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March - 2005


Can this man take Romania over the last hurdles?

No more negotiations, new minister of European Integration Ene Dinga promises, as he reveals to The Diplomat what Romania's plans for joining the EU achieve and when he thinks the country could join the Euro

The incoming minister of European Integration does not have an easy job on his hands.
Although the country completed its accession criteria at the end of last year, the list of conditions on two its chapters, Justice and Home Affairs and Competition, were an inventory of tough challenges that the nation must face as time runs out before 2007.
Prime minister Tariceanu has also given himself a tall mountain to climb by arguing that he does not want to enter the EU on political discussions but on meeting its commitments “like Germany”.
Responsible for caretaking Romania's accession to the EU, this former deputy dean in finance at the Dimitrie Cantemir University, Bucharest and a member of Basescu's democratic party, must coordinate with the other ministries to ensure the criteria is met.
But his first job will definitely not be criticising the record of his predecessors. This department will not suffer the shake-ups that the new ministers in Justice and Culture are carrying out.
“Our national interests transcend political parties,” says Dinga. “Therefore in the EU process there is a necessary and useful continuity… this means that our strategies have not changed now the Government has changed. Although we will try to perfect these strategies and tactics, according to new conditions.”
However he does admit that Romania accelerated “a little” the conclusion of the negotiations last year, but says the terms of the negotiations concluded last December will not change. “It is out of the question to reopen the chapters,” he says.
When pushed on whether changes could occur to renegotiate agricultural subsidies, to gain a better deal for Romania's ailing farms or even to allow Romanians to work on the same terms as other members in the EU in a shorter time frame, he says that: “Given that negotiations have been concluded, we consider that Romania has obtained good results for itself.”
However, he says there is a possibility of ‘technical adjustments’. “We can re-discuss some terms if the European Commission wants this… Any modification of negotiated terms such as the transition period or special arrangements is done with the agreement of both parties. No matter where the initiatives come from.”
The acceleration of the closing of the chapters last year was fraught with political accusations about whether Brussels was indirectly supporting the Nastase regime by closing the chapters before the election.
Eventually, the last two chapters were closed after this date, but these contained a list of eleven conditions, including a demand for Romania to recruit nearly 30,000 border guards, police and gendarmerie, an insurance that judicial independence would start and human traffic would stop.
Other caveats included ending unfair distribution of state aid, an enforcement of anti-trust laws, an end to subsidies for steel mills and an insurance that the competition council would do its job properly. If that was not enough, the ministry has also adopted a further burden. “We are taking out a supplementary condition,” says Dinga, “called making the borders secure.”
Out of these, Dinga says the most delicate in the competition bracket is the issue of state aid. “And the problem of steel and iron is the most severe.” Recently, he has agreed with Europe to restructure the six state-owned iron and steel companies.
Dinga indicates that further state aid could continue, but only if this will allow the industry to meet European standards. “Any decision of granting state aid taken by the competition council is previously discussed with the European Commission,” he says.
But Dinga calls any kind of state aid “not desirable” as it would be an unfair deployment of Government finances and hinder competition.
If Europe does not allow Romania to grant state aid, it may have to face the consequences of an under-funded industry. Therefore, it seems, state aid will only happen for the greater good of the EU, to ensure the country does not close down and unemployment rises.
The signature theme of Basescu's new regime seems to be a zero tolerance attitude to cancelling company's historical debts to the state.
This means some companies could go bankrupt unless the state intervenes, thus creating a conflict between the Government's and the EU's approach to granting subsidy. This could lead to the question of whether renationalisation of such industries should occur, which is looking likely in the new Ukraine.
“In principle, renationalisation is not desirable,” says Dinga. “But in cases where severe fraud is discovered, things can be re-evaluated, not necessarily in the sense of renationalisation, but in the sense of making the company legitimate. Also the same procedures will be applied to some famous acquisition contracts that have gained press coverage or for special cases like [the oil refinery with massive debts] RAFO Onesti… But from case to case, where there is restructuring potential, according to European criteria, certain public support may be used. But this can only happen in specific cases, with established time periods and according to viable restructuring plans.”
A history of bribery, nepotism and political, not business-related appointments in industry are also weighing heavy on Romania's shoulders. “The country has accumulated a regrettable credibility deficit and one of the main causes the lack of transparency and corruption, which is related to it,” agrees Dinga.
He states that the new Government is determined to eliminate this state of affairs, and the main aim is to remove the “political factor” from the privatisation process, the anti-corruption office and the Ministry of Justice, allowing the departments more independence.
The political and economic criteria of Maastricht are set to be ready in the calendar for 1 January 2007. “You know very well there are EU members that have not concluded such criteria, some of the older and later members that do not totally comply,” he adds.
On its fitness to join the Euro, Romania first needs to be part of the exchange rate mechanism (ERM) for at least two years, in a period after the accession date. “Romania has not decided yet when it would be best to join the ERM, right away [on 1 January 2007] or a little later. But in April this year we will take preparatory measures to liberalise ROL deposits of non-residents… which is also a component of liberalising capital accounts.” Dinga says he would want Romania to join the Euro “as soon as possible.”
He says this is likely to happen in 2010 or 2011. Meanwhile when Romania will have access to the Schengen area, which allows its citizens to move freely within many of Europe's borders, including France, Germany, Italy and Spain, as well as non-EU nations such as Switzerland and Norway, still lacks a firm date. The Ministry of Administration and Internal Affairs (MAIA) last year, in its action plan, said 2009 was a reasonable time to open up the borders, a date Bulgaria also agrees with. Dinga says this will depend on several commitments that he has already made and on the MAIA.
This also depends on whether the 2,000 km border with non-EU countries is secure. Recently, the MAIA has said he will renegotiate the controversial contract with trans-European firm EADS, which is providing the training and surveillance systems for border security, and is due to be completed by 2009.
Dinga seems confident that conditions will be met, on schedule and with the agreement of the European Commission and re-discussing terms, it seems, will only occur in a framework of what is better for Europe as a whole.
But Romania has a reputation for making promises that it fails to fulfil, so it will be a long time before whether we can see if this Ministry is all action or all talk.