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| THE WEEK IN REVIEW (2-8.07.2007) |
| (2007-07-07) |
| Last updated: 2007-07-09 16:26 EET |
The law recently passed by the Romanian Parliament on a hefty pension increase has become the new object of the debate pitching the president and the Prime Minister, President Traian Basescu has called on the government to explain where it will get the money for increasing pensions for roughly 6 million pensioners, most of whom live on the breadline. In Basescu's view, a pension increase will bring about a twofold increase in the pension fund over the next 2 years, showing that the executive has assumed unrealistic commitments.
”My main objective is for this law to be applicable, starting from the premise that pensioners must by all means have their pensions increased. What I don't want to see happening is for a law to be used as an electoral scheme.”
In exchange, Prime Minister Calin Popescu Tariceanu is adamant about the pension increase plan:
” I don't have the certainty that this increase will allow pensioners to lead a comfortable life. We however want to provide them with essentially decent living standards. I want to put it very clearly – first we have generated economic growth and it is based on this economic growth that we can take such measures today.”
Romania's GDP went up by 6% during the first quarter of the year, minister of Economy and Finance, Varujan Vosganian said in Thursday's meeting of Romanian trade representatives abroad. The main sectors that had led to this increase are the industry, by 7.8% and the construction sector by about 30%. Moreover, inflation rate in the first quarter of 2007 was the lowest when compared to that of the countries that joined the EU in 2004. According to estimates by the Economist Intelligence Unit (EIU), Romania will register a 6.5% economic growth rate, as compared to an average of 5.9% in the new EU member states. Inflation is also expected to go down, even below 4.1 %, as compared to the 4.3% average in the countries that joined the EU in 2004. According to another survey, this time by the consultancy firm Ernst&Young, Romania ranks 7th in Europe in terms of attractiveness for foreign investors. As many as 140 foreign direct investment projects were carried through in Romania in 2006, 63% more than in 2005.
On Monday , the Romanian national currency - the leu reached its highest in the last five years. According to economic analysts the appreciation of national currencies in the countries that have recently joined the EU, Romania included, is a normal consequence of economic transition. Apart from factors like speculative sales or inflow of capital, the ascending trend of the leu has been determined by a low inflation rate, a relatively low public debt and consequently by drawing direct foreign investment. On the one hand, the appreciation of the national currency can have a negative impact on exports, but on the other it will stimulate the investors to look for solutions to increase productivity and allow the Romanians to purchase goods and services from overseas at lower prices.
Once known as ”the breadbasket of Europe”, Romania now looks like the Sahara of Europe“. The drought affected 1.7 million hectares of farm land out of a total of 2.8 million hectares. The quality of the fruit and vegetables has suffered and they are harvested much sooner than usual. A strategy to mitigate the effects of the draught has been the subject of the long debates among Romanian politicians. The conclusion is that such a strategy should not only provide for immediate action but it should also have a medium and long term objective, as Prime Minister Calin Popescu Tariceanu says:
“Modernizing the national system for monitoring the soil quality and identifying ways for mitigating the effects of the drought; promoting agricultural practices specific to droughty areas, rehabilitating and modernizing irrigation systems; expanding local water management methods; organizing afforestation for preventing soil erosion and cave-ins; establishing animal feeding programmes in extreme drought conditions; establishing an adequate drought insurance system.”
This week Romanians had to cope with violent storms that swept the country from east to west. Trees were uprooted, house roofs were snatched off and cars were severely damaged. On the Romanian Black Sea coast waters ebbed with 50 meters due to storms off the coast.
A western movie setting, cowboy hats, barbecue and hamburgers, this was the atmosphere on July the 4th at the reception given by the US embassy in Bucharest, marking Independence Day. US Ambassador to Romania Nicholas Taubmann took the opportunity to say “America had no better friend than Romania” adding he was honoured to host the celebration in a country that had recently become a member of the EU.
And on Monday, Germany’s President Horst Kohler visited Bucharest. According to the German President Romania must continue to crack down on corruption, reform the judiciary and solve administration-related problems. An alarm signal was also pulled by German Foreign Minister Frank Walter Steinmeier, who admitted though, that reforms were harder to implement in Romania due to the recent political tensions that had stalled the reform process in this country. The fact that the European Commission’s recent progress report on Romania does not recommend sanctions to be applied to Romania is a proof that the EU is confident that any lagging behind on the part of Romania will be recovered.
(Roxana Vasile)
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