Moody's says Romania outlook stable but faces risks

BUCHAREST, July 9 (Reuters) - Moody's Investors Service said on Thursday it had kept its outlook on Romania stable, but failure to stick to an IMF-led financing deal would put downward pressure on ratings.

Moody's is the only major rating agency to keep Romania at investment-grade level, after Standard & Poor's and Fitch downgraded it to "junk" status last year because of its large macroeconomic imbalances and lack of policies to address them.

It also said the economy could contract by 5.7 percent this year, facing a "difficult recession" on faltering exports and high interest rates.

However, it said Romania would avoid calamity due to "relatively low private sector debt and less reliance on foreign trade".

Like most of its neighbours, Romania slipped into recession this year as the world crisis slashed lending and consumption and forced it to secure 20 billion euros in IMF-led aid.

"The ratings would come under downward pressure if the IMF-EU financing programme unravelled due to implementation problems, or if there were signs that the EU was becoming less inclined to support," the agency said in a credit opinion note.

It rates Romania at Baa3.

Enforced structural reforms and stronger fiscal policies would likely lead to a rise in ratings, Moody's said.

Romania targets a budget deficit of 4.6 percent under local accounting standards, but most economists say a bigger shortfall is unavoidable as the crisis hits tax receipts. Moody's sees the gap at 6 and 4 percent in 2009 and 2010, respectively.

Romania to help Oltchim buy Petrom assets -report

BUCHAREST, July 9 (Reuters) - Romania plans to help chemical firm Oltchim OLTC.BX acquire Petrom's SNPP.BX petrochemicals plant by next month, Prime Minister Emil Boc was quoted as saying on Thursday.

Constantin Roibu, the chief executive of state-controlled Oltchim told Reuters last month his company was in talks with several banks for a 70 million euros ($100 million) loan to fund the acquisition.Many analysts say the debt-laden Oltchim faces serious problems in obtaining financing, especially during a global cash squeeze that has also reduced demand for its products.

But Prime Minister Emil Boc said the government will lend a hand to the ailing company and give state guarantees for 50 million euros."The guarantee is on its way and we hope the takeover will be completed at the start of August," Boc was quoted as saying by state news agency Agerpres.

Boc also said the government wants to guarantee 80 percent of Oltchim's long-term investment plans of 400 million euros and may also consider transferring its debt into the portfolio of the state's privatisation agency AVAS.At the end of 2008, Oltchim had debt maturing this year worth of 1.1 billion lei ($365 million) and longer-term debt of about 600 million lei. Its 2008 turnover stood at around 2 billion lei and it posted net losses of 234 million lei.Oltchim works only at a third of its capacity since Romania's top oil and gas group Petrom, majority owned by Austria's OMV (OMVV.VI), halted petrochemicals production.

Oltchim needs ethylene and propylene from Petrom, which has said it is not interested in keeping the plant, in dire need of upgrades, as it is considered a non-core business.Analysts say Petrom needs to finalise the deal as soon as possible as lack of investment may result in impairments which will affect the group's profit.At 1018 GMT Oltchim shares stood at 0.31 lei, up 3.33 percent on the day, while Petrom's traded 2.13 percent higher at 0.24 lei. Both stocks outperform the bourse's main index .BETI which rose 0.5 percent in line with regional peers. (Reporting by Marius Zaharia; Editing by Greg Mahlich)

Reader's question...Anyone?

Hi there,

My name is Phil Gallagher, and I was the youngest volunteer (17) who participated in the Caledonian Convoy from Edinburgh to Romania in February of 1990. This was organised by the Scottish/Flanders Alliance as I remember.

I would like to ask if you have any information and/or photo's from this time as I would really like to do some digging, and find out what happened to everyone who participated.

My email is philipgallagher542@btinternet.com

Any info would be helpful.

Many thanks,

Phil Gallagher.

Roma's exit 'more than racism'

BBC News

A senior Housing Executive official has said the recent departure of members of the Roma community from Belfast was linked to more than racism.

Michael Graham played a key role in facilitating the return of more than 100 immigrants to Romania.Mr Graham said he believed one of their key reasons for returning home was because they realised they were not entitled to any benefits in NI.

Housing Executive funds were used to fly the families home last month."Racism was certainly the catalyst by which the people finally determined that they wanted to go home," Mr Graham said."But I still believe that had these people been entitled to public funds, which unfortunately they weren't, their decision may have been different."More than 70 members of the Roma community who fled their homes in Belfast after racist attacks travelled back to Romania on Friday.

About 25 people, mainly women and children, had already left despite attempts to persuade them to stay.Emergency funds provided by the Housing Executive are being used to pay for the flights.Social Development Minister Margaret Ritchie said it was a "sad day" for Northern Ireland."It is a symbol of the sectarianism that still divides us and it is a marker that the only way forward is a shared future," he said."I am very disappointed that all but two of the Romanians have chosen to leave."She said she was looking at how her department could help in countering racist attitudes in the community."My thoughts are very much with the Romanians as they leave Northern Ireland today," she added."My drive is building the shared future that they and other migrant workers can live securely and happily in."Earlier this week, the police said they did not know enough about the concerns of the families who fled.

Police do not believe paramilitaries were involved in last week's attacks, which were condemned by all political parties.Barbara Muldoon of Anti-Racism Network accused the police of being slow to act.

French warn against stigmatising Bulgaria, Romania

EurActiv.com
Published: Tuesday 30 June 2009

Just weeks before the European Commission is due to publish an assessment on Bulgaria and Romania's accession to the EU, the French Senate cautioned against "stigmatising" the EU's most recent members and suggested fine-tuning the Union's Cooperation and Verification Mechanism, set up to assist the two countries after their entry.

