Romania News Watch

Romanian lawmaker: 5 years prison for bribes

2012-06-04T05:27:00.002-04:00

Posted on June 1, 2012

BUCHAREST, Romania (AP) — A court has sentenced a Romanian lawmaker to five years in prison for receiving hundreds of thousands of euros from businessmen to pay off judges for favorable outcomes in court cases.

The court convicted Catalin Voicu, a Senator for the Social Democratic Party on Friday of receiving about €260,000 ($322,000 ) from July to September 2009 from businessmen Costel Capsunaru and Marius Locic.

Capsunaru and Locic were each handed four-year sentences for paying bribes, and former judge Florin Costiniu was given a three year suspended sentence. All four can appeal Friday's ruling.

Voicu claims he is not guilty. In 2010, lawmakers stripped his immunity, and he was then arrested, making him first lawmaker to be arrested since the 1989 anti-communist revolt.

The European Union, which Romania joined in 2007, has repeatedly called on Romania to crack down on high-level corruption.

Romania’s Chitoiu Sees Gold Mine Start in 2012, Mediafax Reports

2012-06-04T05:25:00.002-04:00

Romania’s Economy Minister Daniel Chitoiu said he is convinced that Gabriel Resources Ltd. (GBU)’s stalled Rosia Montana gold-mine project will start this year, Mediafax reported today.

Chitoiu told reporters during a visit to the Romanian town of Alba Iulia that a political decision on the project might be taken by the end of this year, according to the Bucharest-based news service. Mining will continue throughout Romania in an efficient manner, without causing losses to the state, Mediafax cited Chitoiu as saying.

Chitoiu added that he will take a decision on the mine together with Environment Minister Rovana Plumb, whose ministry decides whether Canada’s Gabriel Resources gets an environmental permit to start work at the mine, the news service said.

The Economy Ministry’s press office couldn’t immediately confirm Chitoiu’s statement when contacted by Bloomberg News by phone and e-mail.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romanian mining town suffers from its gold riches

2012-06-01T08:12:00.003-04:00

(Reuters) - Nature has carved a humbling landscape of deep river valleys and reddish peaks in a corner of the Carpathian mountains in western Romania.

Rosia Montana town, made up of 16 villages that dot the slopes along the river Rosia, has hundred-year-old churches and houses, cemeteries and ancient Roman mine galleries.

It also has gold. But for those who live here, that is more of a bane than anything else.

Canada's Gabriel Resources wants to build Europe's largest open cast gold mine in Rosia Montana, a 15-year quest that has put the area at the centre of a national debate between heritage and development.

The mine could bring billions of euros in taxes and potentially thousands of jobs to an economically depressed region. But it will also require blasting four mountain tops, relocating the community and flooding one village to create a 300-hectare pond for chemical waste held back by a 180-metre-high dam.

The mine has the support of most of the 2,800 locals, the mayor and county administration and President Traian Basescu, eyeing the bounty the investment will bring.

Those who oppose the project - a handful of residents, several church, environmental and human rights groups, the Soros Foundation and neighbor Hungary, which fears the consequences of any environmental damage - want to turn the area into a UNESCO heritage site focused on tourism and farming.

Critics are concerned that concession rights were awarded without transparency and without exploring other options.

Romania's new leftist Prime Minister Victor Ponta, a political opponent of Basescu, has openly criticized both the plan and the president's support, and the topic will be a focus of debate in the run-up to a November parliamentary election.

The issue also cuts to the heart of Romania's economic problems, as the European Union's second-poorest nation struggles to take advantage of its resources and strategic location between western Europe and the Middle East.

"Basically it's a choice between two world views set around the question of how we see Rosia Montana and Romania's future in five, 50 or 500 years," said Magor Csibi, country manager at the Romanian arm of environmental group WWF.

"It's a war of nerves," said Csibi. "Whoever lasts longest wins."

TWO SIDES TO THE STORY

When hundreds rally against the mine in the capital Bucharest, hundreds rally in Rosia Montana in support. When Greenpeace activists stormed the ministry chaining themselves to radiators in January, mine supporters gathered outside demanding jobs days later. Countless court cases challenging the permits are pending, as are many appeals by the company.

Stuck in the middle, with no other source of employment, the community is slowly dying out. The villages lack central heating or running water and infrastructure is decaying, while previous mines have polluted the water.

Most locals hope Gabriel Resources' Romanian unit, Rosia Montana Gold Corporation (RMGC), will restore jobs and the economy.

In fact, mining is the reason there is a community here at all.

The town is in the Golden Quadrilateral, an area of about 900 sq km (350 sq miles) which holds one of Europe's largest gold reserves and is also rich in copper and silver.

The town was founded on mining before Roman times and enriched waves of foreigners who moved to the area under Austro-Hungarian rule.

Nelu Oprisa grew up here and spent 17 years at the state gold mine, working his way up to chief engineer by the time it closed and he retired. He sold his property to RMGC in 2003 and moved to a nearby town, although he still comes back often to look after to a private tourist organization.

"There used to be a time when Rosia was not necessarily thriving, but people had a routine, they worked hard at the mine ... drank a little brandy and went home," said the 52-year-old, smoking and sipping coffee on the main square.

"People had jobs. And we were a lot closer to each other."

But after the 1989 collapse of communism, Romania was left with an inefficient, heavily subsidized mining sector that employed hundreds of thousands and scarred the environment. It closed hundreds of mines and sacked workers. The government estimates it still needs 1 billion euros ($1.2 billion) for ecological repairs.

Many people left Rosia Montana. Others, like Oprisa, sold their properties to RMGC and moved to modern houses the firm built in the town of Alba Iulia, 80 km (50 miles) away.

"The Romanian state cannot sit on the largest gold reserve in Europe without investing," Oprisa said.

Eugen David, a former copper miner who moved to Rosia Montana roughly 17 years ago when he met his wife, feels differently. He owns land on top of one of RMGC's planned quarries and where it aims to build a processing plant and says he will give it up only by force.

As the head of anti-mine organization Alburnus Maior, David no longer greets the mayor or Oprisa. His alternative to the mine is farming and using Rosia Montana's notoriety to attract tourists.

