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  ROMANIA

REPUBLICAN REFERENCE

Area (sq.km)
230,300

Population
22,364,022 

Capital 
Bucharest 

Currency 
Leu

President 
Ion Iliescu

Private sector 
% of GDP 
40%

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Background:
Soviet occupation following World War II led to the formation of a communist "peoples republic" in 1947 and the abdication of the king. The decades-long rule of President Nicolae CEAUSESCU became increasingly draconian through the 1980s. He was overthrown and executed in late 1989. Former communists dominated the government until 1996 when they were swept from power. Much economic restructuring remains to be carried out before Romania can achieve its hope of joining the EU. 

Update No: 066 - (22/10/02)

NATO membership imminent?
The Romanians are ostentatiously backing the US in its effort to attack Iraq. They are hoping for inclusion in NATO and as soon as possible.
The Romanians were responsive to the call to join in the anti-terrorism coalition. Last April the parliament approved a plan to dispatch 405 combat troops to Afghanistan, at a cost of US$3m. An invitation to join NATO at its November meeting in Prague is earnestly expected in Bucharest. The timing is what remains open. The post-9:11 world is expediting existing trends; and entry into the transatlantic organisation, which was on hold beforehand, now looks a distinct possibility by 2005.

Siding with the US
Romania is taking its pro-American policy so far, it endangers its relations with the EU, entry into which is its primary objective. European Commissioner for Enlargement Gunter Verheugen has criticised Romania for signing a bilateral pact with the US, which grants immunity to US citizens from prosecution under the jurisdiction of the International Criminal Court (ICC). He saw the move as Romania ensuring a way of gaining NATO membership, since its adhesion to the EU will be delayed.
This pro-US line might seem to be strange for the ex-communists who now run Romania. But of course these days such a turnaround is not at all unusual. Actual communists have come to power in neighbouring Moldova, the erstwhile Bessarabian province of Romania, with US and EU support. Washington and Brussels welcome parties in office with the correct orientation for today's world, drawing a veil over the past.

Ex-communists back
The ex-communists held power in the mid-1990s, when they promised much and accomplished little, and were replaced by liberals to the right. But they are now back at both presidential and governmental levels
President Ion Ilescu (now over 70) was a minister within the Ceausescu regime. Premier Adrian Nastase was a lesser functionary within it, like so many of his middle-aged generation.
These are positive recommendations for much of the population these days. The collapse of whole industries and the deterioration of infrastructure and the housing stock, the evisceration of the welfare state and the rise amid all the distress of a corrupt bureaucracy in league with crony capitalism has turned people against the existing order of things. Even the bad old days seemed better in retrospect.

Turn to reform
But the ex-communists will not find it possible to turn the clock back. They would have done it last time if they could have. This time they really are initiating reforms. The ex-communists who have returned to power in Hungary were radical reformers in their previous administration in the mid-1990s. Romanian ex-communists are now showing signs of becoming likewise, having no other options.
The US is still critical of the lack of any movement against corruption, pointing out the absence of a proper judiciary, to be above suspicion itself. The IMF is continuing to back the government, releasing a US$69m tranche recently, but is awaiting further proof of progress before extending two more tranches of US$109m.
The Romanian prime minister, Adrian Nastase, travelled to Slovenia recently to attend the international Regional Business Meeting Point (RBMP) round-table. He was greeted by his counterpart, Janez Drnovsek, to attend the forum.
The two premiers, aware of their extraordinary positions, spoke at length about the relations between their nations and their common activities in becoming members of Euro-Atlantic organisations.

NATO and EU membership
Romania and Slovenia are both waiting to join NATO particularly after they failed to secure invitations to the 1997 Madrid Summit. They are both hoping for developments at the Prague meeting in November, where NATO members are going to deliberate the future of the organisation.
The EU is having a meeting in Copenhagen in December. That will be likely to confirm the accession of the first wave of countries. But the second wave is at the door. Romania along with Bulgaria is among the first to apply.

