Vol. X No.4
April 2005


The Romanian “Rough Rider”

The Romanian “Rough Rider”
Ode to Basescu
In describing the great American President, Theodore Roosevelt, Henry Adams wrote: “[Roosevelt's] vitality was [intense] . . . and he was about as subtle, culturally speaking, as a bull moose; yet there was no denying his originality, and his extraordinary ability to translate thought into deed -- with such blinding rapidity, sometimes, that the two seemed to fuse. Roosevelt had that singular primitive quality that belongs to ultimate matter.” Adams’ description of Roosevelt could apply to Romania’s new President, Traian Basescu, whose leadership style and temperament are reminiscent of the American “Rough Rider”. President Basescu’s zeal and determination to solve Romania’s deep-rooted problems of poverty and corruption resonate through his plain spoken, down-to-earth, no nonsense manner. Without any of the airs of self-importance that afflict some Romanian political leaders, this man tells you where he stands, and where he expects to take the country, in clear and understandable language, and then he goes about the business of doing just what he says he is going to do.

The President’s approach is indicative of his background – he is a man of the people -- a former sailor who rose to command the largest ship in the Romanian fleet. He is perfectly comfortable sitting around a table with young people at a beer festival or celebrating New Year’s Eve amidst a throng of exultant citizens in the center of Bucharest. Traian Basescu stands virtually alone among Romania’s leaders in his ability to communicate straightforwardly with his people. This facility will prove indispensable in the struggles that lie ahead for the country.

Although formerly a rank-and-file communist party member -- like millions of his countrymen -- he was otherwise not associated with the former communist regime. After the Romanian revolution, Mr. Basescu served as the nation’s transport minister, and in 2000 he was elected mayor of Bucharest where, although thwarted by the central government which was in the hands of his political opponents, he fought relentlessly to rebuild the city’s decaying infrastructure. Some people described him as Romania’s Rudolph Guliani because of his uncomplicated approach and somewhat irascible manner when confronted with futile obstacles to needed reforms. It’s a good comparison. When the central government blocked his plans to improve the city’s central heating system, he went over their heads and asked citizens to sign a petition shaming the government into agreeing with his proposed improvements.

Yet these strengths have led some people to question whether Mr. Basescu’s “can do” attitude fits the role of the President of Romania as laid out in the nation’s constitution? The Romanian constitution provides that the president is the head of state -- not the chief of the government -- and delineates only a few specific responsibilities for the presidency. These ostensible constitutional limitations have not stopped President Basescu from exercising his leadership in his inimitable way. In part, it is Mr. Basescu’s buoyant personality that unavoidably results in a broader role for the Romanian presidency than in previous administrations. We believe – and we think that President Basescu does too -- that this broader vision of the role of the presidency is what Article 80 (2) of the Romanian Constitution actually envisions in stipulating that: “The President of Romania shall guard the observance of the Constitution and the proper functioning of the public authorities. To this effect, he shall act as a mediator between the Powers in the State, as well as between the State and society.” These words require action, not merely reaction, from the head of state. And action is what Traian Basescu is displaying to the government, the Parliament, the judiciary, and the people – and, quite frankly, it is only this sort of action that can effectuate the rapid changes now required of Romania by the European Union, its other Western allies, and its people.

In analyzing the proper role of the presidency in Romania, we ought to keep in mind that the president is the only person elected nationwide by the citizenry and, once elected, he must remove himself from membership in any political party. The President is supposed to be the unbiased guardian of the rights of all Romanians and the protector of the nation’s institutions. His job is to articulate the hopes, aspirations and expectations of the Romanian people. Teddy Roosevelt once said: "The government is us...You and me!" (quoted in Edmund Morris’, “Theodore Rex”). Traian Basescu seems to act out of a similar belief.

[ Up to Contents ]

Combating Official Corruption
Within a few days of taking office, President Basescu set about the task of dealing with the single largest obstacle to Romania’s progress and the most significant impediment to the large scale investment by small and medium sized businesses that Romania desperately needs -- rampant official corruption. Within a few weeks, he was criticizing his own government for failing to move fast enough to reign in the corrupt forces that have crippled the nation for fifteen years. He even suggested that there might be changes required in the ministerial leadership – just two and a half months after the government was formed. The President then took the bull by the horns and announced the creation of a new institution that would investigate the wealth of public officials, and require new personal wealth disclosures -- the strictest in Europe – that will require substantiation for the sources of all current income as well as the basis for the overall worth of officials and their families. The President next asked for the assistance of Interpol and highly skilled British investigators to find illegally obtained monies squirreled away by former public officials. Notably, Mr. Basescu says that he is even more concerned about impeding the potential unsavory “clientele” of the new government than he is about tracking down the perpetrators of past corrupt acts. To that end, on March 30, 2005, at a government meeting presided over by President Traian Basescu, a National Anti-Corruption Strategy and a Strategy for Reform of the Justice System was adopted in line with EU suggestions.

