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Integration in 2007, a dilema for PSD

Cristian BANU

An old story says that, if you put two equally full buckets of water on front of a donkey, he would thirst to death as he wouldn't know which one to drink from. PSD is currently facing a similar dilemma. On the one hand, European integration could help at a political level, yet on the other hand, the most affected would be its own people, either members or simple voters.

PSD - between the political and economic interest

From an electoral viewpoint, PSD exclusively counts on the State?s captive electorate. These are people who live either on budget-funded wages, or on generous State-funded aid, or on what they receive or steal from companies still left in State administration. And, of course, there are also the peasants, on the one hand impoverished by agriculture policies disastrous for peasants, however beneficial to the party, on the other hand given alms in the form of subsidies just enough to keep them alive. 
These are low-education, low-income people, fully depending on the "big brother." Still, they haven't got to the despair level that fuels the electoral pool of Greater Romania Party. On the contrary, one might say, after the expansion of the sale on credit system, this category saw its life slightly improved.
Definitely, most of them will be flabbergasted to see that Mr. Iliescu no longer runs and it will be quite interesting to see whom they will vote for in the general elections.
With such a profile, the general economic growth does nothing but work - perhaps too slow, in some people's view - for the erosion of the PSD voters' pool. As people live better and grow more independent from the State, their political options begin to change. Accession to the European Union will only speed up this phenomenon.  Already many members of rural communities work abroad where from they send back home to their families the money needed to survive. Therefore, these families are not only no longer dependent on the State, but quite the contrary, they become aware that chances for a better life are somewhere else than in the "Romanian model" proposed by PSD. Although there are no statistics in this respect, apparently approx. 1,500,000 Romanians are working abroad at present, if not 2,000,000. Of these, 90% come from rural regions or from small towns and in past elections they most likely voted for PSD.
Getting in touch with other civilisations, with other norms, people become aware that in Romania things are not what they should be and that maybe a chance would be necessary. On the other hand, PSD is economically dependent on the "local barons". They have developed at the State's expense, through faked bids, though parasiting State-owned companies, embezzling European funds and the like. They are unable to survive in a competition driven, transparent environment, such as it would be after EU accession.
Their managerial abilities are so low that not even State-funded aid can prevent bankruptcies. With a worsening image abroad "the worst foreign image after the miners' riots, for which the same party is to blame, PSD has tried to wash up a bit, by giving up some of the most compromised of its members. However the lame manner of doing it - the "driven away" Vanghelie runs for City Hall and benefits from an image of the same level as the other PSD candidates, whereas the official candidate - whose name nobody knows - is hardly visible. And the icing on the cake, the latter's wife and daughter are members of Vanghelie's campaign staff.
In case Romania is accepted in the EU in 2007, PSD is in for a terrible time. Reforms it will have to implement will deal a serious blow to its voters and will affect the party's "money box". On the other hand, failure to accede can seriously damage the PSD image, which will see its only electoral trump gone with the wind, as, because of the corruption it will be rather vulnerable in campaigns, despite (or precisely because of) the Ceausistic media frenzy.
Better in 2010?
Recently, businessman Ion Þiriac made the headlines with an impressive rationale, trying to prove that Romania would be much better off if it tried to negotiate for an accession in 2010, instead of struggling to reach targets for 2007. He is not the first to make such statements, and very likely will not be the last. Yet, he is the most notable of the supporters of such an idea. Each time, the President's response was close to hysteria: "This is nonsense, our objective is very clear, integration in 2007."
Worth noticing is that every time similar statements were made by persons in the Government's close circle, and every time the President replied sharply. The general impression is that the Government is trying to get people used to the failure - otherwise predictable - of the EU negotiations. Businessman  Ion Þiriac has always been close to governments, which he has helped more than once, with lobby, with arrangements to meet businessmen, with advice. (Never confirmed) rumours have it that PSD has even proposed him to run for president.
The businessman's arguments are that we would thus have more time to prepare, in particular in the critical sectors, such as agriculture or the environment. Obviously, his public stand is hardly believable, because, on the one hand, he has made serious efforts himself to mitigate the disaster, by resourcefully lobbying even Emma Nicholson, moreover, he is a member of a governmental agency. With a privileged access to the premier, he could have warned him a long time ago that the Government's economic policy is disastrous and is pushing Romania to ruin.
Strictly economically speaking, obviously it is "their" Romania which is not prepared for the EU accession. We might even say, it rather defies European integration, as the Government enforced a series of measures contradicting free market concepts  - in spite of its apparent revolt as to the non-functioning market economy rating: the Brasov-Bors motor way, freezing debts of State-owned enterprises, tolerating arrears, commissioning various public works without previous bids etc.
Still, the advantages of a deferral are not in the least negligible: the main advantage would be preserving a relatively low level of labour costs. Another would be of a fiscal nature, with certain products protected from imports through high customs duties, which should be eliminated upon accession.
Also, Romania would benefit from a series of European funds which could help domestic companies get more prepared. Thus, only now is Romania accessing SAPARD funds for years 2000-2001, and it is virtually impossible for all funds to be spent by 2007.
As for the idea that Romanian companies will have time to get better prepared by 2010, this is not a sound argument. The healthy part of the Romanian economy is already integrated in the EU, where they can export freely. As far as the unhealthy part of the economy? it is already artificially kept alive for ruling party clients. It is much like a malign tumour, which once extirpated will allow the healthy part of the body to develop better. Of course, there are several industries which will be facing problems - the dairy industry, the meat industry - nonetheless they can be solved through efficient negotiations.

