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

AND ITS RELATIONS WITH THE

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 - - 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 in the second round run-off. The major surprise in both elections was the strength of the challenge from the nationalist 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 . 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 (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, , 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 is elect president, and appoints 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 (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 (PRM) comes a comfortable second after the ruling DC fails to cross the threshold for representation in the new parliament. December 2000: Mr Iliescu returns as President after a comfortable second-round victory over Mr Tudor. The PDSR forms a single-party minority government under Adrian Nastase. October 2001: The IMF approved a new 18-month stand-by agreement with emphasis on a fiscal tightening. b) Institutions4

The present Constitution was approved by referendum on 8 December 1991. Parliament is a bicameral legislature, made up of a 345-seat Chamber of Deputies and a 140-seat Senate. Members of Parliament are elected by universal suffrage, using proportional representation, for four-year terms. Parliamentary elections took place on 26 November 2000 and a new minority government of the PDSR took over with Adrian Nastase as Prime Minister. The nationalist Greater Romania Party (PRM) finished a strong second in both the Senate and Chamber, gaining about 20% of the vote to the PDSR's 37%, while the centrist parties of the outgoing government were squeezed, the senior coalition party NPP-CD failing to gain enough votes to win any seats.

The results of the parliamentary elections of November 2000 in terms of seats obtained were as follows:

Party Chamber of Deputies Senate Party of Social Democracy of Romania (PDSR) 155 65 Greater Romania Party (PRM) 84 37 Democratic Party (PD) 31 13 National Liberal Party (NLP) 30 13 Hungarian Democratic Union in Romania (UDMR) 27 12 Others5 18 Total 345 140

The Constitution confers considerable power on the President, who is elected for a four-year term and can serve a maximum of two terms. In December 2000, in the closely-watched second round of the presidential elections, PDSR leader, Ion Iliescu, defeated his main challenger, Corneliu Vadim Tudor of the Greater Romania Party, obtaining 66.83% to the latter's 33.17%.

Romania is divided into 40 local government districts and the municipality of . There is also a system of prefects appointed by central government. In the local elections of June 2000 the PDSR made significant gains in local councils. The turnout was low. The judicial authority consists of the law courts, the justice ministry and the Higher Council of Magistracy.

4 For a more detailed institutional survey of Romania see Annex 2 : International Institute for Democracy, Political Situation in the Balkans, Strasbourg 2001, http://www.iidemocracy.coe.int/StabilityPact/Docs/pdf/polsitbalkans.pdf 5 Other parties took less than 4% of the vote and failed to qualify for parliamentary representation; 18 seats in the Chamber of Deputies are assigned to representatives of minorities who obtained at least 1 273 votes WIP/2002/02/0054-55 5 FdR 464703 PE 313.139 c) Recent developments i) The government and its programme Although the PSD minority government has about 42% of parliamentary seats, (the PSD Parliamentary Group in the Chamber currently has 172 members: 160 PSD, 8 PUR and 4 independents) it has a working parliamentary majority. The Prime Minister is Adrian Nastase, a lawyer and former Foreign Minister (1990-1992) and Speaker of the Chamber. Mr Nastase is credited with having helped steer his party towards the centre ground of politics and is a strong supporter of EU and NATO membership for Romania. Government coherence has been enhanced by the unity of the PSD group and also by the fact that it enjoys majority support6 thanks to the UDMR7 with which it signed a formal co-operation pact. On 5 December 2001, Mr Nastase and the UDMR chairman, Bela Marko, agreed to set up a joint commission to examine how the co-operation agreement between the two formations has been implemented at political, parliamentary, state and government levels.

The accord with the UDMR also contained pledges on minority rights. On 21 June 2001, the government set up the National Minorities Council (NMC), an advisory body whose activity objective is to ensure the relations with the legal organisations of the Romanian citizens belonging to other ethnic minorities which make up more than 10 percent of Romania's population8. The NMC meeting in July 2001 criticised the legislation creating the Council for failing to require the executive to consult with it on all legislation pertaining to national minorities. Access to the media by national minorities remained limited9.

The signing on 22 December 2001 of the Memorandum of Understanding by Hungary and Romania, resolving at least for the time being the dispute over the 'Status Law' adopted by the Hungarian Parliament, is important in the context of the relations between the PSD and UDMR given that tensions over the issue could have put strains on their cooperation agreement (see below, section c.iv).

The PSD has also reached agreement on some issues with the National Liberal Party (NLP) and the Democratic Party (PD), although they have been critical of the government of other questions.

On 25 January 2001, Mr Nastase declared before the EP Foreign Affairs Committee that the first goal of the government is to restore confidence. The government programme was the fruit of consensus between different parties. ii) The party political landscape after the elections Although the PSD's election victory was widely expected, the sudden last-minute surge in support for the nationalist PRM in both parliamentary and presidential polls took all observers by surprise. From an estimated level of support of 7-8% earlier in the year, the PRM scored nearly 21% of the vote in the elections, and its populist leader, Corneliu Vadim Tudor, became the main challenger in the presidential contest. International reaction was one of concern in the immediate aftermath of the November 2000 elections, when there still seemed a real possibility of a minority PRM government and a second round victory for Tudor in the presidential run-off.

6 EIU Country Report, Romania, January 2002 7 It represents the interests of 1.6 millions ethnic 8 BBC Monitoring International Reports, 23 June 2001, "Romania to set up Council for Ethnic Minorities". 9 Human Rights Watch Report, Romania, 2002. http://www.hrw.org, WIP/2002/02/0054-55 6 FdR 464703 PE 313.139 The PRM is still the most popular opposition party, although its support in recent opinion polls has fallen somewhat below the 20% it achieved at the time of the last elections. The other opposition parties have much less support in the opinion polls.10 The PNTCD, which was the dominant party in the last government, did not win any seats in the new parliament. Its leader, , resigned on 6 July 2001 and former Prime Minister Victor Ciorbea was elected chairman the following month. The party split, and some dissident former members left the PNTCD with Mr Marga founded the Popular Christian Party at a congress held on 15 December 2001, at which a former PNTCD deputy-chairman, Vasile Lupu was elected chairman. Meanwhile, a court ruling in December 2001 allowed the merger of the PNTCD and the National Christian Democratic Alliance (ANCD) to go ahead.

On 22 January 2002, the National Liberal Party (PNL) merged with the Alliance for Romania (ApR), a party which split from the PSDR in 1997 and failed to cross the 5% threshold required to win representation in the current parliament,. The new party retains the PNL name and logo and aims to try to create a powerful centre right force for the next elections. The PNL is rumoured to be in discussion with other smaller parties on the right and centre-right.

