Great Expectations: Romania Enters the European Union

On the morning of January 1, 2007, Corin Trandafir, Esq., and his wife Adina, crossed the border from Austria into the Czech Republic in their automobile bearing Romanian license plates.

When they handed the border guard their Romanian passport, the guard looked down at the cover and smiled saying: “Welcome to the European Union.” Those five words are among the most meaningful words ever spoken to a Romanian.

Corin and Adina had just experienced what all Romanians will undergo in one form or another over the next days and months – the realization that they and their nation have entered a new era and become part of a large, institutionalized, European political and cultural unit that offers them the prospect of a secure life and a chance at prosperity.

Sitting in their car at the Austrian border, Corin and Adina were unshackled from the manacles of decades of communist oppression, and a painful seventeen years of transition. They were for all times onward, not just Romanians, but Europeans, with a destiny fully open to a world of possibilities.

Fear of Accession

Despite a greatly tangled domestic political scene, Romania’s entry into the European Union on January 1st marked a rare moment of political and social unity in the country. All Romanians seem to concur with Prime Minister Calin Popescu-Tariceanu’s characterization of Romania’s EU accession as historically comparable with the Great Union of 1918.

At the core, is an understanding that EU accession means increased investment and economic growth and, most significantly, a security and stability that Romania has not heretofore known.

Domestic expectations and actual outcomes will undoubtedly differ, and the economic burden of the transition will undoubtedly be significant but, ultimately, for all Romanians, January 1, 2007 will be as significant as unification was on December 1, 1918.

Romania and its neighbor, Bulgaria, who also joined the EU on January 1st, bring 30 million new citizens to the union, and expand the number of member countries to 27. Romania will have 35 seats in the European Parliament, but its number is expected to decrease when the number of seats assigned to each country is reassessed, according to the Treaty of Nice.

An EU Public opinion poll released on December 18th showed that 65% of Romanians had a “very positive or fairly positive image” of EU membership – down from 76% in 2004 (the EU’s population has a less positive view of Romania’s accession, with an approval rating of only 45%) – but the numbers reflect the prevalence of unfortunate myths and rumors on both sides.

Die Welt exclaimed on its front page above a photo of Vlad Tepes: “Dracula ist jetzt ein Europ?er” – Dracula is now a European. Europeans fear a mass exodus from Romania (and Bulgaria) for jobs in the West.

Although there will undoubtedly be more Eastern job-seekers in Western Europe, President Basescu may well have been right when he noted that most Romanians looking for jobs overseas left long ago. More than two million Romanians, a tenth of the country’s population, are already in Western Europe, mainly in Spain and Italy, and they send home more than €3 billion per year.

Of course, there are still a large number of Moldovan citizens seeking Romanian passports and Macedonians seeking Bulgarian citizenship, most apparently with the intention of traveling west for work.

While a number of EU member states have instituted work-related restrictions on Romanians, this will not stop the flow of illegal workers any more than it had before accession or any more than US restrictions have stopped Mexicans from taking the low paid jobs in America that US citizens shun.

While most Romanians welcome accession, over one third – 34.5% – believe that they will live a harder life after the accession to the European Union; 28.8% estimate that their life will be better after integration; and 27.5% state that life will remain unchanged after January 1, 2007. The pessimists may be right in the short-term but the optimists are without doubt right in the long-term.

Just look at Portugal, Spain, Greece and Ireland – and then recall that Romania’s GDP before World War II was higher than any of those countries during the same period.

Congratulations

The credit for EU accession – and previous NATO membership – goes to all of the governments and all of the leaders of Romania over the past seventeen years, every one of whom worked diligently for this result. No matter whether they were former communists or the dissidents who were hounded and abused by the communist regime, both young and old, all had EU membership as their goal.

Knowing that EU membership would bring added pressure on Romania to conform to European norms in changing the political and economic realities in the country, successive governments recognized that such pressure was not only beneficial to accelerating the pace of reform, but actually essential to achieve its ultimate conclusion.

Since Romania submitted its application for accession to the EU in June 1995, all the governments that were in power, and all the major political formations in opposition, consistently promoted accession.

But, as President Traian Basescu aptly stated: “Accession is not the same thing as integration or Romania’s complete modernization, our final aim. The true challenge we have to face from this very moment is to complete the opportunities that integration with the EU offers us.

In order to succeed, integration will need, maybe even more than the accession process needed the support of the entire Romanian society and the consensus of our entire political class.” The President cautioned Romanians to avoid complacency: “Romania did not wish to join the EU only to become another member state. It is important that we enter the EU with dignity.

It is our duty to convince our European partners that Romania joining the EU is not only to our advantage but to the Union’s too. We are part of the EU. Together we have to move forward and to contribute to the building of a united and powerful Europe.”

The Best is Yet to Come

Romania will be hard to ignore. It becomes the 8th largest EU member but also (according to most economists) the second poorest. National salaries are just 16% of the EU average, while GDP – although growing dramatically – is still only 32% of that in the existing 25 members. Salaries remain low by western European standards.

In Bulgaria, the average monthly wage is $235, while the average Romanian earns about $400 monthly.

The final monitoring report by the Commission indicates tougher conditions on Romania’s entry. The country will be closely monitored on the remaining areas of concern. These include further efforts in the justice system and the fight against the tax systems. If the requirements are not met, the Commission can invoke certain safeguards.

