Europe opens the door to an unreformed Romania

By Tom Gallagher

Financial Times

Published: October 2 2006

The European Union has never been good at persuading Romanian politicians to swallow its harsh medicine and purge the country of the abuses that have made the 15 years since the end of communism years of lost opportunity for reform. On September 26, it decided to offer full membership from next January in the hope that overdue measures to ensure clean government will be pushed through by next spring.

But will an elite mainly composed of ex-communist businessmen be impressed by its threat of exclusion from parts of the treaty for non-compliance? I doubt it. They showed their boldness on September 8 when the Romanian parliament refused to pass a bill obliging 100,000 public officials and elected politicians to disclose the extent and origins of their wealth and allow strict oversight. Romania is due to receive Ä30bn from Brussels between now and 2012 and there are fears that instead of modernising the country, it will prove an incentive for corruption on an undreamt of scale. There are many ways to drain away public money to networks of politicians who often double as businessmen.

An unholy alliance between rebellious members of the coalition of reformers in office since 2004 and post-communist forces has thwarted many anti-corruption efforts. Appeals from Franco Frattini, the vice-president of the European Commission, for better behaviour have not had much impact. He has praised Monica Macovei, the minister for justice, for progress in removing the justice system from the control of avaricious politicians. But she is attacked from the government side while plans are being hatched to impeach President Traian Basescu, who has backed her reforms.

Ms Macoveiís achievements might have been greater if early elections had gone ahead to break the deadlock. The Social Democratic party, the heir of Nicolae Ceausescuís communists, is still the largest one. It is dominated by businessmen who have made fortunes from manipulating Romaniaís chaotic lurch to the free market. Some of them hope to return to power in alliance with business figures who dominate the Liberal party headed by prime minister Calin Tariceanu.

In 2005, Olli Rehn, the EU enlargement commissioner, blundered by blocking early elections designed to capitalise on Mr Basescuís popularity and usher in a pro-reform majority. He believed that valuable time would be lost in preparing for entry. But reforms have been blocked by parliament and by infighting in the ministries between rival coalition figures.

Twenty one million Romanians have endured years of shock therapy since negotiations for EU entry started in 2000. Salaries are 15 per cent of the EU average but prices for basic commodities approach western levels. Perhaps the EUís biggest error was to fail to ensure that vigour in the adoption of free market reforms was matched by a determination that the political conditions for entry were also met. GŁnter Verheugen, Mr Rehnís predecessor, closed negotiations in 2004 with many reforms existing on paper only. To his credit, Mr Rehn insisted on reopening negotiations in problem areas such as justice and added penalties for further backsliding. But the Romanian elite knows that much of the economy in Romania is virtually inside the EU already. Nearly all of the banks, much of the retail food industry and much of the energy industry is controlled by west European capital. Those companies have lobbied hard for Romania to join in 2007 with the promises of reform to come.

It could have been very different if the EU had asked Bucharest for broad powers of oversight in order to sweep aside impediments to reform. But Brussels adopted an unimaginative approach to Romaniaís problems, one that barely scratched the surface. It is hard to avoid the impression that the country is joining largely on the terms of a local elite that has often outsmarted Brussels functionaries.

Existing EU states cannot insulate themselves from the consequences of taking in an unreformed Romania. But Romanians will be the biggest losers. Polls show that the great majority do not expect corruption to fall for years to come. Nearly one-fifth of the workforce has already emigrated. The gulf between ruler and ruled will barely diminish and populist challenges are likely. The EUís record in Romania demands close scrutiny. Otherwise, applying the same lazy methodology of entry to the western Balkans and Turkey could have dire consequences for stability in a region where the EU is keen to project its modernising values.

The writerís book, Theft of a Nation: Romania Since Communism, was published by Hurst and Co in 2005