Romanian Voters May Turn to Ex-Communists on Economic Concerns

Romania's President, Traian Basescu

The Romanian Social Democrats, led by former communists, may win the most votes in Nov. 30 parliamentary elections by promising increased social benefits as the global financial crisis threatens job losses and economic stagnation, Bloomberg reported today.

Support for the Social Democrats rose to 35 percent in the last opinion poll before the vote from 25 percent in September, overtaking the Liberal Democrats, who had 32 percent. In third place was the governing National Liberal Party, with 21 percent.

After years of economic boom, Romanians are seeking to prolong the good times and shelter from the worst of the global crisis as emerging markets are buffeted by tumbling stock prices and falling currencies. The Social Democrats, aspiring to power after four years in opposition, risk exacerbating financial instability by increasing social spending in the second-poorest country in the European Union, economists warn.

“The Social Democrats are benefiting from the instability of the global crisis but that’s what we don’t need right now,” Nicolaie Alexandru-Chidesciuc, a senior economist for ING Bank Romania in Bucharest. “We really need a government that can say ‘we need to cut back spending’ and promote fiscal responsibility. The Social Democrats are the very last party that would do it.”

The INSOMAR poll of 12,494 people between Nov. 21 and Nov. 23 showed voter support for the Democratic-Liberals, who back President Traian Basescu, has fallen from 39.4 percent in September while support for the governing Liberals has risen from 19.9 percent. The poll has a margin of error of 1.5 percent.

Hungarian Minority

It also showed the Democratic Union of Hungarians in Romania, favored by the 1.4 million-member ethnic minority in the nation of 22 million, had 5 percent support. The nationalist New Generation Party, led by soccer financier Gigi Becali, scored 3 percent.

Though all parties promise to boost spending and shield the country from the global crisis, none is likely to gain a majority, meaning they must seek alliances to form a government. In 2004 elections, that process lasted until Dec. 28 and ended with the appointment of the Liberal Calin Tariceanu as prime minister, excluding the Social Democrats from government.

Alliances forged in Parliament are likely to shape the policy of the future government more than party platforms, said Alina Mungiu-Pippidi at the Romanian Academic Society in Bucharest.

“Controversy is likely to start on Dec. 1, after the elections,” she said. “They have to start talks to form a coalition government and they will have trouble finding any prime minister that they can agree on.”

Coalition Talks

Social Democrat leader Mircea Geoana, 50, a former foreign minister and ambassador to Washington, told foreign reporters on Nov. 14 that he will negotiate with any party to form a majority coalition and return to power.

“Everything is on the table,” he said. “If we get 40 percent of the vote, though, we will be in a much better position to form an alliance than if we get 25 percent.”

Mihaela Lazar, a 34-year-old clerk in a cable and wire shop that earns her $335 a month, has yet to decide if Geoana should lead the nation. Still, her town of Targoviste, where declining demand forced steelmaker Mechel Targoviste SA to lower production this month, may support the return of the Social Democrats, especially among pensioners.

“The older people trust them because they governed the country for a long time and they think they helped raise pensions,” said Lazar, pacing the unheated shop to stay warm.

Economic Focus

Elections in 2004 were focused on graft in the nation rated by Transparency International as the most corrupt in the EU. In the only televised debate between the three main candidates for prime minister, held on Nov. 26, none mentioned corruption, focusing instead on growth, multiannual budgets and potential finance ministers.

Increased wealth associated with EU membership is tangible as cranes bristle on the skylines of Romania’s major cities. Foreign trips, including many who had never been on an airplane, jumped an annual 21 percent in the first nine months of the year. New cars clog streets and imports more than doubled since the last ballot.

Soaring foreign investment, annual net wage increases of as much as 30 percent and a lending boom have spurred shop openings by retailers such as Carrefour SA, Ikea and Starbucks Corp. and driven real estate prices up as much as 10-fold.

Economists say Romanians may have to give up some of those gains as the international financial crisis translates into higher unemployment, factory closures, a weaker local currency, credit rating downgrades and a sharp slowdown in lending.

Spreading Layoffs

Companies including carmaker Dacia SA, food processor Kraft Romania SA and steel manufacturer Arcelor Mittal Romania have announced cutbacks or layoffs totaling 4,000 in October alone and many of their suppliers have said they will fire workers as well.

Gabriel Pana, a 50-year-old technician who earns $410 a month at the Russian-owned Targoviste steel plant, said he is bucking the trend to the Social Democrats and will cast his vote for the Liberal Democrats because the local politicians are younger and Romanian politics “need fresh views.”

