Tag: the week in review

Tycoon Dan Voiculescu behind bars

One of the most influential characters in post-communist Romania, businessman Dan Voiculescu, the founder of the Conservative Party in the ruling coalition, was sentenced to 10 years in prison for money laundering. Anti-corruption prosecutors proved that Voiculescu used one of his companies to buy from the Foodstuff Research Institute a plot in a real estate paradise, for a much lower price. The state lost, according to estimates, over 60 million euros. Throughout the 6-year trial, Voiculescu, a proven collaborator of the communist political police, the Securitate, pleaded not guilty.

Top-level officials disagree on political issues

The President of Romania, Traian Basescu, has rejected the nominations made by the Social Democratic PM Victor Ponta for the culture and budget ministers. The head of state described as inappropriate the two nominations, Rozalia Biro, from the Democratic Union of Ethnic Hungarians in Romania, for culture minister, and Claudiu Manda, from the Social Democratic Party, for budget minister. Under a Constitutional Court ruling, the President has the right to reject the Prime Minister’s nominations once, and new nominations have to be made in this case.

In another development, President Basescu urged the PM to reconsider his decision to denounce the so-called co-habitation agreement the two signed in 2012, in a delicate political context. The PM argues that the agreement, primarily intended to ensure political stability and which also included a code of conduct, was signed by the President in bad faith. In 2012, PM Ponta was the co-leader of the ruling Social-Liberal alliance, which took several steps to remove the President from office, including a referendum on his impeachment.

The European Commission approves Partnership Agreement with Romania

The European Commission has validated the 2014-2020 Partnership Agreement with Romania, in which Bucharest has outlined the planned spending of the funds earmarked for the country in the current budget cycle. The validation proves that the document sent by Bucharest meets the EC requirements, the Romanian minister for European funds, Eugen Teodorovici said.

Earlier this year, the European Commission harshly criticised the first draft of the document. From the current EU budget, Romania has available some 43 billion euros. Bucharest is under tremendous pressure, according to analysts, given that in the previous budget framework, for 2007-2013, Romania had the smallest EU fund absorption rate, namely 37%.

The National Bank of Romania lowers key interest and inflation forecast

The National Bank of Romania has lowered the monetary policy interest, from 3.5% to 3.25% per year. It is a new signal for cheaper lending, but not for reducing interests paid for deposits, the central bank governor, Mugur Isarescu, said.

Also this week, the National Bank adjusted its inflation forecast, to 2.2% for the end of this year and 3% for late 2015. The lower inflation is not a reason for concern as regards the economic growth, stimulating employment or productivity, Governor Isarescu added. The National Bank official also mentioned that low inflation is one of the five convergence criteria for accession to the eurozone, a goal Romania seeks to achieve in 2019.

Romanian entities come under cyber attacks

The Romanian Intelligence Service announces that several entities in the country are targeted by large-scale cyber attacks. According to the Service, the targets include public institutions, such as ministries and governmental agencies, private companies and even individuals. The attacks come from state actors, cyber crime groups and extremist terrorist groups, the Romanian Intelligence Service explained.

Three Romanian football teams qualify in European competitions

Three of the four Romanian football teams that played in the third preliminary round of the European cups have qualified in the playoffs preceding the group stage. Champions Steaua Bucharest defeated FK Aktobe from Kazakhstan 2-1 on home turf to moved on to the playoffs.

In the Europa League, Astra Giurgiu and Petrolul Ploiesti won their matches against two Czech teams, Slovan Liberec and Viktoria Plzen, respectively. In the first leg, Astra had won 3-nil, and Petrolul only managed a 1-all draw. The fourth Romanian participant in the European football competitions, CFR Cluj, lost at home, 0-2, to Dinamo Minsk, which had also won the home match in Belarus.