In a stunning move, the government froze the assets of 42,000 companies that owe back taxes to the state of approximately US$4.5 billion, and gave them a few weeks to pay up or risk liquidation. Eleven of Romania’s division level soccer clubs were caught up in the net. The President and Prime Minister Calin Tariceanu have both said that nobody in the country, including soccer clubs, will be allowed to avoid their fiscal responsibilities to the Romanian state. One team owner scoffed at the prospect of the government risking the outcry of millions of fans if it tried to liquidate his popular soccer team for its failure to pay its taxes – as he drove off in his new Mercedes Maybach. He ought to read this article.

But why are Traian Basescu’s intentions any different from those of former President Ion Iliescu who spoke out strongly against official corruption, but failed to follow his words with any significant deeds? (See The Romanian Digest™, January 2003, Vol.VIII, No. 1) Without in any way diminishing what we believe to be President Basescu’s sincere disgust for official corruption, recent Romanian history has taught that no President (or designated successor) can be reelected if corruption taints his government. While the government of former Prime Minister Adrian Nastase performed exceedingly well in many significant areas, its utter failure to stem the tide of official corruption – perceived by knowledgeable observers to have grown to unfathomable proportions -- doomed the presidential candidacy of Adrian Nastase. The lessons are clear – if Traian Basescu wants another five-year term in office, he had better deal with official corruption in palpable ways that will result in a very clear perception that the situation has substantially improved, and that past and current wrong doers – no matter who they might be – are being prosecuted to the fullest extent of the law. It does not take much foresight to see that in the not-too-distant future, Romanians will witness serious prosecutions of former and some current officials based upon evidence obtained with the help of major international law enforcement agencies. Romania needs to do this, its people demand it, and President Basescu surely understands that he has no choice but to proceed forcefully.

[ Up to Contents ]

Other Problems to Solve
On the surface, Romania’s prospects appear to be quite good. The economy has grown by more than 5 percent every year since 2001. The country is a member of NATO and EU membership seems likely. Indeed, this month, Romania will sign the official accession treaty with the European Union for entry in 2007 – a target date for which Romania is by no means ready. At the moment, Romania fails to meet virtually every objective test for EU admission. Its economy is a mess and official corruption has been so rampant, that even EU members with major corruption problems of their own are forced to blush. Beneath the surface, the country is a calamity in-waiting. Corruption and a continuingly burdensome bureaucracy have driven roughly half the economy underground. Moreover, the Romanian government must end state subsidies to inefficient state-owned institutions, close some and privatize others, as well as reduce bloated public-sector employment – all of which will throw thousands of people out of work.

"It is time for a new way of government in Romania," President Basescu told voters. And that seems to be what is happening. Dispensing with veterans from prior administrations, Mr. Basescu’s ally, Prime Minister Tariceanu, appointed politically untainted young people to the most significant ministries: a 36-year-old Oxford-educated historian as Foreign Minister, a 44-year-old Justice Minister, and a 40-year-old Finance Minister. Within hours of being sworn in, the new government introduced a 16 percent flat tax on personal and corporate income. Among the lowest in Europe, it is modeled after successful initiatives elsewhere in the region, with the goal being to shrink the black market, reduce tax fraud and spur local and foreign investment.

Satisfying the EU and making the IMF happy by raising burdens on an already intolerably burdened populace, while at the same time making them understand that all that is happening will, ultimately, inure to their benefit, will require incredibly deft leadership.

[ Up to Contents ]

Success in Washington
Last month, President Basescu came to Washington, DC, as the official guest of the President of the United States. Inexplicably, some in the Romanian media labeled the visit as a failure. This imperceptive mischaracterization of the visit prompted this article. No one who has experienced all of the visits of Romanian heads of state or heads of government since 1990 could have been anything but impressed with the reaction of official Washington and the business and ethnic communities to Traian Basescu. Indeed, before the President’s arrival, most observers in those constituencies had either a neutral or even a negative impression of Mr. Basescu. One would be hard pressed following his visit to find anyone in the United States who does not harbor feelings of hope, expectation and even affection for the President.

