Romania has the highest-ranking delegation at this year's board meeting of the European Bank for Reconstruction and Development. RFE/RL's correspondent at the London meeting, Ron Synovitz, says that reflects the Bucharest government's hopes of reassuring international financial institutions about Romania's tardy reform process. Here is his report:
London, 23 April 2001 (RFE/RL) -- Romania's delegation to the European Bank for Reconstruction and Development's annual meeting in London this week contains the highest-ranking officials of all the 27 countries where the EBRD operates.
President Ion Iliescu is heading the Romanian team in an effort to attract foreign investors and to reassure international financial institutions about the reform process in his country. The delegation also includes Foreign Minister Mircea Geoanna, Finance Minister Mihai Nicolae Tanasescu, and former Prime Minister Mugar Isarescu, who is now head of Romania's central bank.
Yesterday (22 April), the team of Romanian senior government officials crowded into the office of EBRD President Jean Lemierre for a closed-door meeting. Olivier Descamps, the EBRD's director of banking for the Balkans and Caucasus regions, told RFE/RL that the discussions focused on Romania's need for speedier reforms in order to attract more foreign investment.
"The presence of President Iliescu has a symbolic purpose. Romania was one of the founding members of the EBRD, and here 10 years after, you have a president coming back -- in charge now of a new government. We can talk about lessons learned, successes and failures of the past, and what could be happening in the future. We didn't go into the nitty gritty, We went into what could we expect and how could we help if the country does want to move in the right direction -- that foreign investment, as we were told, should play a major role, or a bigger role, because it has not been really an important one. How can the EBRD help -- and that's basically what we discussed."
Romania is among the EBRD's top three countries of operation in terms of financial commitments and disbursements. Since its founding in 1991, the EBRD has invested more than $1.6 billion in Romanian projects. It also has helped mobilize a total of $4.5 billion of private investment from outside of Romania. But last year the EBRD's new commitments to Romania added up to only $125 million, a lower level than in previous years. EBRD First Vice President Charles Frank says little reform progress and a poor investment climate in Romania prevented the bank from reaching the level of business that it might have last year. He says the EBRD has a series of proposals for projects that could begin quickly once investment conditions and other economic reforms are implemented.
Frank warns that the transition process in Romania risks being set back further with each day that economic reforms are delayed. He says the implementation of banking reforms is particularly crucial to the revival of Romania's private sector. That's so, he says, because banking reforms will raise public confidence in the market system by providing the backbone needed for a successful market economy to function.
The EBRD has a working relationship with Banca Comerciala Romana, the country's largest commercial bank, and has expressed hope that its privatization will take place in the near future. The EBRD already has signed a $20 million loan to Banca Comerciala Romana that is aimed at supporting small and medium-sized businesses.
But some private-sector financial experts attending the EBRD's London meeting have become skeptical about routine talk on reforms from Romanian officials that is not backed with action. Andrew Roberts, an emerging-markets analyst at Schroder Salomon Smith Barney, says that attracting foreign direct investment requires legislation for a proper investment infrastructure.
Other Western observers at the EBRD meeting this week say Romania's left-leaning government has so far been a pleasant surprise because many economists had expected the worst when it came to power last December. Still, (unnamed) Western diplomats warn that without speedier reforms, Bucharest will soon lose the benefit of the doubt.
Next year's EBRD board meeting will be held in Bucharest. Preparations for that meeting were on the agenda of yesterday's talks between Lemierre and the Romanian leaders. EBRD spokesman Ben Atkins says Romania was keen to send a credible message on its reform commitments to institutions like the International Monetary Fund.
Several thousand international business leaders are expected to attend next year's Bucharest gathering. Anca Ochisor, a Romanian delegate at the London board meeting, told our correspondent that the government sees the Bucharest meeting as an opportunity to attract investment by showing international investors that Romania is able to get on the fast-track for reforms.
The EBRD predicts that the growth of Gross Domestic Product, or GDP, in Romania will be about 2.5 percent for this year. That level -- equal to the forecast for Moldova -- falls below the 4 percent GDP growth expected across all of Southeastern Europe this year. It is also lower than the economic growth projected by the EBRD for this year in all other countries of eastern Europe and the CIS except for Uzbekistan (1 percent GDP growth), Belarus (2 percent) and Macedonia (2 percent).