The European Commission has a new president

The European People’s Party candidate Jean-Claude Juncker was on Tuesday elected as the new president of the European Commission. Juncker was sworn in in Strasbourg after presenting his political programme before the European Parliament. The main priorities of his term in office includes economic growth and making more jobs available, strengthening the economic and monetary Union and the single market, revitalising the industrial sector, continuing negotiations with the United States on the transatlantic partnership, creating a EU policy on migration and paying special heed to the EU’s external relations.

The next step on Juncker’s agenda is to decide on the new team of commissioners. The leaders of the European Union on Wednesday evening failed to appoint new commissioners in key fields, so a new meeting was set for the end of August. Romania wants to hang on to its agriculture portfolio in the new Commission, and preferably keep Commissioner Dacian Ciolos in his current position.

The EU and the US impose fresh sanctions on Russia

EU leaders meeting in Brussels decided to put on hold all financial operations carried out by the European Investment Bank and the European Bank for Reconstruction and Development in Russia. Accused of fuelling the armed conflict in eastern Ukraine, Moscow has been urged to use its influence with the pro-Russian separatist groups to put an end to the movement of arms and militants across the border.

The US has also announced the toughest sanctions on Russia yet, because, as president Barack Obama said, “Russia has failed to take any of the steps the Obama administration was called for to de-escalte the situation in Ukraine”. Sanctions are targeting two important banks in Russia, including that of the natural gas giant Gazprom, as well as two other energy companies, whose access to the US capital market has been restricted. Other sanctions will be imposed on several firearms manufacturers, including the company manufacturing the famous AK-47 known as Kalashnikov.

Ukraine and the Gaza Strip — hotbeds of conflict

The situation in eastern Ukraine became even more strained on Thursday when a Malaysia Airlines jet crashed on Ukrainian territory. All the 298 people were board were killed. The aircraft, which was flying from Amsterdam to Kuala Lumpur, crashed in the Dotetsk region, which is controlled by the pro-Russian separatists and lies only a few tens of km from the border with Russia.

Romania’s president Traian Basescu has called for an immediate investigation into the cause of the accident and for European Union experts to take part in the inquiries alongside the Ukrainian authorities.

The Romanian foreign ministry has also created a crisis group to monitor the Gaza Strip conflict between the Israeli army and local Islamist groups. After the evacuation, early last week, of 84 Romanian nationals and their families living in the region, two mobile consular groups were again deployed on the ground, in Amman and Tel Aviv, to provide consular assistance to the Romanians who are still in the area.

The president and the prime minister disagree over the reduction of social security contributions

A proposed 5% cut in social security contributions paid by employers is beneficial to the business environment unless it attracts new tax and duty rises, said the president of the Foreign Investors Council, Steven van Groningen after talks with president Traian Basescu.

On Monday, the president also held consultations with prime minister Victor Ponta, having earlier said he would oppose the cut in social security contributions unless the government explained how it would cover the reduction and what steps it was considering to prevent upsetting the budget balance. In Traian Basescu’s opinion, the measure would lead to an increase in taxes or the reduction of investments.

Prime minister Ponta argues, however, that this is the best time to take this measure owing to the country’s economic growth and higher budget returns.

Romanian right-wing parties join forces

Talks ended in Bucharest this week between the country’s biggest centre-right parties, the National Liberal Party and the Liberal Democratic Party, as their leaders agreed on the final details of a merger. The aim is to create a bigger party called the National Liberal Party able to compete against the Social Democratic Party, the winner of the European Parliament elections in May. The short-term goal of the new structure is to win the presidential elections in November and its candidate will be announced at the beginning of August.

In another development, the Permanent Council of the Democratic Union of Ethnic Hungarians in Romania, a junior partner in the government, has nominated the party leader Kelemen Hunor as presidential candidate.

Top level scandal in Romania

On Wednesday, the Romanian Parliament adopted a political statement calling on president Traian Basescu to resign, against the background of the corruption and influence peddling scandal involving his brother Mircea Basescu. Social Democrat senator Gabriela Firea presented the statement to the public:

“Worried about the huge impact that the scandal involving the president’s family has on the very credibility of the Romanian state, the Romanian Parliament makes the following political statement: the President of Romania, Mr. Traian Basescu, is no longer entitled to ensure the prestige, independence and legitimacy of the presidential office, that is why he must immediately resign from the office of President.”

