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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: 071 - (27/03/03)


Diplomatic imbroglio
The Romanians are pleased to see a Greek presidency of the EU, which strengthens Romania's chances of joining. The Romanians have temporarily fallen out with their old allies, the French. Chirac ticked off the Romanians for signing up to the 8-plus-10 support documentation for the US over Iraq, even saying that various countries had done their EU entry prospects no good by doing so.
The Romanians reacted with anger at this, in their view, inadmissible linkage. Their press reminded the French of Munich in 1938 and the French record under totalitarian rule in 1940-45, which was far from unblemished, albeit in difficult circumstances.
It is convenient for the Romanians to play the Greek card. Greece has long had a special interest in Romania and Greeks are the number one foreign investors there. Romanian president, Ion Iliescu, went to Athens in early March to cement relations with his Greek counterparts, President Kostis Stephanpopulos and Premier Costas Simitis. Praising the Greek handling of the recent crisis of the EU vis-a-vis NATO over Iraq, he outlined their shared view of Europe. He met with parliamentary speaker Apstolos Kaklamanis and they concurred on this.
Kaklamanis told Iliescu he was pleased that Greece and Romania shared equal views on the future of Europe. "It is a Europe that promotes the equality of all peoples and the common effort for a democratic, social and progressive European Union that will correspond to the vision of its people for justice, progress, democracy and peace," the parliament speaker said.

The British angle
While relations with France are frosty, those with the UK are good at the moment. Bucharest and London have signed an immigration agreement, allowing for the return of failed asylum-seekers from the UK to Romania.
The Romanians are clearly hoping for an upsurge of interest in Romania by the UK, the source of more FDI in Europe than anyone else, and the conduit for much US investment there. The City of London to the rescue.

Economy on the mend
What could begin to attract foreign investors now is that the economy is picking up at last. Industrial output was up 4.9% year-on-year in December, manufacturing leading the way, with 7.9% year-on-year growth. Indeed there was a 15% jump in production of durables.
The reforms made over the last years are beginning to work. Industrial production will climb by 6.5% this year, the government predicts. There are lots of problems, and it is all from a low base. But interest is now picking up in the telecoms sector for instance, whose National Post is looking for partners. Once an economy starts expanding, the telecoms sector invariably booms. The Romanians may be about to turn the corner.

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AUTOMOBILES

Michelin eager to buy tyre makers


Michelin Romania has expressed an interest in the remaining shares in tyre makers Silvania and Victoria Prahova. The Romanian subsidiary of the French company will submit two public offerings in order to clinch the stakes, Budapest Business Weekly reported. Silvania is currently 98.5% controlled by Michelin, while Victoria Prahova is 94.5% owned. Silvania, which reported a 38bn lei loss in the first half of 2002, has a share capital of 139bn lei.

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BANKING

Citibank taps into SME market

The Romanian branch of US banking giant, Citibank, has introduced banking operations for small- and medium-sized enterprises (SMEs), reports New Europe. In a statement, the bank said the SME and retail sectors are among the few with potential to grow in the coming years. "Our decision to tap the small- and medium-sized company market was based on the fact that Romania's banking market has grown significantly, and the country had a third consecutive year of economic growth after all," Citibank Romania Vice President, Dan Sandu, said.

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CREDIT RATINGS

Standard Poor's upgrades Romania's country rating

Standard & Poor's international rating agency upgraded Romania's country rating from B plus to BB minus for the long-term hard currency loans and from BB minus to BB for long-term Romanian currency loans, maintaining at B the rating granted to short-term Romanian and hard currency loans, Rompres News Agency has reported. 
According to a communiqué released by the agency on 27th February, the upgrading is the result of a stabilization policy of the Romanian economy that started a constant economic growth, based on the increase in exports and private investments, followed by a diminution of inflation and interest rate.

