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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 60,358 44,428 38,700 52
         
GNI per capita
 US $ 2,310 1,850 1,720 100
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 118 - (29/03/07)

President tries to defuse political crisis, but to no avail
Romanian President Traian Basescu began consultations with parliamentary parties on March 20th in an effort to defuse the ongoing political crisis that puts him and his Democratic Party-PD allies against both the opposition and PM Calin Popescu Tariceanu's Liberals (PNL). The talks concluded in late afternoon with little signs of a breakthrough.

Basescu first met representatives of the opposition Social Democrats (PSD) led by party leader Mircea Geoana, who has been accusing the head of state of no longer being a mediator between political groups but a source of many scandals that have affecting Romania for months.

Geoana charged following the meeting that Basescu failed to deliver a solution to leave the current crisis behind, while the PSD argued for the "removal" of the current governing alliance of Liberals (PNL) and Democrats (PD).

The PSD had said they did not believe these talks with the president would solve the political crisis in Bucharest, sparked by conflicts between the two major members of the governing coalition - PNL and PD, between Basescu and Tariceanu, with the opposition largely on Tariceanu's side.

While the PNL had announced Tariceanu would join the talks, the prime minister failed to show up and that led PNL vice-president Puiu Hasotti and other several members of the party leadership to meet the president.

Once the PNL round of talks was over, Liberal leader Crin Antonescu dismissed the President as a "viable" partner of political talks or a "political character able to solve crises in Romania. He'd rather generate them, he's performing quite in this regard".

And Antonescu said the disputes should find a solution in the Parliament, between political parties, not at the Presidency.

The Democrats have said they believed the only solution out of the current crisis would be early elections. Once talks with the President were over, PD leader Emil Boc told the media that "the global solution to solve the current crisis stands in early elections" as "in democracy, the solution does not come from backstage games, but from turning to voters."

The Hungarian Democrats believe the crisis would be over either by early polls or by some other means for the government to obtain majority support in the Parliament, party leader Marko Bela said following his meeting with Basescu.

The opposition Greater Romania Party have said they would not discuss with the President and the Conservative Party (PC) had said they would only face Basescu to listen to him, but with little hope of a breakthrough. PC leader Dan Voiculescu told the media after talks that he asked the President to resign.

"We look forward that the decision of a political man who loves Romania and Romanians be made within a very short while," Voiculescu said.

PM allegedly asks for Interior minister's resignation
Romanian PM Calin Popescu Tariceanu is said to have asked the resignation of Interior minister Vasile Blaga on March 19th, according to sources quoted by the Rompres press agency. They say that on his late arrival at a reunion of the governing coalition, PM Tariceanu saw Blaga, asked him what he was doing there and demanded his written resignation.

Blaga is said to have left the meeting immediately, long before other members of his Democratic Party.

Tariceanu's Liberals (PNL) have been considering a breakup with the Democrats (PD) and speculations have been flowing for the past week that one way to do that - or a step towards that goal - was removing PD's key ministers - Blaga from the Interior Ministry and Monica Macovei from the Justice Ministry.

The situation was created a week beforehand when Blaga and Macovei refused to co-sign an ordinance promoted by Tariceanu, calling for a postponement of European elections due to take place in Romania this year.

Moldovan-Romanian division
The Moldovan government has reversed its decision to allow Romania to open two new consulates in the country. Relations between the two countries have deteriorated in the past year. 

The decision follows criticism from the authorities in Chisinau, who called Romanian policy towards Moldova "duplicitous." 

The consulates were aimed at easing a backlog of applications from Moldovan citizens who now need visas to travel to Romania. 

The Moldovan authorities hinted that a change was coming, and now it is official: the opening of two new Romanian consulates, in the towns of Balti and Cahul, will not be going ahead. 

The authorities in both countries were taken aback by the chaotic scenes in front of the Romanian embassy in Chisinau in early January, just after Romania joined the EU. 

Hundreds of angry people waited for days just to register their applications, amid confusion over documents and procedures. Many of them simply wanted to transit Romania to work in other EU countries. 

