Romania’s enemy within
Romania’s economy is doing well, but political in-fighting could discourage investors, writes Adrian Maniutiu.
Adrian Maniutiu is an entrepreneur and producer of the TV show Daily Income, on Antena 3 TV station.
Romania’s economy is currently gaining momentum. The GDP growth reached 5.2% in the fourth quarter, which propelled Romania on top of EU countries, with an overall 3.5% advance in 2013. This upward trend inspired the Financial Times to compliment Romania in a title which called it “a new European tiger”. Romania’s current growth is based on two major pillars: success in agriculture and a significant increase in the industrial production, both well reflected on the foreign trade market.
Despite this, Romania is still in need of three major things: significant FDI’s, a revival of investment funds and successful administrative reform (eradication of heavy bureaucratic procedures and of corruption in key agencies, as well as a crackdown on tax evasion). All of these three elements face a common obstacle: the political instability resulting from a desperate battle for power. One of Romania’s biggest marketing errors consists of the incapacity to tackle those issues. It should be high time that the country with the highest GDP growth in the EU started attracting the investors.
However, this is where things get complicated. Instead of becoming a stability pole in the area, Romania may risk losing momentum. Recently the governing socialist-liberal coalition was disbanded, whilst the prime minister is trying to rebuild the administration. Nevertheless, this could turn away investors and discourage the much needed inflow of FDI’s. Moreover, in his political rhetoric the president, Traian Băsescu, attacks the government as well as the pool of investors. If the president’s motivations are understandable to a certain extent, his messages are extremely detrimental to extend this battle in the investor’s playground.
At a recent press conference, the Romanian prime-minister, Victor Ponta, mentioned that he wanted the country to be attractive to foreign investors. On the same occasion, he invited the president to keep the political battle away from the economic area.
Băsescu recently commented about an alleged intention by the French car maker Renault to exit the Romanian market. Renault has a major subsidiary in Romania, Dacia, which is the largest single exporting firm in the country. Who gains from such devious rumours about Dacia, which would allegedly relocate its Romanian production to Morocco, due to severe infrastructure conditions? Such a statement, coming from a former minister of transport and supporter of the previous government is not only hilarious but also destructive. On top of that, President Băsescu stated in a recent interview that investing in infrastructure would be an uninspired move. Fortunately, Renault dismissed the rumours about leaving Romania.
There are many other examples. Who gains from the president’s pointing fingers at the memorandum between the Romanian state and RomPetrol, the local KazMunaiGaz subsidiary, which amiably concluded ten years of legal disputes for which the previous government found no alternative solution?
Other rumours regarding the Romanian-Chinese memorandum on IT&C giant Huawei involve misleading reports alleging threats to national security and NATO concerns over information security issues. Perhaps the president should stop spreading rumours and start supporting the economy in the eleventh hour of his mandate.
Also, what is the point in delaying a stand-by agreement between Romania and the IMF, by instigating the public opinion against it, when it is obvious that it will facilitate access to affordable international loans and EU grants of up to 95% for public investment projects?
This restless criticism of the president is in contrast with his family’s dubious liaisons, involving, among others, questionable loans granted by the state bank or his shady relationship to Nis Petrol and Gazprom.
Endless political in-fighting can easily erode stability. Serious investors think ahead, therefore they need stability and consistency. The newly regained confidence in the Romanian market may be easily worn down in the face of political vulnerability. The Romanian people as well as the investors have had enough of political disputes. It’s time to offer a reliable steady ground so that respectable stakeholders can be convinced they made the right choice by investing in Romania. May I remind Romanian politicians the fact that Poland, Bulgaria or Hungary are in our country’s vicinity and can be considered a better alternative, despite of our record-breaking economic growth. Could this be a Romanian paradox? It seems that whenever things start going in the right direction we are reactivating our worst enemy, the enemy within.