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Romania

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Last reviewed: 03 September 2009

Country information

Map of Romania

Area: 238,391 sq km
Population: 22.6m
Capital City: Bucharest (population: 2m)
People: Romanian (89.4%); Hungarian (7.1%); German (0.5%)
Languages: The official Language of Romania is Romanian. Hungarian, Romany and German are often spoken as first languages by the Hungarian (Magyar), Roma and Sasi (Transylvanian Saxons) minorities. English and French are widely spoken.
Religion(s): Orthodox (86.8%); Roman Catholic (5%); Reformed (3.5%); Protestant (3.5%); Greek Catholic, Unitarian and others (1.2%)
Currency: Leu, plural Lei
Major political parties: Government: Centre right PD-L (Democratic Liberal Party); Centre-left PSD (Social Democratic Party) in coalition with PC (Conservatives); Opposition:PNL (National Liberal Party); UDMR (Democratic Union of Hungarians in Romania);  
Government: Parliamentary Democracy
President: Traian Basescu
Prime Minister: Emil Boc
Foreign Minister:  Cristian Diaconescu

Membership of international groupings/ organisations: Organisation for Co-operation and Security in Europe (OSCE) (2001 Chairman-in-Office); United Nations (UN); International Monetary Fund (IMF); World Bank; International Finance Corporation (IFC); Multilateral Investment Guarantee Agency (MIGA); European Bank for Reconstruction and Development (EBRD); Bank for International Settlements (BIS); World Trade Organisation (WTO); Central European Free Trade Agreement (CEFTA); Council of Europe (CoE) (2005-06 Chairman); Stability Pact; North Atlantic Treaty Organisation (NATO) ; PfP; European Union (EU).

ECONOMY

Basic Economic Facts (2008, if not state otherwise)


Nominal GDP:  EUR 136.8  
GDP per capita: EUR 6364
Purchasing Power Parity (PPP): EUR 8900  approx
GDP Growth:  7.1 %  
Inflation: currently 6.3 % (5.1% in July 2009) The inflation rate is forecast for 2009: 4.3%
Unemployment:  5. % (6.3% in July 2009)
Major Industries: food and beverages, energy, metallurgy, crude oil processing, chemicals, light machinery and textiles
Exports:  EUR 33.6 bn  (13.6 bn in H1 2009)
Imports:  EUR 51.8 bn  (17.9 bn in H1 2009
Major trading partners: Exports  – EU 60.1%, of which Italy  18.1%, Germany 15.8%, Turkey 7.7%, France 7.5%, Hungary 5% and UK 4.8%. US 2.5%.
Imports – EU  62.5%, of which Germany 15%, Italy 14.8%, Russian Federation  8.1%, France 6.5%, and UK 2.9%, Turkey 4.9%, China 4.2%
Trade Balance:  EUR 18.2 bn deficit (4.3 bn in H1 2009)
Current Account: 12.3% of GDP deficit (5% of GDP deficit in Q1 2009)
Fiscal Balance: 5.2%  of GDP deficit (2.7% GDP deficit in H1 2009)
Foreign Direct Investments:  EUR 9 bn  
External Debts:  EUR 72.5 bn (57 bn in May 2009)
Central Bank (NBR) Reserves: EUR  26.2 bn (27.3 bn July 2009)
Exchange rate (August 09): 1 EUR = 4.20  RON; 1 USD = 2.92; RON; 1 GBP =  4.72  RON.

Economic Developments


Following the collapse of communist rule in 1989, Romania has undergone a long period of economic transition to a market economy.  Compared to its central and eastern European neighbours, this process has not been smooth or particularly well-managed, and included two periods of economic recession and financial scandals during the 1990s.  

Since 2000 there has been more progress.  An extensive programme of economic reforms has included the privatisation of a large number of state-owned enterprises and the restructuring of Romania’s energy, mining and industrial sector.   The reform programme closely followed IMF requirements for fiscal restraints and economic restructuring, particularly in the energy sector.  In 2004, the European Commission gave Romania 'functioning market economy' status.  The economy has been growing at an average annual rate of 6% since 2000, with a peak of 8.5% in 2004, mainly driven by strong domestic demand.  There has been rising demand for Romanian exports of steel, cars, and light machinery.

