's government had said the move was intended to boost economic growth.

"I have reservations regarding its sustainability," Basescu told reporters.

He pointed out that a 0.9 percentage point reduction in the fiscal deficit would be required next year at a time when Romania has already committed to increase its defense budget.

The 5 percentage point cut in employers' tax to 15.8 percent from Oct. 1 will create a revenue shortfall of 850 million in government finances in the fourth quarter of this year. The government had said it planned to cover that with higher-than-expected returns from a tax on special buildings.

Ponta has offered assurances that the budget deficit will not rise above this year's target of 2.2 percent of gross domestic product. In 2015, the social security tax change will cost 4.8 billion lei, just under 1 percent of GDP.

The International Monetary Fund has postponed a review of the aid deal pending a Nov. 2 presidential election. Concerns about fiscal discipline have been raised in the run-up to the vote.

Tuesday, July 22, 2014

Romania's Basescu slams EU for soft Putin stance

(Reuters) - Romania's President Traian Basescu on Monday accused the European Union of being weak and too slow in imposing sanctions on Russia to deter it from encroaching further into Europe after its annexation of Ukraine's Crimea.

An ex-communist state on the Black Sea, Romania joined the EU in 2007 and has been among the most vehement advocates of Western sanctions against Moscow after neighboring Ukrainelost control of its peninsula and some of its eastern territories.

"We're now facing a reality because we didn't discourage Putin, because in Eastern Europe there's a conflict fueled by the Russian Federation, with military equipment, politically, with personnel, so that 192 Dutch citizens died on Monday," Basescu told a news briefing.

He was refering to the downing of a Malaysian airliner with nearly 300 people on board in separatist-held territory in Ukraine last week. One of the victims was a Romanian.

Basescu said it was a mistake to handle sanctions against Russia "with kid gloves".

The more delay in implementing them the higher the price will be paid to stop Putin's plans to rebuild the former Soviet Union's empire, he said.

Romania has said NATO must reposition its resources in the wake of Moscow's manoeuvres and plans a gradual increase in its defense budget over the next two years.

It is especially concerned that Moldova, a small state bordering Romania with a Russian-speaking minority - could be next in Moscow's sights given the risk of separatist unrest there.

Basescu attributed the EU's stance towards Russia to various economic interests by member states: "There's always an argument: one country has a big investment, other has to deliver sophisticated equipment, another is natural gas dependant."

"Today is Ukraine, then the Baltics borders are reached, then Poland and then Romania. Aren't we at risk by making economic considerations weigh more than solidarity with states in the EU's eastern flank ?"

(Reporting by Radu Marinas, Editing by Angus MacSwan)

Transylvanian Mayor to Run for Romanian Presidency

Agence France-Presse

Bucharest: The mayor of the Transylvanian city of Sibiu, Klaus Iohannis, is to run for the Romanian presidency after being chosen as the right-wing National Liberal Party candidate on Monday.

"I want to be a president that brings people together, a mediator," Iohannis told party delegates.

The latest polls show that Iohannis, a Romanian of German origin, is likely to make it to any presidential runoff.

The Liberals are one of Romania's main political parties and choosing a candidate belonging to one of the country's minorities is rare.

A popular mayor in his central Romanian hometown, Iohannis is expected to also attract support from the centre-right Liberal Democrats, which has previously backed outgoing president Traian Basescu.

Iohannis is considered to have the best chance of challenging the Social Democrats' presidential candidate, who is likely to be the current Prime Minister Victor Ponta.

A physics teacher who has won consecutive local elections since first being elected in 2000, Iohannis won acclaim when Sibiu, a city founded by Saxon colonists in the 12th century and praised by Prince Charles, was proclaimed European Capital of Culture in 2007.

Unlike most Romanians with German ethnicity, Iohannis, 55, decided to stay in the country after the collapse of the Communist regime in 1989 as he felt he had a "unique chance to do something for Sibiu".

More than 100,000 ethnic Germans fled the country with the collapse of the Ceausescu regime.

Iohannis has also represented the small centrist Democratic Forum of Germans in Romania party in local elections.

Wednesday, July 16, 2014

Romanian Prosecutors Open Probe of Microsoft Licenses

Romanian anti-corruption prosecutors opened an investigation in connection with licenses acquired by the Romanian government from Microsoft Corp. (MSFT)

Prosecutors are questioning local Microsoft directors and current or former government officials about a $105 million contract to supply Microsoft Office licenses to Romanian schools and other institutions from 2004 to 2009, according to a statement on the prosecutors’ office website. The probe is centered on whether accusations of influence peddling, bribery and abuse of office have merit and is not targeting specific individuals for now, it said.

