ROMANIA A Path for Sustainable Development

An Interview with The Honorable Victor Ponta, Prime Minister of Romania

By taking these measures, we have man- analysts talk about the advent of “a European ti- aged to restart economic growth, Romania reg- ger.” Such descriptions honor us, but also moti- istering in 2013 as one of the highest rates in vate us to continue along this path. To this end, the European Union. We have brought public we are determined to carry on the process of re- sector wages back to their previous levels, in- ducing the fi scal burden for employers, to lower creased the minimum wage, reduced VAT for the level of social insurance contributions, and to The Hon. Victor Ponta bread, decided on reducing the social insurance lower the level of the VAT for several staple foods. contributions for employers, attracted foreign Moreover, we want to continue the projects that EDITORS’ NOTE Victor Ponta is the President of the investments, and created jobs. offer state aid for SMEs, thus facilitating the access Romanian Social Democratic Party (PSD) and leads The main achievement over these past two to loans, as well as to start several new programs the four-party ruling coalition that also includes the years of government is setting Romania on the targeting the business environment. Hungarian Democratic Union, the Conservative right path of sustainable development, thus of- Last, but not least, we want to continue to Party, and the National Union for the Progress of fering Romanian citizens the hope that they can improve the absorption of European funds, an Romania. He worked as a public prosecutor for enjoy a better life. important source of fi nancing for the projects the Anti-Corruption and Criminal Prosecution As the IMF/WB and other institutions tackling competitiveness growth and job cre- Department at the Prosecutor’s Offi ce of the Supreme have underscored, Romania appears to ation. For Romania, attracting European funds Court of Justice, specializing in economic and fi nan- have fared better than most countries in is of utmost importance. The progress we have cial fraud between 1998 and 2001, when he was terms of economic recovery including sev- registered over the past two years, during which appointed Chief of the PM’s Control Department un- eral important indicators (budget defi cit, the absorption rate increased fi ve times to the til 2004. That year, he was elected to the Chamber infl ation, GDP growth, and public debt). current level of 37 percent, offers us strong rea- of Deputies as one of the youngest Romanian MPs. What are the main ingredients of this suc- sons for optimism. In 2010, he won the PSD presidency. In May 2012, cess and, more importantly, what are the The London Stock Exchange IPOs for he became Prime Minister of Romania, leading his next steps to rapidly reduce the existing Romgaz and Electrica, two of Romania’s party’s coalition to victory in national parliamentary gap that separates Romania from the more major energy companies, proved the po- (2012) and European parliament elections (2014). advanced EU members? tential of such privatization procedures and In August 2012, Ponta was elected Vice-President of Over the past two years, the Romanian also the fact that Romanian energy compa- the Socialist International. government has enacted a successful economic nies are attractive in the eyes of investors program. Our central objective was to achieve even in rather harsh economic times. Have Would you please outline the main achieve- the right balance between the sustainable fi s- those two listings met your expectations? ments of your Government over the past cal consolidation and two years? restarting economic When we took offi ce, in 2012, Romania was growth, between the facing a very diffi cult economic and social situa- economic and the tion. As a consequence of a tough wave of austerity social fi eld, and be- policies, the economy had slowed down, the un- tween the need for employment level had raised, and the living stan- strong public institu- dards had worsened dramatically. My belief was tions and reducing that Romania needed a new vision based on eco- the waste of public nomic development and social cohesion. It was a funds. belief supported by the parliamentary majority and So far, we have reinforced by the people’s trust, expressed through achieved significant their vote. Consequently, without neglecting the results: Romania is fi scal consolidation process, we have set up a co- experiencing a posi- herent program targeting economic growth and a tive economic trend, readjustment of the social equilibrium. Hence, industrial output and on the one hand we acted to repair several unjust exports are increas- measures, such as the 25 percent decrease of pub- ing, and infl ation and lic sector wages, the measures that had affected current account defi cit pensions, or the closing down of hospitals while, are stable, at around 1 on the other hand, we have promoted a series percent, whereas the of macroeconomic