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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: 070 - (21/02/03)

Playing the Greek card
The Romanians are going in for a big drive to develop relations with their neighbours in the Balkans and beyond. They are aware of the great opportunity opened up by the Greek presidency of the EU until June. Prime Minister Adrian Nastase went to Athens in January to meet Costas Simitis, premier of Greece to discuss Romania's chances of joining the EU. He also attended a forum called "Bilateral Economic Relations Greece - Romania," focusing on business issues.
The question of EU membership complements that of NATO membership, which Romania was invited to have by 2007 at the Prague summit of NATO in November. Greece is the natural champion of Romania here, as the only Balkan state to be an EU member and as the original homeland of European civilisation.
Greek businessmen have long targeted Romania as a venue for investment. They are said to have invested at least US$260bn indirectly, and more than US$2.5bn via other companies active in Romania than their own concerns. The Greeks and Romanians have a lot in common, Orthodox religion and a common experience of being ruled by the Ottoman Turks. They understand each other's ways and have none of the friction that attends on being exact neighbours.

Croatia and Hungary beckon
Premier Nastase was on his travels again in February to meet with his Croatian counterpart, Ivica Racan, to discuss key joint issues. There is scope for further progress, despite considerable ties so far.
Nastase spoke at length with Racan about the need to complete the Constanta-Omisalj pipeline, linking the Black Sea with the northern Adriatic Sea, because Romania and Croatia will profit from it. "We want to make the Constanta-Omisalj pipeline operational as soon as possible," the Romanian premier was quoted as saying. The terminal at Omisalj could hold the biggest tankers with a load capacity of 500,000 tonnes of oil. 
Officials said seeing Croatia become a member of the Central European Free Trade Agreement (CEFTA) also offers sustainable development of bilateral ties.
"Romania and Croatia could develop ties between their businesses," the Romanian premier said. This can be done via the creation of joint stock companies and mutual investment, he added.
Nastaste and Racan also attended the opening of the Romanian - Croatian Economic Forum and were present at the official signing of a cooperation agreement between the Romanian Chamber of Commerce and Industry and the Zagreb Fair.
Nastase's next port of call was Satu Mare where he met Hungarian premier, Peter Medgyessy, to discuss improvement of ties, commercial and other. Medgyessy raised one issue that has bedevilled investment in Romania, that there is a restriction of 100,000 Euro as the lower limit, which prevents a lot of small investors who want to start cautiously but then grow. Nastase agreed that the limit should be lowered. He is a great believer in the importance of FDI, which is far too low for a country of Romania's size so far.

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AUTOMOBILES

Renault launches public offer for Dacia Pitesti

French carmaker Renault has launched a public offer for the shares (7.28% stake) it still does not own in Romanian auto group, Dacia Pitesti, for delisting the company from the Bucharest Stock Exchange. 
The French group said it would carry out the offer regardless of whether the offer was successful. According to Bluebull, Renault offered 1,200 lei for each share, bringing the overall figure to more than US$18m. Minority shareholders representing 75% of the shares targeted by the offer were allowed to contest the offer price until February 4th. PricewaterhouseCoopers made the decision. The auditor also established the new asset of the company at 810 lei per share. 

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BONDS

Moody's upgrades CFR Marfa's Eurobonds

International ratings group Moody's Investors Service announced it has upgraded the Eurobonds of CFR Marfa, the local freight railway concern, from B3 to B2. The rating upgrade comes after the upgrade of Romania's country ceiling for foreign currency bonds and government foreign currency bonds from B2 to B1 last December. "The B2 rating for Marfa reflects first and foremost anticipated government support for Marfa's operations and financial position in the form of setting access charges to the Romanian railway infrastructure and a letter of intent to support," Moody's said in a statement, reports the Budapest Business Journal. 
Failing to garner the required support would make the company's credit profile materially weaker given its historical lack of profitability, restricted flexibility in tariff setting, large investment needs for restructuring of rolling stock and a short track record of corporate accounts, the ratings group said. The rating's outlook is stable, it added. "The stable outlook for the ratings expects no material change to the strengths of support for Marfa and the credit quality of Romania."

