Romania Lags Behind on EU Accession

Romania’s continuing failure to meet European Union membership criteria is largely a result of endemic corruption and a lack of political will to deal with it, analysts say.

Romania has been expected to join the second wave of East European accession countries, but the 2007 date is looking increasingly unrealistic.

The European Commission’s annual report on progress made by EU accession countries, released on November 5, confirmed that Romania is the only candidate which still fails the test for a “functioning market economy”.

There are no written criteria for earning this label, but leading economist Matei Paun told IWPR, "It is very important to obtain this status, as it is seen as a seal of approval for the country's reform and makes a clear argument for a candidate country to have a place in the European Union. Without it, Romania will remain handicapped in its quest for accession."

The government has stepped up privatisation and other market reforms recently in an attempt to impress Brussels. Economic growth has been reasonable at a forecast 4.8 per cent this year, and the government aims to bring the annual inflation rate below 10 per cent by the end of 2004.

The EC report acknowledges these developments, but sets out a number of policy areas where it would like to see improvements, urging the government to run a more disciplined budget, wind up loss-making state firms that currently live off subsidies and privatise more industries.

Economic analysts interviewed by IWPR say that the real obstacle is corruption, and the failure to drive forward the reforms needed to combat it.

Foreign investors frequently complain that the high level of corruption in Romania make it difficult to do business there. Last month, the non-government watchdog Transparency International named Romania the third most corrupt state in Europe, behind only Russia and Albania. It said the problem had in fact got worse over the past six years.

“Not much has improved in terms of combating corruption,” said Paun, adding that it remains a key obstacle to foreign investment.

The problem is exacerbated by poorly-written and ever-changing legislation, which allows varying interpretations of the law and creates such confusion that officials sometimes demand bribes for overlooking imaginary transgressions.

Critics of the government complain that it has been slow to embark on reforms to make public administration and the courts less corrupt and more efficient, and that this is holding back economic development.

“Besides slow privatisation, especially in the energy sector, a number of related factors continue to pose problems for the Romanian economy,” said Sorin Ionita, director of the Romanian Academic Society, an independent think-tank. “These include the slow progress of reforms in the judiciary and in public administration. Without a clean, impartial judiciary and a good system of governance, there can be no functioning market economy.”

Four laws intended to revamp the judiciary were due to be passed this year, but only two are in place. The pace of reform in public administration has been equally slow, with the authorities failing to enforce laws obliging ministers to declare their wealth.

Given all these obstacles, Romania’s chances of joining the EU in 2007 appear slim. Despite recent economic improvements, the country fails to meet 10 of the 30 formal criteria for membership. All 10 relate to the economy, and are regarded as the most challenging. Neighbouring Bulgaria, which like Romania is aiming at a 2007 accession date, has already met 26 of the criteria and won the prized “functioning market economy” label.

“Under normal circumstances, there is no way Romania can conclude negotiations by the end of 2004,” said Ionita. “If the government really tried hard to convince the EU to keep 2007 as the target date for admission, Brussels would have to waive a number of criteria… the real difficulties would appear after that, when Romania has to deliver on its promises.”

But according to Radu Craciun, senior analyst with ABN AMRO bank, the reluctance of successive governments to tackle economic and administrative reforms over the years has left the EU in no mood to make concessions to Romania. “That is why the EU is seeking to maintain pressure on Romania in the run-up to next year’s local and general elections, instead of granting membership and providing the authorities with a blank cheque,” he said.

Marian Chiriac is an IWPR contributor in Bucharest.