“Geoana’s popularity has improved, but nothing else has changed,” Pana said as he closed the plant’s rusty gate behind him and started his walk home. “The promises are too many and too big, you have to be blind not to notice there’s nothing much they can do.”

Romania gets €1 billion loan from EIB

BUCHAREST, Nov 24 -- Romania Monday signed with the European Investment Bank (EIB) a credit agreement worth €1 billion (1.266 billion U.S. dollars), for co-financing the EU-funded projects.

The loan will be granted as matching funds for implementation of projects in Romania financed under the EU Structural and Cohesion Funds, said Finance Ministry's Sate Secretary Eugen Teodorovici, after signing the agreement with the visiting EIB Vice-President Mathias Kollatz-Ahnen.

The loan will be directed toward environmental, economic competition and transportation operational programs, he added.

The loan will be disbursed in maximum 15 tranches of €25 million ($31.65 million) to €250 million ($316.5 million) each, the deadline for attracting the entire loan being August 31, 2013, according to the agreement.

According to local analysts, the loan will contribute to a better absorption of the resources under the EU Funds.

The 1-billion loan was approved by the EIB Board of Directors on October 21, 2008 and Kollatz-Ahnen said EIB might increase its financing to Romania from €1 billion to €1.3 billion for the coming years, in view of the undeniable impact of the international financial crisis.

"We will do our best for the year to come, to prepare a higher volume for Romania, let's say a third more," said Kollatz-Ahnen, adding that "talks are held at European level on ways to support, encourage investments in this context."

EIB and Romania in Oct. 2006 signed a Memorandum of Understanding, setting a framework for the EIB's support to the country's investment program during the next years. While financing will be based on specific project proposals, the agreement indicates that such financing may be in the order of €1 billion per year and can be adjusted in line with needs.

Since 1990, the EIB's lending in Romania has reached €5.1 billion to finance investment projects relevant for Romania's successful integration into the EU. Since Romania joined the EU in 2007, the EIB has sought to play an important role in supporting the country's successful development within the union.

Romania's government approved a plan to invest more than 10 billion euros ($12.6 billion) in the economy over the next four years to stimulate growth and create jobs, Bloomberg reported on Nov 19. The Romanian government will suspend a tax on new cars to protect jobs in the auto industry, which has been hit by the world economic crisis.

The package includes incentives to companies to hire unemployed people, boost loans to small business, and cut taxes for reinvested dividends and companies that pay taxes on time, Prime Minister Calin Popescu Tariceanu told a news conference in Bucharest today.

"These measures are meant to protect jobs or we risk facing a very difficult social situation,'' Tariceanu said after a Cabinet meeting. "There are risks of rising unemployment and layoffs. I want this plan to make Romania's economy less vulnerable.''

The global financial crisis is lowering international demand for Romanian products and some companies, including carmaker Dacia SA, Kraft Romania SA and chemicals maker Oltchim SA, have announced production cuts and layoffs. Unemployment rose to 4 percent in October from a 16-year low of 3.7 percent in July.

He said the government will have to cut spending next year in non-investment areas to keep the deficit "within macroeconomic parameters that won't deteriorate the economy.'' The government has said it targets a budget deficit of 2 percent of GDP next year, from a deficit of more than 2.4 percent of GDP this year.

Cutbacks

"I won't hide this from you,'' he said. "Part of spending will have to be cut back, but not in investment.''

Romania's economy grew an annual 9.3 percent in the second quarter on a consumption and lending boom, although the government has predicted growth will slow to about 4.5 percent next year.

The government faces general elections on Nov. 30 and a new government is to be formed by Jan. 1, with the power to change the economic stimulus package.

The stimulus package, to take effect in January, would exempt reinvest dividends from a 16 percent tax, give companies a bonus of 1,000 euros for each person they hire who has been unemployed for more than three months and grant 500 million euros in investments and aid for farmers, the government said.

It will also allocate 3 billion euros for job-creating investments, lower social insurance payments to the state and create a 250 million-euro line of financing for medium and small businesses through a cash injection into state-owned lender CEC Bank.

Investment Aid

The government will grant aid of as much as 50 million euros to companies planning to invest more than 100 million euros and create at least 500 jobs, according to the plan. Investments of less than 100 million euros that generate at least 300 jobs stand to receive aid of as much as 28 million euros.

It will also give companies a 5 percent reduction in their tax billion in exchange for paying taxes on time and exempt new car sales for a year from a "pollution tax'' that ranges from 150 euros to 700 euros per car.

