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Books on Romania
REPUBLICAN REFERENCE
Area (sq.km)
237,500
Population
22,355,551
Capital
Bucharest
Currency
Leu
President
Traian Basescu
Private sector
% of GDP
40%
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Update No: 110 - (27/07/06)
Basescu is Best Rated Romanian Politician
Traian Basescu holds the highest approval numbers of any politician in Romania,
according to a poll by the Centre for Sociologic Analyses and Investigations. 57
per cent of respondents express confidence in their president.
Basescu won the presidential run-off in December 2004 as the candidate of the
Alliance for Justice and Truth (DA) with 51.23 per cent of the vote, defeating
Social Democratic Party (PSD) contender Adrian Nastase. The DA encompasses the
National Liberal Party (PNL) and the Democratic Party (PD).
Former prime minister and current presidential aide Theodor Stolojan-who was
forced to withdraw his candidacy due to health reasons in 2004-is second on the
list of trusted politicians with 39 per cent, followed by New Generation Party (PNG)
leader Gigi Becali with 29 per cent, PSD leader Mircea Geoana with 28 per cent,
and current prime minister Calin Popescu Tariceanu with 27 per cent.
The DA won the November 2004 parliamentary election, securing 132 seats in the
332-member Chamber of Deputies. Basescu later appointed fellow alliance member
Tariceanu as prime minister.
In April 2005, the European Parliament approved the entry of Romania and
Bulgaria into the European Union (EU) in 2007, but warned that both countries
still need to enact reforms, eradicate corruption and fight organized crime. The
accession treaty contains a clause that could force a one-year delay in case
certain conditions are not met.
New crisis at home
It is eighteen months since parliamentary elections, lost by the Social
Democrats under then Premier, Adrian Nastase. He has been replaced as leader and
the Social Democrats are now a renewed and recharged force in politics.
Problems abound in Romania, where the public services are in disarray and
teachers and others are threatening strike action. Floods and outbreaks of bird
flu are taking place. Strong suspicion that constituents of the ruling coalition
are corrupt is undermining its authority. There is an air of crisis in the land.
Nevertheless, on Jun. 27, Tariceanu survived a no confidence motion in the
Chamber of Deputies. The PSD-sponsored proposal was supported by just 145
lawmakers. During the debate, Tariceanu chided the PSD leader, declaring,
"There are many people in this room who could become prime minister one
day, but surely Mr. Geoana is not among them."
Basescu, Tariceanu at odds over Romanian presence in Iraq
The much greater popularity of the president than the premier helps to
explain the outcome of a recent row between them.
Political tensions within Romania's ruling coalition heightened late in June,
when Tariceanu made a surprise proposal to withdraw Romanian troops from Iraq.
President Traian Basescu has called the idea "unacceptable."
Tariceanu took many by surprise. After a meeting of the Liberal Party leadership
convened on short notice via SMS text messaging, Tariceanu told journalists he
had ordered his defence minister and a Liberal Party colleague to table the
withdrawal proposal to the Supreme Defence Council. He cited soldiers' security,
financial reasons and "an increased tendency among European states to pull
out their troops," mentioning Spain, Bulgaria and Italy.
Romania's top defence body, the Supreme Defence Council, has overwhelmingly
rejected Prime Minister Tariceanu's demand to withdraw Romania's 890 troops from
Iraq. ''When her allies are facing difficulties, Romania can't take her boys and
leave. You can't change the course of foreign policy overnight," President
Traian Basescu said on 30 June, following the vote.
Tariceanu's proposal garnered just two votes out of 11. He was opposed by the
chief of the army and by two of his Liberal Party subordinates, the foreign and
finance ministers. Following the meeting, Tariceanu maintained that the Romanian
military presence in Iraq was "unpopular and no longer useful."
Nevertheless, the Supreme Defence Council's decision was greeted with relief by
US and UK diplomats. "Basescu made it clear that Romania remains committed
to our common efforts in Iraq and in the global war on terror," said US
Ambassador Nicholas Taubman after two days of uncertainty.
Basescu, who learned about the proposal from the TV, lashed out at his prime
minister. He said Tariceanu's statement was "a serious blast against
national interests" brought up in public debate without any prior
consultation with Romania's allies. Foreign Minister Mihai-Razvan Ungureanu said
Tariceanu had not consulted him either.
US and UK diplomats did not hide their amazement and sought clarification.
"These latest reports from Romania are, frankly, a surprise," said
State Department spokesman Adam Ereli. "We hadn't been informed about them.