policies meant to support the unemployment rate is business environment, to stimulate investments, to beneath the EU aver- create jobs, and to support the increase of living age. This impressive standards. trend has made some PM Ponta with U.S. President Barak Obama (left) and former U.K. PM Tony Blair 28 LEADERS POSTED WITH PERMISSION. COPYRIGHT © 2014 LEADERS MAGAZINE, INC. VOLUME 37, NUMBER 4 What are the main areas and topics most topics: energy, agriculture, industry, min- important for Romania in the next EU bud- eral resources, and infrastructure. These get cycle? fields have experienced development in these The economic crisis and the geopolitical recent years, and contributed to the growth of crisis on the outskirts of the European Union the GDP. Moreover, in the fi rst quarter of 2014, call for a shift in the relations within the EU. We industrial output has increased by 9.1 percent. If need a Europe that is more social in its policies, last year the industrial sector was responsible with a focus on the youth, on jobs, on social for three quarters of the economic growth, the fairness, and on restarting economic growth. We fi rst half of this year confi rms the increased in- also need a Europe with an increased solidar- dustrial competitiveness of the Romanian econ- ity among its member states. The idea of the omy. The IT and manufacturing industries, as Union must remain prevalent, and the member well as the commercial sector and the car in- states must behave more as a whole and less as dustry, continue to perform well. a sum of particular interests. At the same time, The European Union has set itself goals over the coming years, the EU must look with regarding the development of the innova- increasing attention at the Eastern Partnership tive industries. Is the Romanian educational and continue to support the European path of system prepared to reach the EU goals? the European states on its Eastern border. What role does the Romanian IT industry As for the energy field, identifying new play here and how are the educational sys- sources of supply is a strategic objective of the tem and IT working together in Romania? EU. Its accomplishment should increase We share the European Union’s objective What lessons have you learned from here the independence and the energy security of to develop the innovative industrial sector. As and how do you intend to implement them the member states. Ever since the beginning, I far as the IT industry is concerned, Romania re- in the future? Should we expect similar have been a supporter of Polish Prime Minister corded signifi cant results in the fi eld. Romanian moves and opportunities for investors in Donald Tusk’s proposal of setting up a European IT experts are valued worldwide and major the near future? community of Energy. It is an initiative that can international IT companies, such as Oracle or The success of Romgaz and Electrica on only strengthen Romania’s role and message on Microsoft, are present in Romania. the stock market represents a positive message the need of an increasingly integrated Europe. Furthermore, there is synchronization be- for the Romanian economy, and a powerful Following the same pattern of integra- tween the IT sector and the corresponding edu- boost for our policies and our structural reforms. tion, cohesion, and development, we set up cational system that is continuously developing This opening of the Romanian economy has in- Romania’s objectives for the 2014 to 2020 fi - and I do not expect any challenges for Romania creased the profi le of the aforementioned com- nancial framework: increasing competitiveness, would come from the strategic outlook of the panies. Last year, Romgaz was one of the most supporting the citizens, strengthening social EU in this regard. profi table companies. Moreover, in 2013, the 20 solidarity, infrastructure, resources and admin- Is the Romanian health system pre- largest state-owned companies accounted for a istration, and government. Romania aims fi rst pared to face the challenges posed by rising profi t of €350 million, compared to €85 million to develop its human capital by increasing em- costs and aging populations on a backdrop worth of losses in 2012. ployment and by following active policies con- of the real exodus of specialized personnel We had great expectations concerning cerning social inclusion and education, as well to western countries? these companies and we are glad that our ex- as developing the infrastructure and promoting It is true that Romania has experienced a pectations were surpassed by the international competitiveness. true exodus of specialized medical person- markets’ reaction to their listing. This posi- In order to avoid the mistakes of the previ- nel. We are aware of this phenomenon and we tive response is clear proof that the Romanian ous governments, we have a different strategy are taking active measures to ensure that the economy is increasingly attractive, has impor- in regard to EU funds absorption. We will