Romanian President Traian Basescu visited the embassy and promised rapid improvements. The Moldovan President, Vladimir Voronin, initially agreed to the opening of two temporary consulates. 

This idea of re-unification is now no longer on the cards, as the government is becoming ever more suspicious of Romania's intentions.

The Moldovan foreign ministry recently complained to the EU that Romania's policy was "duplicitous" because it exaggerated the number of Moldovans seeking to gain Romanian citizenship. 

This is a long-standing source of tension between the two countries. 

Last year, while meeting Moldovan students enrolled at Romanian universities, President Basescu spoke of a future in which Romania and Moldova could be united within the EU. 

He made a similar statement in a BBC interview recently. The idea was promptly rejected by Moldovan President Vladimir Voronin, who said that "Moldova will not unite with anyone, ever." 

Mr Voronin wants to move his country ever closer to Europe, but dismisses any suggestion that this would imply a change in its relationship with Romania. 

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For most informed people the Moldovans and the Romanians are very alike. Moldova was part of Romania from 1918 to 1940 and the two countries share the same ethnic and linguistic background. 

Stalin had other ideas and extracted Bessarabia from Hitler in his infamous deal, that set off the Second World War. 

The following is by a recent US student, resident in Moldova:-

Moldova: What's Behind Harsh Criticism Of Romania? 
By Ryan Kennedy 
Statements about Romania by Moldovan officials have recently become increasingly harsh. Officials accuse Romania of trying to undermine Moldova's statehood and security. What underlies this negative turn in Moldovan-Romanian relations?

Recent statements by Moldova's government have made headlines for their caustic tone toward neighbouring Romania. President Vladimir Voronin in early March attacked Romania for "financing a fifth column" in Moldova and not respecting Moldovan independence.

The Moldovan government has also criticized the Romanian leadership for "concocting and artificially aggravating" the issue of Moldovan application for Romanian citizenship. Romanian President Traian Basescu recently estimated that the total number of Moldovans seeking to obtain Romanian citizenship could exceed 800,000.

The statement also argued that Romania's refusal to sign a basic political treaty and a border treaty "cannot but be interpreted as a proof of the neighbour state's true intentions."

About the same time, Andrei Stratan, Moldova's minister of foreign affairs and European integration, reversed an earlier decision to open new Romanian consulates in Balti and Cahul.

The additional facilities were meant to ease workload on visa applications for Moldovans looking for work in Romania. Stratan, announcing his decision, said the new buildings were no longer necessary.

For its part, the Romanian government has refused to respond to these accusations, defending their policies as an attempt to re-establish free trade and movement that existed between the states before Romania's accession into the European Union on January 1, 2007.

To some extent, the harsh tone of Moldova's rhetoric toward Romania is an extension of Moldova's general foreign policy. However, the timing of these statements suggests that this is also part of an effort to improve relations with Moscow and the breakaway region of Transnistria.

Ups and Downs 
Moldova and Romania have experienced many ups and downs in their relationship since Moldova's independence in 1991. While pan-Romanianism has been a consistent part of Moldovan politics, and was adopted in the Popular Front of Moldova's platform in 1992, it has played only a minor role in Moldovan policy.

The Front's term in office under Prime Minister Mircea Druc was brief, and its successor, the Christian-Democratic People's Party, has only entered government in coalition with the Communist Party.

After calls for unification failed to gain widespread support, relations with Romania cooled considerably. In 1992, Moldova and Romania started negotiations on inter-state political and border treaties. Both treaties were prepared for signing in 2000, but they have yet to be approved by the Romanian government.

One of the low points in bilateral relations came during the 1994 parliamentary elections, when several Moldovan political parties denounced Romania's interference and its assertion that the Moldovan language and culture were Romanian. Romania, in turn, accused the Moldovan government of using the identity question to stifle dissent.

The 2004 elections in Romania began a period of improved relations. The newly elected Romanian president made Moldova his first official trip abroad, and the states found common ground as Moldova set EU integration as the country's main strategic foreign policy goal.

Two States, One Nation? 
Romania's official policy toward Moldova is "one nation, two states," based on shared history, language, culture and traditions.