"I have a fundamental right to live here," the charismatic 47-year-old said in his backyard, where he and his family run a cattle farm. "I never understood why mining is hailed as the sole development solution for this place. I mean, we haven't developed much in 2,000 years of mining."

Several thousand people visit Rosia Montana each year, most just passing through. Even with massive investment, there is little guarantee the locals will be able to earn enough from tourism.

At the moment, it is difficult to get to and has little tourism infrastructure in spite of its natural beauty and mining heritage.

"If it goes forward it will destroy this community. There will be no more mountains. The company will relocate 1,000 families. How is that good for the community?" David said.

"Not everybody will earn a living from the mine, just as not everybody will earn a living from tourism and farming. But these would be cleaner, more sustainable jobs."

EUROPE'S BIGGEST GOLD MINE

RMGC, in which the Romanian state holds a 19-percent stake, started exploration work in Rosia Montana in 1997 and secured concession rights two years later. Opponents are angry that parts of the agreement are confidential under the country's natural resources legislation, while the project has discouraged any other potential investment.

RMGC estimated the mine is worth $7.5 billion overall and that the state would get more than half of that in royalties, taxes, dividends and indirect services, based on a 2007 study that used an average price of $900 per gold ounce. The economy ministry approved the study without conducting an independent survey.

Gabriel's CEO says the mine could be worth roughly $30 billion at current prices of roughly $1,600 per ounce, and the mine would make Romania the EU's largest gold producer, overtaking Finland, Sweden and Spain.

RMGC plans to dig four quarries on mountain tops, where open pits are necessary to extract the gold and silver particles embedded in the rock, and four of the 16 villages will be largely destroyed.

Cyanide will be used to separate the metals, and the waste treated, then stored in a mud pond where the concentration will be reduced to 5-7 milligrams, below the EU's legal limit.

The pond, one of the most contested issues in the project, would wipe out Corna village. This patch of chemical waste will be contained by a dam the company says can withstand massive earthquakes and rainfall.

Memories of the potential for broken dam disasters are fresh after Hungary's 2010 red sludge spill. Romania has a poor track record of its own after a dam broke in 2000 at a gold processing plant and cyanide poured into the river Tisza, affecting much of eastern Europe, including Hungary.

RMGC says it will use the safest, most up-to-date technology and plans to fix environmental damage, plant trees, completely restore the old centre and create a vast gold mining museum.

"We have addressed all the concerns related to the project and we would like the approval process to go on," said RMGC director Dragos Tanase. "Miners are not looking for favors, but it is also not fair to block important investment for years."

POLITICAL GAME

The project has become a political hot potato after 15 years mired in Romania's bureaucratic process. An environmental permit has still not been issued and a final decision looks distant.

It has a powerful backer in Basescu, who for more than a year has used almost every public appearance to urge politicians to support mining to create jobs and boost the economy.

His comments have often sparked small protests across the country and have drawn criticism from the new prime minister, Ponta, who before he came to power pledged to block the plan.

"Projects of this magnitude cannot be made simply because a politician really wants it, regardless of his name. I obviously mean President Basescu," Ponta said.

He and Environment Minister Rovana Plumb, who has said Romania should reject cyanide mining on principle, have softened their rhetoric since coming to power in early May.

But the November election could cause more delays. Even if RMGC gets the environment permit, the opposition will challenge the decision in courts.

Meanwhile, Rosia Montana remains in limbo. According to Mayor Eugen Furdui, RMGC already employs some 500 people and has helped halve the unemployment rate - but it is still at 40 percent.

"Politicians seem forever shy about making a decision either way, and that is perhaps what hurts Rosia Montana the most," said Oprisa.

(Editing by Sonya Hepinstall)

Romania Central Bank Eases Regulations for Liquidity Operations

2012-06-01T08:11:00.002-04:00

Romania’s central bank eased regulations for the way it provides liquidity to commercial banks, giving lenders a chance to tap more money in exchange for state treasuries.

Policy makers raised the number of different state debt issues a bank can use as collateral to get liquidity from the central bank to five from three, including for weekly repurchase operations, according to a document published on the regulator’s website. The new rules came into force yesterday.

Some of the 41 banks operating on the Romanian market, mostly owned by western European lenders, started relying more on the funding provided by the central bank as a worsening of the European sovereign-debt crisis trims funding from parents.

Banca Nationala a Romaniei lent the biggest amount of short-term liquidity in more than two years on May 28. Eight banks borrowed about 8 billion lei ($2.2 billion) at the weekly repurchase operation, regularly used until May 21 by only four banks, data published on Bloomberg show.

Austrian lenders control about 39 percent of the market, followed by Greek banks with 15.5 percent and French lenders with more than 10 percent, according to the central bank. Erste Group Bank AG (EBS)’s Banca Comerciala Romana SA is the country’s largest lender by assets, followed by BRD-Groupe Societe Generale SA. (BRD)

-- With assistance from Irina Savu in Bucharest. Editor: James M. Gomez

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Erste’s BCR Closed 25 Retail Units In Romania In May, ZF Reports

2012-06-01T08:10:00.005-04:00

Banca Comerciala Romana SA, Romania’s largest bank by assets, closed 25 retail units in May in the eastern European country and downsized its network to 643 units, Ziarul Financiarreported today, citing bank data.

The lenders are considering several options to restructure and adapt their networks to lower business volumes, the Bucharest-based newspaper said today, citing unidentified people in the banking industry. The bank known as BCR, majority-owned by Austria’s Erste Bank Group AG and BRD-Groupe Societe Generale (BRD) SA, is Romania’s second-biggest bank.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Bloomberg: Romanian energy chief fired for 'arrogance'

2012-06-01T08:10:00.002-04:00

BUCHAREST, ROMANIA

The prime minister has fired the head of the national energy regulator for `'arrogant" comments, saying they showed he was out of touch with ordinary people.

Victor Ponta said Thursday he fired Petre Lificiu after the official dismissed a five percent increase in electricity prices as insignificant.