Agriculture remains a weakness.  It represents about 8.1% of GDP  but it is mainly of a subsistence nature.  After 15 years of slow progress, the reform of the sector has been sped up in the last couple of years but is still characterised by low productivity and small land-holdings, despite being largely in private hands.   Direct payments from CAP and rural development funds are likely to raise living standards in the poor countryside as farmers and local authorities are eagerly applying for funding.  Significant amounts of structural funding have been allocated for the 2007-2013 and despite a slow start in absorbing them Romania is expected to reap the benefits and develop its backward infrastructure.

The global financial and economic crisis hit Romania late, but hard, at the beginning of 2009.  Economic growth dropped from 7.1% in 2008 to -6.2% in the first quarter of this year.  The constructions sector went in dramatic decline, credit activity slowed down.  Both trade and current account deficits adjusted rapidly, with significant falls in growth rates.  Struggling with rising public expenditure and lower revenues, the Government requested IMF and EC financial assistance in March.  The agreed package totals €19.95 bn with the first tranche being disbursed to the Central Bank in May.  The IMF agreement should have a positive impact on investors’ confidence.  Political opinion was divided about the package.  The Liberal Democrats showed constant support for the agreement and played a key role in negotiations.  The minority coalition party, the Social Democrats (PSD), were originally against any approach to the IMF and the political costs for them might be significant as they control the social ministries like Education, Labour and Health.  In the medium term, President Basescu is hopeful that the IMF agreement could force reform to the public sector that would otherwise have been unlikely.  

A first IMF assessment mission took place in August, and revised projections and targets were agreed with the government: negative economic growth of 8.5% and a budget deficit of 7.3% for 2009.  The IMF team recommended that part of the next two tranches go towards covering the deficit.  Significant and consistent cuts in public expenditure over the next 4 years will be necessary to bring down the deficit to below 3% of GDP.



HISTORY

Recent History


From 1946 to 1989 Romania was ruled by the Communist Party, led after 1965 by Nicolae Ceausescu.  Following a popular uprising in the western town of Timisoara, which quickly spread to the rest of the country, the Ceausescu regime was overthrown and Ceausescu and his wife Elena were executed on 25th December 1989.  In the aftermath of the revolution a committee known as the National Salvation Front (FSN) led by former communists Ion Illiescu and Petre Roman assumed charge of the country.

Popular dissatisfaction with the new leadership who were seen by many as a continuation of the former regime led to demonstrations in 1990.  A large, protracted protest in Bucharest was broken up by 10,000 miners leaving seven dead and several hundred injured.  There still has not been a full explanation of why the miners took this action or on whose orders they acted.


1990 - 1996


The first post Ceausescu general election in May 1990 was won by the FSN and the first presidential election by Ion Iliescu.  The FSN later became the Party for Social Democracy in Romania (PDSR) and won the general election in 1992. This government's performance was mixed.  There was little progress in tackling corruption, reforming Romania's bureaucracy and introducing a market economy. However political pluralism and a vibrant free media did become entrenched.


1996 - 2000


In November 1996 Emil Constantinescu of the centre-right Democratic Convention (DC) won the presidential election and a coalition government of the DC, centre-left Union of Social Democrats and the Democratic Union of Hungarians in Romania (UDMR) formed a new government.  This coalition managed with some difficulty to remain together until the elections of 2000, but failed to perform well on the economy or the fight against corruption.


2000 – 2004


Disappointment with the Constantinescu government led to the return of Ion Illiescu as President in 2000 who appointed Adrian Nastase as PDSR Prime Minister.  The PDSR later changed its name to the PSD (Social Democrat Party). Elected on a platform of economic reform and integration with the west, Romania became a NATO member in 2004 and laid the foundations for Integration into to the EU in 2007.  The formation of a PD (Democrats) - PNL (Liberals) opposition coalition and emergence of the charismatic Democratic Party leader Traian Basescu who won the June 2004 local election to become mayor of Bucharest did however present voters with a real alternative to the PSD who were still considered by many to be a continuation of the pre 1989 regime.  The PSD lost both the Presidential and General election elections in Nov-Dec 2004.