In contrast, Charles King, a professor at Georgetown University, describes Moldovan foreign policy as "Bessarabism."

This policy orientation defines Moldova as "a distinct cultural and political space, a region whose traditions and interests derive both from its position as a small region surrounded by large neighbours and from the overlapping identities of its multiethnic population."

From this perspective, recent statements from Romania about citizenship rules may seem hostile, and the magnitude of citizenship applications claimed by Romanian officials are somewhat embarrassing to the Moldovan government.

In addition, the government has already expressed its concern about the size of its population working abroad -- as many as 1 million Moldovans -- and has encouraged its citizens to stay home. It is understandable that they would be concerned about the easing of citizenship requirements, which would allow easier exit to EU labour markets.

The current government has an incentive to reassert its commitment to an independent Moldova with local elections approaching. Many Moldovans do not support unification, and this is especially salient among Moldova's linguistic minority groups.

The Price of Transnistria 
Yet, the harsher tone of Moldovan officials toward Romania started well before these most recent statements. A month before Romania's formal accession to the EU, President Voronin slammed Romania's offer of help in Moldova's EU integration, saying "Romania is trying to impose certain rules of the game and principles of Moldova...this should be qualified as interference in the domestic affairs of a sovereign state."

It is interesting that the December 1 statements from Voronin came only a couple of days after Russia announced that it would end its ban on Moldovan wine. It also fell between the September referendum on independence and the December presidential election in the breakaway region of Transnistria.

In his New Year's address, President Voronin expressed his belief that 2007 will be "the year when the genuine and final reintegration of our motherland will start."

It makes sense that, as part of this strategy, Moldova would increase its efforts to resurrect the inter-state political treaty and border treaty with Romania as a method for allaying the concerns of Eurasianists in Transnistria and the regime's sponsors in Moscow.

As Nicu Popescu, a research fellow at the Center for European Policy Studies, puts it, "The true architect of the foreign policy of Moldova since the declaration of its independence has been neither Mircea Snegur, nor Petru Lucinschi, nor Vladimir Voronin, but [Transnistria President] Igor Smirnov."

The Shorter Long Shot 
With EU enlargement put on hold indefinitely, and territorial integrity an important part of Moldova's EU integration strategy, Moldova's cooling of relations with Romania can be interpreted as an attempt to reassure leaders in Tiraspol and Moscow that this administration is not moving closer to Romania.

Reintegration with Transnistria is a long shot, and Russia continues to delay the restoration of economic ties that are essential to Moldova's economy. But criticism of Romanian policy still presents a low-cost method for Moldova to further a number of its political goals.

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AUTOMOBILES

State aid to new Renault car design centre

A car design centre to be built by Renault Group by 2009 in Titu, north of Bucharest, will receive state aid in compliance with European norms, Romanian Finance Minister Sebastian Vladescu said on February 14 at a press conference, adding that the Romanian Agency for Foreign Investment (ARIS) had told the Romanian government that the French auto builder intended to invest some 450 million Euro in the project. 
The government has given ARIS permission to sign a memorandum with Renualt on the scheme for granting state-aid. Vladescu said such negotiations between the government and a key investor are not unusual, but added that the Romanian government has implemented a series of fiscal and human resource measures concerning local infrastructure. Last November, Renault announced the group will invest no less than 450 million Euro in a high-tech centre located in Titu, where some 3,000 engineers and experts will design its new cars, it was reported. Renault Group will transfer the technical conception and design of the Renault and Dacia brands to Titu.

Letters of intent expected for majority stake in car factory

Romania's privatisation agency AVAS said on March 9 that it expects the letters of intent from companies interested in buying the majority stake (72.4 percent) of Automobile Craiova SA, a former Daewoo Motor car factory, until April 25. Companies must reveal the future plans for the factory, noted the agency. The state bought last year the car plant for US$60 million with the intention of reselling it. General Motors and Ford Motors are among companies that have said they are interested in Automobile Craiova. UkrAvto, Ukraine's largest manufacturer and distributor of cars, also said last month that it will bid for the factory. 