They're certainly not consistent with what we've heard from senior Romanian
leadership."
One Romanian soldier has died in Iraq and four in Afghanistan. The military
presence abroad, strongly supported by Basescu, has been judged by Liberal Party
strategists to be unpopular.
Mircea Geoana, the leader of the Social Democratic opposition, reacted
cautiously. A former career diplomat, Geoana favoured a negotiated pullout
timetable. He pointed to the ongoing political battle within the ruling
coalition -- specifically, between Tariceanu's Liberals and the Democrats, still
devoted followers of their former leader, Basescu. "A foreign policy issue
cannot be subject of a political game," Geoana said.
"I think, at least in the short term, the image and the credibility of
Romania in the United States would be affected," says Michael Radu,
chairman of the Centre on Terrorism at the US-based Foreign Policy Research
Institute.
"In the longer term, the problem would be to what extent an ally who takes
unilateral decisions, based on party interests, or even on personal interests,
is a reliable ally," he added.
The Tariceanu government is made up of 200 dignitaries
European states have more efficient governments made up of 30-40
dignitaries, while we have five times as many dignitaries who are less efficient
than theirs, writes Bursa.
We may be behind in many key fields, but we certainly are above the average when
it comes to the number of dignitaries in the government. According to
information coming from the vice president of the Senate's Committee for Abuses
and Corruption, Democratic Petre Marinescu, we hold a "world record"
when it comes to the number of the employees of the government.
Marinescu said the 45 governmental agencies which belong to the government as
well mean annual expenditures of about 200 million euros from the state budget,
plus several other billions coming from the different international funds.
Furthermore, Marinescu said that these agencies usually have the same
responsibilities as the ministries they belong to, making everything even more
chaotic and inefficient.
He added that their activity is not at all transparent, being, in fact, very
bureaucratic.
Marinescu also pointed out that these fake institutions spend tons of money from
the state budget and represent "an oasis" of institutionalised
corruption.
The senator said that no one wants these institutions to disappear, as there is
a lot of money in the middle, and many governmental officials hide their
wrongdoings under the agencies' umbrella.
He gave the example of the director of the Romanian Agency for Foreign
Investments, Traian Iordanescu, who is suspected of having collaborated with the
former secret communist police, called the Securitate.
Marinescu explained that Iordanescu's name is on a list with governmental
employees who have allegedly collaborated with the Securitate; the list was
compiled by the Council for the Study of the Securitate Archives.
The senator added that such a person cannot run an important agency of the
state.
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AUTOMOBILES
State buys back car factory from Daewoo
The Romanian government has reached an agreement with South Korean officials for
the takeover of 51 percent of the Daewoo Automobile Craiova factory, after the
last round of difficulties in negotiations were solved, Bucharest Daily News
reported recently, citing sources at the Ministry of Economy.
The agreement was reached after talks between the Ministry of Economy of
Commerce (MEC) and South Korean officials in Seoul, said the paper. Minister
Codrut Seres will present the terms of the transaction to the government, the
paper added. Daewoo Motor holds a 51 per cent stake in the Craiova factory and
the remaining 49 per cent is owned by Automobile Craiova, in which the state
controls 72.4 per cent of the shares.
General Motors took over part of the assets of the South Korean group, which was
suffering from financial difficulties in September 2002, but in the agreement
the plant had not been included. In a move mandated by the government, the
Office of State Ownership and Privatisation in Industry (OPSPI) negotiated the
takeover of the share package still owned by Daweoo, to later sell to a
strategic investor.
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BANKING
BCR's sale to Erste postponed 3 months
The government decided recently to extend the deadline for the approval of the
sale of Banca Comerciala Romana (BCR) to Austrian Erste Bank to September, as
the Competition Council has not issued an opinion on the operation yet, New
Europe reported.
According to the privatisation contract, the document was originally due to be
endorsed by the cabinet in Bucharest on June 23rd. Government spokesperson Oana
Marinescu said the postponement had been decided because of the delayed answer
from the competition council. The council asked for additional documents in
order to be able to give an opinion, Marinescu added. The decision regarding the
extension of the term was published in the official paper. Initially, Erste Bank
was due to transfer the value of the 61.88 percent stake in BCR by June 26 to
Romania.
Greece's ATE Bank grabs 50.94% of MindBank
ATE Bank (Agricultural Bank) said that after the completion of the due diligence
process it has purchased 50.94 per cent of Romania's MindBank at the price of
32.06 million Euro, which is 2.15 times its book value at the end of 2005,
Euro2day reported.
