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2001 In Review: A Tough Time For Romania On Road To EU Entry

Romania's Social Democratic government ends its first year in power with a mixed record. Political stability and moderate economic growth have been achieved after years of bickering and recession, while privatization of loss-making state enterprises continued, although at a slow pace. The new government also acted on European Union criticism to improve the conditions of minorities and institutionalized children. But a European Commission report says Romania, despite positive steps, is still lagging behind other EU candidate states.

Prague, 14 December 2001 (RFE/RL) -- Romania, in 2001, enjoyed a stable government, the economy grew at its fastest pace since 1995, and the European Union finally agreed to lift visa restrictions for its citizens.

The Social Democratic government led by Prime Minister Adrian Nastase proved it could act swiftly and determinedly upon EU criticism to improve the situation of institutionalized children and curb illegal migration to the West, while Romania's management of the rotating presidency of the Organization for Security and Cooperation in Europe improved the country's international reputation.

The political situation in Romania today is a far cry from a year ago, when ultra-nationalist Corneliu Vadim Tudor and his party came second in both parliamentary and presidential elections, raising alarm across Europe. Eventually, ex-communist Ion Iliescu regained the presidency after four years in opposition, and his Social Democrats managed to secure the largest number of seats in parliament, even though short of an outright majority.

But despite visible progress, Romania is far from being considered a success story. With an average income of just $100 per month, it remains one of the poorest countries in Europe, with a largely unrestructured economy.

Economically, the country lags far behind the more successful former communist states and is ranked last among the 12 Eastern and Central European candidates for European Union admission.

Furthermore, even though the current government did manage to persuade the EU to drop visa restrictions for its citizens, Romania was the last of all candidate countries to secure visa-free travel rights to the EU. That was due to years of inability to improve controls at its borders and to stop the flow of Romanian and foreign illegal migrants to the West.

But the new Social Democratic government went to great lengths in 2001 to improve the country's international image, tarnished for years by reports of discrimination against its Romany minority and of dire conditions in its orphanages.

Romanian officials took swift action after harsh criticism in June by EU special envoy Emma Nicholson, who accused the government of failing to improve the situation of the country's 60,000 institutionalized children. She also said unnamed high officials might be involved in the selling of orphans to child traffickers.

The government imposed a ban on international adoptions to prevent such trafficking and launched a plan of measures to improve conditions. The ban was partially lifted in December, but controls of adoptions have become more rigorous.

Bucharest also forged a national strategy for better integration of the country's estimated 2 million Roma and adopted a new local administration law granting ethnic minorities the right to use their own languages in dealings with the authorities.

Nastase's cabinet pushed ahead with a long-delayed property restitution law and with legislation granting citizens access to their communist-era secret police files, while President Ion Iliescu publicly reconciled with King Michael, Romania's former monarch, after more than a decade of animosity.

But many analysts suspect that such measures might just be an attempt by the government to improve its credibility abroad ahead of next year's NATO summit in Prague, where Romania hopes to gain an invitation to join the alliance.

The success of Bucharest's bid for NATO membership is far from certain, even though Romania has been nominated -- along with Slovenia -- at the alliance's summits in 1997 and 1999 as a front-runner in any next wave of enlargement.

Public support for NATO membership in Romania still runs as high as 85 percent, and its largely obsolete army -- estimated at some 110,000 troops -- has undergone major cuts lately.

But the alliance has so far refrained from making any specific statements regarding the admission possibilities of any of the nine candidate countries -- except to say the matter will be discussed at next year's Prague summit.

Unlike NATO, the EU in November did announce a schedule for enlargement, saying 10 of 12 candidates most likely will be ready for admission in 2004. Unfortunately, the European Commission said Romania and its southern neighbor Bulgaria will be the only two states unable to join the 15-nation bloc by 2004.

EU enlargement commissioner Guenter Verheugen on several occasions in 2001 urged Romania's Social Democrat government to do more toward economic and administrative reform.

Verheugen, who visited Romania in April, said -- in apparent reference to Romania's stated aim of entering the EU in 2007 -- that it is more important to ensure concrete results in the next two years than it is to set timetables: "When the EU concludes negotiations with the most advanced countries in 2002, Romania will want to show that she, too, has made substantial progress. And I tell you, you have the potential to do that. Romania will certainly want to show that she's serious about her accession prospects. I very much welcome the Romanian government's commitment to be judged on its action rather than on its promises."

Echoing Verheugen's comments, the European Commission's annual report on Romania issued on 13 November also urged Bucharest to speed up reforms. The report welcomed what it called Romania's "significant progress" in forging plans for better conditions for orphans and minorities but warned that more efforts should be made to implement such plans.

However, it was Romania's economic situation that the EC expressed the most concern about. While acknowledging Romania's progress toward a market economy, the report said the country is still unable to cope with EU competitive pressures, mostly because of high inflation (nearly 30 percent) and a widening current-account deficit (some 6 percent of gross domestic product).

The report noted that big privatization deals this year, such as the sell-off of the Sidex steel mill -- the single largest loss-maker in Romania's economy -- demonstrate the government's commitment to reform. But it says privatization must be accelerated to achieve sustainable growth.

The International Monetary Fund and the World Bank, in turn, warned that Romania's projected 5 percent economic growth this year may not be sustainable without more market-oriented reforms. Analysts also believe the growth was mainly based on a consumer-led boom, and may not last.

British journalist Phelim McAleer, a Bucharest-based correspondent for London's "Financial Times," says Romania still has a huge number of loss-making companies that must be privatized to consolidate the market and reduce the budget drain.

"They have sold Sidex, which was one of the biggest drains on the budget, but they still have an enormous number of large [state-owned] companies that are not paying their tax bills, that are not paying their energy bills, and all this money has to come out of the state budget," McAleer said. "So, privatize, or in fact, liquidate these companies, and that should bring about a proper market economy, where the state does not control monopolies which push prices up and distort the market."

The EC report also pointed to Romania's corruption, which it called "a serious and largely unresolved problem" despite reform of judicial procedures. More recently, on 6 December, U.S. Ambassador to Bucharest Michael Guest warned that corruption remains "a key obstacle" to Romania's NATO membership hopes.

McAleer of the "Financial Times" told RFE/RL that, by some accounts, corruption in Romania is more widespread than in Russia and is partly determined by the high level of bureaucracy and an ambiguity in legislation.

"Some people say to me that the corruption is worse than in places such as Russia, only it is cheaper. Corruption here is quite low-level, but it is quite widespread. So they need to tighten up the public administration," McAleer said. "They need to change the rules, to reduce bureaucracy. And also one of the biggest problems is that legislation is often ambiguously worded, which means that it is open to interpretation by individual civil servants who can be persuaded, for a small bribe, to interpret it in the person's favor."

European and international officials point out that, while Romania did make some timid steps forward this year, much more remains to be done, and at a much faster pace. And unless the government steps up reforms next year, it also risks being paralyzed by impending elections in 2004.

McAleer believes that for the current government, as well as for Romania as a whole, 2002 will be of critical importance.

"They have done a little bit this year, and they need to do a lot more next year," McAleer said. "And after that, then we are looking at elections, and then we are looking at sweeteners rather than pain. And the EU was quite clear that there needs to be pain before there's gain, so next year's quite crucial."

At the same time, the Social Democrats, who came to power on a populist ticket in 2000, will have to take swift action to alleviate growing poverty among Romania's 22 million people if they want to secure both popular support for further reforms and success in the next elections.