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BANKING

First Bank of Cyprus branch opens

The Bank of Cyprus, the island's premier financial group with a market capitalisation of 6.18 billion Euro, opened its first branch in Romania on March 14th, Deutsche Presse-Agentur (dpa) reported, citing news reports. 
The bank plans to open 10 more branches over the next two years as it expands into Eastern Europe, noted dpa. The Bank of Cyprus has already booked a total of 100 million Euro in new loans in Romania and hopes to repeat the same in Russia, where it has maintained corporate clients for over 10 years, said the group's president Eleftherios Ioannou to journalists in Bucharest. 
The Bank of Cyprus will open a Romanian branch in April and focus on developing the network, as it sees no opportunities to take over other local lenders, Ioannou was cited as saying. The bank will concentrate on real estate services as many Cypriots carry out business in Romania, which joined the European Union on January 1. The Romanian division aims to offer loans totalling 96 million Euro through the end of the present year. President of Cyprus, Tassos Papadopoulos, inaugurated the branch in Bucharest on the final day of his official visit to the newest member of the European Union, accompanied by a 65-strong business delegation keen to invest in property, services and industries in Romania, the Financial Mirror newspaper reported. Cypriot manufacturers were among the first to relocate their operations to Romania and take advantage of the country's cheap labour and proximity to European markets, but nowadays, the main area for Cypriots to invest is in real estate, it was reported. 
According to the Romanian National Trade Registry, Cyprus was 10th in terms of foreign direct investments (FDI) in Romania at 491 million Euro and a 3.73 per cent share, just behind Greece with 497 million Euro, while the Netherlands was ranked first with 2.1 billion Euro, followed by Austria and Germany. 

BCR to sell its 7% stake in Italo Romena Bank

Banca Comerciala Romana (BCR), Romania's largest lender by assets, controlled by Austria's Erste Bank, plans to sell its seven per cent stake in Italo Romena Bank this year, BCR Executive President, Nicolae Danila, said on March 12th, reported local media. Danila said the stake will be sold "soon." 
BCR had an agreement to keep the stake for a limited period only and now "it's time to sell," Danila said. Italo Romena Bank's assets stood at 1.33 billion leu (376.7 million Euro) at the end of September 2006. Its market share was 0.88 per cent, according to the National Bank of Romania. The bank, which had nine branches last year, plans being to double their number by 2008, New Europe reported.

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CREDIT RATINGS

Fitch rates Oradea with BBB-

Fitch Ratings said on March 2nd that it has assigned the northwestern Romanian city of Oradea a long-term foreign and local currency ratings of BBB- and short-term foreign currency rating of F3, with a stable outlook, the rating agency said in a statement, New Europe reported.
"The ratings reflect the city's satisfactory operating performance, helped by a dynamic and wealthy local economy on a national basis. In addition, they reflect its prudent liability management, limiting currency and refinancing risks, and its limited debt," Fitch said in the statement. However, the ratings also consider Romania's still developing institutional framework, which translates, among other things, into limited budgetary flexibility for Romanian cities, the rating agency said.

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ENERGY

Romanian premier calls for energy independence

Romanian Prime Minister, Calin Popescu-Tariceanu, said on March 6th during his visit at Cernavoda Nuclear Plant, Romania must be energy independent, website english.people.com.cn reported. 
"We must start works soon for Units 3 and 4 at Cernavoda Nuclear Power Plant, as Unit 2 is currently under technological tests and will provide energy as of mid-2007," he was quoted as saying by the website, adding: "Romania needs various energy sources and additional quantities for two reasons: if the offer grows, price will drop and domestic and industrial consumers will be glad, and secondly, the energy quantities must satisfy the supplementary demands."