en- Romanian healthcare system continues to per- tant potential, and continues to offer plentiful gage the European funds in the fi rst part of the form. On the one hand, the fact that Romanian opportunities. fi nancial cycle, via a simpler, more effi cient but doctors are needed in Western countries high- If there is a lesson we have learned follow- less bureaucratic recipient-oriented system. lights the quality of the Romanian medical edu- ing these experiences, it is to have confi dence Given the effects of globalization, each cational system and of our human resources. in Romania’s capacities and potential. We have country has to be able proven we can be successful. It is an additional to build its own com- reason to continue on that path. Moreover, petitive advantages Government intends to list another major com- in order to perform pany, Hidroelectrica, a company we took over at the international in a very diffi cult situation and that managed to level. What industries record last year a profi t larger than the profi ts of are capable of being the previous decade altogether. economic champions As far as the regional picture is concerned, for your country? I believe we have a tremendous advantage. One of the objec- While countries such as Hungary and Poland tives of these past two currently have a different approach in this re- years has been to put spect, Romania will continue to privatize minor- Romania on a clear, ity share packages. sustainable, and pre- A new leadership has come to dictable path. To this Brussels at the Commission and European end, we have set up a Parliament level. What agenda and main National Investment features do you anticipate for the EU in the Plan for strategic years to come? What is your view on the investments and job current EU energy strategies and how do creation. This plan fo- PM Ponta with German Chancellor Angela Merkel (top left) and they integrate with Romania’s own agenda? cuses on five main with other heads of government at a meeting in Bucharest in November 2013 VOLUME 37, NUMBER 4 POSTED WITH PERMISSION. COPYRIGHT © 2014 LEADERS MAGAZINE, INC. LEADERS 29 is concerned, Romania We are the party of all generations, a party remains an active and that respects its past and at the same time supports effective international the young generation. We believe this positive, con- partner. structive, and inclusive approach is what Romania Romania is still needs for the coming years. We want PSD to con- outside the Schengen tinue to act as an engine of change in Romanian area with the rule of society, and this is what increases the importance law being one of the of the upcoming presidential elections. main subjects of con- Most polls indicate that you are the best cern for its European placed candidate for winning the race. What partners. What is would the Presidential ambitions and proj- Romania’s current plan ects for your country be? What will you for joining Schengen bring to the position of Head of State and to and what can be done Romanian politics? to strengthen its part- For people unfamiliar with Romania over ners’ confi dence vis- the past 10 years, it would seem strange to fi nd PM Ponta with former U.K. PM Tony Blair à-vis of the rule of law out that the main project of a candidate is to be- and Judiciary indepen- come the President of all Romanians, of all citi- On the other hand, we are aware of the major dence? How can Romania consolidate its anti- zens. During these 10 years, Romania has had challenges to our own healthcare system; the corruption reform? and still has a president that sows discord; this Health ministry is working on a reform pack- I must emphasize several aspects. On has cast Romanians against each other, who has age meant to address these problems. In ad- the one hand, I am honored to lead and the generated a large number of political scandals, dition, we believe that medical specialists are Romanian Social-Democratic Party is fully com- with a defi nite impact on the effi ciency of the to be given more incentives in order to stay in mitted to strengthening the rule of law and en- public institutions and with a tremendous cost Romania – it is for this reason that we decided suring the independence of the judiciary. We in the honor and credibility of the public offi ce. to increase the wages for young physicians, in have proven our commitments to our interna- My project is to promote a different model order to make the medical profession more at- tional partners over the past two years and we of presidency, one that unites people and tractive to the graduates. will follow them. Maintaining the independence strives for consensual decisions, that is based Recently, the Romanian Cabinet held a of the judiciary and observing the rule of law are upon constitutional powers exercised in good joint meeting with the Israel Cabinet. What paramount for the development of our country. faith. The President must propose a vision to his are Romania’s interests and agenda in this On the other hand, the opposition