Longer Historical Perspective


Dacia, a region roughly approximating to present-day Romania, was incorporated into the Roman Empire in AD 107.  Although the Roman presence lasted only until AD 271 Romanians continue to trace their national and linguistic birth back to this period.  The Romans were driven out by advancing Goths whose arrival, as well as those of later invaders, drew a veil over Romanian history until about the 13th Century.  After this date Romania's three main regions, Transylvania, Moldavia and Wallachia followed different paths of development until 1918.


Transylvania was variously under Hungarian, Ottoman or Habsburg rule until its incorporation into the Kingdom of Romania after the First World War.  Wallachia and Moldavia were feudal tributary states of the Ottoman Empire for most of their recorded history, but they produced some leaders who effectively opposed Ottoman rule, most famously, Stephen the Great in the 15th Century and Michael the Brave in the 16th Century.

Wallachia and Moldavia emerged from Ottoman rule in the 19th Century and achieved independence as the unified Kingdom of Romania in 1881.  Romania gained significant territories in the post-war peace settlement, including reunification with Transylvania in 1918.  It began WWII in alliance with the axis powers, but later switched sides.  In 1944 Soviet forces entered Romania and put pressure on King Michael to accept the appointment of a communist-led government.  In 1947 the King was forced to abdicate and left Romania for London.  Stalin also annexed Bessarabia, ceding a part to the Ukraine, but creating a Republic of Moldova from the rest and Transnistria.

INTERNATIONAL RELATIONS

European Union


Romania joined the EU on 1 January 2007.  Romania elected 33 MEPS in the European elections of June 2009.  PD-L and PSD-PC alliance got the highest number of seats (11 each), followed PNL (5 seats), UDMR (4 seats), PRM (2 seats).

NATO 


Romania joined NATO in 2004 and hosted the NATO Summit in Bucharest in 2008.


Romania's relations with the UK

Relations between the UK and Romania are very good.  The UK supported Romania’s membership of NATO and was the strongest supporter of Romania’s accession to the EU in January 2007, providing technical assistance prior and in the first years of EU membership. 

Cultural Relations with the UK


The British Council is active in Romania, with one of the busiest libraries in the world in Bucharest.  There are further libraries in two other cities.


Recent Visits


Inward


  • President Traian Basescu - January 2005
  • Foreign Minister Mihai Razvan Ungureanu - March 2005
  • President Traian Basescu – October 2005 Hampton Court
  • Foreign Minister Mihai Razvan Ungureanu – February 2006
  • Justice Minister Monica Macovei – October 2006
  • Education Minister Cristian Adomnitei – May 2007
  • Defence Minister Theodor Melescanu – November 2007
  • Prime Minister Calin Popescu-Tariceanu – December 2007
  • Foreign Minister Adrian Cioroianu – December 2007
  • Economy Minister Varujan Vosganien – December 2007
  • Interior Minister Cristian David – February 2008
  • Justice Minister Catalin Predoiu – June 2008
  • Foreign Minister Diaconescu – April 2009
  • Justice Minister Catalin Predoiu – June 2008


Outward


  • Home Office Minister Caroline Flint - March 2005
  • Sir Digby Jones, Director-General of the Confederation of British Industry (CBI) - November 2005
  • Minister for Europe Douglas Alexander - February 2006
  • Home Secretary Charles Clarke – April 2006
  • DEFRA Minister Lord Bach – April 2006
  • Minister for State Kim Howells – May 2006
  • House of Commons Foreign Affairs Committee – October 2006
  • Deputy Prime Minister, John Prescott - January 2007
  • Minister for Europe, Geoff Hoon - February 2007
  • Baroness Ashton, Ministry of Justice – May 2006, September 2006 and June 2007
  • Jim Knight, Education Minister - January 2007
  • Foreign Secretary David Miliband – September 2007
  • Rt Hon Keith Vaz, MP – October 2007
  • Home Office Minister Vernon Coaker – March 2008
  • Rt Hon Elliot Morley, MP - April 2008
  • Lord Digby Jones, Minister of State for Trade – April 2008
  • Prime Minister Gordon Brown - NATO Summit April 2008
  • Foreign Secretary David Miliband NATO Summit April 2008
  • Defence Secretary, Des Browne - NATO Summit April 2008
  • Neil McMillan, Director, Cabinet Office – May 2008
  • Lord Hope of Thornes – June 2008
  • Michael Cashman, MEP – June 2008
  • Oliver Brind and Hooper Brooks, The Prince’s Charities Foundation – July 2008
  • Slough Borough Council – July 2008
  • Migration and Advisory Committee – October 2008
  • Westminster Society – October 2008
  • John Ashton, Special Representative for Climate Change – December 2008
  • Justin Mundy, Director of HRH the Prince of Wales’s Rainforest Project – February 2009
  • Matthew Rycroft, FCO’s EU Director – March 2009
  • Andrew Dalgleish, Head of Europe Strategy Group, FCO – June 2009
  • All Party Parliamentary Group – July 2009