The Democratic Party (PD), a centre-left party originally led by former Prime Minister and Foreign Minister , which broke away from the PSDR, saw its support decline in the 2000 election to just over 7% compared with the 13% it achieved in 1996. The current leader is Traian Basescu, mayor of Bucharest. Latest opinion polls put its support at 12.5%. iii) Child care Following EU insistence that Romania take firm action to improve the child care situation before accession negotiations could begin; the government set up the Romanian National Agency of Child Protection in 1999. On the basis of the Memorandum signed with the National Agency, UNICEF is ensuring financial assistance worth US$ 3.5 million11.

In December 2000, UNICEF issued a report on the state of Romania's children in the past decade. At the launch of the report, the UNICEF regional representative, Karin Hulshof, indicated that, while the living conditions of Romania's children, many abandoned and AIDS- infected, had improved since the fall of , anaemia and malnutrition posed growing threats not only to children and pregnant women but also to the general population.

The government's programme of June 2001 recognises the health and well being of all the children of Romania as a priority. In particular, it proposes to draw up and promote a national public programme, to be financed by the EU, regarding the responsibilities of the family and its role in the education of children; to provide for a US$ 10 million budget over two years for a child health programme to be developed in partnership with the WHO; to implement the proposed € 19 million PHARE12 programme to support necessary legislative reform and the creation of new welfare systems; to create a single legislative framework for children's rights, juvenile justice and the regulation of NGO activities in this field and to create a legal system for child protection and the investigation of crimes against children; to intensify action against organised crime, particularly with regard to trafficking in children; to re-examine the principles

10 The IMAS poll of February 2002 showed the following support for the main parties: PSD 52.5%, PRM 17.5%, PNL 6%, UDMR 6.2%, PD 12.5%, PUR 2.1%, NPP-CD 1.2%, UFD 0.9%, Others 1.1%. 11 Internet Securities Daily Bulletin, 24 August 2001. "Nastase cabinet established priorities for child protection" 12 The PHARE programme accepted 111 projects in the field of the developement of the services of child protection. WIP/2002/02/0054-55 7 FdR 464703 PE 313.139 governing international adoptions as recommended by the EP13.

The Commission's Fourth Regular Report on Romania14 acknowledged that the government had taken legislative measures to address the problem of childcare institutions, but the problem of street children remains, and a better targeted scheme on social allowances for families is required to prevent children of being abandoned15.

In June 2001, as a reaction to a provisional draft report on Romania's membership application and the state of negotiations, under discussion in the EP Foreign Affairs Committee, the Romanian government provided detailed information on the Romanian situation on children rights, taking account that the UN Convention for Rights of the Child has been included in the acquis communautaire, present and future actions of the government in adoption legislation, in NGO activities, scrutiny of EU financial assistance for child protection and institutionalised and street children16. In the meantime, international adoptions of Romanian institutionalised children had been halted for one year after reports of serious malfunctioning. iv) Corruption

In its Regular Report published in November 2000, the European Commission noted that corruption was a widespread and systemic problem that undermined the legal system, the economy and public confidence in government. In its latest report the Commission concludes that, 'with the important exception of public procurement legislation, there has been no substantial progress in the fight agaainst corruption since last year's report'.

The new government launched an anti-corruption campaign in 2001, but the Prime Minister has already complained about what he termed 'inexcusable delays' in corruption cases and has criticised many local government mayors and councillors from his own party. International pressures are being exercised on the government not only by the EU but also by NATO and the IMF to implement political and economic reforms, including increasing transparency. 17On 16 January 2002, a National Prosecutor's office was established to fight corruption and on 22 January the government decided to extend the existing ban on ministers sitting on company boards to deputy ministers, prefects and deputy prefects.

The Prime Minister also has to contend with the potential political fallout from the recent 'Armageddon II' affair, which centres on the circulation over the internet of allegations of corruption and what are claimed to be detailed accounts of his personal wealth to press agencies and foreign missions. The reaction of the authorities to this affair has been widely criticised and, on 21 January 2002, the Prime Minister admitted that they had over-reacted and argued that government and public institutions must become accustomed to dealing with criticism.18 v) External relations The Foreign Minister, Mircea Geoana, confirmed that Romania's most important foreign policy objectives would be integration within the EU and NATO, the development of open, pragmatic

13 EP, A5-0259/2001 final, 24 July 2001. 14 COM (2001), 700 final, 13.11.2001. "Making a success of enlargement. Strategy paper and report of the EC on the progress towards accession by each of the candidate countries". 15 EIU Country Report, Romania, January 2002, page 20. 16 BBC Monitoring Service, "Romania", 16 June 2001. 17 Oxford Analytica, Daily Brief, Romania: External pressure to combat corruption, 22 February 2002 18 Oxford Analytica, Daily Brief, Romania: Government fights corruption allegations, 29 January 2002 WIP/2002/02/0054-55 8 FdR 464703 PE 313.139 and good-neighbourly relations with adjacent countries and active participation in regional and sub-regional co-operation initiatives.

The management of the OSCE Presidency demonstrated Romania's capacity to assume its international leadership responsibilities in the field of foreign affairs19.

Hungary Although traditionally difficult since the Treaty of Trianon in 1920, which left many ethnic Hungarians outside Hungary, many of them in Transylvania, relations between Romania and Hungary have improved over the last few years, especially following the signing of a basic treaty in 1996 and the inclusion of the Hungarian Democratic Union (UDMR) in the government in 1997. Important progress has been made in the area covering the education law. Some outstanding issues had yet to be solved such as the restitution of church property.

In mid-February 2001, both chambers of the Romanian Parliament passed the minority language bill, providing the use of minority languages (local councils, publication of legal decisions) in areas where significant national minorities live.

The Hungarian Parliament's approval of the "Status Law" extending benefits to ethnic Hungarians in neighbouring countries caused concern in Romania and risked hampering improving relations between the two countries20. The law gives limited rights to ethnic Hungarians living outside Hungary, and Romania considered this law as being a discriminatory, as it treats Romanian citizens differently according to their ethnic origin. A Memorandum of Understanding between Hungary and Romania on Hungary's "Status Law" was signed on 22 December 2001. The Memorandum has satisfied some of the concerns expressed by Romania. Six months after the signature of the Memorandum the parties are to initiate a review and make the necessary amendments to the law according to their common experiences. In the opinion of the EP Legal Service, this Memorandum and the implementing legislation will have to be examined in the light of the Accession Treaties.

