EU Accession and its Impact on Romania’s Political Economy - Brian Safran

             Since the collapse of the totalitarian and violent regime of Nicolae Ceausescu in 1989, Romania has miraculously transformed itself from a state of political backwardness and economic isolation into a western-style democracy and a burgeoning free-market economy. Perhaps the most influential factor initiating the drastic changes that have come to characterize modern-day Romania has been the prospect of membership in the European Union that began shortly after the Ceausescu regime was toppled and a democratic form of governance established. Along the path to membership, Romania has had to undertake a series of comprehensive structural reforms to fulfill the pre-accession requirements set forth by the European Union. Revolutionary reforms were accomplished incrementally, allowing for a progressive strengthening of Romania’s democracy, and affording it placement on a trajectory of economic growth. An analysis of Romania’s accession into the EU, and in particular, the progress it has made in reducing corruption, protecting minority rights and forging a free market economy can demonstrate how membership has consolidated its democracy and improved upon the aggregate standard of living of its peoples.

While the fall of communism initially brought economic and political instability to Romania, the objective of securing EU membership has been a driving force in reducing political corruption, social tension, and economic mismanagement in the country. (Canberra 2005:18) Although Romania became a full-fledged member of the European Union in 2007, the process of securing its accession began in 1995 when the Romanian government officially submitted its application for membership. (Lovatt 1999:1) In 2002, Romania was formally invited to join the EU upon its fulfillment of a multitude of domestic policy reforms. (Canberra 2005:18) This required that Romania agree to the European Union’s acquis communautaire, requiring its government to align its legislative framework and political and economic objectives with that of the EU. (Ram 2003:29) In exchange, membership in the EU was believed to offer Romania political stability and the means to economic prosperity.

Rampant corruption plagued Romania after the collapse of the Ceausescu regime, rendering its desire to establish a democracy a struggle. The 1991 introduction of a new constitution paved the way for democratic reform, yet true democracy was undermined by the ability of Ceausescu’s protégés and supporters to fill roles in the Romanian bureaucracy after his death. (Lovatt 1999: 1; Anyz 2005: 18) The former communists were able to gain control of the Social Democratic Party, which governed the country in the early 1990s and again in the early 2000s. (Country Watch 2007:1, 5) Under the leadership of Ion Iliescu and Adrian Nastase in the early 2000s, the SDP afforded businesses special privileges; and under their rule, flaws in the democratic institutional structure of the country were perpetuated, ranging from rampant corruption and control over the media to political interference in the workings of the judicial system. (Anyz 2005:18) Furthermore, the then existing judicial system did not promote equality before the law. Judicial proceedings were fraught with bribery and afforded the wealthy and powerful special exemptions from its authority. (BBC H 2005:1) Such occurrences perpetuated a system biased in favor of the rich; and thus impeded upon the establishment of true democracy.

Many Romanians believe that extensive corruption in their country has been the primary inhibitor to meaningful political change and improvements to its standard of living. (Sullivan 2006:2) In response to criticism by EU observers in the early 2000s, the Romanian government was advised to progress toward reducing corruption to further strengthen its democracy. (BBC H 2005:1) Popular support of EU accession in Romania dictated that the elected government adhere to its mandates; and meeting accession obligations have been a positive force for change. (Burduja 2006:64) One of the most influential individuals often credited with having placed Romania on track for accession was then Justice Minister Monica Macovei, who sought out to establish a fair and incorruptible justice system by instituting training programs for judges, establishing a computer system by which to identify and track corruption, and commencing investigations into the affairs of numerous politicians who were alleged to have engaged in corruption. (Irish Times 2006:1) The progress achieved under her direction in part afforded Romania the opportunity to join the EU in 2007.

EU influence has led to the creation of a prosperous civil-society, contributing to the establishment of a participatory atmosphere and a democratic political culture. (Phinnimore 2004: 217) In a pivotal election in 2005, election observers from non-governmental organizations found the SPD attempting to manipulate the election results in their favor; and based on their criticism, the SPD was forced to yield its power to a center-right government formed under the leadership of Traian Basescu. (Anyz 2005:19) Not only did this finding and the result that followed evidence the newfound strength of Romania’s civil-society and democracy, it also demonstrated progress in Romania’s ability to curb corruption; serving to accelerate Romania entry into the EU. Under the leadership of President Basescu that followed, Romania was able to secure an accession treaty from the European Union and pass it through the Romanian parliament, affording the country entry into the EU in 2007. (Country Watch 2007:7)

