Books on Romania
% of GDP
Update No: 106 - (23/03/06)
The fall of a titan
Romania's ex-prime minister Adrian Nastase resigned as speaker of Parliament's
lower house and as a leader of the opposition Social Democrats (PSD) on the Ides
of March, the very day Julius Caesar was assassinated over two thousand years
ago in 57BC.
Things are done more decorously these days, not with daggers in the precincts of
the Roman Senate, but by parliamentary votes. He fell after a no-confidence vote
by party members. Members of Nastase's PSD party met and voted 37 to 16 against
him after he was charged with graft as part of a corruption campaign by
Romania's centre-right government, which is aimed at making the country fit to
join the European Union next year. "I accepted what I felt was a
recommendation from my colleagues," Nastase said.
Adrian Nastase had everything and is about to lose it all. He was foreign
minister, prime minister, Chamber speaker, party president and came close to
becoming the president of Romania.
His Social Democratic Party, or PSD, said "Farewell" to him, which
triggered a chain reaction of radical goodbyes, leaving him isolated. Isolation
is the end-line for any public figure.
Adrian Nastase, the politician with a power narcotic in his pocket
(by Indira Crasnea)
It is rather sad and ironic that, at the moment, Adrian Nastase does not seem to
realize his condition. He thinks he is a victim, that he is sacrificed and
misunderstood, that he is judged by evil and "stupid" adversaries, by
ill-famed persons, and maybe he even faces an inside struggle, unable to realize
what he did wrong.
Nevertheless, as he is an intelligent person - and sometimes intelligence is
similar to a high capacity of self-persuasion - he probably thought about a
series of justifications to disburden him.
At present, Adrian Nastase is out of the game and it is hard to believe that he
will return any time soon. At present, PSD is looking for somebody dull to
replace him at the Chamber of Deputies, so to balance his acid presence.
Adrian Nastase is a character who raised, and still does, people's dislike. In
fact, maybe he did not even struggle to make people like him. His personal
qualities served him more in isolating himself in his own world of discrete
smiles and subtle jokes, which reflected only a misanthropic superiority to
He did not have the dusty charm of Petre Roman, or the honest naivety of Emil
Constantinescu. And he wasn't a "king-maker" like Ion Iliescu either.
And all this is not the result of a diabolical mind trying to set him up at any
cost, but a mixture of unfortunate circumstances and his own nature, which made
him his own victim.
However, he still has a faint chance to reinvent himself, since resources are
not an issue for him. But one must be a good visionary to foresee how "the
new" Adrian Nastase would look in, say, five years.
But for now, MP Adrian Nastase has not disposed of his pill against convulsions
caused by lost power, a pill which creates dependence and gives soothing
Meanwhile life goes on. Romania is attracting huge amounts of foreign
investment, the outcome, it has to be said, partly of Nastase's relatively
successful reform efforts and stewardship of the ship of state during his tenure
of power. Romania is billed to receive some US$7bn in FDI in 2006, second only
to Turkey's US$11bn; and it has under one third of Turkey's population.
It is worth examining an individual case of why Western countries are being
attracted to Romania. The UK is the premier foreign investor in Europe, as it so
happens, and is second only to the US in the Western world, unless Japan is
accounted an honorary member of it. A British angle is of interest, therefore.
UK investors come to town
The business climate has improved considerably in Romania, witnessed by the
attraction of an increasingly higher number of foreign investments, British
ambassador to Romania Quinton Quayle told Rompres, ACT Media news agency
There are three things the British investors seek in Romania, he said, namely
transparency, efficiency in the public administration and safety, with the last
one being decisive for the business climate, Quayle explained.
He actually implicitly conceded that there was a fourth when he stressed another
factor. The fight against graft has improved over the last year and "the
corrupt politicians are becoming increasingly frightened."
Quayle said Britain is the second-largest investor in Romania with investments
amounting to 2.5-3 billion euros and nearly 2,000 British-owned companies. One
of the biggest investors is mobile phone company Vodafone, while a new British
investment in the information technology sector was announced in the eastern
city recently, that has created some 400 jobs. British investors showed interest
in other sectors of the economy as well, like the textile industry and farming,
He said the foreign investors generally agree with the enactment of the flat
tax, but they are dissatisfied with the social taxes, the contributions that
employers must give to the state.
Quayle expressed optimism about the monitoring report the European Commission is
to make public in May, saying Romania will join the European Union on January 1,
2007. However, there are still problems in the public administration and the
reform should go on, he pointed out.
Romanian statistical figures revealed that the commercial exchanges between
Romania and the UK stood last year at 2.133 billion euros, with Romanian imports
totalling 1.2 billion euros and exports 933 billion euros.
Hidroelectrica outlook positive
Standard & Poor's Ratings Services recently revised its outlook on
Romania-based hydropower generator S.C. Hidroelectrica S.A to positive from
stable, reports New Europe.
At the same time, Standard & Poor's affirmed its `BB-` long-term corporate
credit ratings on Hidroelectrica. "The outlook revision is due to the
expected positive impact from a faster and more favourable market deregulation
development than previously expected," said Standard & Poor's credit
analyst, Magnus Pettersson. More than 80 per cent of electricity produced in
Romania is now sold at market prices, and this is expected to have a substantial
positive impact on Hidroelectrica.
Transelectrica plans 300m Euro undersea cable link
Romania will invest about 150 million Euro for the construction of a
high-voltage undersea cable linking it to Turkey, Transelectrica SA managing
director, Stelian Gal, announced recently, New Europe reported.