The bank added that it also signed an agreement to acquire an additional 6.19
per cent stake in MindBank to eventually bring its total holding to 57.13 per
cent. Completion of the transaction and final payment of the purchase price
depends on approvals by the central banks of Greece and Romania. ATE Bank said
that this move was in line with its strategic decision to expand in the Balkans.
Brokers said MindBank has 78 million Euro in assets and a network of 10 branches
in Romania that focus on the small and medium-sized enterprises lending sector.
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ENERGY
Mol plans to buy refinery, build filling stations
Mol Rt, Hungary's biggest oil company, is planning to acquire a refinery and
build new filling stations in Romania as part of its expansion in Eastern
Europe, Budapest Business Journal cited a company spokeswoman as saying.
"We have plans to acquire a refinery in the middle term, possibly in the
next three to five years," Eva Csog, a spokeswoman for Mol's Romanian unit,
said. "But we can make it earlier, if there is an appropriate
opportunity."
The Hungarian oil company does not have any specific acquisition targets at the
moment, Csog said. Mol has no plans to buy the Rafo Onesti refinery, the
newswire Mediafax reported, citing Dumitru Dragomir, Mol Romania's finance
manager.
Budapest-based Mol is competing with companies like Austria's OMV AG and
Russia's OAO LUKoil for customers in Eastern Europe and the Balkans, where
economies and fuel use are growing faster than in the west.
Mol is also seeking acquisitions in Croatia, Bosnia and Serbia.
The Hungarian company also plans to spend 20 million Euro this year and next
building new filling stations in Romania to boost its existing network of 135
stations and gain a 20 per cent share of the Romanian fuel market, Csog said.
Mol controlled 13 per cent of the Romanian retail market at the end of March and
doubled fuel sales in the country in the first quarter, according to Mol's
earnings report.
The company bought Royal Dutch/Shell Group's 59 filling stations in Romania last
year for an estimated US$70 million.
Enel to invest 380m Euro in Romania
Enel will invest 380 million Euro in Romania by 2010 in order to increase and
reinforce its electric plants, said managing director, Fulvio Conti, during a
pres conference the recently, reported AGI.
Conti also said that Enel is still interested in taking part in the tender for
the construction and the management of the third and fourth nuclear reactor of
the Caernavoda plant, for which it has been applying since 2004 alongside four
other companies. The Romanian government is going to wait to receive letters of
intent. The Italian electric company won the competition to lay claim to the
Romanian distribution company, Electrica Banat and Electrica Dobrogea (AGI).
Romania gets another 39m Euro for Petrom sale
Romanian authorities collected an additional 39 million Euro from the Austrian
company OMV, at the end of May, after a price adjustment stipulated in the
contract for the privatisation of Petrom, New Europe reported.
The adjustment mechanism was meant to reflect the evolution of the Romanian
company's financial situation in the period between the signature of the
contract and the completion of the transaction. The contract was signed in July
2004 and the transfer of ownership was complete in December 2004. The audit firm
that evaluated the deal concluded in its report that OMV owed a further 39
million Euro to the Romanian state. The Austrians did not contest the report.
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FOOD & DRINK
PepsiAmericas acquires bottling company for US$98
PepsiAmericas Inc, the second-largest bottler of Pepsi products in the world,
acquired the remaining 51 per cent stake in a Romanian bottling company for
US$98 million, the company said recently, New Europe reported.
The deal makes Quadrant-Amroq Bottling Co. Ltd, which produces, sells and
distributes beverages throughout Romania and Moldova, a wholly-owned subsidiary
of PepsiAmericas.
The Schaumburg-based company paid US$51 million for the first 49 per cent of
Quadrant-Amroq in June 2005. "Contiguous to our existing operations, this
acquisition will allow us to leverage our capabilities, infrastructure and go-to
market system we have built over the last five years in Central Europe,"
PepsiAmericas Chief Executive Officer Robert Pohlad said in a statement. Pohlad
also cited the growth possibilities associated with Romania's impending
accession to the European Union.
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FOREIGN GRANTS
WB to finance health system
The World Bank (WB) could grant Romania several credits for social projects in
the 2007-2009 period some of them focusing on eliminating bribes in the health
system, New Europe reported.
The International Bank for Reconstruction and Development (IBRD), a member of
the WB, will grant Romania US$100 million for the financing of human development
projects. The bank's private investments division, the International Finance
Corporation, will finance the development of private suppliers of health
services. Another programme will contribute to the development of the private
pensions system, allowing the deficit in the pensions system to remain under one
per cent of the GDP until 2009.
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