Background:

When Romania and Bulgaria joined the EU on 1 January 2007, shortcomings remained regarding judicial reform and the fight against corruption - and in the case of Bulgaria, the fight against organised crime. These shortcomings carried the risk that Bulgaria and Romania would not be able to correctly apply Community law and their citizens would not be able to fully enjoy their rights as EU citizens.

A Cooperation and Verification Mechanism was set up to assist both countries. Moreover, the European Commission retained the right to use special safeguards. Such safeguards are included in both countries' accession treaties and can be invoked against new member states as a last resort. If used, the process could lead the EU to refuse to recognise court decisions or even freeze payments of EU funds. Also, if applied, such an unprecedented decision could badly hurt the countries' reputations.

In a turnaround compared to previous monitoring reports, where Bulgaria was invariably portrayed as the laggard in meeting EU standards on judicial reform and fighting corruption (EurActiv 24/07/09), the Commission unveiled new reports last February which depicted Romania as the slow learner this time (EurActiv 13/02/09).

The next annual reports on Bulgaria and Romania are expected in September, but no exact date has been communicated so far. The reports are prepared by the EU executive's secretariat-general under the authority of Commission President José Manuel Barroso, in agreement with Vice-President Jacques Barrot.

A Dutch minister recently asked the European Commission to consider activating safeguard clauses against Romania and Bulgaria should monitoring reports due this summer fail to acknowledge progress in fighting corruption (EurActiv 18/06/09).

In a report to the French Senate, members Pierre Bernard-Reymond (UMP, EPP-affiliated), and Michel Billout (a member of the Communist, Republican and Citizen group), state that the expected report on Bulgaria and Romania, due in September, may "raise doubts among other member states over the conditions under which enlargement has taken place".

The two rapporteurs, who have conducted extensive study visits to the two countries, also consider that the reports may be perceived by Bulgaria and Romania as "excessive stigmatisation" of the two countries. Senators Reymond and Billout also rule out the eventual use of a "safeguard clause", which would annul mutual recognition in judicial affairs between these countries and the EU, describing it as counterproductive for all sides.

As an example, the rapporteurs recall that 60 European arrest warrants were successfully issued between France and Bulgaria in 2007. The safeguard clause can be used only in the first three years after accession; that is, until 1 January 2010. But the Cooperation and Verification Mechanism (CVM) is open-ended. Romania has asked for the mechanism to be shelved, while Bulgaria advocates its adaptation. Reymond and Billout slam the weaknesses of the CVM, which in their view does not provide clear indicators of progress made.

But they are in favour of keeping the monitoring mechanism, provided that it is fine-tuned to put the emphasis on "cooperation". France, for instance, recognises the importance of twinning law-enforcement administrations, the rapporteurs point out. The French senators also advocate more determined action against organised crime at EU level, as in their view, the phenomenon does not only concern the two EU newcomers.

Reymond and Billout also write that there are lessons to be learned from Bulgaria and Romania's accession for future EU enlargements, arguing that stronger compliance should be required before accession takes place. This is already the case concerning Croatia's EU bid, they point out.

Romanian judges to protest against bonus cuts

BUCHAREST, July 8 (Reuters) - Romanian judges plan to close courts for three hours a day from Thursday to protest against pay cuts, adding pressure on the Bucharest government's efforts to contain spending and meet IMF loan conditions.

The new European Union state's judiciary is already a weak part of its administration, blamed for delays, incompetence and corruption, and seen as a major concern in Brussels.Bucharest's centre-left cabinet faces an uphill battle to cut spending, in a move to contain the budget deficit below 4.6 percent of GDP, a key requirement of the International Monetary Fund in the 20 billion euro financing deal secured in March.

As part of planned spending cuts, the government has slashed a number of bonuses paid to its administration staff, while freezing public sector wages. For judges, it scrapped a bonus for stress at the workplace, worth half of their net wages.But Justice Minister Catalin Predoiu and magistrates have said repeatedly that ill-equipped courts and low wages pose an obstacle to justice reforms.

"Tomorrow (Thursday) we will suspend activity for three hours ... and the protest will be held across the entire country," said Mona Pivniceru, president of the Romanian Magistrates Association. "Protests will continue (every day).""A stress bonus or a job bonus...is a person's pay (right) and no one is allowed to cut it," she said.The stress bonus is worth 50 percent of the net wage, which ranges between 4,000 and 5,000 lei ($1,650). Without it, judges still earn bonuses totalling up to 85 percent of the net wage.

The average wage in the Romanian economy was 1,356 lei in May.The justice minister was quoted as saying by state news agency Agerpres that the protest was "illegal" and that he will try to solve the conflict by meeting magistrates to show them the limits of the ministry's budget."I think not all magistrates understand the gravity of the financial crisis we are going through," Predoiu said.The European Commission is still monitoring progress of fresh EU members Romania and Bulgaria in fighting corruption and is set to publish a report this summer. (Reporting by Ioana Patran; Writing by Marius Zaharia; Editing by Louise Ireland)

IMF to cut Romania 2009 GDP forecast

BUCHAREST, July 8 (Reuters) - The International Monetary Fund will revise downwards its forecast for a 4 percent economic contraction in Romania this year, Bucharest's representative to the Fund in Washington was quoted on Wednesday as saying.

Like most of its neighbours, Romania slipped into recession this year as the world crisis slashed lending and consumption and forced it to secure 20 billion euros in IMF-led financial aid in March.

"We are working on a new forecast," Mihai Tanasescu told daily Cotidianul. "The (GDP) fall will certainly be deeper than that we initially estimated."

Under the terms of the IMF deal, Romania must enforce vast public sector reforms, but was allowed to keep a budget deficit target of 4.6 percent of gross domestic product this year -- in Romanian accounting standards -- barely smaller than in 2008 and far above EU limits.
The Romanian economy shrank by 6.2 percent on year in the first quarter, far worse than economists had expected. But the finance ministry has said Romania counts on flexibility from the IMF if the economic pain worsens.