“There are clues that the price for the licenses was increased by about 5.4 million euros ($7.3 million),” the office said. Microsoft Romanian press office didn’t respond to Bloomberg phone calls seeking comment.

Microsoft, the world’s largest software maker, said last year that it’s cooperating with U.S. federal authorities investigating possible illegal activity by employees and business partners in Russia and Pakistan.

The statement followed a Wall Street Journal report that federal regulators are extending their examination of the company’s relations with business partners who allegedly bribed foreign officials for contracts.

The investigation had earlier looked into allegations made by a former Microsoft representative in China, and the company’s relationships with resellers and consultants in Romania and Italy, the newspaper said.

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

To contact the editors responsible for this story: Balazs Penz at James M. Gomez, Michael Winfrey

Romania president's brother indicted in bribery case

BUCHAREST (Reuters) - Romanian President Traian Basescu's brother was indicted on Monday on charges of taking a 250,000 euros ($341,000) bribe to help shorten a crime boss's prison sentence.

The anti-corruption prosecutor's office said Mircea Basescu had accepted the sum from the son of the jailed man and promised to intervene with magistrates with the aim of securing his release or a shorter sentence.

Basescu, a businessman, has repeatedly denied taking money to influence the judiciary.

He was ordered detained for 30 days by a court on June 20. No date was set for the trial, which will take place in the Black Sea port of Constanta, his hometown.

Romania ranks behind only Greece and Bulgaria in terms of corruption in the 28-nation European Union, according to Transparency International, and the European Commission has put its justice system under special monitoring. More than 1,000 people were convicted of corruption last year in the country. Those sent for trial included six ministers and members of parliament, five county council heads, 34 mayors and deputy mayors, judges, lawyers and managers of state-owned firms.

Monday, July 14, 2014

Voice of America: Romania Expects to be Energy Independent Despite Ukraine Crisis

Romania is expected to achieve energy independence by the end of the decade, due to shale gas and alternative energy sources like wind and nuclear power. It is the third most energy independent country in the European Union after Denmark and Estonia.

A neighbor of Ukraine, Romania has found itself in recent months close to Europe’s latest energy and political crisis, a crisis that threatens to disrupt Europe’s gas supply and throw the European Union into economic turmoil. Despite the continent’s dependence on Russian natural gas and oil, Romania is the only southeastern European country believed to approach energy self-sufficiency, and is mostly unaffected by the crisis in Ukraine.

Razvan Niculescu, the Romanian Secretary of Energy, said recent exploration efforts show Romania has significant offshore resources of natural gas in the Black Sea, with recovery expected to start by the end of 2019. These resources and unconventional shale gas will help Romania meet all its energy needs and even become an exporter of natural gas.

Romania already meets 80 percent of those needs from its own oil, gas, hydro, coal and nuclear energy sources, and imports the remaining 20 percent of gas and oil from Russia - unlike Ukraine and Bulgaria, which depend almost entirely on Russian natural gas imports,

Besides a significant supply of offshore gas in the Black Sea, the U.S. Energy Information Administration estimates Romania to have 1.4 trillion cubic meters of shale gas, the third largest reserve in Europe after Poland and France.

The crisis over Russia's annexation of Ukraine's Crimean peninsula and a bill paying dispute between those two countries further encouraged Bucharest to pursue energy independence. In May, U.S. Vice President Joe Biden visited Romania to discuss alternatives to Europe’s dependence on Russian energy and the possibility of Romania becoming a key connection point for energy markets between East and West.

Iulian Buga, Romania's ambassador to the United States, said Ukraine's crisis emphasizes the need to speed up that process.

“This is not only related to the current crisis in the region but it’s about the future, because the need for energy has been there for quite some time and it will increase and increase. With or without that crisis, you still need to find new resources, and the energy subject has always been an important element in the security of every country,” said Buga.

Another consequence of the crisis in the Crimean Peninsula is the construction of an inter-connector system between Romania and the Republic of Moldova, a small former Soviet republic east of Romania that is 100 percent dependent on Russian energy imports. Romania and Moldova have strong historical and cultural ties.

Romania is also doing a feasibility study on building an inter-connector pipeline that will allow natural gas from Azerbaijan to be transported through Georgia to Romania and farther into Central and Western Europe. Romanian Energy Secretary Niculescu said the pipeline will help the region sustain any future energy disruptions.

