% of GDP
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
Update No: 074 - (19/06/03)
Pro-US policy pays off
Bucharest has been solidly behind the US on Iraq, facing criticism from Paris consequently on that count. Chirac dismissively said of the 'new' countries that they had missed an excellent opportunity "to shut up," and that they done their EU cause no good.
The Romanians of all persuasions, including those against the war, have bridled at the linkage here of foreign policy stance and EU membership, a most improper slur on national independence. The reaction was to make the Romanian government even more compliant with the US line. Romania contributed both material and political support to coalition action in Iraq and has become an assertive ally in the war against terrorism, having always had efficient police forces.
Bucharest's support came as early as February 10th this year when the Supreme Council for the Defence of the Country (CSAT) agreed to grant the US the use of airspace and infrastructure for the war. From February 15th the US began to use the Mikhail Kogalniceanu 57 Air Base, near the Black Sea. Twelve C-130 Hercules aircraft and six MA-53 Sea Dragon helicopters landed there and thousands of US troops from Germany came before embarkation for Northern Iraq.
Romania, like Bulgaria and Hungary, was a highly valued venue for coalition forces in place of unreliable Turkey. Naturally all three are now very much in Washington's good books. President, Ion Ilescu, announced the decision early on to deploy a nuclear, biological and chemical (NBC) decontamination unit of 70 troops, a military police platoon of 25 troops, an engineering detachment of 149 troops and military medical staff of 30 troops. The NBC unit was dispatched to Kuwait's Camp Doha on March 20th. Six staff officers were sent to Tampa, Florida to liase with US central command and 10 to ancillary headquarters.
Romania is remaining closely involved with US and UK forces in the post-war stabilisation effort. On May 12th the Romanian Ministry of Defence announced: "It is very possible that we will sent an infantry battalion of 400 to Basra."
Relocation of US troops to Romania and Bulgaria
The US is contemplating shifting some of its forces from Germany to Romania and Bulgaria on a permanent basis. Their location makes them ideal allies to secure stability in the Balkans and even to a degree in the Middle East, as the Iraqi conflict has shown.
Romania has contributed forces to Afghanistan, strongly motivating its adhesion to NATO in November 2002 at the Prague summit.
Romanian Foreign Minister, Mircea Geoana, said, "we bring a particular geo-strategic sensitivity and concern for the countries in Eastern Europe, Caucasus and Central Asia that aspire to a closer relationship with the West. We feel an obligation to provide assistance to our friends in the Republics of Moldova, Ukraine and the Western Balkans by sharing our experience and energy from the Baltic to the Black Sea. Romania can contribute not only peacekeepers, as we have done in Bosnia, Kosovo and Afghanistan, but specialised capabilities, like mountain infantry or NBC troops."
Immediately after the 11th September 2001 attacks, CSAT held an emergency meeting where it approved Romania's participation alongside NATO member states in the international coalition against terrorism. CSAT proposed to the parliament that Romania open its national air, terrestrial and maritime space to NATO in the event of an operation initiated by the alliance as a part of its war against terrorism. On 19th September 2001 the parliament approved the proposal, thereby aligning Romania with NATO policy.
Domestically, the government took an immediate decision to trace possible financial and other revenue sources connected to Al-Qaeda and by October 2001 reported that no evidence of such activities within Romania had been uncovered. On 14th December 2001 the government issued an emergency ordinance to prevent "the use of the financial and banking system for the purpose of financing terrorist acts," and initiated actions to identify suspects.
Government sources said that given the close connection between terrorism and organised crime the ministry for the interior began to implement a programme to prevent and eradicate transnational crimes such as money forgery, trafficking in humans, illicit drugs, stolen luxury vehicles and armaments.
Romania is now a southern European stronghold of NATO, a real turn-around for a country that fourteen years ago was still under the heel of the Ceausescu dictatorship. Never has the future looked so bright from a geopolitical angle.
IMF to the rescue
The West is looking benignly on Romania in every respect these days. The IMF is extending credit of over US$500m in several trenches. The economy is at last showing signs of recovery albeit from a low base, after a decade of worsening poverty. There is still plenty of scope for improvement.
Petrotub, a Romanian utility, is expected to obtain sub-contracts in Iraq and several other companies are likewise interested. Romania is coming in from the cold in more ways than one.
Romanian Industry Ministry expects aircraft plant to be privatised by end 2003
The Avioane aircraft maker in Craiova (southern Romania), the only maker of military aircraft in Romania, will work under the special administration of the Ministry of Industry and Resources, which holds the majority stake in the company, with a view to transferring it to private hands, Rompres News Agency has reported.
The special administrator is empowered to financially supervise the company, to call a general assembly of the shareholders in case of need, to see if the technical-economic performance indicators are met, to make an inventory of the debts, to identify the unused assets that can be sold and the assets that can be redeemed, to make an inventory of the debts other factories have to pay to this company in Craiova.
The Industry Ministry expects Avioane in Craiova to be privatised by the end of this year. The company in Craiova has a share capital of 54bn lei, and the Industry Ministry holds 94 per cent of the shares. The biggest problem the company faces is the fact it does not have an outlet for the IAR '99 Soim aircraft, a plane for schooling and training, offering tactics support.
Several years after the first IAR '99 Soim aircraft was built, Romania's Ministry of National Defence was the first partner that concluded a contract with the aircraft maker in Craiova for four such planes. Although they were finalized, the four aircraft have not been supplied as yet, and the beneficiary seems it cannot order any more aircraft, at least until the budget's rectification.
After successive redundancies in the defence industry in Romania, Avioane in Craiova employs 950 people now.
Romania, USA sign energy cooperation agreement
US Energy Secretary, Spencer Abraham, announced on 3rd June that the United States and Romania had forged an agreement on cooperation in the development of the Romanian energy sector, the US Energy Department said, Rompres News Agency reported.
Abraham and Romanian Minister of Industry and Resources, Dan Ioan Popescu, signed in Washington a declaration of intent on cooperation in industry. The US energy secretary hailed the fact that "Romania has implemented an energy strategy that makes it less dependent on foreign deliveries, while making better use of its own resources."
He said he was looking forward for US businesses to gain full access to investments and trade from the Romanian government, which makes efforts to create a competitive investment climate. The agreement targets cooperation in information exchange and it searches for possibilities of cooperation in numerous fields from research in energy issues to methods of environmental protection.
The Romanian electricity, natural gas and oil sectors have significant investment potential for the United States and Romania continues the privatisation of the energy sector, the release says.
MINERALS & METALS
LNM Holdings pick up Tepro shares
Indian steel producer, LNM Holdings, said it had acquired a 70.7 per cent stake in Romanian pipe maker, Tepro, under a deal worth US$15.6m, investromania reported recently.
"Our plans for Romania are linked to a local metallurgical industry and aim to develop the activity of our Sidex steel plant," a Sidex top management representative was quoted as saying.
Last year, LNM Holdings acquired Romanian steel plant, Sidex, under a deal estimated at some US$500m. It has also announced plans to expand its business in Romania, targeting a few other steel plants or wire producers.
LNM Holdings will pay up to US$2.3m for the state stake and for an additional 12 per cent stake resulting from conversion of pipe producer debts into shares, while US$9m will be paid for the plant upgrading. An extra US$3.5m will be provided for the Tepro's working capital, while some US$1m will be used for environmental protection. Under the deal, LNM has assumed Tepro's debts worth some US$9m. A further US$15m in debts has been rescheduled. LNM also aid it would maintain Tepro's 1,400 employees over the next two and a half years.
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