The Romanian government will suspend a tax on new cars to protect jobs in the auto industry, which has been hit by the world economic crisis, Prime Minister Calin Popescu Tariceanu said Wednesday, AP reported yesterday.

Tariceanu said the government will ask the European Commission to allow the measure, which he wants to run until the end of 2009.

He made his announcement after meeting President Traian Basescu, who also said he wants to scrap the tax to protect jobs.

Dacia said last week it would halt production from Nov. 20 to Dec. 7 because of the financial crisis which has led to a 30 percent drop in cars sales in October compared to a year ago. Dacia's 14,400 workers will get 85 percent of their salaries during the production halt.

On Monday, Basescu visited Dacia and said he would support the suspension of the tax.

Dacia said its market shrank also because of "the invasion of imported secondhand cars" and warned that jobs in the car industry are in danger.

Wednesday, Subansamble Auto, a company that supplies parts to Dacia said it would send home 800 of its 3,500 workers.

Armenia, Romania FMs agree the Karabakh issue should be solved on the basis of norms and principles of international law

The Foreign Ministers of Armenia and Romania Edward Nalbdnian and Lazar Comanescu held constructive and promising negotiations. Armenia’s Foreign Minister Edward Nalbandian told a press conference today that they discussed bilateral relations, the opportunities of intensifying the bilateral cooperation in different spheres and the political dialogue. Reference was made to regional issues, particularly the settlement of the Nagorno Karabakh issue -- Armenia’s Public Radio reported on Nov 15.

According to Lazar Comanescu, constructive talks were held on issues of bilateral interest. “The bilateral cooperation between the two countries should be developed in different spheres. As a member of the European Union and NATO, Romania can develop its relations with Armenia within the framework of those structures, as well as within regional organizations. There are serious perspectives for economic cooperation,” the Foreign Minister of Romania stated. According to him, opportunities should be found for cooperation within the framework of the Black Sea Economic Cooperation Organization, which is currently chaired by Armenia. The Minister noted that Romania is ready to share its experience with Armenia in the context of multifaceted developments, particularly economic reforms. Having met with business circles of Armenia, Mr. Comanescu came to the conclusion that the Armenian-Romanian potential is greater, and it’s necessary to find ways of developing and utilizing it.

The two Ministers discussed issues connected with the settlement of frozen conflicts. “I congratulate and welcome the positive developments targeted at the resolution of the Nagorno Karabakh issue, i.e. the Moscow Declaration. The agreement between Armenia and Azerbaijan can lead to the resolution of the Karabakh conflict on the basis of international law and norms,” Comanescu said.

Which principle of international law should be primary in the Karabakh solution? The Minister said the best and most promising way is the political dialogue between the parties involved in the process. According to him, complex issues like the Karabakh conflict should be solved on the basis of full respect for norms and principles of international law. Territorial integrity is one of those principles, but if we look at the Charter of the United Nations and the Helsinki Final Act, there are other principles, which should be looked at together.”

Edward Nalbandian agreed with his Romanian counterpart and noted that all the principles are very important for resolution of the issue.

Source: Public Radio of Armenia

Foreign Minister Comanescu: Romania stays resolutely engaged in Nabucco project

Romania is and stays resolutely engaged in turning to reality the project of the Nabucco gas pipeline, which is Europe's most important project for gas supply from alternative sources, Romanian Foreign Minister Lazar Comanescu declared on Friday (Nov 14) at the Energy Summit in Baku, Azerbaijan.

"We have positive signals about Nabucco, from partners interested in the project, which strengthen our confidence in its robustness and economic viability," remarked Minister Comanescu, cited in a release of the Romanian Foreign Ministry (MAE).

Lazar Comanescu headed the Romanian delegation to the Energy Summit in Baku, an event attended by the Presidents of Poland, Lithuania, Georgia, Ukraine and Turkey, the Prime Ministers of Estonia and Hungary, European Commissioner Energy Andris Piebalgs and the US Secretary of Energy, other EU ministers and government officials from the Pontic and Caspian regions.

Talks focused on the development of regional cooperation and the energy transit corridor linking the Caspian Sea to Europe, by the promotion of projects for the diversification of hydrocarbon sources and transport routes.

The Nabucco gas pipeline, which is supposed to run from the Caspian Sea to Europe, crossing Turkey, Bulgaria, Romania, Hungary and Austria, is a project aimed at reducing European dependence on Russian giant Gazprom.
Nabucco is planned to be 3,300-kilometre (2,050-mile) long and transport 31 billion cubic metres of gas to the energy-hungry EU from the Middle East and Asia so as to reduce the bloc's reliance on Russian supplies.