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DEFENCE INDUSTRY

Romanian Air Force to purchase Lockheed Martin radars

On 29th January, the Ministry of National Defence, represented by the general manager of the National Company Romtehnica SA, Aurel Cazacu, signed a memorandum of agreement with Lockheed Martin company, represented by Vice-President Dennis Beres. 
The memorandum refers to the continuation of the programme regarding the equipping of the Romanian air forces with 21 radars for low and medium altitudes (gap-filler), between 2004-2008. The document also stipulates the evaluation of the Romanian economic operators in the defence industry that will contribute to the creation of the radars. 
The memorandum was signed at the end of the meeting between the Romanian minister of defence, Ioan Mircea Pascu, and the American deputy of the state secretary for Commerce, William Lash. 
The management of the airspace implies the establishing of an Integrated System for Air Traffic Control (SICTA) in collaboration with US-based company Lockheed Martin. The system has three parts: The Operational Centre for Airway Sovereignty (ASOC) - IT integrated management of the airway space; a system of sensors for high altitudes (tri-dimensional radars FPS 117) and a system of sensors for low and medium altitudes (gap-filler radars). 
Starting this stage of the contract with the American company, the structure of radars will include elements provided by the Romanian industry: secondary radar, the radar's transport platform, the transportation mean of the antenna and the container for the electronic equipment of the radar. The programme requires the hearing of the Romanian economic operators in the defence industry, which, together with C.N. Romarm SA, C.N. Aerostar SA and SC UTI Systems SA, selected by Lockheed Martin as local integrator, will contribute to the creation of the radars in co-production, under the brand and technical responsibility of Lockheed.
The American company will evaluate the Romanian firms for the implementation of the fabrication procedures and the calculation of necessary investments for participating at the programme. 

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INDUSTRY

Three new industrial parks in Arges just around the corner


Romania's Development and Prognosis Ministry said Arges county will soon see three industrial parks. Argecom announced it would introduce one such facility on the Arpechim industrial platform, covering over 14 hectares, according to the Budapest Business Journal. Implementation of this project is pending approval from the ministry. Once approved, the parks could become active by mid-summer. The other two industrial parks will operate at Albota and Topoloveni, which are managed by the respective local councils. Both are greenfield investments and can be developed in line with EU standards, ministry officials were quoted as saying.

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MINERALS & METALS

Global consortium to invest in Alro Slatina equipment upgrade

An international consortium comprising of UK Marco Acquisitions Ltd, US Marco International Inc and Conef Bucharest is prepared to spend approximately US$30m to upgrade the technological equipment at Romanian aluminium maker, Alro Slatina, and Alprom, New Europe reported. 
Another US$10m would go for the protection of the environment, consortium deputy head, Peter Braun, was quoted as saying. The consortium became Alro Slatina's majority shareholder last March after it obtained a more than 10% stake in the company for US$11.4m.

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TELECOMMUNICATIONS

Transelectrica hopes to enter communications market

Romanian industrial group Transelectrica said it would join the communications market after July 2003. This would be done once the company establishes a diverse company using its IT and telecom division - Teletrans - plus strategic partners, Teletrans general manager, Ion Nedelcu, was quoted as saying by Mediafax News Agency. 
In the first six months of the year, an evaluation report will be made for Transelectrica and Teletrans assets. The company will then ask interested investors to meet at the bargaining table. "One of the partners is to provide the required financial resources for investments, and the other one is to be an experienced partner in telecoms," Nedelcu said. "The company participation in launching the diverse company includes the Teletrans company and the Transelectrica optical fibre surplus," he added.

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TRANSPORT

Romania, Hungary to ask EU for money to build motorway

The prime ministers of Romania and Hungary, Adrian Nastase and Peter Medgyessy, agreed on 31st January to call on the European Union for assistance in building as soon as possible a freeway linking Bucharest and Budapest, Rompres News Agency has reported. 
Nastase and Medgyessy met in Satu Mare, northern Romania, at the seventh congress of the Hungarian Democratic Union of Romania (UDMR). The two prime ministers had a brief conversation about issues of bilateral interest. Nastase said the freeway route will run along European corridor IV, pointing out that the Romanian government is interested in developing additional extensions to it to include as much of Romania as possible. 
Prime Minister Nastase also said that this project would help boost bilateral trade and tourist and cultural relations between Romania and Hungary.

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