Romania needs to seize greater advantage of EU status

Romania should make more use of its advantages as an EU member state at a time of financial crisis, argues French Ambassador to Romania, Henri Paul

The financial crisis should make Romania more aware of its role as a member of the European Union, with the responsibilities and advantages that derive from this status, and push the country towards a more dynamic integration, argues France’s Ambassador to Romania, Henri Paul.
The country does not exploit to a sufficient degree the advantages of its EU membership to recover faster from the crisis, according to the Ambassador.
“Romania has been a part of the EU from 2007 and I have the impression that everybody forgot about it,” says Paul. “In the speeches about the austerity measures and about the crisis the President, the Prime Minister and the Minister of Finance never talk about the EU. Only the financial package offered by IMF is taken into account, when there is also financial support provided by the EU. Romania is not isolated, it is facing the crisis in a European context.”
The financial support provided by the EU and the bloc’s economic and political guidance could enhance Romania’s legal, economic and political stability.
“French investors are expecting from Romania a stable and transparent legal environment and the stabilisation of financial and economic rules,” says Paul. “The growth perspectives are difficult to envisage now, due to the political, institutional and economic instability, but the balance should be restored to keep investments coming.”
Last year most French companies which have a strong presence in Romania had to adjust their investment plans to the new conditions, while seeing their sales and profits decline. There are 1,435 French companies in Romania, of which 565 are local branches of French companies, according to Bruno Menat, economic attache at the French Embassy. Many are strategic investors who have plans to see a return on their total investments only after five or ten years.
“French companies are here to invest and they will continue to invest,” says Paul. “They have no intention to stop or leave the country. There are, of course, companies which do not have the necessary funds to keep investing in Romania, but their number is quite limited.”
In 2009, the profit of bank BRD - Groupe Societe Generale in Romania declined by 40 per cent compared to 2008, to 185.2 million Euro, but was still high on a market where banks are posting losses. Between 2009 and 2010 retail chain Carrefour reduced the pace of its expansions, but still opened hypermarkets in Bucharest and Oradea, three supermarkets in Bucharest, one in Ploiesti and another in Sibiu. In 2010, French retailer Cora, which counts four units in Romania, opened a new hypermarket inside Sun Plaza mall in Bucharest and will open another two in Drobeta Turnu-Severin and Craiova.
Last year French insurance group Axa entered the life insurance market by acquiring local life insurance company Omniasig Asigurari de Viata from the Vienna Insurance Group.
As a result of the slump in construction, French cement producer Lafarge registered a 42.3 per cent decline in sales in the first quarter of 2010, against the first quarter of 2009 and ten per cent lower revenues, to 14 million Euro.
Meanwhile the headline French investor in Romania, car maker Dacia-Renault, reached 1.5 billion Euro in investments in 2009, in the decade since taking over the local Dacia brand.
The energy group GDF Suez is continuing the development of a thermo power station in Borzesti and participating in the development of two new nuclear reactors at the Cernavoda power plant, but seems to have put on hold its project to develop a power plant in Galati.
“The price of gas has not gone up from the beginning of the year and this means a decline in profit for gas distributors,” says Paul. “The investors in the area are not tempted to invest under these circumstances.”
This year the French-Greek consortium Vinci-Aktor gave up a multi-billion Euro deal to construct a mountain motorway between Cormanic and Brasov. This was a concession contract which required the companies to bring the initial investment and then receive payback from the Government over a 30-year period. But the consortium was not able to get the financing necessary.
“Infrastructure is a complicated area, because things advance very slowly,” says Paul. “There are works which are not certified by the authorities. The state and local authorities also have to pay a lot of debts to infrastructure companies, but also to companies from other areas. A lot of French companies have not been paid yet for their services and they need the money to keep investing.”
Last month the Romanian Government signed the framework agreement with French helicopter producer Eurocopter, part of European aerospace company EADS, for the development of the Ghimbav technological aerospace park. Eurocopter will create three competence centres in Ghimbav, Brasov county, for the maintenance of Puma and Super Puma helicopters, the construction of Eurocopter helicopters and for the production of helicopter components.
“French investments in Romania declined in 2009 against 2008 and will keep declining this year also,” says Paul. “The austerity measures will influence economic growth negatively. Agriculture is one of the areas which will probably see growth this year if the weather is good, because it is one of the areas which is modernising.”
Last year the total bilateral trade between Romania and France dropped to 4.45 billion Euro, from 4.93 billion Euro in 2008, according to Bruno Menat.