Although Romania was permitted to join the EU in 2007, it remained clear that it had yet to accomplish its obligation to establish a fully independent judiciary able to tackle prevalent, ongoing corruption. (EurActiv 2007:1) There remains throughout Romanian society a dangerous assumption that all functions performed by the political elite are done so with some degree of rule bending. (Anyz 2005: 18) In 2006, Transparency International’s Corruption Perceptions Index found Romania to rank worst in the entire twenty-seven-member European Union. (Shepherd 2007: 117) However, as noted by former Justice Minister Macovei, a widespread and fundamental transformation of the judiciary cannot be achieved overnight. (BBC H 2005:1) Nevertheless, signs of improvement of are visible. The recent establishment of a National Anti-Corruption Department demonstrates the extent of Romania’s ongoing commitment. (Sullivan 2006:2) Over the past year, numerous investigations and arrests of high-ranking public officials have occurred, evidencing continued progress. (EurActiv 2007:1) One such investigation was undertaken into the affairs of former Prime Minister Adrian Nastase, which many observers believed to evidence the newfound ability of the justice system to subject even the most powerful of politicians to its authority (Sullivan 2006:3-4) Thus, Romania has continued its effort to reduce corruption and promote democracy even after securing its membership in the EU.

Another contentious issue for Romania has been the historical subordination of minority groups such as ethnic Hungarians and the Roma to the dominant Romanians.

The continuation of this relationship between the groups stood in direct confrontation to fundamental EU principles; which require the rights of minorities be protected under the law. (Europa 2007:1) The protection of such rights is perceived to evidence the existence of a functioning democracy and is a method by which to ensure the maintenance of social stability. (Lovatt 1999:1) Ethnic Hungarians and the Roma combined compose about ten percent of the Romanian population. (Economist B 2007:1; Dianu 1997) These groups have a long history of being refused civil rights by the Romanian majority on the grounds that they pose a threat to the unity of the country. (BBC A 2007:1) Yet in order to attain membership in the Council of Europe, and subsequently the EU, Romania was compelled in the mid-1990s to agree to the supranational protection of minority rights through the European Court of Human Rights. (Ram 2003: 36) One of the most contentious issues has been the protection of Hungarian language rights under the law. In an effort to quell criticism at home and abroad just prior to the EU rendering its decision on whether to commence accession negotiations in 1997, the Education Law was revised to allow minority students to be taught in their national language. (Dianu 1999:2) In addition, evidence suggests that the decision to include the UDMR, a political party composed of ethnic Hungarians, in 1996 and again in 2000 in governing coalitions was in part based on an effort to prove its inclusion of the group to the EU and international observers. (Ram 2003:38, 45) The recent establishment of a National Council for Combating Discrimination and the passage of strict hate crime statutes to protect minorities further evidence the transformative effect of EU regulations. (Sullivan 2006:4)

Although rights of ethnic Hungarians have improved substantially, some allege that those of the Roma minority have not. (Sullivan 2006:3) However, progress has been shown. In response to a recent murder committed by a Roma migrant from Romania in Italy, Romania’s primer has created an advisory panel of experts to develop policies that aim to better integrate the Roma minority; and has called on the European Commission to do the same. (BBC D 2007:1) The need to maintain a reputable image in the larger context of EU relations has required the Romanian government to abandon its former ethnocentric stance and introduce policies that integrate all of its peoples into Romanian society. Thus, the evolution of minority rights in Romania and their incorporation into the framework of Romanian politics and society demonstrates the extent to which EU accession has furthered the democratization efforts of Romania.

In addition to strengthening democracy and reducing social tension, the requirements of EU accession have served to strengthen and consolidate Romania’s free-market economy. Prior to commencing the accession process, Romania’s economy was characterized by the existence of inefficient and unproductive enterprises, nationalized utilities, and an archaic financial system. (Phinnemore 2006:30) To adhere to the requirements of EU accession, Romania was obliged in the early 2000s to undergo an extensive privatization campaign, introduce free market reform, and achieve the capacity to compete on the European market. (BBC B 2005:1) A major step towards achieving that end was undertaken in January 2001, after property seized under communist rule was to be legally returned to its former owners. (Country Watch 2007:5)  As per EU regulations, Romania has had to establish a fully competitive business environment in which all companies are given equal treatment by the government. (Sava 2006:1) The 2005 introduction of a flat tax also served to encourage foreign and domestic investment, helping the country to achieve a staggering growth rate of almost seven percent of its GDP in 2006. (BBC G 2007:1) Romania has simultaneously been able to achieve a budget deficit rate of 2.8 percent of its GDP, below the EU-set threshold of three percent, one of the prerequisites for EU countries to join the Euro zone (Shepherd 2007:118).

