Life is Better |
Twenty years after the fall of communism, Romania is the seventh largest
member of the European Union and an active participant in NATO; it
provides its people with an array of consumer goods never dreamed of
under communist rule; and an entire generation has grown up in freedom.
While older Romanians have not forgotten just how awful life was when
Nicolae and Elena Ceauşescu ran the country - the abject misery, the
suffering, the oppression and the fear – most Romanians today are
focused upon the unfulfilled expectation of a far better future.
The fall of communism in Europe was the final recognition that common
ownership of property was not the highway to happiness. The Romanian
people knew the true horror of communist rule better than most of their
neighbors. Too many Romanians gave their lives in prison camps and on
the ramparts erected in December 1989 to bring about its end.
Unfortunately, the idealism of December 1989 turned into a distended
materialism in which a few well-connected individuals have prospered
obscenely while many others have seen their economic expectations eroded
into anguish and misfortune. Disappointingly, democracy and the turn
towards a market economy have not yet brought Romanians as much
happiness as they had anticipated. The unbridled optimism of 1989 has
been replaced by a resignation that prosperity, the substantial
curtailment of official corruption and a truly democratic system will
have to await the advent into power of a new generation of Romanians
unspoiled by decades of communist abuse.
Nevertheless, the lives of average Romanians have markedly improved
since the terrible days of Nicolae Ceauşescu. Romanians are totally free
– they no longer live in fear; they have an unfettered future and a
chance to work where they like, doing what they want and traveling where
they wish. Democracy is established – elections are free and fair, and
freedom of speech, religion and press are guaranteed. Oligarchs have too
great an influence on policy and the political leadership, but nothing
like in the former Soviet Union, and this will change in time as a new
generation becomes more active politically.
Even for the average Romanian, economically, things are far better in
Romania today than they were in 1989. Gone are the long lines in the
cities for scraps of food. Peasants have returned to their land; a
middle class has emerged; stock markets, private banking, land holdings,
leaseholds, cellular telephones, computers and hundreds of thousands of
small businesses have come into being; and, while struggling, people are
not starving. There has been a dramatic rise in automobile ownership as
well as real property ownership – although not a concomitant rise in the
streets, highways and city parking structures needed to accommodate
them. New homes, renovations to existing structures, and additions to
present homes are common sights throughout Romania. Gone are the terrors
of the Securitate once perceived as ever present in jobs, schools and
even homes; vanished is the insanity of a centrally planned economy
based upon the whims of a madman; damned is the destruction of villages
and what remains of the old city centers; banished is the suffocation of
creative thought and religion; and dissolved is the stupefying grayness
that darkened an otherwise colorful land and people. |
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Freedom From Want |
While Romanians today enjoy most of the inalienable rights of freedom
elucidated in President Franklin Roosevelt’s four freedoms, it is the
freedom from want that remains somewhat elusive for many Romanians.
Romania remains one of Europe’s poorest nations with an estimated 25% of
its population living below the poverty line (2005). In 2009, after
eight years of rapid economic growth and impressive gains in poverty
reduction, the shockwave of the global economic and financial crisis
exposed the growing imbalances and economic vulnerabilities in Romania’s
economy that are primarily rooted in a large, unfinished agenda of
public sector and governance reforms. There probably is no one in
Romania who does not recognize that successive governments have failed
to meet the promise to its people for a far better standard of living in
the wake of communism. Older persons, artists, educators, middle-aged
professionals, unskilled workers, and even some industrial workers are
often encumbered by despairing plight. Pensioners have seen their
life-savings wiped out and many teeter on the brink of real starvation.
In the current economic recession, unemployment grows daily as foreign
investment spurns the country. In addition, standards of health care
have far to go to meet those of other EU nations; the life expectancy of
a Romanian is 72.6 years of age, even less than that of an Albanian
(76.6) and far less than the average for EU member states (78.7).
Once
an economic powerhouse of Europe, Romania today is mired in perpetual
problems, much of which were self imposed and almost all of which were
avoidable. Nevertheless, following 1998, tens of billions of euros
entered Romania through acquisitions and investments, which spurred
industry and increased the demand for services. Billions of euros came
from the privatizations in the automotive and energy sector, while in
the banking sector just the sale of the Romanian Commercial Bank alone
brought in 2.2 billion euros. The booming retail sector over the last
few years produced an incredible 45 malls built from the ground up in
major cities. Romania has reached a $200 billion GDP (in 1990 it was a
mere $40 billion), but GDP per capita remains one of the lowest in
Europe. Nevertheless, half a million people – more than 10% of all
employees in the entire economy -- were earning more than €1,000 in
gross salary per month in October 2008, a percentage twelve times higher
than in 2004. Today, agriculture accounts for 29.7% of Romania’s
workforce; industry has 23.2% and the service industries have 47.1%
(2006).
