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July 2, 2022

Reform and restructuring

Twenty years have passed since Romania started walking toward democracy and a market economy. We’ve seen many things, these years – ups and downs, economic, social and political dramas etc. Summing up, after two decades, it is hard to find politically unbiased enthusiastic people that could say, without a trace of doubt, that Romania evolved in the right direction, that things are clear in economy and the society has moved closer to what many were dreaming in 1990. Naturally, there are obvious changes, things have moved forward in many respects, and significant advances have occurred in certain sectors. But overall there is little progress, hard to notice in an amalgam of discontentment and failures. During all these years, reform and restructuring were keywords in most sectors, from politics to economy, health or education. There was so much talk about these two desiderata that things seem to be the same as they were at the very beginning: we are still waiting for reform and restructuring to happen and put things on the right track, so Romanians can have a better future. Unfortunately, in most cases, reform and restructuring left things as they were.

The situation was best described by Catavencu, a character conceived by national playwright I.L. Caragiale: “I accept a revision, but nothing should be changed.”

In 1990, Romanians were angered when political analyst Silviu Brucan – a controversial personality of the communist and post-communist years – called his fellow nationals “stupid people” and anticipated it would take Romanians 20 years to understand democracy. Now, as these two decades have passed, even more challenges are present in Romanian politics, and politicians still have not understood that they should serve the citizen and the economy. Vengeance, suburban dialogue, felonies – this is the “tonus” of Romanian politicians at all levels. The political reform, promised by all those who took the power through the years, remained just a promise or a text on a sheet of paper, at best. Let’s take the example of the vote for the reform of the Parliament, chosen by Traian Basescu as slogan for the electoral campaign that brought him the second term as president, in 2009. This remained just a slogan (like so many other reforms), falling into the category of “unfulfilled promises.”

In the ‘90s, economic reform meant privatisation. Romanians were told each day that privatisation is the only way to performance in the economy. But the privatisation was made amateurishly, assets were undervalued and sold at very small prices in rigged tenders, industrial units and other assets were destroyed to the benefit of real estate speculators a.s.o. The cardboard billionaires that proliferated early in the ‘90s were followed by the real billionaires, skilled in more or less licit deals, in financial speculations, in businesses with the state that always put the state at disadvantage. Now, they are known as ‘moguls’ – at least this is how the head of state calls them. And there are many more of them than the few who are publicly accused of trying to interfere with politics.

During the ‘90s, as well as in the first decade of this century, authorities conducted the so-called ‘large privatisations’ that were generally disadvantageous for the Romanian state. Petromidia, Sidex Galati, BCR, Petrom are just a few such examples. Naturally, without the parasitic firms that were orbiting around them when they were state property, and with a private management, these companies or banks suddenly became profitable. If this was the restructuring we needed, it obviously wasn’t enough. Now, 20 years after the move to market economy, the Romanian economy is still in the stage of quasi-savage capitalism and operates with incomplete – often obsolete – laws, with a cumbersome fiscal system that is both bureaucratic and unstable. The advent of the global economic crisis, impossible to avoid for Romania, made things even worse, with a volatile and incendiary situation caused by growing social unrest. Salary cuts, new taxes, legal regulations that even those who should enforce them cannot understand – this is neither reform, nor restructuring. Once again, authorities talk about the urgent need for structural reforms.
But how can this reform and restructuring process move forward in a clientele-driven system where nepotism has become a mania, especially as many don’t even understand what should be reformed and restructured. Surprisingly, the capable employees of ministries, public institutions, even private companies are made redundant, while those with political and family connections can keep their – often very well paid – jobs. In such conditions, there’s no wonder that most analyses, papers and laws drafted by ministries are poorly conceived, come with delay and cannot be enforced. Ordinance 50/2010 that regulates the relations between banks and their clients, and Law 58 on the payment of copyright royalties are just two telltale examples of incompetence and indolence.

Then, who will do the reform and restructuring? A government that found no real measure against the crisis in more than two years? An obsolete and nepotistic bureaucratic and administrative apparatus? A Parliament whose members care for their own political games of power and interests, rather than for passing efficient laws? MPs who got elected for their popularity, singers and businessmen who contributed to the budgets of various parties?

Let’s get serious! The idea of a deep restructuring, of reforms that will turn Romania into an “East-European tiger” is nice, but it’s just theory. As always, ideas are hard to put into practice in Romania. This is why we are still in the same stage of dreaming about radical reforms that will reverse the economic and social decline. Even the brief moments when things seem to improve are just preludes to an even faster collapse. Most likely, economic and political reforms should be preceded by a moral reform.

The present crisis did not come after an era of prosperity, maybe just after a brief moment of recent welfare on credit. The ‘90s were the years of galloping inflation, of economic decline, of indecision and amateurish capitalism. The last decade’s fake economic prosperity did not imply an efficient economy, with a high degree of productivity. It was just an economic development based upon speculations – especially in the real estate sector – an economy of a corrupt, or corruptible, society, of populism without limits. The wake-up was painful. It would have probably come even without the global crisis, precisely because we did no reform and restructuring, though we spoke much about them…

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