Keys to the cash

Carrying out ambitious multi-million Euro public works and responsible for allocating billions in EU funds, Elena Udrea’s Ministry of Regional Development and Tourism has become a key player in Romania’s reconstruction

April 2010 - From the Print Edition

Romania’s new Ministry of Regional Development and Tourism is responsible for spending billions in EU funds, launching an ambitious council house sell-off scheme and a new plan to build 125,000 homes by 2012, which could be a stimulus to Romania’s crippled construction sector.
But there are concerns from building firms that new projects will be awarded to a group of companies that are in favour with powerful politicians.
Minister of Development and Tourism Elena Udrea - a 36 year-old lawyer and Democratic Liberal MP for Bucharest – believes such a worry is unfounded.
“The myths related to fixed auctions have created the appearance of a major problem - which is the proliferation of professional contesters,” says Udrea. “They have made a habit from contesting every tender they lose, thus obstructing the start of the state’s investment projects and the absorption of EU funds.”
The Minister says such companies aim to get a “commission” from the winning firms to shut up and stop their actions. “To end such practices and make things work better, I will notify these companies to the authority that manages public acquisitions to reduce their scores in future tenders,” she says.
This could mean an eventual “blacklist” of serial complainers.

Top connections

Udrea is a close colleague of President Traian Basescu and is married to a businessman in construction, transport and hotels, Dorin Cocos. Both husband and wife are worth around five million Euro and Udrea is a frequent tabloid target – her choice of dresses, skiing boots and hair dye are examined with minute detail by fashion critics on TV and in celebrity magazines. This visibility makes her easy game for political rivals. Last year, when she was Minister of Tourism, she became the target of a commission led by Liberal MP Ludovic Orban, who attempted to prize her out of Government due to a direct deal her Ministry made with BRD – Groupe Societe Generale to promote Romania on international TV stations such as CNN.
This offensive collapsed and Udrea has added to her Tourism Ministry portfolio the job of Regional Development - which is responsible for managing the spending of 3.87 billion Euro in European funds. Added to this is 530 million Euro in funds from local and state budgets, which will be disbursed to co-finance EU investment projects. “My vision is to focus public investments in areas where activities that create income for local communities and the state could develop, such as areas of high tourist potential,” says Udrea.
The institution she is heading has set as main target for 2010 to approve projects financed with EU funds worth at least 1.5 billion Euro and to make EU payments amounting to 450 million Euro.

Tourism brand ready by May

The Ministry will also finance, through EU funds, the development of the Romanian tourism brand, which was last year awarded to Spanish-British consortium THR - Asesores en Turismo, Hoteleria y Recreacion and Taylor Nelson Sofres. The company is scheduled to complete the concept this May. Following the launch of the brand, the Ministry will allocate about 73 million Euro over six years from EU funds on promotional campaigns through public auctions to increase the country’s attractiveness for tourism and business. In addition, Udrea has budgeted 40 million Euro this year from the Ministry’s funds for investments in tourism infrastructure.

Stimulus drive

Udrea’s Ministry is attempting a classic Keynesian tactic of stimulating growth through public works. Through its National Housing Authority (ANL), the Ministry will build 100,000 units for young people by the end of 2012. Now there are around 7,000 units under construction and another 12,800 flats will start construction this year in 348 locations. This aims to solve the country’s chronic housing shortage, while also prop up the ailing construction sector.
The Ministry also targets building 25,000 homes over the next three years for key workers, such as doctors and teachers, to tempt them to take jobs in the countryside – in order to reboot the Romanian village with professionals.
How can the Ministry pay for this? To source part of the financing to build new houses Minister Udrea has loosened the rules for sitting council house tenants to buy their own properties, making 22,000 ANL flats available for sale this year for between 19,000 Euro for a 45 sqm studio to 36,000 Euro for a 70 sqm two-bedroom apartment nationwide. These prices more or less represent the construction costs. “The sale of these housing units is an extraordinary opportunity to obtain funds in stimulating the construction of new flats,” says Udrea.

Profile by Ana Maria Nitoi