“[One of the misconceptions] is that [Romania]
is one of the poor underdeveloped countries somewhere
far away in Eastern Europe,” Sorin Ducaru, Ambassador
of Romania to the United States, tells the European
Weekly. He goes on, “Yes, the country has been
going through really difficult times during the communist
period and also afterwards during the transformation.
Only a few people remember that before WWII it was one
of the wealthiest economies in the world due to its
oil reserves and agriculture.”
misconceptions still linger in many Western European
and North American heads. Ducaru is well aware of it
and says, “Even though we were part of the Iron
Curtain countries, the essence and history of [Romania]
is deeply rooted in the modern Western civilization
that is coming from the fact that we were part of the
Today, Romania is a democratic republic, a member of
NATO, and an acceding country to the European Union.
However, transition from an economy characterized by
excessive centralization, state property and rigid planning,
into a free market economy did not happen swiftly.
Communist rule, Romania’s economy was crippled.
In the aftermath of WW II, the country was left with
scarce resources that were drained by the so-called
“SovRom” agreements (mixed Soviet-Romanian
companies established in the aftermath of WW II to mask
the looting of Romania by the Soviet Union), and excessive
war reparations paid to the USSR.
Later on in the Communist period of the 1980s, Ceausecu
became obstinate in paying Romania’s foreign debts.
He managed to return over 21 billion dollars in 14 years.
The real price, however, was paid by the Romanian people
who suffered from tremendous domestic shortages.
After the Communist regime was overthrown in 1989, Romania
experienced economic difficulties and instability. “We
had a decade of a really difficult transformation,”
Ducaru explains. “In the 90s we had some areas
of GDP growth but most of it was either stagnant or
the GDP declined because of the adjusting process. It
takes time to put something under new management.”
He continues, “[During this period] we went through
a profound process of restructuring the economy.”
In the years to come and in terms of social security
and income, it was hard for Romanians to make ends meet.
The collapse of the economy brought soaring inflation
rates and high unemployment. Romania's aging population
poses another problem. Ducaru explains:
“We have a big number of people in retirement
that have to be supported. Also, we have cases of early
retirement in order to be able to refresh the public
sector, public administration. We wanted to have new
people in the system, not those who were tied to the
former system. The same was naturally [happening] in
the private sector of the economy. So we do have a problem
of supporting retired people. It’s a low level
of pension. This has been strenuous on Social Security
and on the Medical System.”
Ducaru goes on to state that Romania underwent a major
privatization that started with the setup of adequate
laws and reforms concerning the transfer of state companies
onto private hands. “We went through the privatization
of land, small enterprises, and end[ed] with the big
enterprises. This is a process that is already virtually
finalized,” he declares. “The only companies
that have yet to be privatized are, for instance, the
electricity and gas companies and one remaining state
Since 2000, Romania has seen steady economic growth.
“Last year there was an 8.6 percent GDP growth
in Romania. It was the highest in Europe. This year
we are expecting a growth of around 6 percent.”
Ducaru explains this year’s lower
as a result of severe floods that have caused havoc
across Europe. Worst affected was Romania.
There are many factors contributing to Romania’s
economic growth: for instance, a well-educated population,
and its new emerging sectors, such as the IT sector
and communication and software technology. Also strongly
emerging is Aeronautics.
services sector is another growing industry,”
Ducaru says. “Tourism, for example grew in 2004
by 50 percent compared to the year before. I think there
was another growth this year despite the flood.”
Another factor would be trade, primarily with Italy,
Germany, Britain, France and the Netherlands inside
the European Union, and outside with the United States,
but also with China and Japan. “We are actually
trying to catch up with trade with the countries of
the former USSR that we used to have a good trade relation
with, including Russia,” Ducaru states.
of our focuses is to regain some of the market areas
that we lost with the collapse of the former USSR.”
Last but not least, this year Romania is introducing
the flat tax; set to be another boost to its economy.
Interestingly enough, the flat tax, already in use in
several other European nations, has been under fire.
Supporters say the flat tax, a system under which all
taxpayers pay the same rate, cuts out complicated bureaucracy
and encourages people to work harder, earn more, and
keep more of their income. But some see the flat tax
as stealing from poor wage earners and cutting public
spending while widening the wealth gap. Ducaru explains
that with 16 percent income tax and 16 percent corporate
tax it would be the lowest in Europe.
In regard to US-Romanian relations, Ducaru says: “Both
politically and economically we are at an all-time high.”
And he adds, “In terms of business I have to mention
that in the last five years we’ve had an average
growth of 20-22 percent per year in trade with the US.
It is a good dynamic.”
When speaking of Romania’s future, the Ambassador
concludes: “I would like this country to be anchored
in the Western democratic world to which it belongs
through its tradition, values and its people. I would
like that never again in history we’d have to
face a conflict such as behind the Iron Curtain. And
I would love Romania to speak out for the region. We
are already making the point for the Balkans and the
Black Sea in order to connect them to the Trans-Atlantic