Supporting the idea of the president’s resignation were the MPs representing the left wing, namely the Social Democratic Party, the Conservative Party and the National Union for the Progress of Romania, and also the Dan Diaconescu People’s Party and the Liberals, in opposition. The Liberal Democratic Party and the pro-presidential opposition did not participate in the voting. The declaration is not legally binding and therefore the president is not obligated to resign. Actually, Traian Basescu had previously announced he would not comply with the request, as he did not intervene in the case and was not responsible for his brother’s actions.

The Republic of Moldova, Georgia and Ukraine are closer to the EU

Romania’s President Traian Basescu turned the support for Moldova’s European integration efforts into a priority of his term in office. Alongside Georgia and Ukraine, the Republic of Moldova, a former Soviet country with a predominantly Romanian-speaking population, signed in Brussels at the weekend the Association and Comprehensive Free Trade Agreement with the EU. Russia regards the document as a ploy for the three countries to come out of its sphere of influence. In Brussels, on the other hand, the event has been termed as historic.

The Association and Comprehensive Free Trade Agreement will favour a better European integration of those countries, both politically and economically. It will also create a cooperation framework in such fields as trade, security policy and culture. The agreement is for something and not against somebody, said the acting president of the European Commission Jose Manuel Barroso, also stating that the EC has solemnly committed to standing by the Republic of Moldova, Georgia and Ukraine in their efforts to turn into modern, stable and prosperous democracies.

Romania has a new transport minister

Starting this week, the Romanian Government has a new Transport Minister, namely Ioan Rus. Among the measures that the new minister has placed on top of his working agenda, is curbing the improper use of material and human resources. Ioan Rus:

“We will start by cutting losses. By turning more competitive, we will be able to reach the proper level of performance and thus compete with the European rail, road, air and sea transport services.”

Ioan Rus has replaced Dan Sova, who has resigned. According to Prime Minister Victor Ponta, he will also be the spokesperson for the Social Democratic Party.

Fresh economic measures

Good news for the Romanian business sector. This week the Romanian Senate has adopted a draft law regarding the reduction of the employers’ contribution to the social security fund by 5%. If the document is endorsed by the Chamber of Deputies as well, it will be put up for plenary voting in early July, to then come into force on October 1st. According to the Government, this measure will help employers secure funds that can be used to create jobs, will increase the number of contributors to the fund and will stimulate the business environment. The Romanian Government has also passed an ordinance allowing for the reduction by half of payments to banks for those who have problems reimbursing their loans. Prime Minister Victor Ponta says the state will bear this financial burden.

“We will cover this by deducting from the tax the additional interest and this new support for those who have debts to banks. It will help us socially, and also economically, because there will be more money left in the economy, and this is extremely important.”

Also, the government decided to restore the pensions and salaries that were cut when the economic crisis started, as well as to increase the minimum wage to around 205 euros.

Electricity supplier Electrica is listed on the Stock Market

After a string of failed privatisations, the Romanian authorities are now happy to have successfully listed on the stock market 51% of the shares in Electrica, the main distributor of electricity in Romania. The demand was actually twice as big as the offer. The government thus hopes to get some 460 million Euros, to be used for the investments that the company needs in the coming years. The privatisation of Electrica is the first one achieved through the Stock Market.

Heavy rainfall again wreaks havoc in Romania

The second half of this week has again seen a code yellow warning issued by meteorologists and hydrologists. And indeed, the country has been affected by heavy rain, strong winds and high risk of flooding in south, southwest and southeast. Hail has broken windows and damaged the roofs of hundreds of households, and the strong gusts of wind have felled down trees, which have in turn damaged cars. The basements of many blocks of flats have been flooded, gardens and green houses destroyed, and even rail transportation has been hampered in some regions.