Fitch Ratings – Frankfurt am Main – 08 Apr 2022: FitchRatings has affirmed Romania´s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BBB-‘ with a Negative Outlook.

A full list of rating actions is at the end of this rating action commentary.

KEY RATING DRIVERS

Credit Fundamentals: Romania’s ‘BBB-‘ rating is underpinned by EU membership and EU capital flows that support investment and macro-stability, and GDP per capita, governance and human development indicators that are above ‘BBB’ category peers. These are balanced against larger twin budget and current-account deficits than peers, a weak record of fiscal consolidation and high budget rigidities, and a fairly high net external debtor position.

Negative Outlook: The Negative Outlook reflects continued uncertainty regarding the implementation of policies to address structural fiscal imbalances over the medium term and the impact of the Ukraine war and energy crisis on Romania’s economic, fiscal and external performance.

Heightened Short-Term Challenges: The Russian invasion of Ukraine represents a significant macro headwind, as it will heighten short-term risks to growth and inflation, and to a lesser extent, to public and external finances. Trade and export links with Russia—as well as Ukraine and Belarus—are very limited (exports to the three countries accounted for only 2.3% of the total in 2020), and unlike other countries in the region, Romania imports only a modest share of its gas from Russia (20%, the is rest domestically produced). However, steep increases in commodity prices, supply-side disruptions and weaker growth in Romania’s main trading partners (mainly the eurozone) will have significant spillovers, heightening short-term risks.

Public Investment Key Growth Driver: Fitch expects GDP growth to slow to 2.1% in 2022 (from 5.9% in 2021), primarily reflecting a slowdown in private consumption and exports. Although the government has put some measures in place to offset higher energy costs, they will likely be insufficient to prevent a loss of purchasing power. We expect public investment to provide some momentum in 2H22, in line with higher absorption of the 2014-2020 Multi-Annual Financing Framework and from the Recovery and Resilience Fund (RRF). In 2023 we expect investment dynamics to further accelerate, which combined with our assumption of normalisation of external trade and supply chains, will lift growth to 4.8%.

Inflation Higher for Longer: We forecast the harmonised index of consumer prices (HICP) will average 10% in 2022 (the highest rate since 2004), with inflation likely to reach double digits in 2Q22 and possibly 3Q22 (from 7.9% in February), reflecting significant pass-through from higher energy and commodity prices as well as second-round effects. The government has placed a cap on electricity and gas prices for households and some companies until April 2023, which should limit inflation pressures somewhat. Unlike other countries in the region, wage growth appears moderate (largely due to restraint on public wages), but pressures are likely to rise as the labour market continues to tighten and employees feel a squeeze on their living standards. Fitch expects inflation to soften to 5.5% in 2023, in large part reflecting base effects.

Central Bank’s Multiple Priorities: The National Bank of Romania (NBR) has tightened its main policy rate by 1.75bp since September 2021 (to 3% in April) and increased its interest rate corridor in an effort to tackle rising inflation. The authorities have also focused on exchange rate stability to limit inflation pass-through, with the currency maintaining broad stability in 1Q22 following interventions by the central bank. We expect the tightening cycle to continue but at a modest pace to prevent an even faster economic slowdown. The NBR reactivated its programme of government bond purchases in March to improve liquidity and limit volatility in domestic bond yields, a tool we expect to be used only sporadically. However, if volatility persists and macro-challenges accentuate, the NBR might find it more challenging to balance multiple policy priorities, raising the risks of a sharper adjustment on the growth or fiscal side.

Challenging Public Finance Outlook: The government overperformed its budget targets in 2021 (we estimate the accrual deficit at 7.5% of GDP versus 8% in the budget) thanks to strong revenue performance and CAPEX under-execution. This better-than-expected starting position, as well as the government’s commitment to adhere to wage and pension spending limits in 2022 (as was the case in 2021), will help the authorities manage increasing expenditure pressures stemming from rising macro-challenges. The energy cap will have a modest net cost to the budget (most of it will be financed by taxing profits of energy producers) and the authorities estimate costs for Ukrainian refugees to total at least EUR1 billion (0.4% of GDP). However, we believe there are likely to be additional demands for support measures, the scope of which will largely be dependent on access to funding. Overall, and despite expectations of solid revenue growth due to a high deflator, we expect the fiscal deficit to reach 7.1% of GDP this year, compared with the budget target of 6.3%.

