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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: 068 - (01/01/03)

Romania is an anomalous county. It conveys an image of darkness and mystery to foreigners, famous or rather infamous for Vlad the Impaler and Dracula, lurking in some Transylvanian castle for human prey. The Romanians pride themselves on their ancestry, being descended, they claim, from the Roman soldiers billeted upon the province of Dacia, covering modern Romania, after its conquest by Trajan in 117AD. Its language is a Latin one, indeed as close to Latin as Italian. But between the arrival of barbarians in the third century and the thirteenth century of the Christian era, its history is almost a total blank.
Wallachian lords presided over a subject peasantry and accepted tributary status with the Turks, pushing up from the southern Balkans in the thirteenth and fourteenth centuries. The Transylvanian highlands became largely Protestant in the Reformation and remain predominantly Hungarian in population, but with ancient Saxon farm townships dating back to these times. 
In the eighteenth and nineteenth centuries Romania had its heyday, when the local aristocracy had built magnificent country and town houses for themselves, spoke French as their common language and imitated first the "ancien regime" and then the France of "la Belle Epoque." Bucharest became a great capital city to rival Paris with splendid civic architecture, mainly baroque in style like the homes of the aristocrats. Orthodox churches and monasteries and crenellated castles, dating from the Middle Ages, give the country a romantic aura to this day with an indubitable style of its own.
It is worth recalling all this because it puts into sharp relief the bleak experience of communism that ensued after the Second World War. Liberated from a dictatorship imitating fascism by the Red Army in 1945, it produced Ceaucescu by 1957, a dictator imitating Vlad the Impaler and Dracula in his cruelties but without any of their aesthetic sense. He pulled down much of central Bucharest to put up 'brutalist' concrete eyesores to the glory of his special own 'workers paradise.' A cobbler's son, he fulfilled the prophecy of an interwar Romanian intellectual: "one day this nation will be ruled by a cobbler, and then we will go to the dogs."
Nevertheless, a welfare state of sorts existed and rents and prices were kept low, while full employment prevailed. There is a degree of nostalgia for these days after a decade of economic contraction and impoverishment, leaving all but the corrupt elite much worse off. Houses are crumbling, older smoke-stack industries are being shut down and crime and venality are on the increase.
It is not so surprising then that the population voted back the ex-communists at the last election, who have formed a new government. 

Ex-communist return
The disillusionment with the brash new world of market economics, initiated in the 1990s, was doubtless a major reason for the population giving the ex-communists another chance after one unsuccessful spell in power in that decade, when they promised much and achieved virtually nothing, delaying the transitional pain of going to market place economics by five wasted years. 
The president, Ion Iliescu, was a senior functionary under Ceaucescu, while Premier Adrian Nastase, a much younger man, was middle - ranking in the hierarchy at the time. Membership of the Communist Party of Romania was obligatory and no-one holds it against either of them. Nastase is showing signs of being a reformer and is an enthusiast for the EU and of privatisation and foreign investment.

The EU beckons
There is no doubt that the population are putting their faith in EU entry as the way forward. According to Eurobarometer, Romanians are the biggest supporters of EU membership among the peoples of the candidates' countries. Of those recently polled, 76% said that Romania would profit from accession, while 85% would vote for entry if a referendum on the issue were to be held.
The danger is that expectations may be far too high. Ireland and Portugal were two not so rich countries that have done extremely well out of EU membership; so has Greece. But none of them were as destitute or denuded of their past as Romania. It will be decades before it can hope to reach even the lowest levels of EU living standards. 
But it has assets all the same, a large and well-educated work-force (Romanians are well-esteemed in the world of computer technology), a beautiful countryside with some outstanding architecture particularly outside the capital, still left even after the ravages of the Ceaucescus and a fluency in French and now English which is assisting an inward flow of foreign investment. France, Turkey, Italy and Germany are taking an interest. It is only a matter of time before Romania is put where it deserves to be on the European map. 

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AUTOMOBILES

Saab to launch new sport sedan on Romanian market

The Romanian arm of Swedish carmaker Saab Augusta Motors, said the company will introduce a new 9-3 sport sedan model, which should generate sales of 60 units next year, according to BBW.
Augusta Motors general manager, Horatiu Ionescu, said the new model will help boost the company's sales figures in 2003. The Romanian unit reported sales of 100 units in the January-October period of this year.