Most significantly, Mr. Basescu hit it off with President George W. Bush. Here is a bit of what President Bush had to say publicly to President Basescu:
“I am impressed by your leadership. I am grateful for your friendship. Romania has been a steadfast ally of freedom. . . . I told the President I’m most impressed by his campaign to rid the government of corruption in Romania – a steadfast, strong commitment. He believes in transparency and rule of law, and that is very important for American companies looking for a place to invest to hear from the leader of the country. But the thing about this president, he’s more than words – he’s action. And also, Mr. President, I welcome you to the Oval Office, I thank you for your friendship and I’m proud to call you friend. . . . I'll never forget my trip to Bucharest -- it was the rainbow speech. It was a mystical experience for me. It was one of the most amazing moments of my presidency, to be speaking in the square, the very square where Ceausescu gave his last speech. And the rainbow that I saw in the midst of the rainstorm ended right behind the balcony from my point of view. It's a clear signal that, as far as I was concerned, that freedom is powerful and –[-PRESIDENT BASESCU: It meant the signal of destiny, Mr. President.] Well, we'll see. But my point to you is, is that I was there to assure the Romanian people that we were an ally and that the Romanian people need not worry about their security, that the United States, through NATO and through bilateral relations, was committed to the security of our friend. So the people of Romania need to know that the days are passed when -- you know, when outside forces could threaten them without help. . . . I view Romania as a special ally because Romania shares the same values that we share: human rights, human dignity, rule of law, transparency in government, anti-corruption. And this President, I think, is a special leader because he has made a commitment to those values. We want to work with our friends in the region to bring stability and peace. And I value his advice and judgment. I mean, he's no better person to listen to on issues such as Moldova than the neighbor of Moldova. ‘ . . . And so this is a special relationship because of the shared values, and I am honored to call the President my friend, and I'm honored to call Romania a strong ally. (Emphasis added)

These are truly extraordinary words of support and affection from the President of the United States and unlike any heretofore heard from a US President addressed to a Romanian official. Acknowledging this, some critics nevertheless felt that President Basescu walked away from Washington with nothing tangible. That is simply not true. Indeed, the most significant thing that President Basescu wanted from President Bush was a commitment to work with Romania to stabilize the frozen conflicts in the Black Sea area, and he got it. There is little doubt that the United States has now resolved to end what President Basescu calls the “black holes” of Europe, chief among them being the untenable situation in the Transdniester region of Moldova. As President Basescu told the Council on Foreign Relations, “The persistence of lawless black holes threatens the security of Europe by the spilling over of organized crime, human and arms trafficking, and transnational terrorism.” He urged the US and the EU not to leave “. . . the countries of this region as victims of European history, as unstable borderlands outside Europe.”

[ Up to Contents ]

Can Basescu Succeed?
The greatest difficulty facing President Basescu is the power of the entrenched mafia-like syndicates of entwined business and government relationships that have placed personal greed above the common good for fifteen years. They are incredibly strong and efficient opponents that could overwhelm our sea captain with a Romanian-style tsunami. Nevertheless, it took the single-mindedness of Theodore Roosevelt to overcome the corporate trust syndicates that had a stranglehold over the American economy and government in the nineteenth century. It is Roosevelt who bears the nickname, "Trust Buster" and it is Roosevelt who destroyed the corporate monopolies of Rockefeller, Carnegie, Schwab, J.P. Morgan's Northern Securities Company, and other nineteenth century trust and corporate titans of industry. A leader that has his people behind him, and the skill and determination to succeed, has a very potent arsenal.

During the President’s visit to Washington, D.C., Mr. Basescu was asked to assess what might happen if he failed in the enormous tasks before him. True to character, the President said: “I was a captain of a large oil tanker for many years, and never once did I fail to reach my destination."

[ Up to Contents ]

Editors Note: It is our policy not to mention our clients by name in The Romanian Digest™ or discuss their business unless it is a matter of public record and our clients approve. The information herein is correct to the best of our knowledge and belief at press time. Specific advice should be sought from us, however, before investment or other decisions are made.

Copyright 2005 Rubin Meyer Doru & Trandafir, societate civila de avocati. All rights reserved. No part of The Romanian Digest™ may be reproduced, reused or redistributed in any form without prior written permission from the publisher.

societate civila de avocati
Str. Putul cu Plopi, Nr.7, Sector 1
Bucharest, Romania
Tel: (40) (21) 311 14 60
Fax: (40) (21) 311 14 65
E-Mail: office@hr.ro

The Romanian Digest Archive



Herzfeld & Rubin, P.C.
125 Broad Street
New York, NY, 10004
Tel: (212) 471-8500
Fax: (212) 344-3333

Herzfeld & Rubin LLP
1925 Century Park East
Los Angeles, California 90067
Tel: (310) 553-0451
Fax: (310) 553-0648

 Herzfeld & Rubin
Brickell Bayview Centre

80 Southwest 8th Street
Miami, Florida 33130
Tel: (305) 381-7999
Fax: (305) 381-8203

 Chase, et al.,Herzfeld & Rubin, LLC
5N Regent Street
Livingston, New Jersey 07039
Tel: (973) 535-8840
Fax: (973) 535-8841

Israeli Affiliated Law Firm
Balter Guth Aloni & Co.
Textile Center, 2 Kaufman Street, 68012
Tel Aviv, Israel   
Tel: (972)-3-5111-111
Fax: (972)-3-5102-166


New York — California — Florida — New Jersey — Romania
If you no longer wish to receive emails from us, please send an e-mail with UNSUBSCRIBE in the subject line to Romanian.Digest@hr.ro.