Lificiu, the deputy president of the ANRE energy regulatory body, had said earlier this week: "Five percent means nothing. It means we don't leave the bathroom light on when we go to work."

Ponta says the remarks would incur public anger against the government. He says `'It's a hard time and the way (we) relate to people is important."

Romania is in a recession. In 2010, the government slashed public wages by one-fourth, a year after it took a (EURO)20 billion ($25 billion) loan from the International Monetary Fund, the European Union and World Bank

Romanian Social-Liberals Keep Lead In Opinion Polls, IMAS Shows

2012-06-01T08:09:00.000-04:00

Romania’s Social Democrats and the Liberals, who back Prime Minister Victor Ponta, kept their lead in opinion polls before local and general elections this year, a new survey found.

The two parties, who now form the Social-Liberal Union and will run together in elections, would win 59.4 percent, according to the May 9-15 survey of 1,038 people, Adevarul newspaper reported. It had a margin of error of 3 percentage points.

Support for the current governing parties decreased from 61 percent in a May 2 poll done by pollster IRES and is higher than the 48.4 percent result the two parties had in an IMAS poll done in March, before Ponta took office. The former ruling Liberal Democratic Party would get 14.5 percent of the votes, down from 15 percent in May 2, the survey showed.

The new People’s Party, founded by media owner Dan Diaconescu, would garner 12.8 percent of the votes, compared with 10 percent in the previous poll. The opposition Democratic Union of Hungarians in Romania, an ethnic minority party, would get 5.5 percent, up from 4 percent.

Ponta, a former prosecutor, gained Parliament’s support for his new government on May 7 after his Social democrats and the Liberals ousted former Prime Minister Mihai-Razvan Ungureanu in a no-confidence vote held less than three months after he came to power. The new Cabinet pledged to continue Romania’s precautionary accord with the International Monetary Fund and the European Union and partly restored public-sector wages after a 25 percent cut in June 2010.

Romania plans to hold local elections on June 10, with general elections probably following in November.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romania to Double 2012 Wind-Power Capacity on Incentives

2012-05-30T04:31:00.002-04:00

Romania will probably double its wind-power capacity this year, as investors tap European Union- approved incentives for investment in renewable industry, said Ion Lungu, head of CEZ AS (CEZ)’s Romanian trading unit.

Wind-power installed capacity will probably increase to 2,100 megawatts by the end of 2012 in Romania from about 1,000 megawatts at the end of last year, said Lungu, who is also president of the Association of Electricity Suppliers in Romania. The Black Sea country now has an installed capacity of 1,541 megawatts of wind power, Lungu said.

“Romania can support an installed capacity of about 3,500 megawatts of wind power, considering its current infrastructure and backup capacity,” Lungu said in an interview in Bucharest today. “That may increase if additional investments are made and new generation units become operational.”

Romania has attracted investors in its renewable energy industry, including Iberdrola SA (IBE), Portugal’s biggest utility EDP (EDP), Germany’s biggest utility EON AG and Italy’s Enel SA with an incentive plan for wind investments. It wants to attract 5 billion euros ($6.3 billion) in wind-power investments through 2020 under the incentive program.

CEZ, the Czech Republic’s largest power producer, is one of the biggest investors in wind energy in Romania. It is building a 1.1 billion-euro wind farm in the Constanta region near the Black Sea and so far has 388 megawatts operational, Lungu said. The utility plans to finish building the entire 600 megawatts by the end of this year, he said.
Green Certificates

The country is offering two so-called green certificates with a value of 28 euros to 57 euros for each megawatt-hour of energy produced from wind. State-owned power-grid operator Transelectrica SA (TEL) plans to invest 782 million lei ($219 million) this year to expand and upgrade its outdated grid to accommodate the rising wind-farm output.

Romania’s energy-market regulator is now monitoring wind- energy producers, who receive green certificates, to avoid overcompensation. This may lead to a reduction in the number of certificates granted under the program for new investors, Competition Council President Bogdan Chiritoiu said today during an energy conference in Bucharest.

“If we estimated that producers need two certificates for the wind power industry, but in reality the companies reported a higher profit than a reasonable profitability of 11 percent or 12 percent, then the support may be reduced for future investors,” Chiritoiu said.

The monitoring and potential reduction in the number of certificates before 2014 may hamper investments in the industry and jeopardize project funding, Dana Duica, head of the Romanian Wind Association, said on Nov. 14.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

New Romania PM eyes tax cuts to boost growth

2012-05-25T06:36:00.004-04:00

By Sam Cage
BUCHAREST | Fri May 25, 2012

Reuters

Romania's new government will stick to this year's budget plan but aim to combine growth with austerity in 2013 by cutting personal income and sales taxes should it win an election in November, the prime minister said.

Tapping into a Europe-wide debate over how to maintain fiscal discipline while kick-starting a moribund economy, Victor Ponta told Reuters he wanted to gradually ease Romanians' tax burden but also stick to commitments made to international lenders.

His left wing-dominated Social Liberal Union (USL) alliance took charge earlier this month after toppling its predecessor in a confidence vote and, with backing of about 50 percent in opinion polls, looks set to consolidate power after the parliamentary ballot.

"We are committed, after the parliamentary elections, to relax the taxation of labor and strengthen the ties with the business community," the 39-year-old former champion rally driver said in written answers to questions on Friday.

"Financial prudence and the commitment to Romania's international agreements must be complemented by measures that show more flexibility and have the capacity of promoting sustainable economic growth."

Romania's economy was booming until a property bubble burst in 2008 and, after shrinking by more than 8 percent, it is recovering painfully slowly and slipped back into recession in the first quarter.

That could raise questions over revenue generation, especially if the euro zone's troubles continue to suppress growth.

Concerns whether Romania, the European Union's second-poorest member, would stick with its 5 billion euro International Monetary Fund-led aid deal after the government switch sent the leu currency sliding to record lows.

"Important changes in taxation are not feasible without measures to offset the impact," said Ionut Dumitru, chief economist at ING in Bucharest.

While Ponta gave no details on how he aimed to square that circle, Dumitru said proposals to raise government royalties from natural resources and a tax for high wealth individuals could help.