Moldova Re-unification with Moldova, although officially a long-term objective, has lost support on both sides. Romania has supported Moldova's admission to the Stability Pact and its participation in regional and sub-regional co-operation projects. Romania introduced a new passport requirement for visitors from Moldova in July 2001, in order to comply with EU requirements for the abolition of visas between Romania and the EU.

Bulgaria After years of delay that had strained relations somewhat, agreement was finally reached with Bulgaria on the construction of a second bridge over the Danube linking Vidin and Calafat.

Yugoslavia Relations were strained by Romania's cooperation with NATO during the Kosovo campaign. Following the changes of government in both countries, the new Romanian authorities have expressed a desire to resume the traditional cooperation relations.

Russia The Romanian and Russian governments are taking steps to improve their bilateral relations. A

19 COM (2001) 700 final, 13.11.2001. 20 Oxford Analytica, 5 June 2001, "Hungarian Status Bill". WIP/2002/02/0054-55 9 FdR 464703 PE 313.139 political protocol is under preparation for early 2002. This will be the first agreement between the two countries in the post-communist era. A number of outstanding issues remain to be resolved between the two countries, such as reparations for the seizure of Romanian territory by the Soviet Union in the 1940s, and compensation for two trainloads of gold sent to Russia for safekeeping in 1916.21

II. ECONOMIC SITUATION a) Current trends and future outlook

After real GDP growth of 1.6% in Romania in 2000, following three consecutive years of decline, GDP growth accelerated to 4.9% in the first half of 2001. GDP growth was driven by domestic demand, in particular rising investment (up 6.7%) and household consumption (up 7.6%).22 Sustained high GDP growth in the medium run will depend greatly on a better export performance. The external sector made a powerful contribution to economic growth in 2000. Export growth is expected to follow the economic cycle of Romania's main export markets, slowing down in the first half of 2001 and accelerating only in 2003.23

The current account deficit widened sharply in the first seven months of 2001 reaching 3.6% of projected GDP, compared to 3.7% of GDP in the entire previous year.24 It is expected that the current account deficit will hit 6% of GDP at the end of 2001, rendering Romania vulnerable to shifts in international capital inflows and outflows.25 This trend is projected to reverse with the tightening of the monetary policy and the progressive implementation of structural reforms in the economy. The medium-term forecast features a declining current account deficit (falling to 2.3% of GDP in 2003) due to increased capital transfers from abroad.26

There is little prospect of any significant improvement in inflation performance, according to observers. The central bank has effectively abandoned the objective of price stability, in favour of a real exchange rate target and the accumulation of foreign exchange reserves. The forecast for 2001 anticipates an average inflation rate of around 37 percent.27 However, there are considerable risks that inflation may remain well above the forecast.

The government budget for 2001, adopted in April 2001, targeted a fiscal deficit of 3.7 percent of GDP. This projection was revised downwards in June 2001 to 3.5% of GDP as a result of better than expected fiscal performance in the first half of the year (2% of GDP). In line with this tighter fiscal policy stance, the deficit target for 2002 is set at 3% of GDP.28 On 15 November 2001, the 2002 budget was approved by parliament. It foresees a deficit equivalent to 3% of GDP, in line with the agreement with the IMF. The budget is based on GDP growth of 5% in 2002 and inflation of 22%. If these assumptions prove too optimistic, the government may be faced with the choice of running a higher deficit or cutting public expenditure. The

21 EIU Country Report, Romania, January 2002, page 18. 22 European Commission, "Autumn 2001 Forecast," Economic Reform Monitor, Issue 2001/4, November 2001. 23 Ibid. 24 European Commission, 2001 Regular Report on Romania's Progress Towards Accession, 13 November 2001. 25 European Commission, "Autumn 2001 Forecast," Economic Reform Monitor, Issue 2001/4, November 2001. 26 Ibid. 27 European Commission, 2001 Regular Report on Romania's Progress Towards Accession, 13 November 2001. 28 Ibid. WIP/2002/02/0054-55 10 FdR 464703 PE 313.139 budget is associated with an austerity programme, although the government is also planning to reduce the numbers of people living below the poverty threshold (43% in 2000) by introducing a minimum income guarantee.29

At the end of 2000, there were signs that the government might put off privatising several important state-owned enterprises to 2002 and beyond. However, the authorities have reaffirmed their commitment to privatisation and developed elaborate plans for the sale of 64 of the largest state-owned enterprises.30 It is an encouraging sign that the first major privatisation under the government of Adrian Nastase, was that of Banca Agricola to two foreign buyers.31 Another important privatisation that has made progress is that of the large steelmaker SIDEX. The government hopes to raise US$400-500 m. in privatisation proceeds in 2001, but in view of the high indebtedness of companies on sale, this amount may not be realised. In 2002, the government plans to privatise the Banca Commerciala Romana and the Alro aluminium smelter among other companies foreseen in the second public sector adjustment loan concluded with the IMF (PSAL 2).

The unemployment level has been on a downward trend in the first months of 2001 but is expected to increase slightly with the acceleration of structural reform in the next few years.32 In the medium run, unemployment will tend not to increase dramatically due to the combined affect of shrinking population and rapid growth of economic activity in the country.33

Main features of country forecast - Romania Annual percentage change 2000 2001 2002 2003 GDP at constant prices 1.6 4.6 4.4 4.8 private consumption -1.2 5.1 4.2 4.0 public consumption 15.6 4.9 3.0 3.0 gross fixed capital formation 5.5 9.5 8.9 9.5 exports (goods and services) 23.9 12.4 5.8 8.3 imports (goods and services) 29.1 16.3 7.0 7.4

Inflation (a) 45.7 34.1 26.0 17.5

Unemployment (b) 7.1 6.9 7.2 7.2

Government deficit (c) -4.0 -3.5 -3.0 -3.0

Trade balance (c) -4.6 -7.4 -7.8 -7.7 Current account balance (c) -3.8 -6.2 -6.1 -5.7 a) average consumer price index; b) percentage of labour force; c) percentage of GDP Source: European Commission, Directorate General Economic and Financial Affairs, Economic Reform Monitor, Issue 2001/4, November 2001. b) The IMF and the World Bank Contribution

Romania remains dependent on IMF support for its economic transformation. On 31 October

29 EIU Country Report Romania, January 2002 30 European Commission, Regular Report, November 2001 31 EIU Country Report Romania, November 2001. 32 European Commission, "Autumn 2001 Forecast," Economic Reform Monitor, Issue 2001/4, November 2001. 33 Ibid. WIP/2002/02/0054-55 11 FdR 464703 PE 313.139 2001, the Romanian government concluded a new 18-month stand-by agreement with the IMF for SDR300m (about US$383m) in support of an agreed economic programme for 2001-02. The main points of the programme include government commitments to tighten fiscal policy in order to reduce inflation and contain the current-account deficit; measures to address the poor financial performance of state-owned enterprises and utilities; and the implementation of an ambitious privatisation programme.34 The terms of the new IMF stand-by loan will condition economic policy in the short run.

