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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: 072 - (17/04/03)

Having an independent policy
The Romanians are cosying up to NATO and the US, fully backing the latter over its policy in Iraq. NATO Secretary-General George Robertson came to Bucharest recently and congratulated President Ion Ilescu on Romania's "tough economic, political and military reforms and for its participation in world affairs." He was referring to the use of Romanian air space by coalition forces in Iraq and much else besides.
The Romanians are traditionally strongly Francophile, French being still the second language for the population (the easier because Romanian itself is very much a Latin tongue). Nevertheless, they did not take kindly to being lectured to by Chirac in a schoolmasterly fashion that they should tailor their foreign policy to the French-German line on Iraq if they wanted EU entry, in short order, due in fact in 2007. This was deemed an unacceptable slight on Romanian sovereignty.
That has long been a sticking point for the Romanians. Ceausescu was able to dominate the country for decades because he pursued an independent foreign policy gratifying to the pride of an ardently nationalist people. Romania's past as an old Roman province, Dacia, explaining the Latin origin of its language, is justification enough in Romanian eyes for EU accession.

Bucharest bourse to blossom
The transition to capitalism has been decidedly troubled in Romania, more so than in Hungary next door. For Ceausescu, unlike Kadar, never permitted anything like the "goulash communism" of the Hungarian leader, permitting an entrepreneurial market economy to flourish in the interstices of the command-administrative system. Something like that is happening right now.
The idea of a stock exchange in Bucharest was consequently a real novelty for the Romanians. It is not surprising that it got off to a slow start. But it should do well as EU entry approaches and then becomes a fact of life. The Rasdaq Electronics Market, with a net turnover of 11.8bn lei last year, is to merge with the Bucharest Stock Exchange within two years. With a population of 22 million, Romania should then have the largest bourse in Eastern Europe or be on the way to having such, bar the Warsaw bourse.

Information Highway for 40 cities
It is not only the capital that needs opening up to the wider world and to the ways of the market, but the huge, sprawling country as well.
Radiocomunicatii, the number one telecommunications group in Romania, is introducing Multiprotocol Label Switching and Asynchronous Transfer Mode (MPLS/ATM) backbone network to connect 40 local towns and offer nation-wide Internet Protocol (IP) data services to businesses by the year's end, reports New Europe.
According to the company, the new network will give it the opportunity to offer business users throughout the country cheaply basic Internet connectivity and a wide range of IP services, such as IP virtual private networks (VPNs), videoconferencing, IP telephony and international voice over IP. Constructed with Cisco Systems technology, the MPLS/ATM solution's validity has already shown how successful it is thanks to a pilot spanning Bucharest and six other cities. With a strong collaboration between the two groups, Radiocomunicatii and Cisco Systems, working with the Cisco technology, succeeded in connecting seven cities through an MPLS/ATM backbone last December.

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ENERGY

IMF pushing Romania for more work on Petrom sale


The International Monetary Fund (IMF) is urging Romania to announce an expression of interest for the privatisation of Petrom on the international market by the end of the summer, New Europe reported recently. This would meet the new supplementary policy memorandum of the stand-by agreement. 
The move will help push the sale of one of the biggest companies in Romania by the expiry of the agreement, which was in its turn was extended until September. Romania had promised to have finalised and approved Petrom's privatisation plan by April. Analysts said Petrom's market value is over US$2bn. The advisor on the sale has already finished the report on the sell-off plan, as well as a draft feasibility study.

Tomini Trading to study Anina power plant

The Greece-based Tomini Trading group, active in the timber and scrap export business, will begin a feasibility study for the Anina-based power plant in Romania, recently acquired from Termoelectrica for about US$1m. "The whole area stretches to 123 hectares, and we are talking with investors to reactivate some parts to produce energy from alternative sources, and that is gas," the company President, Georgios Vatistas, was quoted as saying by BBW News Agency. Vatistas disclosed that his company was currently in talks with an American firm to produce a feasibility study "so we can approach investors." 
He added that the investment for each megawatt ranged from US$800,000-1 million, so for a proposed plant of 50 megawatts, approximately US$50m would be needed. "We hope to have all final analyses by the end of the summer and then start demolishing parts of the factory, which in fact was never completed," Vatistas said. "Tomini Trading was established in Constanta," said Vatistas, adding that last year the company was the fifth exporter in the county, based on the Constanta Chamber of Commerce figures.