DIVERSE ALLIANCE

The previous centre-right coalition cut public salaries by a quarter and raised value-added tax under a previous IMF deal, which left it deeply unpopular and eventually felled two prime ministers.

Ponta has since reassured markets by sealing IMF endorsement to restore public wages to pre-austerity levels while sticking to a targeted budget gap of 3 percent of gross domestic product, though the euro zone's woes are keeping pressure on the leu.

Ponta, who speaks five languages, represents a change of guard for his Social Democrat Party (PSD), the successor to Romania's communists and the dominant force in the USL.

The group also includes centrists and rightists and should it win a majority in November, one of Ponta's biggest challenges would be to keep the diverse alliance content.

It will honor this year's budget commitments and, starting in 2013, stick with 16 percent as the country's main income tax rate but introduce two bands of 12 percent and 8 percent at lower pay scales. Corporation tax will remain at 16 percent, Ponta said.

The USL is also mulling cutting value added tax from the current 24 percent over several years. The effect of raising VAT had lopped half a percentage point off potential GDP growth and hence the new administration wanted to "remedy this mistake", Ponta said.

"A careful and intelligent mix of policies promoting responsibility and growth at the same time can be the hallmarks of Romania's path towards prosperity."

(Editing by John Stonestreet/Catherine Evans)

Romanian Parliament Passes Law To Change Election System

2012-05-23T07:56:00.000-04:00

Romania’s Parliament today approved a law eliminating a minimum vote threshold for lawmakers ahead of general elections expected later this year.

Proposed by the country’s newly appointed Prime Minister Victor Ponta, who also heads the Social-Democrats, and his coalition partner Crin Antonescu, the leader of the Liberals, the law changes an elections system that required every party to reach at least 5 percent of votes to enter Parliament. The law got 180 votes in favor and 30 against, Mediafax reported.

A candidate who wins the highest number of votes in a voting district in the first ballot will gain a seat in Parliament regardless of the percentage obtained by his or her party, according to the new law. Current legislation regulated that a person only can get a seat in Parliament if his or her party passed the 5 percent threshold of total valid votes cast.

Romania plans to hold local elections on June 10, with general elections probably following in November. The alliance between Social-Democrats and Liberals would win 61 percent of the votes, according to a survey conducted by pollster IRES conducted on May 2 among 1,209 people with a margin of error of 3 percentage points.

“The new law discourages the rise of extravagant parties,” Viorel Hrebenciuc, a social-democratic lawmaker, told reporters after the vote.

The opposition parties said they will challenge the law at the Constitutional Court, Roberta Anastase, the chairman of the Parliament’s lower chamber, told reporters in Bucharest.

President Traian Basescu must also sign off the law for it to become effective.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

OMV Petrom in Romania Fined for Oil Spill in Cotmeana River

2012-05-23T04:41:00.000-04:00

OMV Petrom SA (SNP), Romania’s biggest oil company, said a broken pipe caused an oil spill in the Cotmeana river in Arges county, 150 kilometers (93 miles) northwest of Bucharest, according to an e-mailed statement today.

The Bucharest-based company said 500 liters (132 gallons) of crude oil was accidentally spilled and it plans to clean it up today.

“The incident was immediately reported to environmental authorities and the first measures were taken to limit the pollution and to remove its effects,” the company said.

Petrom was fined 100,000 lei ($28,600) for the spill by the country’s environmental watchdog. The Environment Ministry asked for a review of the oil fields and the pipeline network to avoid such accidents in the future, the ministry said in an e-mailed statement today.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

EurActive: Two Romanian leaders fight over single EU summit seat

2012-05-22T02:06:00.000-04:00

Romania's recently elected prime minister, Victor Ponta, was prepared to attend the informal EU summit on Wednesday (23 May) although his country is usually represented by President Traian Băsescu. If both turn out at the summit, they there will only be one chair for them, a Council representative told EurActiv.

Ponta, who is the leader of the Social Democrat party (PSD), said he wanted the Romanian Parliament to decide who should represent Romania at the EU summit, which is expected to discuss measures to promote growth in the crisis-hit Union.

Over the past years, Romania was represented at all EU summits by Băsescu, who is affiliated with the centre-right European People's Party (EPP).

Observers see the conflict between the country’s two top politicians as politically motivated. The Romanian leftist opposition USL toppled a Băsescu-appointed government last April and Ponta acceded to the post of prime minister. His real challenge will be to retain this post following parliamentary elections to be held in November.

Ponta contends that the Romanian president has authority over foreign policy, while EU summits are increasingly focused on economic affairs.

“As EU decisions touch upon the executive, they relate to internal politics, therefore my opinion is that it’s the prime minister who should attend. The Romanian constitution does not foresee an absolute right neither for the president or the prime minister to attend" EU summits, Ponta was quoted as saying.

“On Wednesday in Brussels [leaders] will discuss economic growth and jobs creation. Băsescu has no attribution in this field, therefore he will be going just to eat and make jokes,” he said, according to reports in the Romanian press.

The EU summit, which will take place over dinner, was called by European Council President Herman Van Rompuy to discuss growth initiatives that could supplement the recently adopted fiscal discipline treaty. A major highlight will be the first appearance of newly elected French President François Hollande, who wants to renegotiate the fiscal compact so that a growth dimension can be added to it.

Without any doubt, Ponta, who acceded to the executive power two weeks before Hollande’s victory in the French elections, would like to be present on such an occasion, the Romanian press reported.

Meanwhile, Băsescu's bid received support from the president of Romania’s Constitutional Court, Augusin Zegrean, who said the Romanian president should continue to represent the country at EU summits. He said that anyone who would like to find an answer to the question should read Romania’s Constitution. However, he did not provide details and in fact, the Constitution doesn’t go into such details.

Ponta fired back, stating that Zegrean was “a friend of Băsescu”. He said he had discussed the issue with the president on 16 May, and that the two had “agreed to disagree” on the subject.

Asked what would happen if both Băsescu and Ponta attended the summit, Council spokesperson Jesús Carmona told EurActiv that both would be allowed into the building, but that there would be only one chair for the representative of Romania.

