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DIRECTORATE GENERAL for RESEARCH Directorate a Division for International and Constitutional Affairs ------WIP 2002/02/0054-0055 AL/Bo Luxembourg, 13 February 2002*

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DIRECTORATE GENERAL for RESEARCH Directorate a Division for International and Constitutional Affairs ------WIP 2002/02/0054-0055 AL/Bo Luxembourg, 13 February 2002* DIRECTORATE GENERAL FOR RESEARCH Directorate A Division for International and Constitutional affairs ------------------------------------------------------------------- WIP 2002/02/0054-0055 AL/bo Luxembourg, 13 February 2002* NOTE ON THE POLITICAL AND ECONOMIC SITUATION IN ROMANIA AND ITS RELATIONS WITH THE EUROPEAN UNION IN THE FRAMEWORK OF ENLARGEMENT This note has been prepared for the information of Members of the European Parliament. The opinions expressed in this document are the author's and do not necessarily reflect the position of the European Parliament. * Updated 11 March 2002 Sources: - European Commission - European Parliament - European Council - Economic Intelligence Unit - Oxford Analytica - ISI Emerging Markets - Reuters Business Briefing -World Markets Country Analysis - BBC Monitoring Service WIP/2002/02/0054-55/rev. FdR 464703 PE 313.139 NOTE ON THE POLITICAL AND ECONOMIC SITUATION IN ROMANIA AND ITS RELATIONS WITH THE EUROPEAN UNION IN THE FRAMEWORK OF ENLARGEMENT CONTENTS SUMMARY................................................................................................................................ 3 I. POLITICAL SITUATION a) Historical background......................................................................................................3 b) Institutions...................................................................... .................................................5 c) Recent developments...................................................... .................................................6 II. ECONOMIC SITUATION a) Current trends and future outlook..................................................................................10 b) IMF,World Bank negotiations........................................................................................11 III. RELATIONS WITH THE EU a) European Commission...................................................................................................12 b) European Parliament......................................................................................................14 c) European Council and Council of Ministers..................................................................16 ANNEX: 1. Government List.............................................................................................. ............18 2. Institutions ........................................................................................19 3 Basic statistics for candidate countries ......................................................................23 * * * For further information please contact: Anton Lensen, European Parliament, DG IV, Luxembourg Division for International and Constitutional Affairs Tel: (352) 4300 23707 / Fax: (352) 4300 27724 / e-mail: [email protected] Frank McAvoy, European Parliament, DGIV, Brussels Tel: (32) 2 2842130 / Fax: (32) 2 2849063 / e-mail:[email protected] WIP/2002/02/0054-55/rev. FdR 464703 PE 313.139 SUMMARY After the Presidential and parliamentary elections of 26 November and 10 December 2000, the Party of Social Democracy (PDSR)1 won the largest number of seats and has formed a minority government headed by Prime Minister Adrian Nastase. Mr Iliescu secured the presidency in the second round run-off. The major surprise in both elections was the strength of the challenge from the nationalist Greater Romania Party (PRM), led by Corneliu Vadim Tudor. The government enjoys a working majority in parliament thanks to support from the Hungarian Democratic Union in Romania, based on a cooperation agreement which was renewed at the beginning of 2002. The government inherited an economy, which was tentatively emerging from three years of severe recession. Real GDP is estimated to have grown by 4.6% in 2001, although the prospects for 2002 are somewhat less favourable given the slowdown in global growth. In its Autumn Forecast, the European Commission concludes that implementation of the government's economic policy programme could deliver sustained high growth of GDP and sizeable reductions in the inflation rate, along with the stabilisation of the current account deficit. However, partial policy implementation and a sharper-than-expected deterioration in the international economic environment are significant risks for the Romanian economy2. Romania's major foreign policy initiatives are directed towards obtaining membership of the EU and NATO. By the end of December 2001 Romania had opened 17 chapters in the accession negotiations with the EU and had provisionally closed 9 chapters. At the European Council of 