Tanasescu did not comment on whether the IMF will set a new deficit target for Romania.
A mission of IMF experts will review Romania's progress in early August before the Fund approves the loan's second tranche.

Romania budget revenues down 6 pct Y/Y in Jan-June

BUCHAREST, July 8 (Reuters) - Romania reported 67.5 billion lei ($21.8 billion) in budget revenues collected from taxes in the first half of the year, 2 percent less than planned and 6 percent down on the year, the tax authority said on Wednesday.Like most of its neighbours, Romania slipped into recession this year as the world crisis slashed lending and consumption and forced it to secure 20 billion euros in IMF-led aid.

Under the terms of the IMF deal, Romania must enforce vast public sector reforms, but was allowed to keep a budget deficit target of 4.6 percent of gross domestic product this year -- in Romanian accounting standards -- barely smaller than in 2008 and far above EU limits.The IMF deficit target hinges on a forecast of 4 percent economic contraction this year.

Six-month tax receipts, which account for the bulk of consolidated budget revenues, amounted to roughly 13 percent of the government's gross domestic product forecast for this year.Romania recorded a consolidated budget deficit of 2.7 percent of gross domestic product in January-June, meeting the quarterly target agreed under the deal with the IMF.

However, first-quarter data showed a deeper than expected recession at 6.2 percent on the year, raising concerns that a bigger budget shortfall would be unavoidable as the crisis hits tax receipts.The finance ministry said Romania counts on flexibility from the IMF if economic pain worsens.Earlier on Wednesday, Bucharest's representative to the Fund in Washington said the lender will revise downwards its 4 percent forecast of economic contraction in Romania this year. A mission of IMF experts will review Romania's progress in early August.

CEZ eyes minority stakes in Romanian unit

PRAGUE, July 8 (Reuters) - Czech power group CEZ (CEZPsp.PR) launched talks to buy the
minority stakes held in its Romanian distribution unit, the power group said on Wednesday.

CEZ acquired a majority stake in Romania's distribution company Electrica Oltenia in 2005 and, as part of the privatisation deal, it got an option to buy minority stakes, CEZ spokeswoman Eva Novakova said in an email."We have now launched talks with owners of the share holdings, but since they are under way we will not comment on them or provide details," Novakova said. (Reporting by Jana Mlcochova; Editing by Michael Winfrey)

Romania Retail Sales Plunge, Led by Cars, Services

By Adam Brown

July 8 (Bloomberg) -- Romanian retail sales declined the most on record in May as lending and wage growth slowed, prompting consumers to put off buying new cars and avoid restaurants, movie theaters and other services.Retail sales slumped an annual 12.3 percent, falling for a fifth month after a drop of 9.7 percent in April, the Bucharest- based National Statistics Institute said in an e-mail today.

That is the biggest decline since at least Jan. 2006, the earliest data available. On the month, sales rose 0.2 percent.The economic recession, which has hit retail sales throughout Europe, has prompted Romanians to delay or cancel shopping trips for non-essential goods after a spending spree that drove up retail sales as much as 34 percent in 2007. Gross domestic product shrank an annual 6.2 percent in the first quarter and the drop in consumption may postpone a recovery.

“We are concerned about economic prospects for 2010,” Nicolaie Alexandru, chief economist at ING Bank Romania, said in an e-mail today. “The ability of households to consume is key in this regard and the data so far is not looking good at all.”Sales of cars dropped 44 percent on the year in May while sales from services including restaurants, hotels and travel agencies dropped 13.9 percent, the institute said. Sales of consumer goods such as clothing and home appliances fell 11.9 percent and food sales slid 4.1 percent.

Lending growth, which accounted for much of the spending increases in the past three years, slowed to an annual 15.9 percent in May from as fast as 64 percent a year ago. Wage increases slowed to 8.7 percent from more than 20 percent.

The leu has weakened about 16 percent against the euro in the past year, discouraging Romanians from buying imports, which have fallen about 20 percent this year from last year.The statistics institute started this year reporting retail sales comparisons adjusted for the difference in the number of working days between months. Figures before January weren’t adjusted.

To contact the reporter on this story: Adam Brown in Bucharest atabrown23@bloomberg.net

Romanian Sailors Kept Captive by Somali Pirates

By Gina Neagu
Epoch Times StaffJul 7, 2009

After months of uncertainty, the names of most of the crew members of the Italian ship Buccaneer, seized by Somali pirates, have been released.

The online Italian publication Liberoreporter.it revealed on Monday, July 6, the names of four of five Romanian sailors taken hostage, along with 10 other fellow Italians and one Croatian by Somali pirates in the Gulf of Aden on April 11.

According to the source, all four Romanian sailors whose names were published—Nicusor M. (chief engineer), Adrian G. (deck officer), George D. (mechanic), Marius A. (pilot)—were from the Romanian city of Constanta, while the fifth sailor was from Bucharest. All five Romanian sailors are between 28 and 35 years old.

There are over 40,000 Romanian sailors boarded on various ships around the world. This stems from the maritime tradition of Romania, which in the past owned a third of the world’s merchant fleet. In light of the economic crisis and the fact that Romania has only five commercial vessels left, Romanian sailors take out contracts on foreign ships passing through the Gulf Aden and the Horn of Africa, where Somali pirates have operated for several years.

“After the Filipino sailor community, with over 100 sailors in the hands of pirates, and Ukrainians, with 20 sailors seized in the Gulf of Aden, in the third place in the ranks of those nations most affected by the phenomenon of piracy comes Romania, with 16 sailors taken hostage,” reports Liberoreporter.it.

The Italian site has frequently published articles in recent weeks about the Buccaneer, and talks about the drama that the 16 families of the kidnapped sailors are going through, as the Italian Foreign Ministry chose to deal with the problem in a quiet way.