“It’s them who should decide who sits on the chair,” Carmona said, insisting that the Council would not play a role as an arbiter.

He also made it plain that the other Romanian leader would not even be allowed to sit in the same room, even in the back row, and therefore would not be able to make a statement.

Since the entry into force of the Lisbon Treaty in December 2009, EU heads of state and government attend EU summits alone, as the practice that they could be accompanied by the foreign minister was abandoned. Their ambassadors and other collaborators watch the summit discussion on screens from another room.

Romania And Moldova Seek To Fortify Relationship

2012-05-21T06:28:00.005-04:00

By: SETimes

May 20, 2012
By Paul Ciocoiu

The newly elected Moldovan president’s visit to Bucharest this month marked a change in the countries’ diplomatic relations, which have been marred by tensions stemming from the Communist administration in Chisinau for more than a decade.

“President Nicolae Timofti came to Bucharest to tell his Romanian counterpart Traian Basescu that the diplomatic mistakes of the past will not repeated — that the previous Moldovan administration’s hostility towards Romania is history,” Vladimir Turcanu, presidency spokesman, told SETimes. “It is high time the two neighbours had a correct relationship,” he said.

Timofti was elected by the Moldovan parliament in March, ending a three-year political deadlock during which the deputies failed to choose the head of the state seven consecutive times.

During their meetings, Basescu and Timofti agreed on accelerating the common energy projects, among them the trans-border gas pipe that will link the Romanian city of Iasi and the Moldovan town of Ungheni.

Basescu said he hoped the Iasi-Ungheni pipeline, which is partially funded by the EU, will be finished in 2014. To expedite it, the two governments declared the pipeline a project of national interest.

“Through this project, Romania has given more concreteness to bilateral projects,” Turcanu said. “The Iasi-Ungheni gas pipe will help Moldova decrease its energy dependence because the energy alternative is vital to Moldova. For us, this is like a new declaration of sovereignty.”

“The Iasi-Ungheni pipeline strengthens the economic co-operation between the two countries and marks Romania’s ever clearer presence in Moldova’s economic development and defining new strategic projects,” Eugen Tomac, former secretary of state, told SETimes.

At the same time, he underlined, Moldova has in Romania the strongest supporter of its European aspirations. “Bucharest has been by far the keenest supporter of Moldova’s Western urge. There was no European Council without Romania to bring this into discussion,” Tomac noted.

Apart from the pipeline, the two countries also agreed on speeding other common projects — such as the trans-border electric lines connecting Falciu-Gotesti and Suceava-Balti, modernising the Iasi-Unghen-Kishinev railway and the bridges over Prut River which marks the border between the two states.

Despite this, analysts say Moldova should show more resolve concerning the road it plans to take.

“Timofti’s visit confirms the privileged partnership [Chisinau] … says it has with Romania. Moldova should be aware that getting closer to Romania equals getting closer to the Euro-Atlantic space,” Dan Dungaciu, director of the Romanian Academy’s International Relations Institute, told SETimes.

“As long as the Transdniestr conflict is still out there … Moldova will not be able to be 100% pro-European. Because as long as Transdniestr remains an issue, Moldova has to pay attention to Russia, too. Moldova cannot go on playing this double game,” Dungaciu said.

Romania’s Cristian Mungiu looks at love and faith in Cannes entry ‘Beyond the Hills’

2012-05-21T06:27:00.000-04:00

By Associated Press, Published: May 19

CANNES, France — Both boos and applause greeted Cristian Mungiu’s latest film at Cannes — and that’s fine with him.

The Romanian director won the film festival’s top prize in 2007 with abortion drama “4 Months, 3 Weeks and 2 Days,” but he’s had a more mixed reception this time around.

“Beyond the Hills,” in which love and faith collide with fateful inevitability, was inspired by the true 2005 case of a young woman who died during an attempted exorcism at a remote monastery.

Some Cannes viewers failed to warm to the 2 1/2-hour film’s wintry setting and deliberate pace, or wished for more overt condemnation of religious dogma. By contrast in Romania, the director said, it was hard to make the film because of the power of the Orthodox Church.

But Mungiu says it’s “a very good thing” if the film polarizes audiences.

“Films are not meant to generate a unanimous reaction,” Mungiu told reporters ahead of the film’s red-carpet gala on Saturday. The festival runs through May 27. “I don’t want the film to be liked. I hope the film will challenge people to have an opinion.”

The film focuses on feisty but fragile Alina (Cristina Flutur), who has returned from Germany to visit childhood friend Voichita (Cosmina Stratan). The pair were once intimate, but now Voichita has joined a strict religious community with a severe view of sin.

Alina enters into a life-threatening battle of wills with a charismatic priest and a band of devout nuns, but Mungiu says he did not set out to knock religion. He is more interested in the forces that brought the characters to the crisis that unfolds on-screen.

Two decades after the fall of communism, the film shows a Romania still struggling to build up strong social institutions. Police, government officials and doctors all appear in the film — all equally ineffectual.

“All the films that I do are finally about society, or how the society behind influences the choices of the main characters,” Mungiu said.

The two central characters grew up in one of the notorious orphanages set up under dictator Nicolae Ceausescu, and Mungiu said that as well as exploring “different kinds of love and what people do in the name of love,” the film is also about abandonment.

“People who are really responsible for what happened in the lives of these girls are not present in the film,” he said. “They are the result of an education that started from the age of two or three or even younger. The kind of choices that were in front of (them) the day they left this kind of state school were very limited.

“So the film does not try to identify the guilty parties from among the characters you see on the film.”

Mungiu insists that “Beyond the Hills” is a departure from the gritty “4 Months,” but the new film retains a focus on the relationship between two women in conflict with more powerful men.

It also keeps the director’s distinctive style of long takes, painterly compositions and minimal music. Mungiu’s filmmaking is the antithesis of flashy — a deliberate choice, he says.

“Things happen in front of you and you will decide what is important,” Mungiu said. “For me it in the end is a matter of respect for the spectators.”