Under the Accession Treaty, there are three types of safeguard measures: economic, internal market and JHA safeguards, which can be invoked for up to three years after accession. These could affect food export bans and cuts of EU funds, such as agricultural and structural funds, as foreseen in the report. Romania is to receive €30 billion in subsidies through 2013.

In addition, there are transitional arrangements, such as the restriction of free movement of workers from new member states. Also the Commission can take remedial measures to ensure the functioning of EU policies. This concerns the areas of food and air safety, agricultural funds, the judiciary and the fight against corruption.

The EU could refuse to recognize judgments rendered in Romanian courts if it is dissatisfied with Romania’s efforts at combating official corruption in its judiciary.

Romania’s economy, however, is looking good. GDP is up by 8.3% compared to the same period in 2005, exceeding expectations, and economic growth during the first nine months of 2006 rose to 7.8%. According to the Financial Times, Romania is undergoing the fastest economic development in Europe, surpassing Greece (3.2 %), Turkey (5.2 %) and Bulgaria (5.7 %).

According to Bloomberg market analysts, in 2006, Romania’s leu surpassed all European currencies and became the world’s best performer. In 2006, following the purchase of 60% of the Romanian Commercial Bank by Austria’s Erste Bank, the Romanian leu rose 20% against the dollar, passing a six year high.

Romania expects a record € 8 billion in foreign capital this year, a significant rise from € 5.2 billion in 2005. The government projects foreign investment will rise by € 10 billion in 2007.

One of Romania’s most important foreign investors, Renault, France’s second largest carmaker, has announced that it will inject € 100m to raise production at its Romanian assembly plant to 350,000 vehicles a year in 2008.

The World Bank and other strong commercial banks have begun issuing obligations in lei. Analysts see this as reflecting general optimism based on Romania’s strong economic performance. But . . . one in ten Romanian families lives on money sent by relatives living in a foreign country. Half of the Bulgarian population lives on €2 a day.

Some Background Facts

Romania was the first Central and Eastern European country to have established official relations with the European Community. The bilateral agreement on Romania’s inclusion in the EC’s Generalized System of Preferences dates back to 1974, and another Agreement on Industrial Products was signed in 1980.

Romania established diplomatic ties with the European Union in 1990, and the following year a Trade and Co-operation Agreement was also signed. In 1995, the bilateral Europe Agreement entered into force. Romania submitted its formal application for membership in the EU on June 22, 1995. However, the decision on the application came only at the Luxembourg European Council in December 1997.

The Romania-EU intergovernmental conference meeting in Brussels on February 15, 2000 marked the official start of membership negotiations.

At the Copenhagen Summit in December 2002, EU leaders set 2007 as the target date for Romania to join the Union. „The 2007 entry goal is a realistic scenario,” said former Enlargement Commissioner G?nter Verheugen in June 2004.

„Romania is in a decisive phase – it may be hard but it’s possible.” In June 2004, the EU decided to set a new „safeguard clause” for Romania (and Bulgaria), which could have delayed accession by one year if the countries had failed to meet their targets. In May 2004, Romania became a full member of the North Atlantic Treaty Organization (NATO).

On December 17, 2004, the Brussels Council took note of Romania’s progress in its accession preparations and considered that the country „will be able to assume all the obligations of membership at the envisaged time of its accession”, i.e., January 2007. On February 22, 2005, the Commission agreed to the scheduled April 2005 signing of Romania’s Accession Treaty.

In April 2005, the European Parliament gave its overwhelming support to Romania’s EU bid. The vote was 497-93, with 71 abstentions. The second such report was issued on 16 May 2006. On April 25, 2005 Romania signed its EU Accession Treaty, and on October 25, 2005, the Commission published its monitoring report on the country’s level of preparedness.

In its final monitoring report on September 26, 2006, the Commission gave its green light for Romanian accession in 2007, but insisted on further reforms. If the requirements are not met, the Commission can invoke safeguard measures, which could lead to the suspension of funds.

Conclusion

Soon ordinary citizens of European Union member states will get into their cars and drive to legendary Transylvania with its medieval castles, forests, myths and colorful inhabitants for a vacation that they and their children have thought about for decades. And they won’t be disappointed.

Maybe these visitors will drive to Sibiu, this year’s European Cultural Capital, or on to the Danube Delta – Europe’s greatest nature preserve – or visit swinging Bucharest.

More and more investors from all over the world, secure in the knowledge that Romania has met EU standards for its laws and customs, will make financial investments in the country that will alter the economic landscape of the nation and further Romania’s transition into the European family. The change will be positive and significant not only for Romania, but for Europe as well.

As Mrs. Ana Maria Zarnescu, 64, a retiree from the city of Cluj, told the AP: „Europe is adopting us like poor relatives or orphans, but I hope they will become fond of us because we are hardworking and inventive.” Ana, be assured that like most foreigners who already know your country, Europe too will soon become quite fond of Romania and its people.

The article was published based upon approval of:

Rubin Meyer Doru & Trandafir

SOCIETATE CIVILA DE AVOCATI / LAWYERS PROFESSIONAL CORPORATION

IN ASOCIERE CU / AFFILIATED WITH HERZFELD & RUBIN, P.C.

http://www.hr.ro