Italian press has recently published several articles about the crew of the Buccaneer, including telephone discussions with Somali kidnappers who pressed for negotiations with the Italian authorities to be performed directly, without intermediaries.

In an article published recently by the daily newspaper La Stampa, the father of a kidnapped Italian sailor stated that all five Romanian sailors had been transferred to shore to fishing villages by their kidnappers, while the ship remains anchored off the coast of Lasqorey village, 68 miles west of the port of Bosasso, the economic capital of the Somali region of Puntland.

Ship captain Mario Iarloi said on June 10 that six of the crew members had been transferred to shore. Pasquale Vollaro, the father of one of the Italian sailors, said only the 10 Italian sailors are still on board and are being treated very badly by their kidnappers.

“The pirates moved the Romanian sailors to shore and kept on board the ten Italians, whom they treat like animals. My son told me they only get a little rice every day, they have no drinking water and they have to boil the water they get because it is dirty. He is afraid they will be killed, he is terrorized,” Vollaro said.

Early June, ship captain Mario Iarloi contacted the newsroom of Corriere della Sera and told reporters that the crew has very limited reserves of food, drinkable water, and medicine and people are forced to live without air conditioning in temperatures that frequently top 104 F.

“We are exhausted. Please rescue us from this ordeal, or we’ll ask the pirates to kill us,” the ship's captain said over the phone.

The Italian Foreign Ministry has repeatedly stated that negotiations for the release of the crew are conducted through political channels, via Somalia, not directly with the pirates. Additionally, he stated that the possibility of military action to force the release of the crew or getting the crew released through payment of a ransom has been excluded.

He has asked the Italian and Romania press to be more discrete in this case, not to endanger the sailors’ lives by circulating information about them.

The ship Buccaneer is the first Italian flag sequestered by Somali pirates, and the press speculated in April, during the first days after the seizure, that Rome would obtain a quick release of the crew due to their influence in the former Italian colony. These comments were fueled at that time due to the optimism shown by some senior Italian officials such as Premier Silvio Berlusconi, the President of the Chamber of Deputies Gianfranco Fini, and the head of diplomacy Franco Frattini.

Romania says backs Moldovan opposition

Reuters

Romania's president risked antagonising Moldova and Russia by saying he hoped the pro-Western opposition would make gains in Moldovan pollsRomania's president risked antagonising Moldova and Russia on Tuesday by saying he hoped the pro-Western opposition would make gains in this month's Moldovan parliamentary election.

Wading into a sensitive campaign, President Traian Basescu told a group of foreign journalists: "I hope that democratic forces, the current opposition, get a better positioning after the 2009 elections."

He added: "We consider that after the elections, irrespective of who is in power, (bilateral) relations would re-enter a normal path. No one can change our goal to bring Moldova closer to the European Union ... we have a duty towards the Moldovan population."

The last election in April produced a Communist victory and sparked violent street protests, which the authorities said were fomented by Romania. Bucharest denied this.

Russia said at the time that the riots were aimed at undermining the sovereignty of Moldova, and pointed the finger at forces favouring union with Romania.

Wedged between Ukraine and Romania, Moldova is among a group of former Soviet republics where Russia and the EU are waging a competition for influence that has fanned tensions between them.

Most of Moldova was once part of Romania and the two countries share a common linguistic heritage, but the country of 4.3 million also has longstanding links with Russia.

Three liberal opposition groupings, broadly pro-Romanian in outlook, won 41 seats in the April election. The Communists won 60 and fell one vote short in parliament of securing the election of communist Prime Minister Zinaida Greceanii as president, an outcome that triggered the new general election which is set for July 29.

Communist President Vladimir Voronin accused Romania, a member of the EU since 2007, of whipping up the April violence and said opposition parties were bent on having their country swallowed up by its western neighbour.

He said opposition groupings had done nothing to distance themselves from the "unionist" arguments of Romania's leadership which has offered Moldovans free education and passports -- about 800,000 people have applied.

Basescu would not say how many applications were currently pending but said: "We evaluate that in time, no more than 2 million (Moldovan) citizens would regain Romanian citizenship." This did not represent a danger from the point of view of emigration, he said.

EU tells nations to curb deficits

BRUSSELS—The European Union on Tuesday gave Poland, Hungary, Romania, Latvia and Lithuania two- and three-year deadlines to curb their budget deficits, which have been swollen by the world financial crisis and its fallout in Eastern Europe.

EU finance ministers gave Poland and Latvia until 2012 to bring the yearly gap between government spending and revenue under the maximum 3 percent of gross domestic product.
They set a 2011 deadline for Hungary, Romania and Lithuania.None of these countries use the euro but they are still required to stick to budget limits in order to minimize the differences between EU economies.

Government debt and deficits have soared over the last year as the financial crisis forced them to spend heavily to rescue banks, shore up their currencies and pay out more in welfare benefits while tax revenues shrank during the downturn.Hungary, Latvia and Romania have tapped billion euro (dollar) bailouts from the European Union, the International Monetary Fund and others to help them pay the bills.

These come with strict conditions attached that require them to make harsh cutbacks.Latvia had to approve spending cuts last month in order to get a second slice of its EU bailout, worth euro1.2 billion, that the EU will borrow on the market and lend to the Baltic nation before the end of the month.EU Economic and Monetary Affairs Commissioner Joaquin Almunia said he knew "the efforts are huge" but said Latvia had to stick strictly to the promised cuts.

Neither Hungary or Romania have ever stuck to the 3 percent limit since they joined the EU. Hungary entered in 2004 and Romania in 2007.Euro member Malta was also given until 2010 to reduce its deficit. Ministers said it could not get a longer deadline because overspending was not linked to the financial crisis.

Romanian president hopes Moldova opposition wins

By ALISON MUTLER
Associated Press

Romania's president said Tuesday he hopes pro-Romanian opposition forces will prevail in Moldovan elections.Traian Basescu said in a meeting with foreign journalists that he wants the "democratic forces, the opposition to the current government to have better results after the election."