Romania Plans Third-Quarter Bond Abroad as Leu-Debt Sales Shrink

2012-05-21T06:23:00.003-04:00

Romania plans to sell international bonds in the third quarter and scale back domestic debt issuance after a record first three months as speculation Greece will exit the euro roils markets, a Finance Ministry official said.

The eastern European nation, which raised a record 26 billion lei ($7.5 billion) at home in the January-March period, retains plans to sell as much as 2.5 billion euros ($3.2 billion) of bonds on global markets this year, depending on market conditions, Deputy Finance Minister Cristian Sporis said.

“We want to be a constant issuer on the international markets,” Sporis said in a May 19 interview in London. “We said we’ll issue 2.5 billion euros this year so we’ll try to issue that amount.”

First-quarter Treasury-bond and bill sales rose more than 50 percent from a year earlier as wage cuts and a tax increase aimed at trimming the budget deficit bolstered investors’ optimism toward the European Union’s second-poorest member. Romania, which exited a 20 billion-euro bailout led by the International Monetary Fund in 2011 after its deepest recession on record, has also raised $2.25 billion abroad this year.

After reaching a year low of 4.4625 percent on April 23, the yield on Romania’s dollar bond due 2015 has jumped to 5.119 percent as investors sell emerging-market assets amid reports Greece may return to the drachma. The cost of insuring government debt against non-payment for five years using credit- default swaps has risen to 431 basis points from a 2012 low of 295 basis points on March 14. A basis point is 0.01 percentage point.
Leu Sinks

The leu has lost 2.6 percent against the euro since January, making it the worst performer among eastern European and African currencies tracked by Bloomberg.

Romania won’t be forced to sell bonds abroad as it has a cushion of about 4 billion euros and is in line for a 1 billion- euro backstop from the World Bank, pending approval at a June meeting of the Washington-based lender, Sporis said.

“We have a buffer and we’re not caught in a corner to issue at any cost, unlike some countries,” he said. The World Bank loan “will be at our disposal any time we want to draw on it, for which we will be paying a commitment fee.”

Romania also has a two-year 5 billion-euro precautionary agreement from the IMF and the EU, which was agreed on last year after the bailout expired.

Domestically, Sporis said Romania will sell less debt after frontloading this year’s plan and will continue offering treasuries with maturities of as long as 15 years.

“We’ll reduce our debt issuance,” he said. “We’re sticking to our plan to lengthen the maturities because we want to avoid repayment peaks in the next three to four years. If we can’t find enough interest on the local market, we can tap the foreign markets if the opportunity arises.”

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

New Romania govt to stick to privatisation plans

2012-05-18T03:58:00.002-04:00

By Kylie MacLellan

LONDON, May 17 (Reuters) - Romania's new government will stick to existing timetables for the sale of stakes in state-owned power companies and hopes to achieve dual listings for those slated to go public, its business environment minister said on Thursday.

The left-leaning government sealed parliamentary backing just over a week ago after public anger against spending cuts and tax rises helped it to power in a vote of parliamentary deputies. Romania is due to hold general elections in November.

The new administration will begin with the secondary sale of a 10 percent stake in pipeline operator Transgaz towards the end of June.

Initial public offerings (IPOs) of power producers Romgaz, Hidroelectrica and Nuclearelectrica are planned for September, October and December respectively.

"In terms of the privatisation we will stick with what we committed," Lucian Isar told Reuters during a visit to London.

"I am pushing for a dual listing because I believe it is good for the state and the result of the IPO."

Where they might be dual listed is yet to be decided, he said, but candidates include London and Vienna. Earlier this year the London Stock Exchange signed an agreement with Bucharest to help promote Romanian companies to London-based investors.

Romania, which has long shied away from privatising its inefficient state sector for fear of job losses and accusations of selling off the family silver, committed to an ambitious timetable of privatisations under a 5 billion euro IMF-led aid deal struck last year.

The timetable has slipped again and again and so far it only has a small secondary offering of shares in power grid operator Transelectrica to show.

A failure to sell a minority stake in oil and gas group Petrom - the jewel in an albeit tarnished crown - and copper mine Cupru Min had raised serious questions over commitment even before the previous government fell in April.

Former investment-banker Isar said he was also looking at which other state-owned companies could be privatised to help generate more income for the state and improve Bucharest's international standing in the IPO market.

Bucharest Stock Exchange president Lucian Anghel, also part of the delegation visiting London, said the bourse had this week agreed a tie up with the Bulgarian Stock Exchange which could see its companies list in Romania.

"Our strategy to be a regional hub for smaller countries in Southern and Eastern Europe," he told Reuters.

"After this very ambitious programme we could see even up to a 50 percent increase of daily trading volumes on the Bucharest stock exchange in 6 to 12 months."

Anghel said the exchange had learnt from the failed Petrom sale and taken steps to improve the ease of investing, such as reducing the paperwork and bureaucracy involved, to make it more attractive to international investors.

The Petrom sale is now not likely to be revived until early next year, he said.

Minister Isar said he was looking in to what happened with both Petrom and Cupru Min. The previous government backed out of a deal to sell Cupru Min, the country's biggest copper mine, to Canada's Roman Copper Corp last month after failing to agree to the terms of the deal.

"We will come up with a solution; this could be selling, joint venture, listing. We do not know exactly but in this case (Cupru Min) for sure we will do our homework better," he said. "There are several elements which we didn't agree with and we want to do it properly."

Romanian Economy Returns to Recession in First Quarter on Crisis

2012-05-17T08:34:00.002-04:00

Romania slipped back into a recession in the first quarter as the European sovereign-debt crisis and freezing temperatures slowed growth in exports and industrial output.

Gross domestic product shrank a seasonally adjusted 0.1 percent from the previous quarter, after contracting 0.2 percent in the fourth quarter, the National Statistics Office in Bucharest said today in an e-mailed flash estimate. GDP grew a seasonally unadjusted 0.3 percent from a year earlier, below the median estimate of 0.8 percent in a Bloomberg survey of nine economists.

Romania’s economy has fallen into a second recession in four years, after exiting its worst decline on record last year, as European austerity measures aiming to cool the sovereign-debt crisis slowed exports from the eastern European country, home to Dacia SA cars. Freezing temperatures and heavy snowfall also disrupted transportation and supply chains.

