What the newspapers say: November 18, 2009

PSD leader and presidential runner-up Mircea Geoana admitted a second unofficial visit to Moscow. Elsewhere in the news, Romanians earn a mean income of 150,000 euros in a lifetime, not enough to allow them to dream of affording their own home. Last but not least, two foreign banks active on the Romanian market are breaking a gentlemen’s agreement by deciding to take their money out of the country.

PSD leader and presidential runner-up Mircea Geoana admitted a second unofficial visit to Moscow after he resigned from Romania’s Supreme Defence Council (CSAT), meaning after June 7, Romania Libera reads. Mircea Geoana announced his resignation from CSAT on the day of the elections for the European Parliament. According to the publication, Geoana had mentioned possible contacts with Moscow in 2008.

The PSD leader said that a visit for Romania’s incumbent president Traian Basescu’s to the Russian Capital was also being prepared. „I went to Moscow because it was anticipated that I will become Prime-Minister, because PSD had won the elections”, Geoana declared, adding that it was the correct decision for the main institutions of the state, namely the presidential administration and the potential Government to re-establish their links with the political power in the East, the newspaper reads quoting Romanian news agency NewsIn.

Mircea Geoana said he met people from both the Russian presidential and governmental administrations, which also happen when he goes in unofficial visits to the US. He said it was not a secret meeting because he was accompanied by the Romanian Protection and Guard Service (SPP). The social-democratic says he’s ready to teach Foreign Affairs to Basescu (PD-L) and Crin Antonescu (PNL), runners for presidency. He took the chance to accuse the Economy minister Adriean Videanu for having given the Russian gas company Gazprom the gas depot from Margineni, one month before signing the treaty for Nabucco. This is Romania’s biggest underground gas depot.

Romanians earn a mean income of 150,000 euros in a lifetime, not enough to allow them to dream of affording their own home, Cotidianul reads quoting MONEY.ro. According to the publication, Romanians earning a medium income can spare a maximum of 12%. This means they can afford a house no more expensive than 18.000 euros. According to the study, despite the fact that house prices have decreased slightly due to the economic crisis, Romanians on a medium income can only afford to pay half of the circulated prices after 40 years of uninterrupted employment.

The Romanian National Statistic Institute (INS) calculated the national mean income in September to be around 1.359 lei. One euro is currently worth 4.3 lei. That means that, in 40 years of work, the mean income of a Romanian could amount to 150,000 euros, which pays for an apartment in the Alba Iulia Square from Bucharest. That is if the person does not spend any cent on anything else.

For two foreign banks activating on the Romanian market, the notion of gentleman’s agreement (based on mutual trust) means that they can do what they want, in this case taking money out of the country despite signing an agreement with the IMF in spring, when they pledged to keep their money in Romania, Gandul informs, quoting sources from Romania’s Central Bank (BNR) who spoke to the Romanian news agency Mediafax.

Most of the foreign banks present in Romania signed an agreement with the IMF earlier this year, engaging to not take their money out of the country. If the rest of the foreign banks follow, Romania’s nightmare could come true: the 3.5% interest IMF loan will have to replace the money the banks send to their mother-branches, instead of protecting the national currency (leu) and help the restart of the crediting. Macroanalitica managing partner Laurian Lungu said that having two billion euros taken out of Romania could put more pressure on the leu, but will not lead to imbalances, provided the trend is not continued.

BNR sources said that it is very likely for mother-banks to not have found good short-term investment opportunities in Romania and decided to use an opportunity occurred elsewhere. This means it is not profitable for them to lend the state with a 5.25% interest, or the population with a 7-12% interest. But the Romanian state has no choice but to borrow heavily, so the banks might bring the money back if the interest rates would go up or if loans are taken in foreign currency (euro). The official reasons underlined by banks for taking the money out of the country is either that Romanians do not borrow or that Romanian businesses do not have affairs profitable enough to deserve the money.