Policy trends over the next two years might reflect tensions between the pro- and anti-reformist wings of the governing PDSR. The government has promised conflicting objectives: to bring down inflation and the budget deficit, and conform with IMF requirements, but at the same time to reduce the tax burden on employers and raise income for the poorest households. It has also begun its term with an expansionary fiscal policy. However, it has taken a number of measures to accelerate privatisation and conform to the World Bank's private-sector adjustment loan programme. This policy stance is intended to convince the World Bank to authorise the second public-sector adjustment loan (PSAL-2), worth US$300m, which could be the first step towards the successive release of World Bank credits of US$1bn in 2002-04.35

III. RELATIONS WITH THE EU a) European Commission

i) Romania's application, the Commission's Opinion and the Accession Partnership Romania submitted its application for membership of the EU on 22 June 1995. The Commission issued its opinion in July 1997. In Agenda 2000, which grouped the various opinions together along with proposals aimed at accompanying the accession process, the Commission placed Romania in the group of countries that it felt were not able to integrate the acquis communautaire in the medium term. The Luxembourg European Council confirmed the Commission's proposals in December 1997, including the adoption of Accession Partnerships as the key feature of the enhanced pre-accession strategy. The first partnerships were decided in March 1998 and the current document is the text of October 1999, revised in February 2000 in the light of the regular progress reports.

ii) Regular reports The Commission published its first evaluation report on Romania's progress towards accession on 4 November 1998. Following the publication of the second series of reports and the Commission's new accession strategy on 13 October 1999, the Helsinki European Council decided to open negotiations with all the applicant countries of Central and Eastern Europe.

On 13 November 2001, the European Commission published its Fourth Regular Report on Romania's progress towards accession.36 The main conclusions were :

"Romania continues to fulfil the Copenhagen political criteria. The efficiency of the legislature has improved considerably as has the overall functioning of government. The reform of judicial procedures has continued and effective implementation of new legislation on public

34 EIU Country Report Romania, November 2001. 35 Ibid. 36 The full text of the regular report can be found on the Commission's website at: http://www.europa.eu.int/comm/enlargement/report2001/ro_en.pdf. WIP/2002/02/0054-55 12 FdR 464703 PE 313.139 procurement should play an important role in the fight against corruption37. Other particular concerns are the lack of progress in carrying out a strategic reform of the public administration and the need to further guarantee the independence of the judiciary.

Significant progress has been made in the field of human rights. Reform of the childcare system is well under way; homosexuality has been decriminalised; and important new legislation has been passed regarding the restitution of property and the treatment of asylum seekers and refugees. (...)

Romania has addressed the short-term Accession Partnership priorities related to the political criteria by improving the conditions of institutionalised children, making progress with the reform of childcare policy, developing a national strategy for Roma, and taking measures to provide support to minority programmes. As regards medium-term priorities, progress has been made towards meeting the medium-term priority related to childcare, and initiatives have been taken to increase the Roma’s access to education. However, important actions are still needed in other areas: the Roma strategy has not yet been implemented; anti-discrimination legislation has been adopted but it is not yet operational; and the demilitarisation of the police has not yet started. (...)

Romania has made progress towards establishing a functioning market economy and although it would not, in the medium term, be able to cope with competitive pressure and market forces within the Union, it has taken measures that would allow to develop its future capacity, provided that it keeps to the engaged economic reform path.

Romania has made progress towards macroeconomic stabilisation: growth has resumed and exports have increased. The government is acutely aware of the need to implement the programme agreed with the IMF and the Pre-accession Economic Programme. Structural reforms have been re-launched, most notably in the area of privatisation and energy price adjustments. The recent privatisations demonstrate a new commitment towards the establishment of a functioning market economy.

However, there are still serious economic imbalances with high inflation and a widening current account deficit, in a difficult social environment. The still fragile macroeconomic environment, the uncertain legal framework and the poor administrative capacity hinder the development of the private sector. Large parts of the enterprise sector have yet to start restructuring or are still in the early stages of the process. Romania’s reform agenda remains considerable. (...)

Romania has continued to make progress with the adoption of the acquis. However, advances in legal transposition have not always been matched by improvements in administrative capacity. (...)

The overall capacity of the public administration to implement the acquis remains limited and represents a major constraint on Romania’s accession preparations. While certain parts of the

37 In January 2002 an anti-corruption action plan was approved and launched immediately. It is divided into two parts: the first one concerning corruption among public servants, the second refers to corruption in the Ministry of the Interior. World Markets Country Analysis, Romania. "Anti-corruption action plan approved", 10 January 2002. An anonymous report entitled “Armageddon II” distributed to foreign embassies in Bucharest and newsagencies on 16 January 2002 focused on high-level corruption in Romania. Oxford Analytica, 29 January 2002. “Romania: Corruption Concerns”.

WIP/2002/02/0054-55 13 FdR 464703 PE 313.139 administration are able to function effectively there are many important sectors where the weakness of the administration is a serious cause for concern. These concerns extend beyond adoption of the acquis and also apply to the management of EC funds. There has been no significant progress in developing administrative capacity although this issue is beginning to be addressed by the government. (...)"38

The Romanian Prime Minister, Adrian Nastase, welcomed the new report and remarked that it is "more favourable than the 2000 Report. For the first time, the European Commission includes Romania among the candidate countries that have made significant progress in the EU accession process. For the first time, Romania is treated as a reliable partner that respects its commitments," he declared.39

From 1 January 2002, Romanian citizens are exempted from visa obligations40. Justification to do so was based on Commission findings which noted a marked improvement in Romania's illegal immigration policy, its visa policy and the controls at its borders. The United Kingdom and Ireland have decided not to participate in the application of this Regulation. Hence the provisions of that Directive will not apply to Ireland or to United Kingdom.

ii) Pre-accession funding Romania benefits as all applicant countries of Central and Eastern Europe from three pre- accession instruments which are PHARE, SAPARD and ISPA programmes. The PHARE programme provides Romania with support for the institution building, investment to strengthen the regulatory infrastructure needed to ensure compliance with the acquis and investment in economic and social cohesion41. The SAPARD programme provides aid for agricultural and rural development has now a legal basis for implementation in Romania which is the Romania's National Plan for Agricultural and Rural Development, approved in December 2000. The Romanian government decided to concentrate efforts on three of the measures of the programme which were: rural infrastructure, processing and marketing of agricultural and fishery products and technical assistance42. The sectors benefiting from ISPA programme are transport and environment. An overall ISPA strategy adopted in 2000 by Romania and the Commission is currently being revised. It will concentrate on heavy investment, which are intended to bring Romania to EC standards and on projects located on the Trans-European Networks43.