“The second-quarter data will be crucial in shedding light on whether the observed softening in economic activity is largely driven by temporary factors such as harsh winter conditions,” Citigroup Inc. economists Ilker Domac and Gultekin Isiklar wrote in a note to clients before the report.

The country will probably see growth slowing this year to 1.5 percent from 2.5 percent in 2011 as European spending cuts hinder export growth, according to International Monetary Fund forecasts. The economy will probably grow 1.4 percent this year, the European Commission said in its spring forecast published on May 11.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romania Property Fund Posts First-Quarter Loss, Shares Drop

2012-05-15T07:00:00.003-04:00

By Andra Timu - May 15, 2012

Fondul Proprietatea SA (FP), a Romanian property fund, incurred a first-quarter loss of 1.5 million lei ($434,000), compared with a 14 million-lei profit a year earlier, according to a filing with the Bucharest Stock Exchange.

Net asset value declined to 16 billion lei at the end of March, from 16.5 billion a year earlier, and to 15.5 billion at the end of April, Fondul said in a separate bourse filing.

The fund has stakes in Romanian companies such as oil company OMV Petrom SA (SNP) and utilities Transelectrica SA (TEL) and Transgaz SA. (TGN) It was set up to compensate citizens for property confiscated under communism and started trading on the bourse in January last year.

Fondul’s shares dropped 2.9 percent and traded at 0.475 lei per shares at 11:21 a.m. in Bucharest today, valuing the company at 6.5 billion lei.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romanian Economy Returns to Recession in First Quarter on Crisis

2012-05-15T06:59:00.002-04:00

Romania Utilities Post First-Quarter Profit Drops on Weather

2012-05-15T02:19:00.005-04:00

Transelectrica SA (TEL) and Transgaz SA, Romania’s biggest publicly-traded utilities, said profit fell in the first quarter as a cold snap and heavy snowfall disrupted energy supplies, lowering revenue and raising maintenance costs.

Transelectrica’s net income fell 73 percent to 43.6 million lei ($12.7 million) from 160.9 million lei a year earlier, according to an earnings statement to the Bucharest Stock Exchange today. Transgaz posted an 11 percent decline in net income in the first quarter to 173.5 million lei from 194.9 million lei a year ago, it said in its bourse filing.

Romania’s utilities need to increase spending to expand and upgrade their outdated energy grids to accommodate growing output and consumption. A decline in the companies’ first- quarter profits may be compensated by higher regulated tariffs later this year, as the country’s energy regulator is expected to approve pricing plans for both utilities.

“Even though the volumes transported by the two companies declined and none of them benefited from an increase in regulated prices, the results are quite promising,” said Mihai Caruntu, an analyst at Erste Group Bank AG’s Banca Comerciala Romana SA. “We expect 2012 to be a decent year especially if we compare the current results with an exceptional first quarter last year, but for Transgaz (TGN) it will be crucial to see a tariff increase approved by the energy-market regulator in July.”

State-owned Transelectrica plans to invest 782 million lei this year in power-grid expansion, as Romania’s incentives for renewable-energy companies boost investments and wind-farm output.
No Capital Raise

Transelectrica’s majority owner, the Romanian Economy Ministry, has no plan to increase the company’s share capital through a cash contribution this year, after it sold a 15 percent stake on the stock exchange in March.

Romania raised 37.7 million euros ($49 million) from the sale of the minority stake, the country’s first in more than four years, to meet pledges to international lenders under a precautionary agreement. The ministry plans to sell a 15 percent stake in Transgaz on the stock exchange this year.

“Considering the results the Transelectrica shares may fall below 12 lei per share in the short term,” Andrei Radulescu, an analyst at the brokerage SSIF Broker SA, said in an e-mailed response to Bloomberg questions. “Trangaz’s results are decent. The company is undervalued at this point, so its shares may rise to about 235 lei.”

Transgaz fell 6.7 percent at close to 194 lei per share in Bucharest trading today, while Transelectrica’s shares declined 5.8 percent to 13 lei, valuing the company at 953 million lei.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romanian Transgaz Posts First-Quarter Profit Drop on Costs

2012-05-15T02:19:00.002-04:00

Romania’s natural-gas grid operator Transgaz SA (TGN) said its profit fell 11 percent in the first quarter from a year earlier on rising costs and lower revenue.

Net income dropped to 173.5 million lei ($50 million) from 194.9 million lei a year earlier, the Medias, Romania-based company said today in an earnings release sent to the Bucharest Stock Exchange.

The state-owned company’s revenue fell 0.5 percent to 472.2 million lei as it transported lower volumes of natural gas in the first quarter, while expenses rose 7.4 percent from January through March to 260.2 million lei, according to the statement.

“Total revenue fell short of the level reported in the first quarter of last year by 2.4 million lei, mainly because the company transported about 92 million cubic meters of natural gas less than it did in the same period of last year,” Transgaz said in the statement.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romania’s Government Seeks a Progressive Tax System From 2013

2012-05-11T07:15:00.001-04:00

By Andra Timu - May 11, 2012

Romania’s new government plans to scrap the country’s flat tax from 2013 and introduce a progressive taxing system pending a win at this year’s elections, Prime Minister Victor Ponta said.

The newly instated cabinet seeks to design next year’s budget using a progressive taxing system with an 8 percent tax for low-income earners, a 12 percent tax for average incomes and a 16 percent tax for high incomes and cut some social contributions, Ponta said in a document published on the cabinet website today.

Romania introduced a flat tax of 16 percent in 2005 to attract foreign investors. Ponta’s government took office on May 7 after his Social-Liberal Union ousted former Prime Minister Mihai-Razvan Ungureanu in a no-confidence vote in Parliament.

The alliance, known as USL, would win 61 percent of the votes in a general election, a survey, conducted by pollster IRES on May 2 among 1,209 people, showed. Romania is scheduled to hold parliamentary elections in the second half of this year.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

FT: Romania: 340 jobs at new Bosch plant

2012-05-10T06:47:00.002-04:00

Bosch, the German car parts maker, has confirmed plans to go ahead with a €77m plant in northern Romania, in a move which will give the new government in Bucharest a bit of a boost.

