What the newspapers say: May 27, 2010

The Romanian Government approved the letter of intention agreed with the IMF. Elsewhere in the news, „It is not the ministers who ask for bribe and charge projects, it’s the civil servants”. Last but not least, Romania, between the Russian-German coalition and the US alliance.

The Romanian Government approved the letter of intention agreed with the IMF, Adevarul informs. The letter adopted on Wednesday, May 26, includes the austerity measures meant to cut budget spending, like reducing pensions and salaries in the public sector. PM Emil Boc states austerity measures will only be enforced by the end of this year. Romania’s budget deficit must be reduced to 6.8% for 2010. Boc said this would not happen by an increase in taxes and the economic environment would not, thus, be suffocated.

Boc’s claims that an increase in taxes would have hindered the economic recovery, would have led to inflation and this is the less damage the austerity measures could make. He explained that Romania needed to borrow 8 billion euros because it consumes more than it produces and it needs to support the deficit. He also stated that the minimum state-supported salary is 600 lei and the minimum pension – 330 lei.

According to the PM, those owning an expensive cars will not receive the minimum guaranteed benefit. But the mothers’ child care benefit is being cut by 15%, but won’t amount to less than 600 lei. He added that these measures will help pay the state’s debt to the private sector. The letter will be sent to the International Monetary fund, to be approved by its board at the end of June.

„It is not the ministers who ask for bribe and charge projects, it’s the civil servants”, President Basescu said, quoted by Gandul. This was part of his speech arguing in favour of reducing salaries and pensions, when he even resorted to calculating pen to paper percentages of the GDP, billions for a potential new credit as well.

The President promised IMF chief Dominique Strauss-Kahn to send the document that summarises the Fund’s mission and that promises the increases in taxes and the cut in 20% of the state-supported salaries. He scolded the leaders of the opposition for trying to rob the Executive of credibility and he attacked union leaders. „It is time to end union’s demagogy. Union leaders are ridiculous when they talk about politician’s corruption. I would like to ask Mr. Marica what he knows about corruption at customs. (…) In their opinion, the civil servants are angels”, the President said.

Basescu told all Cabinet members that they must make cuts in the sectors they manage. He also asked the ministers to publish on their websites the incomes of the ministerial, agency and authority staff. „It is not at all my pleasure to announce the measures that need be taken”, the president added, noting that he supports the adoption of the intention letter. „The lack of an IMF agreement, should we not adopt the measures, can only be a condemnation to lack of finance in the current situation”, he stressed.

Romania, between the Russian-German coalition and the US alliance, Romania Libera reads. The newspaper quoted Stratfor president George Friedman to say that the Greek crisis is making EU’s existential crisis surface. For example, the biggest European power, Germany, is looking forward to an alliance with Russia. Rich countries are not cheering for spending their tax payers’ money to save poorer countries. But if they do, they want at least the control on how this money is spent. The Greeks reject this control and the Lisbon Treaty does not entail any such prerogatives.

This could make countries chose a convenient alliance on economic grounds. And with Germany being a capital EU member, the professor looks at the joint economic projects that Russia and Germany have been developing over the last years, like North Stream gas pipe, for example, where France was also invited to join. Plus, the two have strategic partnerships, whose results were visible in blocking Georgia and Ukraine’s way to NATO and Europe’s recognition of a Russian sphere of influence in the former Soviet region.

Poland fears such an alliance, so it quickly sealed an alliance with the US. Having Patriot missiles in Warsaw is only to show that Washington is also worried of such a perspective, the paper goes on. The Obama Administration seems ready to recognise Moscow’s sphere of influence, but not ready to give up its European share. Jo Biden’s visit to Warsaw last year and his speech in Bucharest, Romania’s capital, have been considered US’s attempt to court the powers standing between Germany and Russia.

Berlin is very likely to decide on Monday to cancel visas for Russian citizens, during the EU-Russia Summit in Rostov, which is going to change the regional balance in East Europe in Russia’s favour.