towards country. I have this vision, this project. I started region? How does Romania see the chances Romania’s accession to the Schengen Area is a enacting it in 2012, when I took over as Prime for peace in the region? Do the Arab Spring matter of political debate in some member Minister and it is called “A Strong Romania.” and opening of new societies in the ME and states, which has very little to do with concerns “A Strong Romania” is a strong state offer- Golf regions pose threats but also opportu- regarding the judiciary or the rule of law. The ing all of its citizens access to high-quality public nities to the global environment? European Parliament, the European Council, services, stimulating a competitive and growing Romania and Israel share long-standing and the European Commission together have economy and ensuring an independent Judiciary, traditional bilateral relations and we are pleased certifi ed repeatedly that Romania fulfi lls all of as well as a just, inclusive, and solidary society. to see that, in recent years, these relations have the conditions for joining the Schengen Area. What is your vision for the future of been on a positive trend in many fields of We have invested funds and efforts in order Romania, now at almost 25 years since cooperation. to build capable and effi cient institutions and communism has collapsed and preparing We are concerned with the recent develop- mechanisms that are meant to keep the bor- to celebrate its centennial in a few years? ments in the Middle East and their impact on ders of the European Union safe. However, for Where do you see your country in 10 to regional security. We believe that the possibility various political reasons, closely connected with 20 years? How do you see yourself trans- for peace is still there and that the parties must the rise of Euro skepticism and European pop- ferring your vision for Romania into real- continue to strive for attaining a peaceful settle- ulism, several of our European partners have, ity and to the next generations? ment of the confl ict. We have supported all the until now, been against our accession to the I see Romania in the coming years as a de- efforts deployed by the EU and U.S. in this re- Schengen Area. veloped economy that has managed to overcome spect, and we encourage the parties to resume We will continue to prove to them that not only the trauma of the communist period, negotiations. Romania is of fulfi lling its commitments and of but also the pitfalls and the problems that have It is a fact that the Arab Spring and the maintaining the same high standards required left their mark on its transition to democracy and opening of new societies in the ME and Golf for protecting the external borders. Joining the market economy. I hope that on December 1, regions have brought opportunities but also Schengen Area remains a major objective and 2018, when we will celebrate 100 years since threats to the regional and global environment. we will continue to pursue it. our Great Union, when the Romanian provinces The Arab Spring has shown that potential This is an electoral year for Romania. were brought together after the end of the First for democratic change exists in the region. Of The Romanian Social Democratic party re- World War, we will fi nd ourselves as a more course, revolutionary moments can be confi s- fl ects both a change in generations as well as united nation, which has managed to overcome cated by extremist actors, but that does not mean a consolidation of a “progressive” trend that is its divisions, and is building for itself a better and that the European Union and Romania should growing around the world. What lies ahead? brighter future in Europe. not encourage the transition towards legitimate PSD is the strongest political party in I had the privilege of being the youngest regimes and democratic governing systems. Romania and, during the past few years, it has Prime Minister of the Government of Romania. The threats are also there, and it is up to us, managed to undergo a process of moderniza- I share many of the concerns and views of the in strong coordination with all of our partners, to tion, while at the same time consolidating its younger generation and by looking at my col- counter the spread of terrorism and extremism ideological and political dimensions. The major leagues and the Romanian society, I believe that that are already destabilizing the region. We must force of PSD comes from the experience and we have the resources to overcome decades of continue to fi ght terrorism, irrespective of the the expertise of its members, as well as from the political divisions and the memories of the to- identity and of the objectives of its authors, and progressive view it proposes on the Romanian talitarian regime, in order to build a prouder, I reiterate that as far as cooperation in this fi eld political scene. stronger, and developed country.• 30 LEADERS POSTED WITH PERMISSION. 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