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FOREIGN ECONOMIC RELATIONS

Romania, Russia to boost economic relations despite differences

Romanian-Russian relationships do not seem to have been affected by the two countries' different political stand regarding the Iraq crisis and there is a joint wish by the leadership to strengthen the economic cooperation, according to the conclusion drawn after the meeting between Russian Prime Minister Mikhail Kasyanov and his Romanian counterpart, Adrian Nastase, Rompres News Agency has reported. 
The prime ministers reiterated the two countries' good political relationships despite certain problems in the past, and expressed their common will of making the Romanian-Russian dialogue more constructive and pragmatic by means of the signing of a Romanian-Russian Basic Treaty shortly. 
"We left aside the problems coming from the past which thus we will be able to surpass, and we will concentrate more on the economic cooperation," Adrian Nastase said, while Mikhail Kasyanov noticed that the Romanians' "open and constructive approach" to these issues and said that signing the treaty would consolidate the bilateral relationships and create the opportunity for their development on new bases. 
The economic cooperation was the dominant issue of the debates, despite Romania's more than 1bn-dollar balance of trade deficit generated by massive imports of natural gas. Both Romanian and Russian prime ministers considered that finding new cooperation fields was very important, especially at the businessmen's level, by creating joint ventures that should export products in foreign markets too. 
In this respect an important step ahead was to be taken in Bucharest on 28th March at the meeting between Romanian and Russian businessmen attended also by the two prime ministers.

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FOREIGN LOANS

Romania's Banc Post has apportioned over 100 loans…

Romania's Banc Post has apportioned over 100 loans, with a combined value of €2m, to small- and medium-sized enterprises. The funding falls under the €10m funding pact with the European Bank for Reconstruction and Development (EBRD). "Most of them are microcredits, between €10,000 and €30,000, and so far we have no non-performing loans," Banc Post's communication manager, Hermina Apostol, was quoted as saying by BBW. With its successful realisation of the programme, Banc Post was awarded "Best bank participating in the EU/EBRD SME facility for accession countries" by the European Union and the EBRD.

Russia may offer state credit to Romania for power projects

Russian Prime Minister, Mikhail Kasyanov, who travelled to Bucharest to attend the Romanian-Russian economic forum recently, said his government is willing to examine a proposal to extend a state credit to Romania for the realisation of infrastructure projects in its region, with particular attention placed on the nuclear and thermal energy sectors, Interfax News Agency reported.
"Russia is also interested in active involvement in implementing the state privatisation programme in Romania," the Russian government leader said. According to Kasyanov, Bucharest's efforts to set up appropriate conditions for the operation of Russian power enterprises in Romania have been fruitful.
But Russian enterprises have also seen not-so-rosy times. They have encountered insufficient accurate fulfillment of the terms of privatisation agreements, the Russian official said. "However, certain decisions have already been made towards stabilising the situation in this sphere," Kasyanov said. To date, Russia has been able to generate more than US$400m in funds for the Romania economy, Kasyanov said. More than 200 joint ventures with Russian capital have also been launched in Romania, he added. "Practice has shown that Russian investors come to Romania with serious intentions," the Russians premier said, adding that Moscow plans to back Russian companies currently active in Romania.
Of the numerous projects, Kasynov noted his government has expressed an interest in the privatisation of the Romanian oil group Petrom, gas distribution networks and facilities producing oil and gas equipment synthetic rubber. "It is impossible to remedy the mis-balance in trade between the two states only at the expense of traditional Romanian exports to Russia, such as clothing, wine and furniture," Kasyanov told the forum participants.

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RETAIL INDUSTRY

Tomis Mall gets face-lift with US$6m investment

Colliers International announced Tomis Mall of Constanta will be revamped. "An extension as well as renovation and refurbishment works are being carried out. We will have a food court, multiplex and an entertainment centre, aside from the shopping facilities already present," BBW News Agency quoted Colliers International's retail broker, Monica Barbu, as saying. 
Due to open next October, the new Tomis Mall will house many shops including Italian clothing company, Stefane,l and British retailer, Marks & Spencer. The new mall will be extended to 16,000 sq. m from 12,000 sq. m. The overall investment will reach US$6m, according to BBW.

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TRANSPORT

Government, railway company kick off train station renovation project

Romania's Transport Ministry and the state railway concern started projects on March 12th for the upgrading of 20 train stations. Under the programme, the European Bank for Reconstruction and Development (EBRD) and First Suisse Boston granted €76m in funds. 
The stations are located on major railway connections to European capitals, according to Medifax News Agency. The architecture of the buildings will be preserved by construction groups, but their technology will be modernised.

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