The ruling Communist Party that won the April 5 ballot in Moldova is generally seen as pro-Russian. Moldovan authorities have been criticized by diplomats and rights groups for mistreatment of protesters in anti-government rallies and a lack of press freedom.

Basescu's public remarks about the upcoming vote will likely irk Moldovan Communist leaders who have already accused Romania of backing violent ant-government protests after the elections. Romania strenuously denied the charges.

At least two people died in the protests in the Moldovan capital. The opposition says the elections were rigged. Protesters stormed the Parliament and president's offices and there were mass arrests. Rights groups said some protesters were beaten and forced to sign statements while under arrest.Relations between Romania and Moldova have deteriorated since then. Moldova imposed visa requirements on Romanians traveling to Moldova.

Moldova holds elections on July 29.

Romania GDP may shrink by 6 pct in '09 -Econ Min

BUCHAREST, July 7 (Reuters) - Romania's economy could shrink by as much as 6 percent this year, as the world crisis batters the European Union state's exports, Economy Minister Adriean Videanu said late on Monday.Like most of its neighbours, Romania slipped into recession this year as the global crisis slashed lending and consumption.

It was forced to secure 20 billion euros in IMF-led aid.Under the terms of the IMF deal, Romania must enforce vast public sector reforms, but was allowed to keep a budget deficit target of 4.6 percent of gross domestic product this year -- under Romanian accounting standards -- barely smaller than in 2008 and far above EU limits.The IMF deficit target hinges on a forecast of a 4 percent economic contraction this year.

So far, Bucharest's centre-left government has said it would stick to the agreed shortfall target, but first-quarter data showed a deeper than expected recession at 6.2 percent on the year, raising concerns that a bigger gap would be unavoidable.'I think that the most pessimistic scenario could be -6 percent,' Videanu told a late night show on local television station Realitatea.Videanu said that if the economy shrinks by more than the initially forecast 4 percent, the budget deficit would rise, but he added investment spending would not be hurt.

Earlier on Monday, Prime Minister Emil Boc said the deficit could rise only to allow investment spending.'I have every determination to discuss with the IMF and the European Commission about raising the budget deficit, but only for infrastructure,' Boc said in a statement after meeting representatives of employers associations.'I can assure you the money will not go in plasma TVs, awards, bonuses or other such things. However, we will not touch the flat tax or the VAT.'Earlier this month, a ruling coalition party chief said Romania's government may raise this year's budget deficit target if the economic situation worsens.

Romania leftists push for major fiscal stimulus

BUCHAREST, July 6 (Reuters) - Romania's ruling coalition Social Democrats proposed on Monday spending 14 billion euros ($20 billion) on investment and fiscal incentives to counter the impact of the global economic crisis.

The 24 measures, which the party plans to discuss with their Democrat Liberal partners, envisages spending on infrastructure, housing and farming, rebates for pay-on-time taxpayers and incentives for employers who create new jobs.

The Social Democrats also proposed scrapping a corporate lump sum tax which the government has just introduced in a bid to bring the grey economy to the surface. The plan supports a cut in the value added tax for staple foods and cutting energy tarriffs for household consumers by a third.

'It is good to have proposals that focus on investment. But we've been hearing about investment plans for a while and nothing is actually done,' said Nicolaie Alexandru-Chidesciuc, ING Bank's chief economist in Bucharest.

'It isn't good at this time to adopt measures that ... help companies or the population because we cannot afford these expenditures. They may help the real economy in the short term but ... lead to tax hikes in the longer term.'

Romania has slid into recession this year as the world crisis slashed lending, consumption and demand for Romanian goods abroad, and forced the EU member to secure 20 billion euros in IMF-led aid in March.

The two ruling parties form an uneasy coalition, riven by disputes and policy differences, with the leftists seen as less fiscally restrictive. However, they command some 70 percent of seats in parliament, allowing them to push through difficult legislation.

Romania June unemployment rate rises to 6.0 pct

BUCHAREST, July 6 (Reuters) - Romania's unemployment rate rose to 6.0 percent in June from 5.8 percent in May, the employment agency said on Monday, as global crisis hits the country's manufacturers.

In June 2008, the unemployment rate was 3.7 percent.

Tumbling demand from the euro zone has hurt central and eastern European economies in recent months, forcing many manufacturers to halt production and lay off workers.

Moreover, the centre-left government needs to make deep spending cuts to curb Romania's large imbalances bloated by lavish spending by the previous cabinet, especially since the country secured 20 billion euros in IMF-led aid in March.

This may also mean a restructuring of the country's inefficient public sector, which employs about a third of Romania's workforce.

However, Labour Minister Marian Sarbu said in May that unemployment should rise less than previously expected this year, reaching no more than 7 percent or 620,000 people as the country's economic downturn shows signs of tempering.
June '09 May '09 June '08
Number of unemployed 548,940 526,803 337,084
Jobless rate 6.0 5.8 3.7

Romania: A Tough Crowd

Oxford Business Group Latest Briefing

3 July 2009

The cooling of the Romanian economy and the near saturation of the market have resulted in lower earnings for the country's telecommunications sector. There are signs that competition is about to increase the pressure on sector players even further.

Romania's GDP fell 6.2% in the first quarter of 2009 compared to the same period in 2008, with household spending down by 12.3%, according to figures released by the National Institute of Statistics on June 9. As with other sectors in the economy, this slowdown has hit the telecoms sector.

All of Romania's main mobile phone service providers have reported reduced earnings so far this year, with market leader Orange Romania, which has some 10m subscribers, announcing revenues of $366m for the first three months of this year, well down on the four-quarter average of $453m in 2008.