The investment in the city of Cluj-Napoca will bring 340 jobs in the production and development of automotive electronic controls near a site where Nokia closed a showcase plant last year. Good news for a country struggling to avoid recession.

Bosch said on Tuesday that construction would start in the second quarter of 2012, with manufacturing scheduled to begin in mid-2013.

Bosch currently has three locations in Romania – a sales company in Bucharest, a communications centre in Timisoara, western Romania, and a factory in Blaj, northern Romania, which produces linear-motion technology. The group has 1,400 employees in the country.

Romania’s unemployment rate in March was 7.5 per cent, on a seasonally-adjusted basis, well below the European Union average of 10.2 per cent. But the country suffers from chronic underemployment with large pools of people in the countryside without full-time jobs. The employment rate for people of working age is around 60 per cent, compared with an EU average of nearly 70 per cent.

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Romania Agrees With Bailout Lenders on Increasing Budget Gap

2012-05-10T06:45:00.002-04:00

The International Monetary Fund completed a review of Romania’s loan accord and agreed to let the country widen its budget deficit to accommodate a public- sector wage increase after a third government took office this year.

The IMF and Romania reached a staff-level agreement to unlock about 475 million euros ($616 million) from its 3.6 billion-euro precautionary loan, Mission Chief Jeffrey Franks said in Bucharest today. The IMF also agreed to let Romania increase its budget-gap target to 2.2 percent of economic output from 1.9 percent.

“Romania met almost all the targets under the accord except for two of them referring to some unpaid debt to private companies,” Franks said. “There are still difficulties in restoring the economic growth because of the international crisis and the risks remain high.”

The IMF and the European Union’s fiscal flexibility toward Romania comes at a time when more European leaders are pushing for pro-growth policies after France’s first power shift to a socialist president since 1981 and Greece’s electoral rebellion against austerity busted the budget-cutting consensus that has dominated the response to the sovereign-debt crisis.

Governments Fell

Romania, which secured the loan from the IMF and the EU last year as a safeguard against the European sovereign-debt crisis, changed governments twice this year amid protests against austerity measures. Former Prime Minister Emil Boc resigned on March 6 and his successor Mihai-Razvan Ungureanu lost a no-confidence vote in Parliament on April 27, three days after the IMF review began, delaying its completion by two days.

The Social-Democrat Victor Ponta was appointed as Prime Minister on May 7. His new government signed a letter of intent needed to complete the lenders’ review yesterday and agreed on an 8 percent increase of public wages on June 1, followed by another raise in December to reverse a 25 percent cut in 2010. The Cabinet is also seeking to pay back some social contributions to pensioners.

The IMF warned Ponta’s government to keep a cap on spending before elections this year after the state’s arrears started to increase “probably because of pre-electoral pressures,” Franks said.

The Romanian leu, which slid to a record intraday low of 4.4620 on May 1 after Ungureanu’s government collapsed, weakened 0.3 percent and traded at 4.4202 against the euro at 2:20 p.m. in Bucharest trading.
Easing Monetary Policy

The country’s central bank may have “small” room to further ease monetary policy this year after the government fell and the debt crisis prompted policy makers to take a pause, Franks said in an interview in Bucharest today. He also said that the inflation rate, which fell to a record low of 2.4 percent in March, will remain within the central bank’s targeted band of between 2 percent and 4 percent.

“So far we don’t see negative effects on inflationary expectations, on the exchange rate, yes, it’s weakened a bit but not significantly, so there’s no compelling reason for a tightening of the monetary stance at this point,” Franks said. “There may be a small additional space for monetary easing, but not much.”

Romania’s economy will expand 1.5 percent this year as exports to western Europe, the country’s major trading partner, are slowing amid the sovereign-debt crisis, Franks said.
Technical Recession

Romania may enter a technical recession as the economy may post a “minor” quarterly contraction in the first quarter, central bank Deputy Governor Cristian Popa said yesterday.

The Balkan country’s Finance Ministry will continue borrowing money from domestic and international markets “on an opportunistic basis” under a 7 billion-euro medium-term note program, Franks said.

Romania should wait with a plan to sell stakes in energy companies on both internal and international markets as announced by the new Economy Minister Daniel Chitoiu as it will slow the sales timetable already agreed with the lenders, Franks said.

The country pledged to sell 15 percent stakes in natural- gas company Romgaz SA and Transgaz SA (TGN) and 10 percent stakes in hydro-power operator Hidroelectrica SA and nuclear-power generator Nuclearelectrica SA this year on the Bucharest Stock Exchange.
Transgaz, Romgaz

“While in principle that might be an interesting option, at this stage it would be technically much more complicated and it might slow down the process, so I would be much more in favor of pushing ahead the plan that we already have,” Franks said. “Additional international listings can be considered afterwards.”

The Transgaz and Romgaz stake sales will probably be the next, according to Franks.

Romania and its international lenders also agreed on a schedule to fully lift price controls of natural gas for companies starting this year and for households starting the second half of next year until the end of 2018, Franks said.

To contact the reporters on this story: Andra Timu in Bucharest at atimu@bloomberg.net; Irina Savu in Bucharest at isavu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romania's Petrom Q1 net profit tops forecasts

2012-05-10T06:43:00.002-04:00

May 9 (Reuters) - Romania's top oil and gas company Petrom, majority-owned by Austria's OMV , posted on Wednesday a net profit of 1.384 billion lei ($407.73 million) for the first quarter, above market expectations.

The average forecast in a Reuters poll was for a net profit of 1.08 billion lei. Petrom recorded a profit of 840 million lei in the same quarter last year.

"The extreme weather conditions we witnessed in the first two months of 2012 caused technical disruptions which impaired our production volumes ... and dragged down our marketing sales," Petrom CEO Mariana Gheorghe said in a statement.

"However, our gas sales volumes benefited from the harsh winter and we also recorded improved margins mainly on gas extracted from storage." ($1 = 3.3944 Romanian lei) (Reporting by Ioana Patran; Editing by Jonathan Hopfner)