The construction is scheduled to begin in 2009, with the completion date set for 2013, yet the final decision on the construction of the pipeline is due this year and provided that works begin in 2008/2009, gas might start flowing through the pipeline in 2012.

The Nabucco project was initiated by five energy companies: OMV (Austria), MOL (Hungary), Botas (Turkey), Bulgargaz (Bulgaria) and Transgaz (Romania). Germany"s RWE joined later as the sixth partner to the project that should supply gas from alternative sources in Azerbaijan, Iran, Iraq, Turkmenistan and Kazakhstan.

Romania to facilitate Armenia-EU action plan implementation

Armenian Foreign Minister Edward Nalbandian said the whole scope of the Armenian-Romanian relations was discussed during the meeting with his visiting Romanian counterpart Lazar Comanescu.

“We discussed bilateral relations, specifically economic cooperation, regional issues and the ways to resolve of the Nagorno Karabakh conflict,” he told a news conference today.

For his part, Minister Comanescu said that Romania, as a member of EU and NATO, can facilitate implementation of the Armenia-EU action plan.

“To date, Armenia and Romania are developing bilateral economic cooperation within the BSEC,” he said.

EU woman of the year hailed by parliament president

Parliament´s president has hailed the winner of the 2008 "European Woman of the Year" competition as a "great symbol for women everywhere".

Romanian anti-corruption campaigner Monica Macovei saw off competition from 11 other women to land the award, the aim of which is to encourage the involvement of women in European affairs.

Macovei, an ex-minister of justice in Romania, currently works for the UK government as a consultant on justice reforms in EU candidate countries.

But it was her efforts in rooting out political corruption in her own country which won her the plaudits of an international jury, including MEPs Andrew Duff and Gerard Onesta.

Presenting her with the award, a gold broche, Pottering said she and the other candidates were a "symbol and model for women everywhere" and that she could be proud of her achievements.

He said the EU was making efforts to promote gender equality but more was needed, particularly by the EU institutions.

Macovei described the award as a "great honour" and praised the other candidates who came from 11 different countries.

Dedicating the prize to "all Romanians who believe in the rule of law", she said, "Tackling corruption has been the most challenging thing in my life but I will continue because I believe in zero corruption."

Each of the 12 shortlisted candidates was given five minutes to make a presentation to the jury in parliament on Wednesday.

This list was reduced to three candidates, who included Macovei, Lithuanian journalist Zuokiene Agne, who has campaigned for children´s rights, and academic Saulle Maria Rita, a judge on Italy´s constitutional court,who was listed for her work in promoting human rights.

Macovei told the jury that tackling corruption in Romania had been a "very, very challenging and difficult" task, not least because the country's politicians and top officials used to enjoy "virtual" immunity from prosecution.

French politician Nicole Fontaine, a former president of parliament, praised the "high quality" of the candidates, saying, "They are all outstanding and amazing women and picking a winner has been very difficult."

Her comments were echoed by Duff, who said,"It was an interesting selection and a fair reflection of the contribution made by talented women across Europe."

He pointed out that the plans he has put forward for transnational lists for next year's European elections emphasise the importance of gender equality.

Onesta, a vice president of parliament, said, "The fact that one of the candidates is the only female among the 15 judges on Italy's constitutional court illustrates the scale of the gender problem."

The award has been given each year since 1987 by the International Association for the Promotion of Women in Europe. The jury consisted of MEPs, journalists, NGO representatives and academics.

Romania's trade deficit after Q3 increased by 12.5 percent to €16.93 billion

During the first nine months of 2008, Romania's trade deficit increased by 12.5 percent y.o.y. to reach €16.93 billion even though the exports dynamic exceeded the imports, Romania's National Statistics Institute reports. The exports' advance was 18.3% up to €25.58 billion while imports increased by 15.9 percent to €42.51 billion.

Fitch downgraded Romania's country rating

The financial rating company, Fitch, downgraded Romania's country rating for the long term foreign currency credits from BBB to BB+ and for the long term national currency credits from BBB+ to BBB-, a press release shows.

According to the document, the decision reflects the fears of the agency regarding the local macro-economic policies and the ability of the government to avoid a severe financial and economic crisis. Moreover, Fitch downgraded the rating for short term foreign currency credits from F3 to B and decreased Romania's ceiling from A minus to BBB.

Romania's rating was BBB which was two steps over the junk category and the country's rating was negative. Critics against Romania's economic policies were rejected by local authorities who declared that Romania does not need help from IMF.