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May 25, 2022

There might be recession for all

It’s official: the recession feels at home in Romania, a sad but very real conclusion following the announcement of the official data on the economic developments registered in the last quarter of last year and in 2009 as a whole. Despite the optimism shown by various officials, in Q4 of 2009 the economy continued to drop by 1.5 per cent, with the GDP drop standing at 7.2 per cent for the whole year. Moreover, the unemployment level continued its upward trend in January 2010, reaching 8.1 per cent, a figure comparable to the one registered in 2003.

Let us not forget the optimism shown during the Presidential elections campaign at the end of last year. That enthusiasm was present in December too back when the new Emil Boc Government was formed. The Premier and the Ministers were anticipating (a small) economic growth in the fourth quarter of 2009, one that was destined to put an end to the negative trend.

For that they relied on the recovery of exports and of the internal demand. Unfortunately the facts contradict them. And a large part of the analysts anticipate that 2010 will be a year in which the recession will continue to be felt. At least when it comes to unemployment the news are not ‘rose’ at all. To the more than 700,000 unemployed one will have to add those from the transport domain (railways in particular), the education system, the public servants, the constructions sector, with the employers suggesting the sacking of approximately 80,000 persons in this domain.

Given these conditions, Finance Minister Sebastian Vladescu tells us that the economic winter is not as difficult as it looks like, nor is it as harsh as the one outside our windows, and that spring time might arrive in 2010 for the Romanian economy too. It might… The phrase itself is extraordinary and offers a multitude of possibilities that could even consist of sci-fi. Man might land on Mars but he isn’t doing that yet. Romania might become the seventh economic power in Europe (as former Premier Calin Popescu Tariceanu hoped) but the chances are slim. In a similar way Romania might soon feel the economic spring. But will it actually do that?

Faced with the economic realities that are not gladdening at all, Premier Emil Boc might in turn be honest with the Romanian citizens. He might tell them that the difficult period is not over, that many will lose their jobs in 2010 too, that the real incomes will drop after the introduction of new taxes (visible or hidden), that the agreement with the IMF gets us out of trouble for several months but won’t help us throughout the year least of all for eternity, that we will not see any kilometer of highway built this year, that the health system is almost on the brink of collapse and that the funds for it won’t last beyond the first six or seven months of the year, etc. He might say that the recession hits us all. He might do that provided he is honest. But Premier Emil Boc carries on in a post-electoral style, something that he actually blames his political opponents for doing. A pompous style that underlines the Government’s ‘great achievements’ while minimizing the negative aspects. He ignores the lack of anti-crisis measures that any citizen notices, even a citizen that is not in any way familiar with the economic domain. And, a fact that seems the most serious, he tries to distort the serious economic situation by ‘launching’ false issues. Of course, these issues have their political, social and economic importance but are not necessarily newsworthy, being instead meant to draw the attention towards secondary targets.

Criticisms and ideas appear periodically. That was the case of the attack against the Social-Democrats that allegedly failed to responsibly negotiate with the EU the issue of agricultural subsidies during the Adrian Nastase Government. Then there is the issue of the ‘callous pensions,’ an issue that dominates the news channels. It is true, social justice is preferable and the principle of contribution should be respected. However, to make a matter of immediate national importance out of the pensions of 200,000 persons, pensions that are indeed ridiculously high, is at least exaggerated. Just as exaggerated as the idea that the persons that abused the right to retire early because of medical conditions ‘will be sent back to work.’ What work might that be, considering that the number of layoffs and implicitly that of the unemployed is on the rise? Mr. Boc should be honest once again and should inform the aforementioned pensioners that they will simply stop receiving a pension. This is the real issue, the state’s expenditures and revenues. In what concerns the special and callous pensions within the justice system, we are waiting for the day in which that system will reject the magistrates’ (inevitable) complaint that argues that the new pensions’ law violates the non-retroactivity principle. The judges will retire some day and it is difficult to believe they will give satisfaction to Premier Boc. The Parliament will most likely reject the draft too, with the Opposition levying harsh criticism against this law.

Finally, another false issue with which the Prime Minister wants to distract us is the issue of the single-Chamber Parliament. He warned the leaders of PSD and PNL to publicly and clearly explain whether they back the immediate reduction of the number of MPs and the switch to a single-Chamber Parliament, stating that the parties are deliberately delaying the start of the debate. Now this is a newsworthy issue! The referendum on the single-Chamber Parliament might very well have been approved by the ‘people’ but in 2010 when the people do not know whether they will still be employed tomorrow and whether they will have the means to pay their loans and bills, is the single-Chamber Parliament the immediate necessity?

Slightly namby-pamby, the Finance Minister told us last week during a press conference that the Government won’t be the one to pull Romania out of the crisis, with the Romanians being the ones to do that instead. They might do it by accepting higher taxes, fewer jobs, no investments and a lack of medical assistance. On the other hand however, the citizens that are members of trade unions might go out into the street (and will do that once the spring arrives) to protest against the Government’s measures. And they might have a lot of demands in their pockets…

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