14-15 December 2001 in Laeken, the heads of government reinforced the EU political will for enlargement by naming the countries which could be ready for the completion of enlargement negotiations by the end of 2002. Romania and Bulgaria were not in the list. However, the European Council appreciated the efforts made by Romania and Bulgaria and would encourage them to continue on that course. The European Council also stated that "if those countries are to receive specific support there must be a precise framework with a timetable, and an appropriate roadmap". I. POLITICAL SITUATION a) Historical background The origin of the modern Romanian state can be traced to the 1859 unification of the principalities of Moldova and Wallachia under Prince Alexandru Ioan Cuza. However, the Prince Michael the Brave achieved the first unification of the traditional Romanian-inhabited lands (Transylvania, Moldova and Wallachia) for a short time in 1600. The new state gained formal independence in 1878 and became a kingdom three years later, but comprised only a part of the Romanian population; three million remained in Transylvania (which was attached to Hungary in 1867). About two million settled in Bessarabia (controlled by Russia since 1812), and smaller groups in Dobrudja (in Bulgaria). The union of all Romanian-inhabited lands was achieved at the end of the First World War. In 1940, Romania was stripped of most of its 1918 gains by the Soviet Union, and by the German-dictated award of Northern Transylvania to Hungary. The 1947 Peace Treaty restored Romanian control over this area, but awarded Bessarabia and Northern Bucovina to the Soviet Union. 1 . In June 2001, the PDSR merged with other Social Democrat political formations to create the Party of Social Democracy (PSD). World Markets Country Analysis, Romania, Political Environment, 8 February, 2002. 2 European Commission, Economic reform Monistor, Issue 2001/4, November 2001. WIP/2002/02/0054-55 3 FdR 464703 PE 313.139 The Soviet-backed Romanian Communist Party (RCP) effectively seized power in 1945, and King Michael abdicated on 30 December 1947. The RCP gradually loosened its links with Moscow at the beginning of the 1960s, but adopted all the main features of a command economy. From 1965, when he came to power, Nicolae Ceausescu set about accumulating personal power, underpinned by the notorious Securitate secret police. By the late 1980s, the RCP leadership had degenerated into a nepotistic clan. Because of hardship and repression, which held back economic and social development, there was little opposition until December 1989, when the Ceausescu dictatorship was overthrown. Under the umbrella of the National Salvation Front (NSF), the coup leaders quickly reversed some of Ceausescu's most unpopular policies. They reduced working hours, removed curbs on domestic energy consumption and lifted restrictions on the press. Limited agricultural reforms secured rural support, which helped the NSF to win a strong mandate at the May 1990 general election. Its candidate, Ion Iliescu, portrayed as a moderating force, won the presidency by a large majority. Mr Iliescu dismissed Mr Roman as Prime minister, and Mr Roman subsequently left the NSF to form the Democratic Party (PD), a centre-left party with a greater orientation to economic reform. The Democratic National Salvation Front (DNSF), the dominant faction after the split of the NSF, remained the largest parliamentary party after the general election in September 1992, and in the presidential election of 1992 Mr Iliescu was re-elected after a second-round run-off. The DNSF was subsequently renamed the Party of Social Democracy in Romania (PDSR). Meanwhile, the major centre-right parties created an umbrella organisation, the DC, which was dominated by the National Peasant- Christian Democratic Party (NPP-CD) and became the major source of parliamentary opposition to the PDSR. Important recent events3 November 1996: The Democratic Convention (DC) wins the largest number of seats in parliament and forms a governing coalition with the Social Democratic Union (SDU) and the Hungarian Democratic Union in Romania (UDMR). The DC's Emil Constantinescu is elect president, and appoints Victor Ciorbea as Prime Minister. January 1997: A fast-track economic reform programme is launched. The IMF and World Bank renew their support. July 1997: Romania is excluded from the first-round list of NATO and EU enlargement candidates. December 1999: The EU Council of Ministers approves the opening of accession negotiations for Romania. December 1999: Mr Vasile is dismissed as Prime Minister and replaced by the governor of the National Bank of Romania (the central bank), Mugur Isarescu. 3 EIU, Country Profile Romania, March 2001. WIP/2002/02/0054-55 4 FdR 464703 PE 313.139 November 2000: The Party of Social Democracy in Romania (PDSR) is elected as the largest single party in the new Parliament. The nationalist Greater Romania Party
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