For the period 1990 to 1998, Romania received € 971.85 million in contracts for which payments totalling € 675.75 million were made. The indicative annual allocation for Romania in the years 2000-2002 will on average amount € 260 million from Phare, € 150 from SAPARD,

38 Abstracts from the 2001 Regular Report on Romania's Progress Towards Accession, SEC (2001) 1753, 13 November 2001, http://www.europa.eu.int/comm/enlargement/report2001/ro_en.pdf. 39 -East of 27/11/2001, Issue 104. 40 Council Regulation 2414/2001/EC ammending Regulation 539/2001/EC. On 29 November 2001, the European Parliament had approved the proposal for this Regulation, listing the third countries whose nationals must be in possession of visas when crossing the external borders and those whose nationals are exempt from this requirement 41 In order to meet rapidly the EC standards, the European Commission proposed in 1998 to mobilise human and financial resources to help applicant countries to implement and enforce the acquis through the process of twinning administrations and agencies. For Romania, under Phare 2001 programme 12 twinning projects have been designed in the field of public administration reform, fisheries, road safety, management, PME policy migration, border management, etc. 42 COM (2001) 700 final, 13.11.2001, page 11. 2001 Regular Report on Romania's Progress Towards Accession 43 Implementation of the ISPA project will follow the same general institutional framework as the Phare programme, with the National Fund at the Ministry of Finance which is in charge for the overall financial management and with number of Agencies being responsible for the technical implementation. Ibid. WIP/2002/02/0054-55 14 FdR 464703 PE 313.139 and between € 208 and € 270 million from ISPA.44 b) European Parliament

In 3 December 1998, the European Parliament adopted a Resolution on Romania's application for membership of the European Union, with a view to the European Council to be held in Vienna on 12 and 13 December 199845() In the resolution, Parliament hoped "that Romania, which in general meets the political criteria laid down in Copenhagen, will remedy the outstanding shortcomings concerning human rights, the protection of children, judicial control over the police, the freedom of the press, prison conditions, the situation of the Roma and the campaign against corruption"; encouraged "Romania, which is still a long way from meeting the Copenhagen economic criteria, to press on with the vital reforms, in particular the privatisation process, the reform of the banking system, the restructuring of the large State undertakings and the consolidation of a legal framework capable of attracting foreign investment, which will enable accession negotiations finally to begin"; and drew "Romania's attention to the need for an in-depth reform of its administration if these reforms are to be successfully carried out". The report shared the Commission's view that "it would be premature to open accession negotiations with Romania in 1999, although there can be no doubt about its aspiration to become part of the European Union".

In October 2000, the European Parliament adopted a Resolution on Romania's application for membership of the European Union and the state of negotiations46. In the resolution, Parliament welcomed the opening of negotiations but stresses the major effort Romania still has make, with EU support, to incorporate the acquis. In particular, it notes that, in overall terms, Romania meets the Copenhagen political criteria and, while welcoming the measures taken to improve the situation of minorities, it still considers that there is room for improvement in the situation of the Roma and Sinti. The resolution points to the stabilising and constructive role of Romania in the region and believes that its accession would be an asset to the Common Foreign and security policy.

On the economic situation, it notes that there is still cause for concern, despite signs of recovery, and urges the authorities to implement resolutely the action plan for the Medium-term Economic Strategy as an essential step towards meeting the Copenhagen economic criteria. Parliament calls for the removal of structural obstacles to the modernisation of agriculture and encourages the authorities to put in place the necessary administrative structures needed to benefit fully from the SAPARD programme.

The Resolution regretted the slow pace of reform of public administration, calls for swift adoption of the package of reforms of the judiciary and penal code and asks the Romanian authorities to remove the remaining obstacles to the adoption of the acquis. It also notes that much remains to be done to overcome corruption, despite numerous government initiatives. As regards the problem of children in institutions, Parliament confirms that accession to the EU requires a fundamental change in current practice going much further than the efforts which have been made so far and calls on EU institutions and the Romanian government to examine all possibilities for joint programmes to help secure a definitive solution to the problem.

44 2001 Regular Report on Romania's Progress Towards Accession, SEC (2001) 1753, 13 November 2001, http://www.europa.eu.int/comm/enlargement/report2001/ro_en.pdf. 45 Report A4-0428/1998, rapporteur for the Foreign Affairs Committee, Mr Pierre Bernard-Reymond. 46 Report A5-0247/2000, rapporteur for the Foreign Affairs Committee, Baroness Nicholson of Winterbourne. WIP/2002/02/0054-55 15 FdR 464703 PE 313.139 In its Resolution of 5 September 2001 on Romania's application for membership of the European Union and the state of negotiations47 (), the EP commended the measures taken by the Romanian government "to tackle root-and-branch reform of child health and development within the proper legal framework, including the suspension of international adoption to address trafficking directly."48 Implementation of these reforms, the resolution stated, will significantly enhance the smooth passage of the accession process and bring the date of EU membership considerably closer.49 Other issues taken up in the resolution include the need to integrate minorities; applause for improvements in macro-economic stabilisation; concern over the environment and the 'weak infrastructural capacity' in this sector; the importance of the fight against corruption and the contribution of Romania to regional stability.50

The European Parliament maintains regular relations with the Romanian Parliament through the EU- Romania Joint Parliamentary Committee. Its 12th meeting took place on 17-18 September 2001 in Bucharest. Meetings are usually held twice a year. Prime Minister, Adrian Nastase, addressed the EP Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy on 25 January 2001. The Committee organised a special information visit to Romania on 19-20 November 2001 in view of the Parliament’s September 2001 resolution and the Commission’s 4th Progress Report. c) European Council and Council of Ministers

At Luxembourg in December 1997, the Council decided to "launch an accession process comprising the ten central and eastern European applicant states and Cyprus". In addition, the Council "decided to convene bilateral intergovernmental conferences in the spring of 1998 to begin negotiations with Cyprus, Hungary, Poland, Estonia, the Czech Republic and Slovenia on the conditions for their entry into the Union and the ensuing Treaty adjustments". The enlargement process was duly launched in London on 12 March 1998, with the first European Conference.