Vodafone Romania has also seen reduced incomes, announcing profits of $731m for the fiscal year ending March 31, down 3.5% on the preceding 12 months. This drop in profits was despite adding almost 670,000 new subscribers over the year, the 7.5% increase taking its customer base to 9.58m.

An additional factor for lower earnings is the highly congested nature of the mobile phone market. Romania has one of the highest penetration rates in the world, 133% as of the end of 2008, according to a report by the National Communications Administration andRegulatory Authority (ANCOM) issued in early June.

With five service providers currently in the market, competition is fierce. Though there was a 44% increase in the amount of mobile minute usage last year, with users racking up 30bn minutes of conversation, along with 4bn text messages sent, up 36.5% on 2007, campaigns by networks to retain customer loyaltyreduced earnings, ANCOM said.

According to ANCOM's president, Catalin Marinescu, it will not be until after summer when the full impact of the economic downturn on the telecoms sector will be felt.

"The effect of the current economic climate on telecoms in Romania is to be evaluated only in the autumn of this year, when we have data on the first half," he said on June 4. "We expect stagnation in some sectors and maybe even drops, but we will certainly have an increase in broadband penetration."

Though profit margins may have shrunk and the market is approaching saturation point, there is still some overseas interest in the sector, with Turkish fixed-line service provider Turk Telekom considering buying into the market. In mid-May, Hakam Kanafani, the development director for Oger Telecom, the Dubai-based majority shareholder of the Turkish firm, said Turk Telekom had built up a $1bn acquisitions fund, some of which could be used to gain a stake in an existing Romanian telecoms operator.

"I'm not sure whether it will be spent or not but these are sort of opportunities we're looking at in 2009 and 2010," Kanafani said in an interview with the Reuters news agency.

It is not the first time the Turkish firm has floated the idea of expanding into the Romanian market. In mid-2007, Turk Telekom's chief executive officer, Paul Donay, was quoted by local media as saying the company was examining fixed and mobile telephone business opportunities in Romania, along with other countries in Central Europe, though nothing came of the proposal at the time.

Interestingly, just as Turk Telekom was again talking up the possibility of buying into Romania, its parent company Oger was finalising a deal to sell its Romanianmobile service provider Telemobil, the owner of Zapp, to Greek telco Cosmote and its subsidiary Cosmote Romania.

The $277m buyout is a strategic move by Cosmote, which is the only mobile service provider in the Romanian market that does not have a 3G licence that would allow it to offer internet access to its customers. Cosmote missed out on winning a 3G licence in the last round of tenders and was not expected to have another chance to obtain one before 2011 at the earliest.

By acquiring Zapp's operations, which run on a CDMA platform, the company will put itself on an equal footing with the two market leaders in the domestic market, Orange Romania and Vodafone Romania, along with the relatively small RCS&RDS. Currently, neither Oger or Cosmote are publicly commenting on the sale, thoughindustry analysts expect it to be sealed in the second half of this year.

Equipped with fast next-generation data services, Cosmote is expected to step up efforts to rein in the big subscriber gap between itself and Orange and Vodafone, though with an estimated 6m registered customers it has a long way to go before Romania's mobile phone sector becomes a real three-horse race.

The long, hard road to nuclear safety

An inside look at a global imperative: keeping enriched uranium from terrorists

By Bryan Bender, Globe Staff | July 5, 2009

PITESTI, Romania - Two stories underground, in a concrete room with a heavy steel door, gloved technicians wearing smocks carefully measure and weigh the charcoal-gray pellets, 182 in all. They are among the most dangerous materials in the world: highly enriched uranium, the main ingredient for a nuclear bomb.

This supply alone, provided to the Institute for Nuclear Research here in 1990 by the then-Soviet Union, is enough to make a bomb with the explosive power to level a major city.

The pellets, classified as “fresh’’ because they have not been used as fuel in a reactor, are compact - each about the size of a shotgun shell - and do not emit much radiation in this form. This makes them a particular nightmare for officials who worry they could be readily stolen and transported by terrorists.

“You can pick it up and put it in your pocket,’’ says Andrew Bieniawski, assistant deputy administrator of the US National Nuclear Security Administration.

And so they will be carefully crated and escorted in the predawn hours by heavily armed military police to a waiting cargo plane that will whisk them to Russia, where they will be turned into a safer form of low enriched uranium. This painstaking and costly process marked the first step in an aggressive new effort by the Obama administration to secure vulnerable nuclear material around the world.

President Obama has said that preventing terrorists from acquiring a nuclear weapon is his top national security priority. This week, senior administration officials said, Obama will sign a joint declaration with Russian President Dmitry Medvedev in Moscow setting forth a framework to complete the removal of highly enriched uranium from 15 other countries within four years.

That goal has taken on new urgency recently with intelligence assessments concluding that Al Qaeda and other terrorist groups have made obtaining nuclear material a central goal.

“Unless the world acts decisively and with great urgency, it is more likely than not that a weapon of mass destruction will be used in a terrorist attack somewhere in the world by the end of 2013,’’ the US Commission on the Prevention of Weapons of Mass Destruction Proliferation and Terrorism said in a report.

The Romania operation, which a Globe reporter and photographer were given exclusive permission to chronicle, was the first to transport by air these highly enriched uranium stocks, both the “fresh’’ pellets and a stockpile of highly radioactive spent fuel - pellets that have been fed through a reactor as fuel.

By removing all of its highly enriched uranium, the Romania operation is seen as a model for other countries that worry about the risks in giving up their nuclear materials.

To the Romanian officials involved, the removal will improve the country’s security, and security of the world as well.

“We feel relaxed now,’’ says Marin Ciocanescu, the deputy director for nuclear safety at the Institute for Nuclear Research, after watching some material being prepared for removal. “Highly enriched uranium means you have a problem.’’

Cold War remnants

The National Nuclear Security Administration, an arm of the US Department of Energy, estimates that research facilities around the world contain some 2,000 kilograms of highly enriched uranium - enough to make 80 nuclear bombs.