GEOGRAPHY

Romania lies in SE Europe, bordered by Ukraine, Moldova, Hungary, Serbia and Bulgaria as well as by the Black Sea. The Danube flows along the southern border and forms a delta where it flows into the Black Sea. Romania has 3 historical regions: Wallachia to the South, Moldavia to the North-East and Transylvania to the North-West. Several large rivers, such as the Mures and the Siret, rise in these mountains whose highest point is Mt Moldoveanu, 2544m above sea level. The climate is temperate with hot, dry summers, punctuated by thunderstorms and showers, and cold winters with frequent snowfall, especially in the high mountains.

General

After the 1989 revolution, Romania embarked on a period of transition. Romania joined NATO in 2004 and the EU on 1 January 2007. Although economically one of the poorest countries in the region Romania has many natural resources including oil and a large, though largely un-modernised, agricultural sector. The country is also attracting an increasingly amount of foreign investment and the economy has been growing on average around 5% per annum. Some 20% of the population are from national minority groups, including the Roma, Magyar (Hungarians), Germans, Slavs, Serbs and Jews.

TRADE AND INVESTMENT

Trade and Investment with the UK

Since EU accession, there has been growing interest from UK business in Romania.  Major factors included; access to European funding and the potential offered by the second largest market in the CEE region after Poland.  The increasing availability of low cost flights also helped support this trend.

Over €4 billion of investment and more than 4000 UK companies placethe UK as Romania’s 10th largest inward investor (April 2009).  An accurate figure for FDI is however difficult to estimate as some investments may be done through companies registered in other countries for fiscal reasons.  Investment fund activity has seen major growth and accounts currently for over over €1.2 billion.  Bilateral trade accounted over €2 billion in 2008.  

The British Embassy in Bucharest facilitates this through such initiatives as regional visits in both the UK and Romania to identify business opportunities and find potential investors/trade partners; hosting trade missions to Romania; encouraging partnerships between regions and cities in the UK and Romania and working with the British Romanian Chamber of Commerce, and through its own British Business Group, to support present and future investors in Romania.  A high number of British companies benefit  yearly of UKTI services in Romania and long term partnerships between Romanian and UK companies are being created with the team support.



Priority Sectors


UK Trade and Investment supports three priority sectors (Ports, Rail and Water) and two opportunity sectors (Airports and Financial and Legal Services).  These are kept under regular review.  Additional important areas include agriculture (including agri foods), education & training, oil and gas, engineering, power (including renewable energy), construction, security.

Key investment sectors to date

Consulting (ARUP, Atkins, EC Harris, Halcrow, Hyder, Mott MacDonald, Pell Frischmann, RSK, Waterman Int, WYG, WSP), Energy (Aurelian Oil), Power (ABB, Aggreko, AMEC, Parsons Brinckerhoff), Oil & Gas (Melrose Resources, BP), Infrastructure & Construction (Mivan Development, Gleeds, Kier International, Chapman Taylor, Leach Rhodes Walker, YRM), Software (Endava), Agriculture (PIC, BOCM Pauls), Aerospace (BAE Systems), Security (G4S), Financial & Legal Services (Aviva, Provident Financial, RBS, Allen & Overy, Eversheds), Engineering (HI-LO Storage), Telecoms (Vodafone, Regenersis), Property (Dawnay Day, North Real Estate, Cheyne Capital Management, Willbrook Management), Food & Drink (Cadbury, Halewood), Pharmaceuticals (GSK) and manufacturing (EIMCO, Fusion, JCB, Vitafoam).  The UK is also active in the retail sector with names like Boots, Debenhams, Mothercare and Next.

