Cinderella Romania gets herself invited to the ball

Series Title
Series Details 20/03/97, Volume 3, Number 11
Publication Date 20/03/1997
Content Type

Date: 20/03/1997

A VISIT by Romania's foreign affairs minister to Brussels next week will signal a remarkable turn around in the country's international image.

Six months ago, Romania was on the bottom rung of the ladder to EU membership. Under fire for slow market reform, weak economic prospects and a poor civil liberties record, its early accession to the Union was out of the question.

Today, following its change of government last autumn, western Europe is welcoming Romania with open arms.

The prospect of some very interesting sell-offs of Romania's state-owned industries, and the realisation that its 23 million consumers may soon be clamouring for western goods, have encouraged widespread support from political and financial communities.

Spain, Italy and France have joined forces in supporting Romania's early entry to NATO - and its bid for EU membership - and the European Commission has positively gushed with enthusiasm over the country's economic reforms.

“My message today is that Romania is not alone at this crucial moment in its history, but can count on the solidarity and support of the EU, its member states and its citizens,” said Foreign Affairs Commissioner Hans van den Broek during a recent visit to the country.

But the impact of this change of heart should not be overestimated. Romania has a long way to go before it reaches western standards and early EU membership still looks highly unlikely.

Romania's currency (the leu) depreciated by around 60&percent; last year, and its fall has continued in 1997. Purchasing power also looks set to decline this year, with inflation remaining a considerable problem.

In response, Prime Minister Victor Ciorbea pledged in February to privatise 3,600 companies by the end of the year, including 30&percent; of the national telephone monopoly, and new investment should soon start flooding in.

Support from the International Monetary Fund, to the tune of 350 million ecu, with possibly as much again from the World Bank and around 70 million ecu from the EU, will certainly help.

But success is far from assured. Market reform is not new and has not always reaped rewards.

According to the European Bank for Reconstruction and Development (EBRD), 60&percent; of Romania's earnings were already being generated by the private sector in late 1996; most prices had been liberalised (although oil, energy products and some agricultural produce were still under government control); and Romania had been operating a Europe Agreement with the EU since early 1995, phasing in free trade in industrial goods over ten years. Nevertheless, the country's economic woes continued.

On the other hand, the psychological impact of Romania's final rejection of its Communist masters was immense, both on its citizens and potential investors. Recent friendship agreements with Hungary and Ukraine were also vital steps towards good neighbourly relations.

All signs now are that, if things continue to improve at a steady rate, Romania has a relatively rosy future.

Its workforce is well educated and, importantly for the Union's Mediterranean members, speaks a Latin dialect close to French and Spanish. The country's location - bordering the Black Sea, central Europe, the Balkans and Ukraine - also makes it an important transit point for East-West commerce.

“Our joint aim is to create the conditions whereby Romania can capitalise on its many comparative advantages, the talent and creativity of its people, its key position, its resources and traditions so that it may take its rightful place in the new Europe,” Van den Broek told the Romanian parliament earlier this month.

Politically, question marks remain. The people at the top may have changed, but corruption is allegedly still widespread. The press has some way to go before it can be termed 'free'. But Romania provides a ray of hope for the Balkans in a decade when good news is hard to find.

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