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| THE WEEK IN REVIEW (8-14.10.07) |
| (2007-10-12) |
| Last updated: 2007-10-17 10:45 EET |
This has been a tough week for the minority government made up of the National Liberal Party and the Democratic Union of Ethnic Hungarians in Romania, which has been the target of much criticism both at home and from Brussels. Almost 11 months after Romania's entry into the European Union, the European officials have rebuked Bucharest for having failed to meet its obligations as far as agriculture, justice and fighting corruption are concerned. On Wednesday, the Brussels officials called on Romania to address the deficiencies in its payment system for agriculture or face the risk of a 25% cut in community funds earmarked to this area, accounting for some 110 million euros. The European experts have established that there are big problems with the system used to identify the plots of land, and that more than one application has been filed for one plot of land in the case of 400,000 of the 1.3 million applications made for subsidies. Brussels has given Romania one month to correct these problems, a difficult task for the new agriculture minister who will replace Decebal Traian Remes, who has resigned following corruption allegations. Though he first denied them, Remes stepped down at the request of Prime Minister Calin Popescu Tariceanu, after the public television station showed hidden camera footage which, in the opinion of the Prosecutor's Office, demonstrates he did take bribe. The video shows Remes discussing with a former agriculture minister, Ioan Avram Muresan, the possibility to obtain a large sum of money in exchange for favouring a certain business man in one of the tenders organised by the ministry.
Also this week, Romania has been warned by Brussels that it may face sanctions over its failures in the fight against corruption. Fighting corruption has recently started a genuine media war featuring the National Anticorruption Directorate and the Supreme Council of the Magistracy as leading actors. The Anticorruption Directorate, whose investigations have targeted members of several post-communist cabinets regardless of their political orientation, is at the moment awaiting the approval of the President to start prosecuting them. Incumbent ministers Paul Pacuraru and Tudor Chiuariu and the former agriculture minister Decebal Traian Remes, from the Liberal Party, the former Social Democratic Prime Minister Adrian Nastase and his party colleague Miron Mitrea, Zsolt Nagy from the Union of Ethnic Hungarians, the Conservative Codrut Seres, the former Democrat Victor Babiuc and the Peasant Party member Ioan Avram Muresan, are all being investigated by the Anticorruption Directorate for charges ranging from bribe taking to peddling in influence and abuse of office. The current Justice Minister Tudor Chiuariu believes, however, that the National Anticorruption Directorate is being used as an instrument of political fight. He asked the Supreme Council of the Magistracy to conduct a severe investigation into the activity of anticorruption prosecutors, who have also compiled a file against him.
The European Commission also keeps a close eye on privatisation in Romania. European experts have started an inquiry into the sale of the car factory in Craiova, in the south, to the US company Ford. They suspect the Romanian government of having granted state aid in violation of community law. Last month, the European Commission started similar inquiries into the privatisation of two other Romanian factories, Tractorul Brasov and Petrotub Roman. Moreover, the European Commissioner for Energy, Andris Pielbags, has criticised the intention of the Bucharest government to create a big national company in the energy field. In the opinion of the European official, this may create a “monster” and would hinder competition on the market.
The Tariceanu cabinet has received a lot of criticism from inside the country, as well. Only one day after it was approved by the government, the state draft budget for 2008 was harshly criticised by the main opposition parties, the Social Democratic Party and the Democratic Party, which described it as unrealistic, and by trade unions, which are chiefly dissatisfied with the increased taxes. The International Monetary Fund has also expressed its reservations, underlining that some of the figures targeted by the authorities are much too optimistic, an opinion shared by the Association of Business People in Romania. Prime Minister Calin Popescu Tariceanu believes, however, that the budget meets the interests of all social categories and aims at maintaining a stimulating fiscal policy, given that the daft budget does not provide for any increase in taxes and fees, nor does it introduce new ones:
“We started from the assumption that maintaining the current fiscal policy favours the accelerated economic growth Romania has seen in the last few years. The GDP, which stood at 58 billion euros in 2004, will go up to 138 billion euros in 2008. The budget for next year also introduces a new measure aimed to stimulate investment and create new jobs, namely the reduction of social insurance contributions by 6% representing the cumulated figure for employee and employer.”
The draft budget is based on an economic growth of 6.5%, a deficit of 2.7% and an inflation rate of 3.8%. Almost all ministries will receive more money under the new budget. Most of it will go to education, namely 6% of the GDP, the highest in the last 17 years, and the healthcare system, with 4.5%. Insurance and social assistance have been earmarked 11.9%, meant to cover the pension increase and child allowances, and a 12.3% salary increase.
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