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중동부유럽┃[정치] 루마니아 전문가 칼럼 The Evolution of Post – Communist Romania Elena Druică1) University of Bucharest, Professor At the end of 1989 Romania was the last Eastern European Country to begin the transition to a free market economy. Political and economic transition in the rest of communist Eastern Europe had begun much earlier, with Hungary and Poland engaging in meaningful and gradual economic and political reforms. In the fall of 1989, the die-hard communist regimes of Czechoslovakia and of the German Democratic Republic collapsed. After the fall of the Berlin Wall on November 9, 1989, the regime of Nicolae Ceausescu remained the last Stalinist rampart of the Warsaw Pact. By December 23 1989, however, it too had collapsed amid massive social protests and political confusion that led to bloodshed and devastation. In 1990, Romania was one of the poorest European countries2). The forced industrialization process that began in the early 1960s generated serious structural problems. Although industrial production had grown tremendously during the communist regime, it was not sustainable. It required massive investments in obsolete industries, using obsolete technologies to produce low-quality products destined to flood Western markets in an attempt to generate the much sough-after hard currency. It drained the natural resources of the country, it produced massive pollution and it left the population in a permanent state of near-starvation. To get a better idea of the situation, it is fair to say that to some extent, the policies of the Communist regime were partially inspired by the economic, political, and cultural example of North Korea, who in the early 1970 became a source of admiration and envy for the late dictator Nicolae Ceausescu (Kim, 2013). Fortunately for the Romanian people, communism in Romania was never willing nor able to achieve the same 1) 2) The opinions expressed in this document, as well as all remaining mistakes, are of the author alone and do not represent the opinion of the University of Bucharest. World Bank data shows that GDP per capita expressed in current US$ in Romania was $1,650.7 in 1990. http://data.worldbank.org/indicator/NY.GDP.PCAP.CD - 1 - 중동부유럽┃[정치] 루마니아 전문가 칼럼 degree of despotism and political indoctrination. When transition began in the early 1990s it proved to be painfully slow and incredibly confusing. The lack of political transparency and stability played a major role in delaying meaningful reforms early on (Dimitrova & Dragneva, 2001; Racovita, 2011). After years of poverty and lack of hope, the population wanted stability and the perspective of the shock therapy was too much to bear. Privatization proved to be one of the most significant challenges because the economy, nominally owned and controlled by the government, would not and could not function in the absence of the ruthless and overbearing iron fist. The 1990s were characterized by declining industrial output, declining exports, declining productivity, high inflation, and recurrent financial blockages that put tremendous pressure on the government budget and the few emerging healthy enterprises. Imports of consumer goods skyrocketed in order to pacify the population and compensate for the excesses of the previous regime, leading to government deficits and unsustainable levels of foreign debt. In 1996, a shift of political regime to the right promised significant economic reform and a speedier privatization, but its efforts faltered. Between 1996 and 2000, Romania did not do much better economically than in the first phase of the transition, and continued to lag behind other Eastern European countries, such as Hungary, Poland, and the Czech Republic. Political scandals and controversies alternated with economic and financial crises. Nevertheless, it became clear that the reforms entailed at the beginning of the decade were irreversible and their influence was slowly becoming noticed. The only country that experienced a very similar transition in the 1990s was neighboring Bulgaria, also relatively impoverished and stagnant. Both Romania and Bulgaria experienced economic hardship and inflation, however, inflation in Bulgaria was much more severe and devastating than it has ever been in Romania. Economic and political stabilization did not occur in earnest until after 2000. Although contrived and hesitant, reforms began to produce results. Relative to the early 1990s, the Romanian economy began to strengthen. By the time Romania gained EU membership, gross domestic product increased tenfold in terms of current US dollars, from a low of per capita had $1,100 in 1992 to a high of $10,130 in 20083). The sub-prime financial meltdown reached Romania with some delay, and its impact, although significant, appears to have been proportionally less severe than in other countries, such as the United States, UK and Iceland. After all, ever since the communist period, Romania was a country in a perpetual economic downturn, and the terrible economic shock felt in Western Europe and North America seemed less dramatic in Eastern 3) Author’s calculation using World Bank data - 2 - 중동부유럽┃[정치] 루마니아 전문가 칼럼 Europe. Of all former communist countries, Poland was best able to weather the storm, becoming one of the most dynamic European economies4). The pace of economic and political reforms accelerated substantially in the first decade of the new millennium. With a new goal on the horizon and a firm deadline, successive Romanian governments were able to implement meaningful changes in order to ensure EU membership. While neighboring Bulgaria was still reeling from the effects of a devastating period of hyperinflation, the National Bank or Romania was finally able to tame the runaway increase in prices. A sweeping monetary reform was introduced in 2005 and the Romanian currency gained some much-needed stability. After a failed attempt in 1997, Romania was finally admitted in NATO in 2004 and this proved to stimulate more fervor and optimism with respect to the goal of achieving full European integration. Romania and Bulgaria managed to accede to the European Union in 2007. Croatia was the last country to gain EU membership in 20135), and it remains unclear whether and when the EU will proceed with another enlargement in the near or more distant future. It is certain, however, that the accession process gave a boost to the embattled Romanian economy. During the last two years, Romanian industrial