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Dan Boiangiu, Arval
Public and private investment seems to re-gain a proper focus»
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Building bridges, changing perceptions

In the first decade since the fall of communism 23 years ago, an obsessively asked question was, "What have you done in the past five years?" With 2012 marking five years since Romania became a full member of the European Union, Corina Mica asks the Romanian Presidency's Chief of Staff Cristian Diaconescu what the country's main achievements are in the 27-strong block and how its weak points can be tackled

December 2012 - From the Print Edition

Romania can no longer be ignored.

Whether as the scene of strategic investment projects that can reshape the face of Europe or, once again, in the unfortunate situation of being the laughing stock of the continent for its political scheming, Romania has spent the last five years consolidating its status as a country to be reckoned with in the EU.
Chief of Staff at the Romanian Presidency Cristian Diaconescu believes that two aspects are of the utmost importance in the wider scenario: the harmonization with European standards and values, as well as Romania′s integration process, which is one of transformation.
"This includes building institutions, changing perceptions in accordance with fundamental values, like rule of law, justice and compatible institutions," he tells The Diplomat - Bucharest. "We need the capacity to understand that fundamental rights are more important than political aspirations, as accession to the EU was the completion of a process to fundamentally change a country."
The Chief of Staff argues that Romania′s major handicap was related to mentality. "We worked hard as a country to establish institutions that would tackle environmental policies, institutions such as the Competition Council, or the National Integrity Agency (ANI). These would have not existed if we had stood no chance of joining ‘the civilised world′," he adds.
At the same time, says Diaconescu, acceding to the EU meant Romania gained the right to decide. "Romania takes part in the decision process, with regards to decisions that affect the country directly. The point of view on a matter is not imposed through brutality; one has to keep up with the standards it assumed at any cost . We now have power to decide," says Diaconescu, adding that Romania′s current unstable image in the EU is the direct result of mistakes made internally.
"There is no external authority that can impose something on Romania or that would think of asking Romania to do something, just to fill in the numbers. Romania′s problem in the EU is strictly an internal one, and it will only be perceived as a deferential country if it acts as a deferential one," he adds.

Base for growth

Regardless of the continuous warnings that stem from a shaky political scenario, Romania is still playing its trump card business-wise.
The country has, to date, managed to establish itself as a solid development base in the region for industries that play a vital role in the future development of a sound European market. Romania′s interest with regards to foreign direct investment and liquidity is a major one, argues Diaconescu. "What potential investors complain about, though, is the lack of legal rigor, corruption and lack of transparency with regards to procedures or mechanisms when one has to be very attentive," says the Chief of Staff.
At the same time, he adds, it is not understood very well in Romania that when talking about a private investment, that particular investment stems from market analysis, which is much applied and revolves around a certain interest. "Romanians, even at decision-making levels, imagine that the state has to provide opportunities on both internal and external markets, has to find options, to protect or to guarantee investments, but that should not be the case," says Diaconescu. "Unlike our eastern neighbouring, Romania was not a market of raw resources and Romanian private investors did not have the courage to tackle markets other than the regulated ones. As an example, 80 per cent of Romania′s trade is with the EU because that is a safe market. Russia′s and Ukraine′s markets are opened, but Romanian investors are reluctant to go there."
On a market with an estimated total value of over 226 billion Euro, according to a recent study by Expense Reduction Analysts (ERA), which totalled the turnover of all companies active in Romania at the end of 2011, performance seems to lag behind.

How can this be remedied?

"There are interesting investments made in Romania, where the performance of both the investor and the Romanian producer is big: this is the case with Dacia," says Diaconescu. "From this point of view, something that is very well orientated is very correct. But the majority of Romania doesn′t recognize a need to develop. The banking and insurance sectors have seen large investments and, judging by the raw figures, countries such as the Netherlands and Austria rank very high, but the question is raised when we look at profits being reinvested in economic development."
To capitalise on the still untapped potential, the Chief of Staff argues that Romania′s interests are to diversify its best performing economic areas and to transfer the excellent political connections it has with some EU member states into economic growth.
One potential field where Romania would need a strategic investor is infrastructure, where there has been increased interest from Chinese investors, says Diaconescu. "Furthermore, Romania cannot be avoided on any map of projects related to the energy field in the region," he adds.
Diaconescu has been the chief negotiator over the delimitation of the continental platform between Romania and Ukraine in the Black Sea, a process which has taken a total of 11 years. The efforts proved to be to the benefit of Romania, as the recent discovery of natural gas reserves to the tune of over 80 billion cubic meters puts the country in a new light at a European level.
"Romania has an immense chance," says Diaconescu, "but it must understand that in order to exploit the gas reserves found in the Black Sea it needs a large investor, which at this point is not present locally."
He goes on to say that, despite still existing opportunities on large projects, such as energy and environment, Romania shoots itself in the foot due to the corruption marring every field of practice.

Where do we go from here?

With 2012 seeing three Governments taking the reins locally, a suspension of the country′s President leading to a national referendum which did not meet the minimum quota to be valid, and deep concern from the European Commission with regards to the rule of law, how can this country keep its head high at the larger decision-making table?
"Sadly, Romania is no longer perceived as a country with integrity in the EU," says Diaconescu. "We have touched a sensitive area, an area that is considered already won at a European level, the Copenhagen criteria, which are political criteria. If a country acts the way Romania did this year, it loses all support and has all the strong partners against it. Should there be bilateral problems, they are exacerbated at a European level, transformed into an instrument of vulnerability or of blockage. We should not take it personally; there are rules that are sanctioned either though infringement or through political attitude."
Formerly Minister of Justice in the Adrian Nastase Government in 2004, Diaconescu is no stranger to the sensitive field.
"Justice was always a black mark for Romania," he says. "We entered the EU with a flag on the Justice chapter, but now this is doubly so. The status is evaluated by the European Commission, not by the member states. The EC is the guarantor of the treaties and, unfortunately, Romania has breached them." Efforts are now being made to return to the initial assessments, and the Chief of Staff says only when this is reached will the EC take notice of significant changes. "However, I do not believe this will happen within three years, if it is proven that Romania has changed its attitude."
Fighting several battles at the same time is no strange concept for Romania. Whether the focus is on the right subject though, is another matter.
With accession to the Schengen area as well as joining the Euro zone hogging the headlines for the past few years and constantly keeping Romania on its toes at a European level, is there a chance to move forward?
"We need the Euro because we cannot keep pace otherwise," says Diaconescu. "With regards to Schengen, there′s no point in discussing the technical aspects. The main issues relate to the rule of law and the state of the justice. On large European issues, before being taken seriously we′d better solve our internal problems."
One week before Parliamentary elections that could, once again, either put this country where it has strived to be since the fall of communism, or dump it in a deeper hole, Diaconescu says in the next five years Romania needs to reach 100 per cent of the credibility level which an EU member state should have.
"The EU is Romania′s only chance, there is no alternative and I don′t believe there′s anyone who would dare to try the alternative out," he concludes.



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