December - 2005



Serious contender

This Government is now serious about development, says Owaise Saadat, country manager of the poverty-busting World Bank Romania

                This is what the World Bank now seems to have in the Romanian political system. Last month the non-profit financial organisation launched its Country Partnership Strategy (CPS) with Romania, a process where the local Government takes a more active role in choosing projects for World Bank cash.
                This has happened in other middle income countries, such as Poland and Slovakia. So why here and now?
                “Because of Romania's solid macro-economic performance over the last five years,” says country manager of the World Bank in Romania, “and the exceptionally good health of our projects in this nation. From a reluctant reformer, Romania has almost become an accelerated performer over 2004 and 2005.”
                This could make funds of 500 million Euro available for 2006 and a further 500 million Euro for 2007.
                The bank is now considering issuing a local currency bond on the market in RON. Its value will be what the country manager calls “a small amount” - around 50 to 100 million Euro. “This could be a very important instrument for the market and could boost confidence,” he adds.
                But the World Bank has to be careful the Government does not use this new CPS for its own intentions. In Slovakia, the bank met criticism for commis-sioning a consultant who allegedly gave the Government advice on how to counter opposition criticism, according to Financial Times.
                Saadat says the World Bank has given advice on communications and external affairs to Romania for five years, “but in a narrow focus.”
                “It is the lack of information, misinformation and disinformation that leads to a failure of good intentions. Having a good communications strategy is important,” he adds.
                The bank does supply experts, but he states that this is “apolitical”. It is about clear communications, not those linked to giving political gain to the incumbent leadership.
                Last February the Government outlined five priorities in development, which cohered with those of the World Bank - culture and rural development, infrastructure, environment, health and education.
                After Poland, Romania is the largest agricultural economy of the new and due EU member states. But 62 per cent of people in rural areas are poor. “This is of immediate concern to us,” says Saadat.
                Around half the land is commercially viable, but a further 50 per cent has around 4.5 million people on mostly fragmented and small plots.
                “More people are working on the land than is probably required,” he adds. Investment is low and subsistence farming is high.
                Land titles need to be fixed and there needs to be a “rationalisation”, so farmers can make the best use of pooling their machinery, fertiliser or insecticides. But cash is needed.
                “This may be a chicken and egg situation,” says Saadat. “Because these farmers are trapped in low productivity and low-value output, they may not be attractive suitors for commercial credit. But these small farmers may be trapped in a low input and output mode because there is no credit available to them.”
                But asking small farmers to pool their plots is a hard job.
                “There is a psychological barrier to having cooperatives,” says Saadat. “It smacks of centrally planned land holdings.”
                How can rationalisation be then encouraged, without invoking a Communist ghost?
                “It has to be voluntary,” says Saadat. “A community cooperation. There is not a long tradition of this. But people, because of their own enlightened self-interest, can get together and pay to hire a tractor over 20 ha.” Here, leasing of agricultural machinery has to be activated “more aggressively”, says Saadat, because there is huge potential in hiring out tractors and threshers.
                In social injustice, some Rroma NGOs say they have seen 20 million Euro poured into projects to help their community from international organisations, with nothing to show.
                “Education, health, employment, environment are inter-related social problems so need to be dealt with in an integrated manner,” says Saadat of the situation.
                Rroma parents need incentives to send their kids to school not to work. This “could be financial” says Saadat or persuading them of the long-term benefits of education.
                Because of concern that the Rroma could become the beneficiary of aid independent of other poor groups in Romania, the World Bank has merged them into a social inclusion project.
                “We cannot go into an undeveloped area and say: you're poor, but because you're not Rroma, we can't help you. But we cannot deny Rroma are more vulnerable to the ravages of poverty and need special attention.”
                In health, demand for services at present outstrips availability and bribery is so rife that some experts call Romania the most corrupt health system in Europe. “This disadvantages the poor against the rich who can afford proper private services,” says Saadat.
                The system needs “structural change” he adds. Rather than a policy of providing every service free at the point of access, he says there could be a basic services package of around 16 services the system can provide - then the Government could think about a part-privatisation.
                This is what is called thinking the unthinkable.
                Not a situation Romania is too unfamiliar with.

Michael Bird