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May 25, 2022

8 per cent worth of reasons

The main Romanian parties are sifting good from bad, or at least they give the impression this is what they want. The Liberals and Social-Democrats in the opposition, the Democrat-Liberals in power, they all go through internal convulsions generated by older or newer griefs, unfulfilled expectations or wishes that imply changes of orientation. For the parties that form the opposition in Parliament, we would say this is natural, given the deep traces left in their political conscience, but also in their budgets, by the loss of the presidential elections. But why is PDL so convulsed by such unrest?

Seen from a distance, the disputes between the so-called reformers of the party (Cristian Preda, Monica Macovei and Sever Voinescu) and the so-called conservatives, or barons (Vasile Blaga, Adriean Videanu, Radu Berceanu etc.) seem ridiculous. The country is going through a deep recession and the immediate prospects are bleak – at least with respect to the labour market.

The words “escaped” by IMF representative Jeffrey Franks, about the number of jobless possibly reaching 1,000,000 this year, inflamed to an even higher degree the protests of trade unions. Though it was later nuanced by the Fund official, and further nuanced by Premier Emil Boc, the prediction was widely commented by the media and the society, as a whole. And the government’s problems do not stop here.

The government includes the aforementioned “heavyweights” (Blaga, Berceanu, Videanu). They also belonged to the Boc 1 Cabinet in 2009, formed in alliance with the Social-Democrats – a government team that answered only few of the challenges it was faced with. Now, when PDL escaped from the “burden” called PSD, it gives no sign of performing better. Premier Emil Boc presented in Parliament, at the beginning of the current session, the lawmaking priorities of his cabinet. Meanwhile, the legal chaos is almost total. In the Education sector, nothing is sure, apart from the certainty that some 15,000 jobs will be scrapped until September this year. The railways sector expects its own share of layoffs. Various officials said the lump tax will be canceled, but nothing concrete happened so far, and the promise to enforce it only in certain sectors is just theory. Micro-enterprises no longer benefit from the tax worth 3 per cent of their incomes, which was replaced by the flat tax worth 16 per cent of their profits. But the methodology norms of this tax have not been enforced yet, and officials from various ministries do not know what answer they should give to small entrepreneurs, about how to pay their dues to the state. The Finance Ministry only said it will directly switch to the flat tax payment. And what is there to be said about the financial aspects. The VAT refunding to companies is delayed by months, the same as everything that relates to the state’s debts to suppliers, but the slightest delay in the payments due by a firm to the state is sanctioned on the spot. Because of the lump tax and an increased indirect taxation, over 100,000 companies went out of business, and each day brings more bankruptcies. Some say that many of these firms were out of business anyway. True. But they were not alone in their failure, being accompanied by small firms with a few employees, whose closure only increases the number of those who queue at the door of labour offices, seeking unemployment benefits. In this context, it is no wonder that the trade unions form industry, education and the public sector are bracing for protests and, for the time being, resort to warning strikes, as required by law. The state lacks the cash, this is for sure, but it does no effort to attract funds, apart from the loans from the IMF, WB and the European Commission. The prospect of receiving the next two loan tranches from the Fund is putting the Boc Cabinet at ease. Beyond February, however, the financial evolution is unclear.

In this context of insufficient cash, we should recollect one of the main themes of dispute (which caused endless accusations between the Cotroceni and Victoria Palaces) during 2004-2008, between President Traian Basescu and Liberal PM Calin Popescu Tariceanu. The controversy was centered on accessing European funds. The head of state repeatedly attacked the then government and accused the Tariceanu Cabinet of incompetence, over insufficiently using these funds. It is true that only few of them were actually used, but those were early years (2007), and achieving a project takes some time. Here we are in 2009, and things are no better. On the contrary. Recently, one of the officials in charge with making the projects used to draw European money explained on the TV the same thing: until now, authorities worked on projects, and only from now on will they move to actually accessing the funds… In theory, Romania may benefit from EUR 30 bln by 2013, from Brussels. Given the economic slowdown of these years, drawing European cash can be a solution to mitigate its effects and even start the economic recovery. But in the year 2010, President Traian Basescu is far less critical against the government led by Emil Boc, though the average rate of accessing European funds amounts to only 8 per cent.

Did anybody hear a message addressed by the president to the government, in the sense of stepping up the procedures required to access European funds? We can perceive no special effort of the PDL-led government for boosting the process that defines projects meant to draw and use European money in fields like infrastructure and agriculture. The same PDL leaders we mentioned above have other concerns, dedicated to the party they belong to. The Democrat-Liberals talk about changing their name and logo. Are these the immediate priorities for Romania? Premier Boc is also the leader of PDL. In speeches, he does well in his both positions – as party president and premier – but when it comes to government achievements, we can hardly find reasons to be pleased. In terms of accessing European funds, justifications can always be found, but the level of 8 per cent makes any other comment useless.

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