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ENERGY

Romanian agency negotiates contract to lease five oil fields

The National Agency for Mineral Resources (ANRM) is negotiating with Regal Petroleum (UK), Toreador (US), Pannonian International Energy and Rompetrol companies on the lease contracts for five oilfields, said the ANRM's spokesman, Ovidiu Ovessea, Rompres News Agency has reported. 
The four companies won the ANRM-organized auctions for the exploitation of these oilfields in November 2002. The Rompetrol Group won the auctions for two oilfields: E IV-3 Zegujani and E IV-5 Satu Mare, and is negotiating with ANRM on the contractual terms of the lease documents. 
The Regal Petroleum company is under negotiations for leasing the oilfield E IV -1 Suceava, whereas Pannonian International Energy won the auction which gives it the right to exploit the oilfield E IV-4 Anina. To lease the last of the five oilfields 9E IV-2 Viperesti), Toreador company is discussing with the ANRM officials. 
"The negotiations will be ended, most likely, by the end of March. Afterwards, the contracts will be sent for approval to the Ministry of Industry and Resources, Ministry of Public Finance and Ministry of Justice," said the ANRM official. The agency put up for auction the exploitation rights for the five oilfields twice last year as during the first attempt, the least number of bids, that is, two bids were not registered for each of the oilfields. The lease of the oil and natural gas fields in Romania by ANRM started in 1996 by transferring 19 perimeters under Petrom administration and another 14 under Romgaz administration.

Romanian company to invest in building Black Sea oil terminal

The Rompetrol oil group plans to invest US$31m in the building of a sea oil terminal placed 7 km off the Black Sea port of Midia, southeastern Romania, Rompetrol president, Dinu Patriciu, announced on 4th March, Rompres News Agency has reported. 
"The investment will begin this summer and will be completed in 2004," Patriciu said. 
Rompetrol already owns an oil terminal at Midia which it acquired when it purchased the Petromidia refinery, in which it invested US$5m. 
The Rompetrol president stressed that the upgrading of the Midia oil terminal enabled the group to receive ships of 25,000 tonnes on sea, compared to 5,000 tonnes two years ago. 
Last year Rompetrol brought two million tonnes of oil through the Midia port and exported oil products to all the Black Sea ports by 5,000 tonne-ships. 
In 2002, 92 per cent of the oil refined by Rompetrol was imported, the remainder 8 per cent coming from the Black Sea offshore oil rig.

SNP Petrom buys Siberian Light crude oil

SNP Petrom, a Romanian state-owned oil company, announced it has acquired 140,000 tonnes of Siberian Light crude oil and 3,500 MTBE tonnes on the Bucharest Commodities Exchange, according to Bluebull. The crude oil and MTBE tonnes will be taken to the company's two refineries - Arpechim Pitesti and Petrobrazi Ploiesti - in March.
Britain's Glencore and Switzerland's Kronos were the auction winners. The former will supply each refinery with 70,000 tonnes of crude oil and Swiss Vitol will deliver the MTBE tonnes.
Bluebull said the auction organisers will not accept the participation of Swiss Litas group, a subsidiary of Russian oil giant LUKoil, in the coming auctions, for a period of three months, because of the financial exposure of Petrom with this company, totalling US$45m instead of the maximum of US$50m.
Litas ended a supply contract with Petrom in January. The deal covered 210,000 tonnes of crude oil. 

Transgaz Medias, Tyco Valves deal

Romanian operator of the state's natural gas transport system Transgaz Medias said it has entered into an agreement with Tyco Valves for the delivery of flow control systems, according to Budapest Business Weekly. Transgaz deputy general manager, Liviu Pintican, said the deal is valued at €3.6m. Transgaz operates over 13,000 kilometres of natural gas transport pipeline, under a 30-year concession contract.

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FOREIGN ECONOMIC RELATIONS

Romania's trade with Balkan countries exceeds US$2bn in 2002

Romania's trade with Balkan countries increased to nearly US$2.33bn in 2002, the highest increase rate having been recorded in the trade with Turkey, which went up from US$826.36m in 2001 to US$1.136bn in 2002, the director of the Romanian Foreign Trade Centre (CRCE), Marius Vitionescu, has said, Rompres News Agency has reported. 
Romanian exports to Turkey totalled US$575m, while Turkish imports stood at US$560m. 
"All the business fields are covered in our collaboration, because the compatibility between Romanian and Turkish markets is high. Except for commercial exchanges, there are many joint ventures and Turkish investment conducted in Romania," says Beratiye Oncu, the deputy secretary-general of the Turkish export promotion centre. According to Oncu, the ongoing privatisation process in Romania is encouraging Turkish business people to invest. 
With bilateral trade having advanced from US$642m in 2001 to US$652m in 2002, Greece is the second largest trade partner of Romania in the Balkans. Romanian exports to Greece last year stood at US$388m, while Greek imports totalled US$264m. A less significant trade partner in terms of trade volume is Macedonia, which is no deterrent to Macedonia having strategic importance on its trade with Romania. "Macedonia has concluded a free trade agreement with Romania in the run-up of Romania's accession to the European Union," says Ljupco Kovcegarski, the secretary-general of the Macedonian Chamber of Commerce....

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