At the Helsinki in December 1999, the European Council "decided to convene bilateral intergovernmental conferences in February 2000 to begin negotiations with Romania, Slovakia, Latvia, Lithuania, Bulgaria and Malta on the conditions for their entry into the Union and the ensuing Treaty adjustments." It stressed that "in the negotiations, each Candidate State will be judged on its own merits. This principle will apply both to opening of the various negotiating chapters and to the conduct of the negotiations. In order to maintain momentum in the negotiations, cumbersome procedures should be avoided. Candidate States that have now been brought into the negotiating process will have the possibility to catch up within a reasonable period of time with those already in negotiations if they have made sufficient progress in their preparations. Progress in negotiations must go hand in hand with progress in incorporating the acquis into legislation and actually implementing and enforcing it."

Accession negotiations started on 28 March 2000 The end of the Belgian Presidency in December 2001 had opened negotiations opened on seventeen chapters of the acquis, of which nine had been provisionally closed. The Commission foresees the possibility of opening all

47 Rapport A5-0259/2001, rapporteur for the Foreign Affairs Committee, Baroness Nicholson of Winterbourne. 48 EP Resolution of 05.09.2001 on Romania's application for membership of the European Union and the state of negotiations, A5-0259/2001. 49 EP Press Release, Daily Notebook of 05-09-2001, "Romania - cause for optimism." 50 Ibid. WIP/2002/02/0054-55 16 FdR 464703 PE 313.139 remaining chapters with Romania during 2002 and envisages an updated road map and a revised pre-accession strategy for Romania, if needed.51

The Nice European Council welcomed the stepping up of accession negotiations and endorsed the conclusions of the General Affairs Council of 4 December concerning the enlargement strategy proposed by the Commission, particularly the reaffirmation of the differentiation principle and the proposed 'road map'.

The Göteborg European Council of 15-16 June 2001 confirmed that the candidate countries will continue to be considered solely on their merits, that the enlargement process is irreversible and that the road map should make it possible to complete negotiations by the end of 2002 for the best prepared candidates with the objective that they should participate in the EP elections of 2004. The European Council decided that special efforts would be devoted to assist Romania and Bulgaria.

At the Laeken European Council of 14-15 December 2001 the heads of government reinforced the political message on enlargement by naming the countries concerned with the enlargement and which were "ready to a successful conclusion by the end of 2002"52. Bulgaria and Romania were not in the list. However, the EU leaders offered appreciation of "the efforts made by Bulgaria and Romania and would encourage them to continue on that course". The European Council declared that any specific support for Romania and Bulgaria requires a "precise framework with a timetable and an appropriate roadmap"53. The European Council declared that "negotiations will accordingly continue to respect the principle of differentiation, own merits and catching-up"54

The French Foreign Minister, Hubert Vedrine, has warned that a "big-bang" enlargement that left Bulgaria and Romania out of the process could destabilise South-East Europe and that it would be preferable to admit all 12 applicant countries in a single enlargement55.

The seventh EU-Romania Association Council of 19 March 2001 reviewed the state of Romania's preparation for accession. The progress made in meeting the priorities of the 1999 Accession Partnership is assessed in the 2001 Regular Report. The revised Romanian National Programme for the Adoption of the Acquis (NPAA) was adopted in June 2001 It covers the period 2001-2004. Actions are divided between short-term measures (2001 and 2002) and medium-term measures (2003-2004). The NPAA is divided into two volumes. The first provides a description of the current situation, the second lists the elements of acquis that need to be adopted, specifying the national measures proposed to meet each part of the acquis, indicating institutions responsible for initiating the required reforms and stating indicative deadlines56.

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51 Euro-east of 27/11/2001 N° 104. 52 Presidency Conclusions, Laeken 14-15 December 2001, http://ue.eu.int. 53 Ibid 54 Council of the EU, 15059/1/01, 10 December 2001. 55 EIU Country Report, Romania, January 2002, page 21. 56 COM (2001) 700 final, 13.11.2001, page 112. COM (2001) 660 final, 13.11.2001. "Proposal for a Council decision on the principles, priorities, intermediate objectives and conditions contained in the Accession Partnership with Romania" WIP/2002/02/0054-55 17 FdR 464703 PE 313.139 ANNEX 1

ROMANIA GOVERNMENT LIST

President Ion ILIESCU (Sworn in 20 December 2000 for a four-year term)

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PSD MINORITY GOVERNMENT: Prime Minister Adrian NASTASE (Appointed 21 December 2000)

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CABINET: Ioan Mircea Pascu: Defence : Interior Mircea Geoana: Foreign Affairs (f): European Integration Vasile Puscas: Minister Delegate to the Prime Minister; Chief EU negotiator Mihai Tanasescu: Finance Rodica Stanoiu (f): Justice Dan Matei Agathon: Tourism : Public Works, Transport and Housing : Communications and Information Technology Ioan Dan Popescu: Industry and Trade (f): Education and Research Marian Sarbu: Labour and Social Solidarity Vasile Dancu: Public Information (f): Small and Medium Enterprises and Co-operatives Ilie Sarbu: Agriculture, Food and Forestry Octav Cozmanca: Public Administration Leonard Cazan: Development and Forecasts Daniela Bartos (f): Health and Family Aurel Constantin Ilie: Water and Environment Georgiu Gingaras: Youth and Sports Razvan Theodorescu: Culture and Religious Affairs Acsinte Gaspar: Parliamentary Relations Ovidiu Musetescu: Privatisation Constantin Valeca: Minister Delegate at the Ministry for Education and Research Serban Mihailescu: Secretary-General of the Government

(CIRCA, Cambridge International Reference on Current Affairs, 14 May 2001)

18 ANNEX 2 Institutions of ROMANIA57

( based on International Institute for Democracy, Political Situation in the Balkans, Strasbourg 2001)

1.1.1. The Constitution

The was adopted on 8 December 1991.

The Government

President: Ion Iliescu (2000, PSD). The President is directly elected for a four-year term. Prime minister: Adrian Nastase (29 December 2000, PSD).

Governing coalition: theParty of Social Democracy (PSD)- Social Democrat and Humanist

Elections: Last presidential elections: 26 November and 10 December 2000.

