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Romania: Business Behavior Damages Pipeline Dreams

Bucharest, 30 September 1998 (RFE/RL) --Managers in Romania's state-controlled energy sector may be thwarting Bucharest's lobby effort for oil and gas pipelines.

Western businessmen say officials at firms like Romgaz, the state-owned gas carrier, have made doing business difficult and may not even be aware of the damage they could be causing their country.

Since early last week, a British consultancy to the European Union's PHARE program has unsuccessfully tried to meet with managers at Romgaz. The consultancy is working on a report that will be used by PHARE to determine the feasibility of pipeline projects in Romania.

Ultimately, the European Union will form its decision on whether to help finance Romanian pipelines based on input from its PHARE and INOGATE programs.

But rather than welcoming the PHARE consultants and allowing them to quickly complete their report, a member of the consulting team told RFE/RL that Romgaz mangers have refused to meet them for eight days.

The consultant, who asked not to be identified, said mid-level managers at Romgaz are showing exactly why Romania deserves its reputation as a place where western businessmen face high risks and seemingly never-ending frustrations.

Ironically, at the same time that Romgaz managers have kept their doors closed, Bucharest's highest officials have been hosting a conference proclaiming the openness of the sector in a bid to win foreign investment for pipelines.

The Romanian president, prime minister, foreign minister, transport minister and privatization minister all used the conference as a forum to convince international oil executives that Romania now has its act together.

Ultimately, Bucharest wants the Black Sea port at Constanta to serve as a major transit point for Caspian oil. Those hopes depend upon financing for an oil pipeline linking Constanta to Italy's Adriatic port at Trieste.

The PHARE consultant told RFE/RL that even a phone call from Romania's energy ministry had failed to help his team gain access to Romgaz officials.

He also said that the behavior appeared to be endemic to Romania's energy sector, where mid-level managers at many companies also have refused to cooperate with the team unless receiving direct instructions from their immediate supervisors.

One explanation for the behavior could be lingering "old habits" from the days of central planning. Another is that Romania's energy sector is now in turmoil as it undergoes massive restructuring ahead of planned privatizations.

As this week's oil conference in Bucharest wound to a close, former Finance Minister Daniel Daianu made a speech about the need for practical reforms. His words appeared aimed more at the Romanian ministers present than the foreign investors.

Daianu said economic crises in Russia and Asia have permanently altered the psychology of emerging market investors. He said that as the world's private sector becomes more cautious about loans in countries like Romania, the cost of foreign credits will continue to climb. He concluded that Romania must work much harder on restructuring and also focus on obtaining loans from multilateral institutions rather than the private sector.

The PHARE consultant's complaints about Romania were substantiated in several instances at the Bucharest conference.

In one case, dozens of credential-carrying journalists who had been properly registered for the event were prevented from watching Prime Minister Radu Vasile's address because of what organizers called "security concerns." However, promised facilities to monitor the speech from another room never materialized.