In addition to improving its macroeconomic indicators, the progressive change stemming from reforms required by the EU has impacted the average Romanian citizen, who has seen substantial improvement in their quality of life and standard of living. Restaurants and shopping centers have sprung up in previously impoverished neighborhoods and a series of massive construction projects have commenced in numerous localities. (Carey 2004:553-54) Such development has allowed Romania to utilize its substantial labor pool to its fullest, affording the country one of the lowest unemployment rates in Europe. (Sava 2007:1) In addition, the expected inflow of common agricultural policy monies is expected to increase the productivity of Romanian agriculture and farming, an important source of income in the Romanian economy. (Condon 2007:29) Thus, Romania’s securing of membership into the European Union has brought about economic change for its betterment.

The extent of Romania’s effort to improve upon its political economy while meeting the requirements of EU membership has, and will likely continue to be maintained in the post-accession era. The ongoing impact of the EU is evidenced by continued democratic and free-market reform since its accession in January 2007.  In the spring of 2007, the strength of Romania’s democracy was put to the test after President Basescu was suspended from office in the on the grounds that he had failed to uphold the constitution. (Connolly 2007: 26) The fact that Romanian voters refused to impeach him in the referendum that ensued was attestation to the potency of the democratic process as it evidenced electoral legitimacy. (Country Watch 2007:9; BBC F 2007:2) On the economic front, Prime Minister Calin Popscu Tariceanu recently commenced a large-scale effort to improve upon Romania’s infrastructure and relative competitiveness vis-à-vis other European countries, propagating increasing average wage rates, rising aggregate personal consumption and declining inflation. (Economist A 2007:1-2) EU membership has reduced the perception of political and economic risk among investors, and many believe that Romania’s newfound ability to market its highly skilled yet comparatively cheap labor force will put it at a marked advantage in the years to come. (Shepard 2007: 119) Romania has not faltered in its adherence to its European Union commitment, and despite its need to undergo further reforms, it has demonstrated an unwavering desire to attain a prominent position on the map of Europe.

Some analysts fear that the drive toward reform will fade as the incentives for continued efforts to democratize and privatize fall by the wayside. (Shepard 2007: 118) However, many others note that incentives for conformity with EU demands still remain. As per Romania’s Accession Treaty, the commission retains the ability to reduce EU funding and to refuse to recognize the decisions of the Romanian court system at the EU level. (EurActiv 2007:1; Parker 2006:1) If Romania desires to use the benefits of its membership to their fullest by becoming an active and respectable participant in EU affairs, it will need to continue its effort to root out corruption and comply with the economic policies embedded in EU law after its accession. (BBC C 2006:1) Furthermore, Romania’s desire to further the cause of integration by joining the Schengen area, which harmonizes policies related to immigration and law enforcement between its members, will require the country to meet further European demands. (BBC E 2007:1) Thus, the EU will likely continue to improve upon Romania’s domestic trajectory for the years to come.

Romania has undergone a series of reforms since the Romanian Revolution of 1989 that marked the end of the Ceausescu era. Initially plagued by the remnants of an archaic, corrupt and discriminatory communist regime, the country in the post-communist period seemed unable to create and sustain a fully functioning democracy. Romania’s eventual desire for entry into the European Union was based on the belief that membership would improve Romania’s socio-economic standing, and afford it a degree of competitiveness comparable to that of other European countries. However, inclusion into the ‘club of democracies’ did not come without a price. Romania was required to make numerous concessions, compelling the country to undergo substantial political and economic reform. Among these changes were the requirements that Romania reduce the instance of corruption, protect the rights of its minorities, and align its economic policies with that of the EU. In effect, these undertakings have served to strengthen Romania’s democracy while simultaneously promoting free market reform; instilling a perception of political stability and encouraging foreign investment. An analysis of the transformations undertaken by Romania in preparation for and subsequent to EU membership demonstrates how supranational integration in Europe can contribute to the political stability of its members and the economic improvement of their citizenry.

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