1.1.1.1.1. The Parliament

1.2. 1. Composition and electoral system

The Romanian Parliament (Parlamentul Romaniei) is bicameral.

1) The Chamber of Deputies (Camera Deputatilor) has 345 members elected for four years. 327 members are elected by proportional representation with a 4% threshold and 19 members represent ethnic minorities. Romania consists of 42 multi-member constituencies, where 4 to 29 members have to be elected. This is one Deputy for every 70 000 inhabitants. The President of the Chamber of Deputies is (PSD). The Secretary General is Stefan Cristian Ionescu.

2) The Senate (Senatul) has 140 members elected for four years by proportional representation with a 4% threshold. The 42 multi-member constituencies have to elect 4 to 13 seats. This is one Senator for every 160 000 inhabitants. The President of the Senate is Nicolae Vacaroiu (PSD). The Secretary General is Constantin Sava.

Powers: - Parliament passes constitutional, organic and ordinary laws (Art. 72-1, Const.). - The Chambers meet in joint sessions in order to receive the message of the President of the Republic, to approve the State budget and the State social security budget, to declare general or partial mobilisation or a state of war, etc. (Art. 62-2, Const.). Electoral Law: 15 July 1992. Ministers can be members of the Parliament (Article 68-2, Const.).

19 Last parliamentary elections: 26 November 2000 Next elections in 2004

1.2.1. - The Chamber of Deputies Elections results November 2000 Party/Coalition Members Percentage Social Democratic Pole of Romania (PDSR) 155 36,6 The Romanian Social Democracy Party (PDSR, Andrei Marga), 142 leading party of the coalition Romanian Social Democratic Party (PSDR) 7 The Humanist Party of Romania (HUR) 6 Party of Greater Romania (PRM) 84 19,5 Democratic Party (PD) 31 7,0 National Liberal Party (PNL, Mircea Ionescu-Quintus) 30 6,9 Hungarian Democratic Union of Romania (UDMR) 27 6,8 Minorities 19 23,2 Representation of women: 37 out of 345 (10,7%).

Current Parliamentary groups (Source: Official Website of the Chamber of Deputies, March 2002) PSD Parliamentary Group PSD (Social Democrat and Humanist) 172 Members PRM Parliamentary Group PRM (Greater Romania) 69 Members PD Parliamentary Group of the Democrat Party 29 Members PNL Parliamentary Group of the National Liberal Party (PNL) 29 Members UDMR Parliamentary Group of the Democratic Alliance of Hungarians in Romania 27 Members Minorităţi Parliamentary Group of the National Minorities 18 Members Members who are not affiliated to any parliamentary group 1 Members

1.1.2.

1.1.3. - The Senate Election Results November 2000 Party/Coalition Members Percentage Social Democratic Pole of Romania (PDSR) 65 37.1 Party of Greater Romania (PRM) 37 21.0 National Liberal Party (PNL) 13 7.6 Democratic Party (PD) 13 7.5 Hungarian Democratic Union of Romania (UDMR) 12 6.9

Representation of women: 8 out of 140 (5,71%).

Current Parliamentary groups PSD Parliamentary Group PSD (Social Democrat and Humanist) 65 Members PRM Parliamentary Group PRM (Greater Romania) 36 Members PD Parliamentary Group of the Democrat Party 9 Members PNL Parliamentary Group of the National Liberal Party (PNL) 13 Members UD Parliamentary Group of the Democratic Alliance of Hungarians in Romania 12 Members MR Non-affiliated Members 5 Members

20 2. Organisation of Parliament

Standing committees - Committee for Economic Policy Reform, and Privatisation - Committee for Budget, Finance, and, Banks - Committee for Industries and Services - Committee for Agriculture, Forestry, Food Industry and Specific Services - Committee for Human Rights, Cults and National Minorities Issues - Committee for Public Administration Territorial Planning and Ecological Balance - Committee for Labour and Social Protection - Committee for Health and Family - Committee for Education, Science, Youth, and Sport - Committee for Culture, Arts, Mass Information Means - Committee for Legal Matters, Discipline, and Immunities - Committee for Defence Public Order, and National Security - Committee for Foreign Policy - Committee for the Investigation of Abuses, Corrupt Practices, and for Petitions - Committee for Standing Orders - Committee for information technologies and communications

3. Sessions: February-June and September-December (Art. 63, Const.).

4. The parliamentary system

Legislative process: - Initiative of laws: the Government, the Deputies, the Senators and at least 250.000 citizens having the right to vote. The citizens exercising the right to legislative initiative must belong to at least one quarter of the country’s counties, while each of these counties or the city of Budapest at least 10.000 signatures should be registered. This initiative from citizens may not concern matters concerning taxation, international affairs, amnesty or pardon (Art.73-1 and –2, Const.). - Vote: majority in each Chamber. - Referendum: the President may, after consultation of the Parliament, ask the people to express, by referendum, its will on matters of national interest.

Dissolution of the Assembly: After consultation with the Presidents of both Chambers and the leaders of the parliamentary groups, the may dissolve Parliament, if no vote of confidence has been obtained to form a government within 60 days after the first request was made, and only after rejection of at least two requests for investiture. The President can only dissolve Parliament once in the same year, and it cannot be dissolved during the last six months of the of the President of Romania or during a (Art. 89, Const.).

Motion of confidence: A motion of confidence must be initiated by at least one fourth of the total number of deputies and senators, and it passes with a majority vote of the deputies and senators (Art. 112, Const.).

21 Participation in European and Euro-Atlantic structures

Accession to the OSCE: 25 June 1973 (original member). Accession to the Council of Europe: 7 October 1993. Partner State of NATO. Associate Partner of the WEU (1994).

Request for accession to the European Union: June 1995. Europe Agreement: signature on February 1993, entry into force on February 1995.

Participating State of the Black Sea Economic Co-operation Pact. Member State of the Central European Initiative.

Minorities Issue

On 11 May 1995, Romania has ratified the Council of Europe’s Framework Convention for the protection of national minorities (1st February 1995, STE 157)58 and on 17 July 1995 has signed the Council of Europe’s European Charter for national or minority languages (5 November 1992, STE 148).

58 The first Report of Romania on the legislative and other measures taken to give effect to the principles set out in the Framework Convention (article 25-1 of the Convention) was received by the Secretary General of the Council of Europe on 24 June 1999.