POLITICS

PRESIDENT 


Romanian President Traian Basescu is Head of State and was elected for a five year term in December 2004.  Presidential election will be held again in November 2009


EXECUTIVE


The current government is a coalition of the PD-L (Democratic Liberal Party) and the PSD (Social Democratic party) and they have an overwhelming majority. The coalition is headed by Prime Minister Emil Boc of the Democratic Liberals.  Government Ministers head the 19 National Ministries, and 42 Government appointed Prefects (see Local Government below) oversee local government.    

PARLIAMENT


The bicameral (two Chamber) Parliament consists of a Senate (137 seats) and a Chamber of Deputies (332 seats).  Elections to both chambers of Parliament are held simultaneously every four years and the most recent were in November 2008.  The voting system was changed in 2008 from a pure party list system to one whereby voters vote for individual candidates, so that only candidates achieving more than 50% of the vote are directly elected.  Where there are no clear winners seats are filled through redistribution of Parties’ votes to the most successful of the candidates who polled less than 50%. 


LOCAL GOVERNMENT 


County Level

Romania is divided into 41 counties (Judete), with the separate city of Bucharest forming a 42nd area.  Each county is governed by a County Council (consiliul judetean) consisting of members elected by universal suffrage for a 4 year term.  The President of the county council is appointed by the elected members of the council having executive responsibilities.

A Prefect is appointed to each county by Central Government and is the Central Government representative at local level directing public services of the Ministries and other central agencies at county level.  A Prefect may block action by a local authority if he/she deems it unlawful or unconstitutional.   Although often Party Political MPs before appointment, Prefects do not represent political Parties.

Counties have their own responsibility for development planning, water supply, sewage, public transport, roads, social assistance for children, education. 


Towns and Villages
 
Villages and towns are administered by local mayors and councils elected by universal suffrage for four year periods.  The county council co-ordinates the activities of town and village councils.

Responsibilities include housing, urban development, environment, transport, water and sewage, local education (not university), heritage, public order, parks.


Local Elections  

Local elections take place every four years and the last were in June 2008.


HUMAN RIGHTS

Romania has ratified the major human rights instruments, including the revised European Social Charter but the following issues remain concerns:

Children

Conditions in children’s institutions are slowly improving and the number of children in care fell to 30,500 in December 2004 with a further 50,000 in foster homes. The Romanian government introduced new laws on adoption and child protection on 1 January 2005. The new regulations have tightened up procedures and the government has set up a Romanian office for adoptions.

Roma

There is no evidence of systematic, officially sanctioned discrimination against Roma. But, despite anti-discrimination legislation, Roma are still routinely discriminated against individually, particularly in employment, justice, education, and social services.

Mentally handicapped

The October 2005 European Commission’s Comprehensive Monitoring Report on Romania country report drew attention to concerns over care in homes for disabled adults, psychiatric clinics and homes for mentally ill and disabled. The EU will continue to monitor the situation in the run up to Romania’s planned EU integration.

People trafficking

The international community is also working with the Romanians on the problem of Romania as a source and transit country for people trafficking.

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Contacts

Romania, Bucharest, British Embassy

Address:

British Embassy, 24 Jules Michelet
010463 Bucharest, Romania

Telephone:

Visa (40) (21) 201 7300
Main (40) (21) 201 7200

Fax:

(40) (21) 201 7299 Chancery
(40) (21) 201 7317 Consular
(40) (21) 201 7315 Management
(40) (21) 201 7311 Trade Development

Email: Press.Bucharest@fco.gov.uk

Office hours:

GMT:
Mon-Thurs: 0630-1500; Fri: 0630-1400
(From last Sun Oct - last Sun Mar)
Mon-Thurs: 0530-1400; Fri: 0530-1300
(From last Sun Mar - last Sun Oct)

Local Time:
Mon-Thurs: 0830-1700; Fri: 0830-1600

Website: http://ukinromania.fco.gov.uk