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AUTOMOBILES

Maersk Romania invests in Volvo trucks


Maersk Romania has announced it has expanded its fleet of trans-container trucks with the purchase of 10 new Volvo FH12 trucks, according to Balkan Business Weekly (BBW). The company said it has the largest fleet of trucks, which now stands at 40, to supply both domestic importers and exporters.
BBW quoted Maersk Romania as saying it hopes to guarantee the delivery of goods to the headquarters of its clients, in particular door-to door delivery.
The VESP system has been installed in all of the trucks, which helps boost the safety of the goods, in case of accidents, by 40%. As such, the driver, the two tanks and a new generation braking system are better protected with the system, BBW wrote.
In other automotive news, Romania's official Citreon importer, ATS, has introduced the C3 model on the domestic market. According to the subsidiary, it hopes to sell 300 vehicles by the end of 2002.
"ATS' sales target for the new model whose basic price ranges between 8,400-10,950 Euro, has been set at 500 units for 2003," ATS' general manager, Bogdan Bucurescu, was quoted as saying

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FINANCIAL NEWS

Mismanagement of EU funds in Romania no "special problem" 

The cases of defective management of the funds allotted by the European Union found in Romania have no political implications and do not differ at all from similar cases encountered in the other EU candidates, director general of the European Commission's Anti-Fraud Fighting Group (OLAF), Hemann Bruener, said after meeting Romanian Prime Minister Adrian Nastase on 24th September, Rompres web site has reported.
The European official said Romania too was facing cases of defective management of the funds allotted by the EU, but stressed that this fact should not be given exaggerated connotations. The OLAF director general said he was satisfied with the cooperation with the Romanian Prime Minister's Controlling Corps and voiced his confidence that Romania too will prepare a structure to work independently and efficiently on these financing programmes. 
"This is not a Romanian programme, it exists in all European Union candidates and therefore it differs in no way, we cannot speak of special problems. We make such controls in all the candidate states, because similar problems exist in all these countries," Bruener stressed. The two officials confirmed, however, that part of the files had reached the table of the Romanian general prosecutor, but offered no details. 
At the meeting with Prime Minister Nastase it was said "that for Romania the way in which each euro is spent counts very much, that we treasure our credibility, that we shall tackle these problems in all seriousness and we will take care to take the appropriate measures," the head of the Prime Minister's Controlling Corps, Victor Ponta, said.

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FOREIGN LOANS

New terms for EBRD loan to LNM Holdings

The board of the European Bank for Reconstruction and Development (EBRD) green-lighted the conversion of a one-year US4100m revolving loan apportion to LNM Holdings, the owner of Ispat Sidex, in 2001, into a seven-year financing agreement, according to BBW.
As per the new terms, the loan deal also provides a grace period of one year. The deal should be signed sometime during October. Although the loan was initially supposed to subsidise Ispat Sidex's working capital, the funds will now be used for restructuring.

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PHARMACEUTICALS

GlaxoSmithKline calling for recruits to join team

British pharmaceutical company, GlaxoSmithKline (GSK), announced a major recruitment campaign in hopes to acquire 200 new workers, according to the Balkan Business Weekly. One hundred and fifty workers will be employed by the distribution group, Europharm, and the rest by GSK in numerous national offices.
The company would like to recruit workers who specialise in sales, logistics and management because these are the areas that GSK hopes to develop. Active in Romania, GSK's products and generic goods are produced to globally-recognised GSP standards, GSK said. The British group overseas Europharm's operations Europharm controls a retail pharmacy network and a Brasov-based production plant. 

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TOURISM

Eximtur clinches German contract

Eximtur, a Cluj-based travel agency, announced that it has secured a contract to act as a representative of TUI, a German tour operator, New Europe has reported, quoting BBW. The agreement is worth 15,00 Euro. 
The agency will open its office in Baia Mare in October and will inaugurate its fifth office in Arad, Eximtur said. "We have invested more than US$30,000 in the past years in offices, training personnel, and IT networks," Eximtur's Director of the International Tourism Department, Dan Vladea, was quoted as saying.
Eximturn reported a turnover of US$8m in 2001. "Eximtur was established in 1993 as an entirely private company. It has more than 20,000 Romanian clients and over 2,000 foreign ones. It ranks first in Cluj as a tourism agency and it is the 49th company of the country, according to the Chamber of Commerce," Vladea was quoted as saying. According to the Eximtur official, IATA said in its latest report that Eximtur ranks fifth in Romania and is the number one agency not headquartered in the capital city of Bucharest.

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