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DEFENCE INDUSTRY

Romanian arms companies to be put up for sale

The Office for Industrial State Shareholdings and Privatisation (OPSPI) will put up for sale six defence companies in which the government is a majority shareholder and whose capital stand at over 210bn lei (some US$6.3m) in the first half of 2003, sources with the Ministry of Resources and Industry report, Rompres News Agency has reported. 
The companies are Avioane Craiova, Uzinele Mecanice Dragasani and Babeni, the factories of Mirsa (Sibiu County) and Filiasi (Dolj County), as well as the Mecanica company of Poiana Rusca Teliuc (Hunedoara County). The share capital of Avioane Craiova is valued at 50.1bn lei. The company posted a gross profit of 7.8bn lei in 2001 on a business turnover of 114.5bn lei. The company is currently employing a staff of 1,800. A stake of 91 per cent in Avioane Craiova is held by the Ministry of Industry and Resources. The share capital of the mechanical plant of Babeni is estimated at 28bn lei. The company produces arms and ammunition, employing some 400 workers, having recorded a net profit of 1.4bn lei. 
The mechanical plant of Dragasani has a share capital of over 70bn lei. The mechanical plant of Mirsa declared a 2001 business turnover of about 28.5bn lei, having employed some 330 workers and a share capital of over 35bn lei. The share capital of the mechanical plant of Filiasi is estimated at 29.2bn lei, while the mechanical plant of Poiana Rusca Teliuc has a share capital estimated at 1.2bn lei. The OPSPI, which is operational under the authority of the Ministry of Industry and Resources, has recently voiced intention to issue privatisation calls for these six companies. The office's board is expecting interested investors to submit letters of intention. The ministry will put up the companies for sale in separate dealings, according to the interest of potential buyers.

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ENERGY

Oil Group Mol plans to expand in Romania

If the privatisation of the Romanian national oil company, Petrom SN, proves to be a good business opportunity, Mol will also be there, Zsolt Hernadi, president and CEO of the Hungarian oil and gas group Mol, was quoted as saying in the Romanian business paper 'Ziarul Financiar,' MTI News Agency has reported. Petrom is to be privatised in 2003. 
Hernadi said Mol was planning to double the number of its pump stations in Romania over the next three years. Ziarul Financiar estimates that such an expansion will cost Mol US$40-50m. Mol Romania, founded in 1995, opened its 47th pump station in Craiova recently. To date, Mol has invested in Romania US$87m, close to half of the total Hungarian working capital received by Romania. 

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FINANCIAL NEWS

Optimism grows for foreign companies in Romania

Foreign enterprises in Romania have disclosed they are more optimistic about their financial status following a laggard start earlier this year, according to Budapest Business Journal. 
More than 66 per cent of the companies say they are "confident about the future," while only 33 per cent voiced that opinion by June 2002. Approximately 50 per cent of the companies polled said their investments were rising, while a little more than a tenth said theirs were shrinking. Staff levels were rising in less than 50 per cent of the companies, and just eight per cent said their staff numbers were declining. The poll, carried out by KPMG Romania, queried some 80 enterprises.

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FOREGN LOANS

Romania, EU team up for institutional projects


The Romanian Ministry of Agriculture, Food and Forestry will team up with the European Union to conduct two institutional projects, valued at nine million Euro, according to InvestRomania Business Daily.
The projects fall under the PHARE programme. The main objective of one of the projects is to merge and expand capabilities to implement the provisions in the European acquis communautaire, related to the protection of plants against pests.
The second project aims to merge the capabilities of the country's plant administration to realise and implement the phyto-sanitary legislation. The projects, expected to run for a period of two years, will make Romania's plant protection legislation comply with similar EU standards. Both projects will help assure consumers that the goods they use are healthy and that Romania may export farm products to the EU and other countries across the globe, said Jonathan Scheele, head of the European Commission delegation in Romania.

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NUCLEAR ENERGY

Radioactive waste storage facility to be built in southeastern Romania

A special precinct for the stocking of small to medium radioactive waste coming from the nuclear plant at Cernavoda will be built by the year 2010 in the nearby of the plant, the daily newspaper 'Romania Libera' reported on 28 November. 
According to Romania's National Nuclear Programme approved early in November, safety studies will be conducted through the year 2005 and the design of the landfill will be finished by the year 2008. In the short run, a new store will be built for intermediary storing of burnt nuclear fuel. The store will be finished shortly after 2003, the year when the storage capacity of the existing facility is estimated to reach its fullest.

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