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. Last Updated: 07/27/2016

Reluctant Romania Turns West




BUCHAREST, Romania -- With a new, reform-minded government and the prospect of European Union membership, some Romanians believe the country has finally reached the starting gate on the road to a market economy.


That still puts this impoverished nation of 22 million people about 10 years behind the elite of former communist Eastern Europe: Hungary, the Czech Republic and Poland. Those are among the leading candidates for EU membership.


The budding optimism here is not universally shared by ordinary Romanians, who have seen living standards plunge since the bloody 1989 uprising toppled communism and led to the execution of President Nicolae Ceausescu.


Nevertheless, political analysts point to the prospect of EU membership and a consensus for reform among the major parties as hopeful signs of change.


"I would say that the year 2000 is the first year in which there are some hopes that Romania is going to advance on the road to capitalism," said Silviu Brucan, a former ambassador to the United States and now a television commentator.


Under Prime Minister Mugur Isarescu, a former central bank governor appointed last month, the government has already slashed corporate taxes by 13 percent, hiked its value-added tax to bring in new revenue and cut tax exemptions.


The government hopes the new corporate tax break will encourage foreign investment. Since 1989, foreign investors have sunk only about $4.4 billion in Romania, less than 10 percent of the figure in neighboring Hungary, with a population less than half this country's.


"We have achieved after 10 years what Poland, the Czech Republic and Hungary already had in 1989," said Dorel Sandor, a former adviser in the first two post-communist governments and head of a think tank. "We have now started the transition from a neo-Stalinist to a liberal state."


This is not the first time, however, that Romanian analysts have seen signs of optimism.


The 1996 election of President Emil Constantinescu was widely hailed as a sign that the country was ready to reform its economy, dismantle inefficient state enterprises and take other measures to set Romania on a course toward a functioning market economy.


When Constantinescu took office, inflation was about 45 percent, the average monthly salary equaled about $100 and the underdeveloped banking system offered few services to average Romania.


More than three years later, inflation is over 55 percent. The average monthly wage has sunk to the equivalent of about $95 due to the collapse of the national currency. And the underdeveloped banking system still offers few services to the average Romanian.


Adding to the sense that little has changed, Constantinescu's likely opponents in this fall's presidential election include former president Ion Iliescu. Constantinescu defeated Iliescu in the 1996 contest. This time, the tables appear reversed. Iliescu is running well ahead of Constantinescu in opinion polls.


However, some analysts believe that the carrot of EU membership will ensure that Romania continues along the reform path regardless of the winner.


"External factors could force Romania to move in the right direction, the European Union, accompanied by the International Monetary Fund and the World Bank," Brucan said. "This is the decisive political factor for the year 2000."


With the possibility of EU membership, Iliescu's left-wing Party of Social Democracy, the largest opposition bloc, has taken on the slogans of market economy and global competition.


Iliescu bristles at suggestions that his party is a collection of unreconstructed communists seeking to rebuild the old economic order.


"The main goal is integration in Euro-Atlantic institutions," Iliescu said in an interview. "You can find former communists in all political parties in Romania. There is a paranoia in this problem."


What is unclear, however, whether the Romanian people themselves are prepared for a speedy transition to an economic system based on competition rather than state control. "Dissatisfaction is in a way a part of the national culture," the writer Horia Patapievici said. "The idea is that you have to eliminate competition and dislike the person who succeeds. "


Moving the economy away from state control, with its guaranteed incomes and employment, has already led to a rise in unemployment to 11 percent and a huge drop in living standards.


In November, 6,000 disgruntled workers ransacked a government building in the western city of Brasov to protest planned cutbacks. It was the worst labor violence in Romania since coal miners went on a rampage in February, leaving dozens of army and police personnel injured.


"The majority of Romanians are not very enthusiastic about capitalism," Brucan said. "Capitalism was demonized in the communist era. Up to now, they have known only the bad aspects of capitalism. In Romania, you have a big majority against radical reforms."