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FOREIGN INVESTMENT

BRD to invest 35-40m Euro in 2007

Banca Romana pentru Dezvoltare (BRD)-Groupe Societe Generale plans to invest 35 to 40 million Euro in 2007, BRD-SocGen President, Patrick Gelin, said on February 16th at a press conference. "In 2006, 60 million Euro were invested. It was something exceptional and I think that in 2007 [the investment] will be between 35 million and 40 million Euro," Gelin said. The bank will invest in information technologies (IT), bank cards, Automated Teller Machines (ATM) and new outlets. BRD-SocGen's share, listed on the Bucharest Stock Exchange, gained 0.46 per cent to end at 21.7 leu (6.4 Euro) on February 16th. Gelin also said Societe Generale was considering establishing, in Romania, a unit of its real estate promoter Sogeprom. "The company is not yet established. It will be directly financed by BRD-SocGen," he said, New Europe reported.

Investments in power sector to reach 60m Euro in 2007

Investments in upgrading Romania's power distribution sector will reach 600 million Euro in 2007, Romanian Economy Minister, Varujan Vosganian, said on February 23rd, New Europe reported.
Vosganian said recently that investments in the development of Romania's power sector will top five billion Euro by 2010, mainly in the nuclear power plant Cernavoda. Romania plans to build two more reactors at the plant and the estimated cost of their construction is 2.2 billion Euro, including the cost of decommissioning the spent nuclear fuel. 
Construction work is projected to last 64 months at each unit. One of the main objectives of Romania's business authorities is to increase to 30 per cent the weight of nuclear energy in the total energy output by 2015, Vosganian said. "We are want to bring Romania's nuclear energy production at 28-30 per cent of the total, water-power energy at 30-35 per cent and the energy generated by coal, crude oil and gas at 35 per cent," said Vosganian. At the same time, legislation for coal and gas generated energy is expected to be finalised, he added. In connection with the energy market, Vosganian said a system of direct contracting should be conceived, the energy exchange should be improved and the Romanian Commodity Exchange should get involved in energy transactions. According to data of the National Statistics Institute, Romania's 2006 energy production was 24.59 million tonnes of oil equivalent, making up 98 per cent of its total energy resources. The largest share of the energy, or 61.5 per cent, was generated by thermal-power plants, 29.5 per cent by water-power plants and nine per cent by nuclear power plants.

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FOREIGN LOANS

Alpha Bank lends US$190m in five-year loan

The Romanian unit of Greece's Alpha Bank said on February 22nd it had extended a US$190 million loan to electricity and steam heat producer Electrocentrale Bucuresti for buying raw materials. The five-year loan was extended in Romania's currency, the leu, the bank said in the statement. Electrocentrale chose Alpha Bank's bid out of offers from the seven largest Romanian banks, the company's general manager was quoted as saying in the statement. Electrocentrale Bucuresti produces and sells electricity and generates, transports and distributes steam heating, New Europe reported.

Japan bank to extend US$700m loan for rail link

The Japan Bank for International Cooperation (JBIC) will extend to Romania a long-term loan of some US$700 million to build an underground rail link between the centre of capital Bucharest and international airport, Henri Coanda, Romania's government said on February 22nd. "We hope that the approval [for the loan] will be granted at least for the next fiscal year, which starts on April 1st," Prime Minister, Calin Popescu Tariceanu, was quoted as saying by the cabinet's press office in a statement after a meeting with JBIC officials in Tokyo, New Europe reported.
The cabinet did not provide further details on the loan or the project, which will be developed by the Bucharest City Hall. The underground line will help further increase passenger traffic at the airport, Tariceanu said. Passenger traffic through Henri Coanda international airport rose by 16 per cent last year to 3.5 million. The airport completed in September a new 19 million Euro runway, raising its capacity to 4.5 million passengers a year.

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TELECOMMUNICATIONS

Orange Romania's posts 1bn Euro revenues

The mobile-phone operator Orange Romania said in an e-mailed statement on March 7th that its revenue went up by 24.4 per cent to 1.08 billion Euro in 2006. Orange Romania had more than eight million clients at the end of December, up by 18 per cent from a year earlier, it said in a statement. Orange Romania is leading the Romanian market as rival, Vodafone Romania, said it has 7.7 million clients at the end of 2006. The company has invested 1.2 billion Euro in Romania. Orange Romania launched its third-generation (3G) wireless services last year, which covers 20 cities by now, New Europe reported.

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