The project costs are estimated at 300 million Euro (US$359.4 million), he
added. The cable will be connected to the 400-kV station based in Constanta
(southeastern Romania) and to the 400-kV station in Pasakoy, Turkey. The cable
will have 600-MW capacity, it will be 400-km long and will be placed at a
maximal depth of 1,000 metres below the sea level. Transelectrica officials say
the project might be finalised in two years, by 2009. "This cable is
important for the Romanian energy exports," Gal said.
Eight bidders vie for Electrica Muntenia
All eight investors who presented their bids for the privatisation of the
company Electrica Muntenia Sud were accepted, the participating documents
presented being legally acceptable and in accordance with bidding regulations,
stated the Ministry of Economy and Trade, New Europe reported.
For the upcoming period, the technical offers will be analysed for the
privatisation of the Societatea Comerciala filiala de distributie si Furnizare a
Energiei Electrice (Electrica Muntenia Sud) - SA. The eight bidders who
presented their bids are - AES Corporation USAm, Eez As - The Czech Republic,
Enel SpA - Italy, EVN AG - Austria, GAz de France - France, Iberdrola SA -
Spain, RWE Energy AG - Germany, Union Fenosa International - Spain.
Romania promises electricity to Turkey
Excess electricity from Romania's four planned nuclear energy facilities will
provide extra energy to Turkey, economy and trade minister, Ioan Codrut Seres,
said at a meeting with Turkish Energy and Natural Resources Minister, Hilmi
Guler. A joint project between the two countries includes a 600-1,000 megawatt
power line under the Black Sea, connecting Istanbul and Constanta, New Europe
Foreign investment up to 5.19bn Euro
Foreign direct investment in Romania reached a record 5.19 billion Euro (US$6.18
billion) in 2005, up more than 26 per cent from 2004, a government agency said,
citing preliminary data released by the central bank. The final figure is
expected to be higher because the bank didn't report some investments, such as
reinvested profit by foreign companies, the Agency for Foreign Investment said
in a statement, New Europe reported.
In 2004, the central bank similarly reported that foreign companies and
residents invested 4.08 billion Euro (US$4.86 billion) in Romania, which
included the sale of state-owned oil company Petrom to Austrian group OMV AG for
1.5 billion Euro (US$1.8 billion) to the government.
Analysts believe Romania's perspective to join the European Union in 2007 or
2008 and low labour costs have made the country more attractive for foreign
investment. The government also overhauled the tax system in January 2005,
introducing a flat tax of 16 per cent which replaced taxes of 18 per cent to 40
per cent for individuals and 25 per cent for corporations.
Investors have complained however, about Romania's inefficient court system and
The foreign direct investment figure for 2004 has recently been adjusted upward
to 5.18 billion Euro based on additional data from the National Statistics
Institute, which included reinvested profit and other investments not reported
by the central bank, the agency said.
BNR calculates the FDI level by taking into account the capital spent by foreign
investors to create participation in a company (the central bank considers only
those investors which hold at least ten per cent of a company) and funds inflow
as credits from the main international company to the local entity.
The structure of foreign investments in Romania will considerably change in the
years to follow as the state capital still to be privatised is running low, said
Adrian Nitu the advisor to State Minister, Gheorghe Pogea,. Greenfield
investments will have an increasingly more important share in the structure of
foreign direct investments as the rate of privatisations slows down, Nitu
MINERALS & METALS
Laminorul Steel on sale
The state privatisation authority (AVAS) said recently it will re-start
procedures to privatise the Laminorul iron and steel works of Braila, putting up
for sale a stake of 68.80 per cent in the works, this being the sixth attempt to
make this company private, said AVAS, New Europe reported.
So far, none of the investors that have shown interest in the deal have met the
prerequisites for negotiations. Laminorul has a share capital of 29,397,226.56
RON (some 8.1 million Euro) and it is a sole manufacturer in Romania of knotted
chains for the naval industry, various parts of electrical machinery for means
of transportation by road and tongs for railroad metal sleepers.
RomTelecom shows growth
Fixed-line telephone operator in Romania, RomTelecom, part of the Greek OTE
Group, posted overall operational earnings of 925.7 million Euro in 2005 up from
839 million Euro last year, registering an annual growth of 10.3 per cent,
according to results announced by OTE Group, New Europe reported.
Romtelecom Division posted operational revenues of 235 million Euro in the 2005
fourth quarter, up 6.5 per cent from 220.7 million Euro in the 2004 fourth
quarter. OTE's revenues increase came about from results by the fixed-line
telephone RomTelecome and the one in Greece, as well as by cell phones'
The Greek-owned telecommunication operator, RomTelecom, said recently that the
Board has decided to cease planned investments worth approximately 500 million
Euro in infrastructure due to the unfavourable and unfair domestic business
environment. The company's capital expenditures declined last year to 92.5
million Euro, respectively by more than a third due to the suspension of the
next generation network project (NGN). For 2006 RomTelecom's investments in NGN
are on hold. They are the only viable investments this year worth slightly more
than 100 million Euro being directed towards modernising the access network.
"The current state of the NGN program is closely linked to the government's
and its subordinated institutions, namely the National Communications Regulating
Authority (ANRC), attitudes toward the issue. Hardly is this the type of climate
in which to invest 0.5 billion Euro in next generation network," James
Hubley, RomTelecom's General Manager, said while announcing his company's 2005
financial operating results. The company lost approximately 380,000 fixed
telephony lines in 2005 to competitors and is likely to make a loss, according
to RomTelecom's officials. Hubley further mentioned that the strategy was odd as
less than 20 per cent of the population may access the digital fixed phone
Moreover, he pinpointed the lack of coherence in the strategy approach towards
the rural customers, referring to a loss of 38 million Euro incurred by the
company from an implemented project started four years ago in Alba, Cluj and
Buzau counties that currently has no positive perspectives. "Moving
customers from one company to another does not contribute to the enhancement of
competition and improvements in infrastructure," Hubley underlined.