production remained sluggish, but in spite of a global economic slowdown, particularly in China, it has not contracted yet. There are signs, however, that even the existing modest growth is about to evaporate; there are some worrisome indications that exports are slowing down and consumer confidence is declining6). Romania has an economy that relies to a good extent on foreign markets as exports represent about 40% of the GDP at the end of 2015. Internal demand is not sufficient to fuel economic expansion, and just like many other smaller economies, growth is tied to mood swings in international markets. Although the country is still lagging behind economically when compared to other EU members such as UK, Italy, and France, the public finances of Romania are nevertheless in a better shape. Gross government debt hovers around 40% of GDP, still well bellow the EU average, at about 70 %. When taking into account the government's financial claims, the net debt is only 32% of GDP, and foreign currency reserves stand at 4.6% of GDP at the end of 2015. It is estimated that foreign debt represents only one third of total public debt, and of this, another third represents US dollar denominated government bonds. 4) 5) 6) Piatkowski, Marcin (2015), Four ways Poland’s state bank helped it avoid recession, | June 12, 2015 9:00am http://www.brookings.edu/blogs/future-development/posts/2015/06/12-poland-financial-crisis-pia tkowski http://europa.eu/about-eu/countries/member-countries/ http://www.economistul.ro/barometrul-industriei-irsop-amp-snspa-facultatea-de-management-s1290/ - 3 - 중동부유럽┃[정치] 루마니아 전문가 칼럼 Although Romania is faring better than the average when it comes to public finances, there is a concern among Romanian economists and commentators that the burden of public debt would become critical if it grows above 45% of GDP7). The most delicate issues negotiated between Romania and the European Europe prior to the 2007 accession were social reforms, political stability, and corruption. The government has moved swiftly in the direction of harmonizing social policies with those of the more developed member nations. The internal political situation, although relatively stable, has proven acrimonious and ridden with bitter power struggles. To make things more complicated, Romania adopted in 1991 a presidential system fashioned after that of France. This meant that the usual two-way political disputes between the executive and the legislative acquired a whole new extra-dimension. The president is claiming his own specific prerogatives, making the political decision-making process more cumbersome. As a result, the National Assembly, the Government, and the President are frequently locking horns amid mutual accusations and political posturing, creating confusion, frustration, and disillusionment among voters. The latest presidential elections in 2015 produced a president who is a member of the small German minority from Transylvania. Klaus Iohannis won the elections on a political platform that makes the fight against corruption one of the central political pillars of the new administration. Romania had for sometime a less than enviable reputation for endemic corruption, and Romanians need not read international rankings to be reminded of this problem. The public mood and the political discourse on this topic is fierce and uncompromising. For a society with a low level of social trust and tolerance, this national obsession is about to turn into a veritable witch-hunt. While the perception of corruption is indeed poignant, it is not clear if in reality it is as widespread as claimed by all political sides in the debate. No doubt, corruption is a troublesome reality, but Romania is a country with a byzantine bureaucratic apparatus that imposes tremendous costs and inefficiencies on almost every economic and political process. In a paradoxical sort of way, the more bureaucratic safeguards are put in place to ensure fairness, the more costs are imposed on an already frustrated population. One of the major challenges that lie ahead is to replenish the stock of social capital so that social trust will engender more cooperation and goodwill across the nation. In spite of a large initial handicap, Romania has made substantial progress since 1990. Its economy has recovered, prices have 7) http://www.economistul.ro/la-cumpana-anilor-2015-2016-datoria-publica-tema-de-controverse-perpetue-si-sol utii-acceptate-tacit-de-toata-lumea-a8340/ - 4 - 전문가 칼럼 중동부유럽┃[정치] 루마니아 stabilized, democracy is surviving, and the standard of living is inching higher, slowly closing the gap that separates it from the more prosperous European countries. Much remains to be done, and only time will tell if Romanians will be able to muster the social and material resources needed to maintain the momentum. [참고문헌] 1. Dimitrova A., Dragneva A. (2001) Bulgaria's road to the European Union: Progress, problems and perspectives, in Perspectives on European Politics and Society 2 (1), 79-104 2. Kim, Yvonne (2013), Romania-Korea Relations: A Case Study in Foreign Policy Change (22 Nov. 2013), http://asiasociety.org/korea/romania-korea-relations-case-study-foreign-policy-change,retrievedonJan uary15,2016 3. Piatkowski, Marcin (2015), Four ways Poland’s state bank helped it avoid recession, June 12, 2015 9:00am http://www.brookings.edu/blogs/future-development/posts/2015/06/12-poland-financial-crisis-piatko wskiretrievedonJanuary17,2016 4. Racovita M., (2011) Europeanization and Effective Democracy in Romania and Bulgaria, in Romanian Journal of Political Science, Vol 11 - No 1 – 2011 5. The Industry Barometer, IRSOP & SNSPA, Faculty of Management, ECONOMISTUL INFO, 2015-12-22 09:15, http://www.economistul.ro/barometrul-industriei-irsop-amp-snspa-facultatea-de-management-s1290/( publishedinRomanian;retrievedJanuary9,2016) 6. The public debt: never-ending controversies and tacit solutions, ECONOMISTUL Nr. 49 50, 2015-12-14, http://www.economistul.ro/la-cumpana-anilor-2015-2016-datoria-publica-tema-de-controverse-perpet ue-si-solutii-acceptate-tacit-de-toata-lumea-a8340/ (published in Romanian; retrieved January 9, 2016) World Bank Data: http://data.worldbank.org/indicator Other online sources EU member countries: http://europa.eu/about-eu/countries/member-countries/,retrievedJanuary15,2016 - 5 - 전문가 칼럼 중동부유럽┃[정치] 루마니아 Date: 2016.01.20 EMERiCs의 사전 동의 없이, 상업 상 또는 다른 목적으로 본 칼럼의 내용을 전재하거나 제 3자에게 배포하는 것 을 금합니다. 본 칼럼에 대한 저작권 책임은 작성자 본인에게 있으며 KIEP 및 EMERiCs의 공식적인 입장을 대변하고 있지 않습니다. - 6 -