Disadvantages of delay

Arguments against deferral are a lot stronger than those in favour. Any delay will allow the Executive to "relax" - not that it would be very focused at present, since it has allowed its most important Ministers, the Foreign Minister and the Minister of Home Affairs, to enrol in the race for local elections, offices which none of them would have much use of. The Governmental relaxation could endanger macroeconomic targets. objectives might even get postponed a few years, which would jeopardise the inflation, for instance, for instance the budget deficits, already on the verge of breakdown. Maybe the most important for the regular fellow, accession in 2007 would put pressure on the modernisation of public administration, where Romania is at its worst. Currently, one of four Romanians work in public administration, a huge ratio, yet not prorated with the efficiency.
Administration functions on clientele criteria and appears to have as its main purpose the organisation of celebration and public feasts with pop music stars. Unbelievable, but true, the Tulcea Local Council allocated 20% of its annual local budget for celebrating the town's day!  Such waste is to be found in all regions dominated by the ruling party. In the "Vrancea European province" such events are organised on an almost monthly basis, whereas the inhabitants in the town of Focsani were about to be disconnected from the natural gas network for outstanding debts. Luckily Mr. Oprisan put in a word with the party and Dan Ioan Popescu ordered the measure be postponed, for it wouldn't fit the party to leave the voters without natural gases right before the elections. And such examples can be found throughout Romania.
Through the reform in administration, PSD will lose an important voter bribery lever, which evidently - in the absence of other arguments - can lead to losing the elections.
By postponing accession, a series of economic opportunities might be lost, as investments will be deferred. Maintaining a high inflation will slow down the economic recovery. The Government will lose its already scarce credibility. In exchange it will be able to carry on its massive State aid policy - veritable organised charities.
But perhaps the most important aspect of this deferral is placing Romania in the same category with Turkey, the perpetual candidate - which has minimum accession chances, because it is hard to assume that the European Union can afford in the medium run a common border with Iraq - or with the former Yugoslavia states, still plagued by inter-ethnic conflicts.

Advantages of integration

The advantages of integration are self-evident. An economic growth will be achieved along with a rise in living standards. The Government will be forced to implement sound economic and social policies, with aid from public funds to companies in debts reduced. This will speed up the economy competitiveness. Moreover, elimination of borders will allow Romanian products and services to access a huge market. Also, Romanian labour will have easier access to jobs abroad.
Another important aspect is represented by the funds, which will be three times higher for Romania as a Member State, than they are for the Candidate State.
Equally important are the elements related to the development of the democratic system.
Authorities will be bound to take another attitude as to citizens, and certain slips evident today will no longer be accepted. Going through the motions of the democratic system will not be enough, but measures will actually have to be taken to enforce the Rule of Law and democratic institutions.
By Romania and Bulgaria's accession, the Balkans area will gain in stability and security, which will definitely lead to increased investments in the region and consequently to a sustainable economic growth.

The strawberry picker' PSD's maker ? and breaker?

For the past three years, the most important investors in the Romanian economy got to be the Romanians themselves. According to more or less official estimates, USD 6bn allegedly entered the country, legally, in the past four years, and almost the same amount got in through other channels.  For this year, USD 1.8bn is expected through official channels and at least another billion USD illegally. Which means each "strawberry picker" would send an annual approx. USD 2,000, which is fairly reasonable. 
These enormous amounts dripped into the Romanian economy artificially kept alive the PSD Government, which had one of the most unnefficient economic policies in Romania's history. The money sent by Romanians employed abroad - the "strawberry pickers" ?-have led to the economic growth - for which the Government takes all credits, although its economic performances as utterly ruinous. Were these amounts taken off the triumphant statistics, Romania would not only have no economic growth, but also even a decrease.
The same amounts encouraged consumption in the last 2 years, triggering the boost of retail chains. Sales on credit skyrocketed and the standards of living rose massively. Entire villages have about 50% of their inhabitants working abroad, with only the children and the old left at home. Old houses were repaired, many households now have tractors or even combines - although in agriculture the horse and cart dominate the Romanian agricultural landscape.
While they saved the PSD Government from social convulsion - inevitable in the absence of this valve - whom they will vote for in the coming elections remains to be seen. For the time being, they seem to be ignored by all parties, which have no strategies to attract their votes. And we are talking about 1.5 million votes! That is, about 5% which together with their families could ensure 15% to 20%. Which is enough to win the elections.
Latest developments
The BBC has recently made public a piece of information according to which Romania and Bulgaria will be accepted in the European Union in 2007, however it will be a "conditioned accession." The two countries will be monitored more strictly, through a mechanism that would enable the EU to postpone accession of a country if the latter does not comply with commitments. "The enlargement strategy must be redesigned," stated European officials. "The only way in which we can control and have a political lever in Romania and Bulgaria is this monitoring mechanism, which will enable us to defer by one or two years the accession of a state which does not put commitments to practice." This is what the Romanian and Bulgarian governments feared the most, as they would have liked to benefit from the same rules and principles which led to the integration of the first 10 new Members on May 1.
Vasile Pușcaș - Romania's head negotiator stated in a news release that "we are confident that this normal monitoring process will not mean an arbitrary difference in treatment between the 10 on the one hand and Romania and Bulgaria on the other hand. [...] Permanent monitoring of what Romania does in accession preparations can only help us better implement the acquis communautaire." Details on the new plan of the European Union will only be made officially public in September.

In conclusion

If these new developments prove true, the Nastase Government is in for difficult times, in which it has to choose from blowing up its own voters' pool and the party "money box" which keep it at the helm of the country, or entering history books with the stigma of the failed EU integration. Regardless of the situation, it becomes clear that PSD's chance to remain a strong party are zero after the next elections. It will either operate the reforms, and therefore lose elections in 2008, or it will miss the integration, and, even if it wins the elections, the political crisis will be so great that they will have to pay. Given also that PSD is not a political party in the true meaning of this word, but a group of interests, primarily economic, its implosion is not far.

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