22 Basic statistics for the Candidate Countries Czech Lithuani Slovak European Bulgaria Cyprus Estonia Hungary Latvia Malta Poland Romania Slovenia Turkey Rep. a Rep. Union Area (1000 sq. km) 110,9 9,3 78,9 45,2 93,0 64,6 65,2 0,3 312,7 237,5 49,0 20,3 774,8 3.191,1 Population (MIO, 1st January 2000) 8,2 0,8 10,3 1,4 10,0 2,4 3,7 0,4 38,7 22,5 5,4 2,0 63,9 376,4 Population/sq.km 74 82 130 32 108 38 57 1.203 124 95 110 98 82 118 Infant mortality (per 1000, in 1999): 14,6 n.a. 4,6 9,5 8,4 11,3 8,6 7,2 8,9 18,6 8,3 5,1 5,0 Expectation of life at birth, 1997/99: Women 74,3 80,0 78,1 75,5 75,1 75,8 76,9 80,1 77,5 73,7 77,0 78,7 71,2 80,9 Men 67,1 75,0 71,4 64,4 66,3 64,4 66,5 74,4 68,8 66,1 69,0 71,1 66,5 74,6 Demographic dependency 1997 (1): 47,7 55,5 44,9 50,6 46,8 50,6 50,4 49,9 48,8 47,1 47,7 43,3 56,7 49,5 Gross domestic product (1999), in 1000 MIO EUR: 11,6 8,5 49,7 4,8 45,2 6,2 10,0 3,4 146,0 31,9 18,5 18,7 173,0 7.985,4 GDP per capita in PPS EU=100 (1999) 22 81 59 36 50 27 29 n.a. 37 27 49 71 28 100 Real growth of GDP, 2000 5,4 5,0 3,1 6,6 5,3 5,7 2,9 4,1 4,2 1,6 2,2 4,5 5,8 3,4 Real growth of GDP, 2001 (forecast) 5,2 4,5 3,5 5,9 4,6 5,5 3,5 4,3 4,3 1,8 3,0 4,3 -2,0 2,8 Real growth of GDP, 2002 (forecast) 4,9 4,0 4,0 5,7 5,0 5,5 4,0 4,0 4,6 2,3 3,8 4,3 3,3 2,9 Agriculture: value added as % of GDP: 1999 (6) 23,8 4,1 3,4 5,1 4,3 4,0 7,7 2,2 13,9 4,1 3,2 15,0 2,1 General governm't budget bal. (% of GDP), 2000 -1,8 -3,9 -5,1 -0,7 -3,3 -3,1 -3,4 -7,2 -3,1 -3,8 -5,2 -1,1 -8,9 Inflation, average consumer price index (2000) 8,1 4,3 3,8 3,8 10,1 3,4 1,0 2,6 10,1 45,0 12,1 8,3 55,0 Net official development assistance (1998, % of GNP) 2,3 0,4 0,9 1,7 0,5 1,6 1,2 0,6 0,6 1,1 0,8 0,2

External indicators: Exports as % of GDP (1999): 29,5 11,1 48,9 71,7 51,5 35,5 39,6 55 16,5 24,3 53,1 42,7 14,4 9,5 Balance of payment (1999, MIO USD): Balance on goods and services: -766 -282 -801 -305 -806 -691 -1.099 -194 -13.691 -1.512 -1.054 -881 -3.002 28.092 Current account: -685 -234 -1.032 -295 -2.101 -647 -1.194 -148 -12.487 -1.297 -1.155 -782 -1.364 -4.957 Current account (% of GDP): -5,5 -2,6 -1,9 -5,7 -4,4 -9,7 -11,2 -4,1 -8,0 -3,8 -5,9 -3,9 -0,7 -0,1 Direct investment (in reporting economy): 806 65 5.093 307 1.951 348 487 880 7.270 1.041 354 181 783 -195.351(2) Total external debt (1998, MIO USD): 9.907 25.301 782 28.580 756 1.950 47.708 9.513 9.893 Debt service as % of exports of goods and services: 22,1 15,3 2,1 27,3 2,5 3,3 9,7 23,5 15,9 Labour force: Unemployment (% of civilian labour force): 2000 18,0 3,4 9,1 13,3 6,5 8,4 8,2 4,7 16,4 7,2 19,2 7,1 8,7 8,3 Agriculture (% of labour force): 1998 26,2 5,5 9,1 7,5 17,6 21,5 3,0 25,2 38,1 8,3 5,6 43,0 4,8 Employment rates (Spring 2000): Male 53,4 78,9 73,1 64,3 62,7 61,8 51,0 37,0 50,0 47,0 52,0 48,0 56,1 55,2 Women 45,3 52,5 56,8 57,1 49,4 58,5 25,0 10,0 23,0 21,0 25,0 22,0 33,7 45,0 2000 Transparency: Corruption Perceptions Index 3,5 n.a. 4,3 5,7 5,2 3,4 4,1 n.a. 4,1 2,9 3,5 5,5 3,8 4,6-10,0(3) Gini index (latest year available)(4) 30,8 n.a. 26,6 35,4 27,9 28,5 33,6 n.a. 27,2 28,2 19,5 29,2 Enviromental: Carbon Dioxide (CO2) tonnes/capita Internet hosts/10000 inhabitants (July 2000) 18,80 n.a. 134,39 249,29 129,30 65,26 38,66 n.a. 67,14 13,23 58,78 99,12 16,60 289,70 Human development index (1998)(5): 0,772 0,886 0,843 0,801 0,817 0,771 0,789 0,865 0,814 0,770 0,825 0,861 0,732 0,910 Sources: EUROSTAT, IMF, OECD, UN and World Bank Production: JDa/Parliamentary Documentation Centre/European Parliament (15/06/2001) (1) Population under 15 and over 64 as % of population between 15 and 64; (2) net; (3) Italy 4,6/Finland 10,0; (4) A lower figure indicates a more even income distribution (5) Based on three indicators: 1) longevity, 2) educational attainment and 3) standard of living measured by GDP per capita in PPP (see Human Dev. Report, UNDP); (6) Bulgaria 1997 Note: Bold, italic and underlined text/figures indicate updated and/or revised data Conversion rate: 1998: 1 ECU=1.121 USD; 1999: 1 EUR = 1.066 USD; 2000: 1 EUR= 0.922 USD 23 New .eu Domain

Changed Web and E-Mail Addresses The introduction of the .eu domain also required the web and e-mail addresses of the European institutions to be adapted. Below please find a list of addresses found in the document at hand which have been changed after the document was created. The list shows the old and new address, a reference to the page where the address was found and the type of address: http: and https: for web addresses, mailto: for e-mail addresses etc.

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