Most of the material is left over from the Cold War, when the United States and the Soviet Union provided some client states with equipment and material for research reactors. Other significant quantities were supplied by the United Kingdom and France, or in the case of South Africa were enriched domestically.

The highly enriched form of the metal - the result of a complex and costly engineering process that only a handful of nations have mastered - was needed at the time to achieve the energy or “flux’’ required to power reactors. With technological advances since then, however, low enriched uranium - which is ill suited for a nuclear weapon - can now accomplish the same goal.

Many of these sites, however, are not well protected and considered prime targets for theft or sabotage.

A US-financed program to remove the bomb-grade material and have it “downblended’’ began a decade ago under the Clinton administration. Since then, highly enriched uranium has been cleaned out of 14 countries and returned to either the United States or Russia. In addition, a series of reactors around the world have been converted from high to low enriched fuel; several more, including one at the Massachusetts Institute of Technology, are slated for conversion in the coming years.

But many arms control and counter-terrorism specialists have warned for years that the gravity of the terrorist threat has not been matched by the necessary urgency to secure the most vulnerable bomb materials. Indeed, the job of securing the stockpiles is only about half complete. From Libya to Chile to Belarus, more than a dozen countries still maintain supplies of highly enriched uranium, both in the fresh and spent fuel form.

Meeting Obama’s aggressive schedule will be challenging, officials acknowledge. The Romania “cleanout,’’ for example, cost $10.5 million and was five years in the making, requiring a series of sensitive agreements with the host nation, Russia, and several international bodies.

Even so, there were fears of a delay last week when Romanian officials temporarily raised objections about which government entity had proper jurisdiction to approve the transfer.

The new ability to ship all the material by air, however, could speed up the process considerably by reducing the number of countries that would have to grant permission for a shipment to cross borders.

Russia designed special equipment to fly the radioactive spent fuel out of Romania, including 5-ton casks that have undergone extensive testing to ensure they would survive a crash.

Delicate operation

Housed inside drab concrete buildings with crumbling facades and neglected grounds is the now-defunct nuclear research reactor at the National Institute of Physics and Nuclear Engineering, built in 1949 in the town of Magurele on the outskirts of Romania’s capital, Bucharest, to train civilian nuclear scientists.

Visible through two manhole-size openings in the floor of the cavernous reactor room are 288 spent fuel rods of highly enriched uranium that have been cooling in a special pool for more than a decade.

The water also serves to block the deadly gamma rays emanating from the rods, which were so radioactive when they first came out of the reactor that they could not be handled for several years.

The institute, like others in the former Eastern bloc, fell on hard times after the end of the Cold War. For the next decade and a half the institute experienced “a kind of turmoil,’’ said Zamfir Victor Nicolae, director of the facility, as funding dried up and the Romanian government had no strategy for what to do with the reactor, which was finally shut down in 2002.

The US Department of Energy stepped in to provide security upgrades, including cameras and fencing. But ultimately, Romanian officials agreed the materials were too dangerous to keep.

For the international team that arrived on the site in late June, the greater challenge was not the removal of the fresh uranium pellets, but rather the transfer of the spent fuel.

Over three days technicians carefully removed the fuel rods from the pool using a metal pole, placing them in a transfer basket. The maneuver must be completed entirely underwater to minimize radiation exposure for the technicians, engineers, inspectors, and security personnel on hand, who constantly scoured the area with Geiger counters measuring for radioactivity.

Every person in the reactor room carried a dosimeter to measure any exposure to gamma radiation.

With the fuel rods secured in the special shipping drums, technicians sprayed helium into the seals. If the helium leaks, it will be a clue that the seals are weak and that radiation might escape. A mass spectrometer measures for any leaking gas.

When the loading was complete, drivers took the spent fuel rods under the cover of darkness along secret routes to the airport, where a giant Russian Antonov 224 cargo plane waited.

The convoy required six trucks to carry the 18 casks, loaded with more than a dozen fuel rods each, along with a reserve truck and a crane in case of any problems. A helicopter hovered above with infrared cameras, while scores of Romania’s Jandermeria military police, in ski masks and carrying automatic weapons, guarded the convoy and blocked streets.

“The danger is very high,’’ says Florin Hulea, a police spokesman, noting that if the material were released, either from an attack or an accident, much of the city could be at risk of contamination.

Through a stormy night and into the early morning, the casks were carefully loaded by crane into the belly of the plane, parked on the end of a runway at Bucharest’s main airport.

Finally, the American team breathed a sigh of relief as the paperwork was complete - all the material now officially belongs to Russia - and the plane prepared for its 6 a.m. departure.

Said Bieniawski, the senior American official on the scene: “Every kilogram removed is one less kilogram that a terrorist can use to make a nuclear weapon.’’

But there was little time to tarry. Members of his team fanned out to meetings in Moscow and to negotiate removals in Libya, South Africa, Chile, Argentina, and other countries.

“The Romania operation shows that even with a cooperative partner this is a really complicated task,’’ said Corey Hinderstein, director of the international program at the nonprofit Nuclear Threat Initiative in Washington. “That is why the president’s goal is so important. We can’t do it on our own. This needs to be a joint effort among many states. Presidential leadership is what will be needed to meet the challenge.’’

Bender can be reached at bender@globe.com.

Romania gets European loan for new metro line

BUCHAREST (AFP) — Romania will get a 370-million-euro (517-million-dollar) loan from the European Investment Bank to build a new metro line in Bucharest, Transport Minister Radu Berceanu said Saturday.

"We hope that the financing for all the work will come from the bank," said Berceanu following a meeting with the vice president of the institution, Matthias Kollatz-Ahnen.

Set to cost around 700 million euros (980 million dollars), the route will link the city centre with a west suburb. The new line, the fifth in the city, will cover nine kilometres (5.5 miles) and have 14 stations.