But neither EU accession nor the entry of foreign investors have been
able to completely modernize Romania: only 166 kilometers of highway
have been built in twenty years, with just another 42 kilometers to be
completed by year-end. Financial markets have not developed much
compared with those in the rest of Central Europe, but they are still
subject to the shock of foreign downturns. The Stock Exchange is nowhere
near as liquid as it should be and red tape still hinders the business
sector. The agricultural sector also remains underdeveloped,
particularly because of the absence of a market that would encourage
investments in this field. |
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Breach of Promise |
The
legacy of Nicolae Ceauşescu still persists twenty years after his
demise. None of the other major nations of the region had a tyrant quite
as onerous and destructive as Nicolae Ceauşescu. But this does not
excuse the bureaucratic incompetence, red tape and corruption that have
burdened the Romanian people, reduced foreign investment and resulted
with the most recent ranking of Transparency International placing
Romania as the most corrupt nation in the European Union. Neither does
it explain the intentional avoidance of sensitive issues, or the
political fumbling of unmanageable coalitions of political parties.
Moreover, instead of nourishing the business and investment community,
Romania has over the years, regrettably, squeezed them financially,
ignored or belittled their pleas for assistance, altered the rules of
investment retroactively, and failed to adequately deal with corruption.
The nation’s innovative restitution plan with its promise of justice for
the victims of communism has been dishonored by incomprehensible and
disreputable delays arising from promises of patronage and other
benefits afforded to political cronies and financial supporters of
successive regimes. Even the transparent and fairly won bid process to
find an international fund manager for Fondul Proprietatea that led to
the approval of Franklin Templeton’s offer by the Fund’s shareholders
has been thwarted by indolence and political wrangling – causing many
international financial institutions to question the veracity of
Romanian government commitments at this most crucial time in the
nation’s economic recovery which requires a dramatic increase in foreign
capital flows into the country.
In the late 1990’s, former Prime Minister, Victor Ciorbea, reportedly
said that Romania is not run by the government, but is actually
controlled by fifteen “families” who own most of the media and exercise
undue influence among some leading politicians. Has that changed at all
today? The influence of the oligarchs creates the seeds of corruption,
numerous injustices and a huge economic cost to the efficiencies of true
competition. Whether exaggerated or not, the pall cast upon Romania by
the perception that corruption flourishes in the country is devastating.
It leads ordinary Romanians to conclude that justice is for sale and
engenders disrespect for all governmental institutions. As troubling, is
the lack of a genuine belief in the sanctity of the law. Any country
coming out of sixty years of totalitarian rule (starting with King
Carol’s coup d'état in 1938) would be hard pressed to have a citizenry
still believing in the rule of law, but successive governments have
merely given it lip service while the corrupting power of money further
erodes respect for the law by tainting the judicial system, the police,
customs, and local and national government officials. While corruption
is still a problem throughout the former communist countries of Eastern
Europe, Romania is one of the few where senior political leaders can
still count mostly on impunity.
The promise of a return to Romania’s pre-War economic greatness remains
unfulfilled and distant. To achieve it, Romania’s leadership must
improve the nation’s legal system with its slow form of unpredictable
justice to something that investors and citizens can trust and rely
upon. Despite improvements brought by EU membership, Romania’s profit
constricting regulations and bureaucracy must be streamlined – just ask
the countless businesses waiting endlessly for their corporations to be
formed. Romania must find the means to build a proper social safety net
for those of its citizens who have failed to secure the benefits of
democracy and capital markets. Having a sizeable part of the population
that sees itself as losers rather than winners can only sharpen the
divide among them and lead to unpleasant political results. |
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Responsibilities of Citizenship |
Romania’s political class has been allowed to fumble so badly because
the Romanian people are still primarily observers of, and not
participants in, democracy and good government. They sit by the wayside
muttering into their newspapers rather than actively participating in
the work of democracy and good government. Only half bother to vote. It
was the late Ambassador Silviu Brucan, who said in 1990 that it will
take Romania twenty years to understand democracy. He was assailed for
the comment then while now, twenty years later, many Romanians think he
was overly optimistic. The said truth is that Ceauşescu did much more
than demolish the nation’s institutions and infrastructure. Ceauşescu
destroyed the mentality of an entire generation and ravaged civic
virtue. The legacy of fifty years of fear, lies and deception have yet
to be fully dissipated. Consequently, too few Romanians belong to civic
organizations, support their local schools, participate in good
government leagues, give of their time to charities, take part in
neighborhood associations or, most particularly, partake in party
politics. Because these activities are so rare or just do not yet exist
in Romania, the checks and balances upon government of an involved
citizenry are simply not present. But a partial sense of public spirit,
trust, decency and compassion has most certainly replaced the moral
corruption of communism. No more are Romanians faced with the moral
dilemma of denouncing a colleague or risking their job or their child’s
future attendance at a university. However, the mentality of fifty years
of oppression has not yet allowed for the full formation of civic
responsibility to develop in Romania. When it does, the power, wealth
and corruption of Romania’s political elite will dissolve. |
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Romania’s Future |
Twenty
years after the fall of communism, what has been achieved in Romania
would have been just a pipe-dream in 1989. To be members of the European
Union and NATO, to be free and to be generally optimistic about the
future are no small achievements. Free markets, free prices, free
exchange rates, free labor markets and the comprehensive privatization
of state-owned companies have been a great success. And through there is
despair, there is still the likelihood of a bright and vibrant future
for Romania in the years ahead. This stems not from the size of its
market or the wealth of its natural resources. The brightness of
Romania’s future shines in the eyes of its youth – intelligent,
cultured, committed to change, Western in their views, and determined to
rebuild their nation as a modern European state. |
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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 2009 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.
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