Niculescu said Europe will continue to import natural gas and oil from Russia, but these imports will be at an acceptable percentage and will ensure energy will never again be used as a political weapon.

The booming energy sector is expected to be the main economic driver and job creator as Romania works to catch up to wealthier EU members. According to government data, the energy sector alone is expected to create 20,000 jobs in Romania over the next decade.

Romania puts former prison commander on trial

Associated Press

BUCHAREST, Romania (AP) -- For the first time since communism collapsed in Romania 25 years ago, a former prison commander goes on trial Monday charged with being responsible for the torture and murdering prisoners considered a threat to the country's old order.

Survivors say the delay in bringing perpetrators to justice was a cynical tactic by Romania's new rulers, some of whom held senior positions under the communist regime, to avoid accountability.

"These criminals were left in peace on purpose and most died in their beds. now they are bringing some of the crimes to light and it is important," said Octav Bjoza, director of the Association of Former Political Prisoners in an interview with The Associated Press.

Alexandru Visinescu, 88, goes on trial charged with crimes against humanity for deaths that happened under his command at Ramnicu Sarat prison from 1956 to 1963. Since authorities brought charges against him, Visinescu says people in the street have shoved him to the ground and called him a criminal. He has pleaded not guilty and calls himself a scapegoat.

"I only followed orders. They should ask those that gave the orders," he told the AP on Friday. "I am convinced they will do anything to take revenge.

"Why didn't they put me on trial in 1964?" when the political prisons closed "or after (Communist leader) Nicolae Ceausescu died? Why now?"

He contests the number of deaths that prosecutors say happened under his command and denies mistreatment happened under his command that led to prisoners' deaths. The word "criminal" is scrawled on the outside wall of the building where he lives in a shabby one-room apartment, full of old photographs of him in uniform and as a young boy. Born into a family of peasants, Visinescu said his father died the year he was born.

He seems more resigned than he was a year ago when he cursed and lunged at reporters after hearing charges against him and says he expects to go to prison. Another former prison guard was charged in 2000 with aggravated murder, but died before his trial could get underway.

Former ministers, diplomats, army officers, farmers, priests and workers considered a threat to the Communist regime were locked up in prisons from 1948 to 1964. Historians say one-fifth of the 500,000 who were incarcerated died. Bjoza says there were 40,000 political prisoners when communism ended with only 3,000 alive now.

Former prisoner Valentin Cristea, who was incarcerated in Ramnicu Sarat while Visinescu was commander, communicated by Morse code in the grim lockup where prisoners were mainly kept in solitary confinement and banned from communicating.

Cristea, 84, said he learned that the inmate in the neighboring cell, former army officer Jenica Arnautu, had gone on hunger strike to protest mistreatment, was being force-fed with a tube down his throat. In November 1959, three days after the tapping on the wall stopped, Arnautu, who was 36, died, Cristea said in an interview from his home in Campina, 80 kilometers (50 miles) north of Bucharest. Visinescu denied knowledge of the case.

Prosecutors say 14 people died under Visinescu's command, and said corpses showed signs of malnutrition according to doctors who signed the death certificates. They accuse Visinescu of denying medical treatment and postponing the hospitalization of gravely sick prisoners. "The regime ...did not allow for the minimum survival conditions in the long term, "the indictment said. "Prisoners died in a long drawn-out process, that was nonetheless efficient, in which they were tortured physically and mentally," were denied food, and were physically punished on the slightest pretext, the indictment says. Visinescu says fewer died.

A probe ordered by the Communist government in 1968 into the prisons concluded the state had installed "a regime to exterminate political prisoners from 1948-1964."

Diplomat Victor Radulescu Pogoneanu, who was serving a 25-year sentence for "plot and treason," died at Ramnicu Sarat after prison guards held his paralyzed legs and dragged him down stairs, banging his head on each step, according to the indictment. Visinescu denied he had been dragged down the stairs.

Bjoza said many prisoners died disappointed that there had been no attempt to punish former prison guards.

"We forgave these people but there has been no justice, so we feel condemned again."

Thursday, July 3, 2014

Romania parliament approves employment tax cut despite budget hole

The Romanian parliament's lower house approved on Wednesday a 5 percentage point cut in social security taxes for employers that is intended to boost economic growth but will leave a gap in the budget. The tax cut was approved last month by the leftist government of Victor Ponta, going against a recommendation from the International Monetary Fund, which leads Romania's 4 billion euro aid deal. The lower house has the final say.