Berceanu also said he had "finalised the details" of a 300-million-euro (420-million-dollar) loan which Bucharest is going to take from the Japan Bank for International Cooperation with the aim of constructing a sixth metro line.

He added the Japanese firm Itochu is considering working on the line, which will go to Bucharest-Otopeni airport.

Bucharest is the only Romanian city with an underground transport system and its first line was opened in 1979.

IMF says Romania's standby deal on track

By Radu Marinas

BUCHAREST, July 4 (Reuters) - Romania's performance under a two-year IMF loan programme is on track, the International Monetary Fund said on Saturday, but warned populist measures in an election year may quickly undermine its emerging credibility.

Following similar deals by fellow EU states Hungary and Latvia, Romania has secured a 20 billion euro aid package from international lenders including the IMF in a move to shield its vulnerable economy in the wake of a global cash squeeze.

A mission of IMF experts will review Romania's progress in early August when the macroeconomic framework might also be revised, Tonny Lybek, the IMF's regional representative told Reuters, before the Fund approves the loan's second tranche.

Romania recorded a consolidated budget deficit of 2.7 percent of gross domestic product in January-June, meeting the quarterly target agreed under the deal, which also sets an overall 4.6 percent gap ceiling for the end of 2009.

"Preliminary data suggest that Romania remains on track, but a final assessment will only take place during the first review of the programme," Lybek said.

As part of the aid deal, Romania has to implement sweeping public sector reforms aimed at making wage policies more transparent and state spending more efficient.

Lybek said the first quarter's slightly worse than expected GDP contraction of 6.2 percent poses further challenges to the budget that would require a review of tax collection efficiency and further spending prioritising by the centre-left government.

For the second quarter Lybek said he does not rule out "some further (GDP) deterioration" compared to what the Fund had projected and also that an adjustment of the current account deficit could be sharper than originally forecast.

The Fund forecast a 7.5 percent external gap for 2009 from around 12 percent a year before.

Lybek welcomed recent commitments by large foreign-owned banks in Vienna and Brussels to maintain their exposure to Romania that will facilitate an easing of monetary policy.

POPULISM DANGER

"Populist measures could be tempting ... but they are extremely dangerous for economic stability as they would quickly undermine the emerging credibility. We thus appreciate ... the government so far has decided to resist such pressures," he said.

Asked if Romania could follow Hungary's lead as the Fund agreed to allow the neighbouring country to raise its budget deficit from an earlier target by one percentage point to 3.9 percent of GDP because of plunging tax revenues, Lybek said:

"Romania and Hungary are two different countries facing different challenges ... however, please note that Romania's budget deficit is already at 4.6 percent of GDP."

"The macroframework might might be reviewed in August so, until then, any discussion on revising the budget deficit is simple speculation," he added.

Mircea Geoana, a ruling coalition party chief said on Friday the government may want to raise this year's budget deficit target if the economic situation worsens.

Some observers say the cabinet faces an uphill battle to agree on details ahead of a presidential poll in the fourth quarter which pits the incumbent Traian Basescu, linked to the coalition's Democrat Liberal Party, against the leftists' Geoana. (Editing by Peter Blackburn)

TV Da`wah for Romania Muslims

By Hany Salah, IOL Correspondent
www.islamonline.net

CHAREST - Reaping the fruits of telecommunication revolution, Romanian Muslims are using television to introduce the message of Islam to the southeastern European country.

"Television is the fastest way to reach out to different sectors of the society," Abu El-Alaa El-Gheithy, director of the Taiba Foundation, told IslamOnline.net on Saturday, July 4. "Through it, you can have an easy access to every home."

The foundation is broadcasting a two-hour weekly show; Islam Today, on DDTV private channel to introduce Islam to Romanian society. "Since 2006, more than 100 episodes of the program have been broadcast," Gheithy said.

Muslims are also regular guests on TV programs discussing issues of concern of the Muslim minority. "This has made people better know us and our message," he said.

There are some 70,000 Muslims in Romanian, making up two percent of its 22 million population.

Most Romanian Muslims belong to the Tatar, Turkish or Albanian ethnic communities.

Bearing Fruit

Gheithy said that many TV programs are also seeking the help of Muslim leaders to better understand Islam. "We have been invited by the popular private National TV channel to get advice on issues related to the Muslim minority," he told IOL.

"We were also consulted on the issues of mixed marriages and polygamy," he said, adding that the effort has borne fruit. "We were able to correct many misconceptions."

Gheithy said Muslims have also showed up on television to discuss different issues from an Islamic perspective. "We are expounding the Islamic ideals and the sanctity of human being, religion, offspring and money in Islam.

Gheithy said the television also gives Romanian Muslims the chance to defend Arab issues.

"We are also discussing different issues about woman, extremism, terrorism and coexistence," he added. Romanian Muslims are also translating many Islamic books into local languages.

"Muslims have translated more than 55 books that suit the European mentality," he said.

Muslims have also took part in many book fairs with several translated Islamic books.

In addition, Muslims are organizing forums and meetings to introduce Islam to Romanian society.

"It is very important for Muslim minorities in the West to seize on media in educating their societies about Islam," he said.

Romanian Bishop calls office building ‘hideous’ and ‘illegal’

BUCHAREST, Romania

The head of Romania’s Catholic Church has called on the president to stop the construction of a high-rise office building next to the Catholic cathedral.

Bishop Ioan Robu says the 19-storied building is “hideous” and “illegal” because it has been built higher than its original plans. He said it is a risk for the foundations of the 19th century St. Joseph Cathedral.

A court ruled June 25 that work on the building could resume. Construction was halted in 2006 after authorities said the Millennium owners did not have all the building permits.

The bishop called the court ruling a blow to Romanian Catholics and the Romanian justice system.

Associated Press