The IMF has postponed a review of the aid deal pending a November 2 presidential election that has raised concerns about fiscal discipline. The cut in employers' tax to 15.8 percent from October will create a revenue shortfall of 850 million lei ($264.61 million) which the government plans to cover with higher than expected returns from a tax on special buildings introduced this year.

The head of the Fiscal Council, an independent fiscal watchdog, has said revenues from the special building tax will not be sufficient, however, as overall tax collection fell behind estimates in the first quarter. Prime Minister Victor Ponta has said the budget deficit will not rise above this year's target of 2.2 percent of gross domestic product. In 2015, the social security tax change will cost 4.8 billion lei, just under 1 percent of GDP.

Central bank Governor Mugur Isarescu said on Tuesday the cut was a step in the right direction, but that it would not be enough to take Romania out of a vicious circle without structural reforms and job creation. "It (the cut) must be surrounded by more measures to help create new jobs," Isarescu told reporters. "Consider ... how few the taxpayers are, 4 million out of an active population of 10 million, and 6 million beneficiaries."

Romania to contribute troops, police officers to Afghanistan mission after 2014

BUCHAREST, July 2 (Xinhua) -- Romania will contribute some 200 troops, as well as 50 police and gendarme officers to the training, counselling and assistance mission in Afghanistan, the country's Supreme Council for National Defence (CSAT) decided Wednesday.

"Depending on the NATO decision, Romania will contribute up to 200 troops under the authority of the Defence Ministry and up to 50 police and gendarme officers under the authority of the Interior Ministry, to the training, counselling and assistance mission in Afghanistan," said a press release of the Presidential Administration after the CSAT meeting.

The CSAT, which includes the president, the prime minister, the ministers of defense and foreign affairs, and intelligence chiefs, is Romania's top-most executive body able to decide on security and defense issues.

Romania began to send troops to Afghanistan in July 2002, as part of NATO's mission in the country. The action was the country's first military mission abroad after World War II. As many as 23 Romanian soldiers died there in the past 12 years.

The Romanian contingent in Afghanistan currently consists of about 2,000 troops, who will progressively pull out in the coming months, before their UN-authorized mandate expires at the end of 2014.

Tuesday, July 1, 2014

Romania Keeps Main Rate on Hold as Reserve Ratio Cut

Bloomberg News
By Andra Timu and Edith Balazs
July 01, 2014

Romania’s central bank left its benchmark interest rate at a record low for a third straight meeting as policy makers assess how long the slowest inflation since communism collapsed in 1989 can be sustained.

The key rate was kept at 3.5 percent, according to an e-mailed statement today. Ten of 11 economists in a Bloomberg survey predicted the move, while one forecast a cut to 3.25 percent. The central bank cut reserve requirements to 16 percent from 18 percent for foreign currency liabilities and maintained those for leu deposits at 12 percent. Governor Mugur Isarescu will hold a briefing at 3:30 p.m. in Bucharest.

With inflation at a quarter-century low and economic growth the fastest in the European Union in the first quarter, policy makers halted an easing cycle in March after 175 basis points of rate cuts since July. Tax increases may fan inflation to 3.3 percent by year-end, according to the central bank, bringing price growth close to the upper bound of its target corridor.

“The central bank’s next moves will be determined by the inflation path, with the probability of rate cuts increasing,” Dan Bucsa, an economist at UniCredit Bank AG in London said in a note before the decision. “A stable leu and well-behaved energy prices supported by households contribute to the benign inflation scenario.”

The leu traded little changed at 4.3845 per euro at 12:25 p.m. in Bucharest, according to data compiled by Bloomberg. It’s 1.5 percent stronger this year, best-performing currency in central and eastern Europe.
Inflation Target

The central bank is seeking to keep consumer-price growth between 1.5 percent and 3.5 percent this year. It forecasts inflation at 1.4 percent at the end of this quarter from 0.9 percent in May. June data will be released by the country’s National Statistics Institute on July 10.

The economy grew 3.8 percent from a year earlier in the first quarter, boosted by industry and exports.

“The key rate could be cut later this year if inflationary pressures remain subdued,” Radu Craciun, chief economist at Erste Group Bank AG’s Romanian unit, said in a note before the announcement.

To contact the reporters on this story: Andra Timu in Bucharest at; Edith Balazs in Budapest at

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