The ruling coalition remains committed to medium-term fiscal consolidation and implementation of ambitious revenue measures to boost tax collection and expenditure reforms tied to the RRF. However, this will require difficult political compromises and the passage of key pension and wage bills by mid-2023, just before the busy 2024 electoral cycle begins. Romania has a very weak record of adopting structural fiscal reforms, often relying on under-execution of investment to meet deficit targets.

Broadly Stable Debt, Financing Pressures: Under our baseline scenario, strong nominal growth and a modest reduction in the primary balance will keep the public debt/GDP trajectory on a very gradual upward trend, rising from an estimated 48.9% in 2021 to 51.3% in 2023 (and compared with a ‘BBB’ median of 55%). The strong commitment to exchange rate stability somewhat moderates the potential risks from high foreign-currency exposure (50% of total debt). Financing needs will remain large in 2022 (at around 11% of GDP), requiring significant domestic and external issuances. This will heighten the risks around financing flexibility, in particular in the event of additional domestic or external shocks.

Large External Imbalances: Fitch expects Romania´s current account deficit (CAD) to average 6.8% of GDP in 2022-2023, down slightly from a 13-year high of 7.0% in 2021 and compared with the current ‘BBB’ median of 1%. Some of the improvement will be due to a weakening of domestic demand in 2022 (which lowers import demand), followed by our expectations of a recovery in manufacturing exports in 2023. Foreign direct investment picked up in 2021 but in conjunction with capital transfers only covered around 66% of the CAD last year. We expect this ratio to remain broadly constant in 2022-2023, even as EU flows accelerate. High public external debt issuances will keep the net external debt position at around 22% of GDP over the forecast period, compared with the ‘BBB’ median of 5%.

Political Stability: The grand coalition of the centre-left PSD and centre-right PNL has proven remarkably stable since taking power in December, despite various areas of policy disagreement and confrontational stance in the past. The coalition government has turned its focus to dealing with Ukrainians and the cost of living crisis while fully supporting the EU stance against Russia. There are few risks around short-term stability, in particular as parties want to focus on meeting RRF milestones to unlock generous funding. Nevertheless, public discontent could increase rapidly if the cost of living crisis accentuates, potentially risking more populist policies or sharpening internal divisions within the coalition.

ESG – Governance: Romania has an ESG Relevance Score (RS) of 5[+] for both Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. These scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in our proprietary Sovereign Rating Model (SRM). Romania has a moderate WBGI ranking at 59.2 percentile, reflecting a recent record of peaceful political transitions, a moderate level of rights for participation in the political process, moderate institutional capacity, established rule of law and a moderate level of corruption.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative rating action/downgrade:

-Fiscal: Reduced confidence in the capacity to implement fiscal consolidation that undermines fiscal policy credibility, leads to a faster-than-projected increase in public debt, reduces financing flexibility or increases risks to macro-economic and external sector stability.

-External: A sustained deterioration in the balance of payments, for example, reflecting a sharper widening in the CAD and/or failure to attract non-debt financing flows.

-Macro: Weaker growth prospects, for example, reflect a more pronounced or longer period of an economic slowdown that leads, for example, to increased fiscal pressures.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

-Fiscal: Improved confidence that the government´s fiscal strategy will lead to a narrowing fiscal deficit and broad stabilisation of general government debt/GDP over the medium term.

-External: Evidence of increased economic and external resilience to tighter financing conditions and geopolitical risks.

SOVEREIGN RATING MODEL (SRM) AND QUALITATIVE OVERLAY (QO)

Fitch’s proprietary SRM assigns Romania a score equivalent to a rating of ‘BBB’ on the Long-Term Foreign-Currency (LT FC) IDR scale.

Fitch’s sovereign rating committee adjusted the output from the SRM to arrive at the final LT FC IDR by applying its QO, relative to SRM data and output, as follows:

– External Finances: -1 notch, to reflect Romania’s higher net external debtor and net investment liabilities positions than the ‘BBB’ median, as well as higher external vulnerability than implied by the SRM model, given adverse policy developments in recent years that have impacted external competitiveness and aggravated its exposure to shocks.

Fitch’s SRM is the agency’s proprietary multiple regression rating models that employ 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to an LT FC IDR. Fitch’s QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within our criteria that are not fully quantifiable and/or not fully reflected in the SRM.

BEST/WORST CASE RATING SCENARIO

International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories range from ‘AAA’ to ‘D’. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCES CITED AS KEY DRIVERS OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG CONSIDERATIONS

Romania has an ESG Relevance Score of ‘5[+]’ for Political Stability and Rights as WBGI has the highest weight in Fitch’s SRM and is therefore highly relevant to the rating and a key rating driver with a high weight. As Romania has a percentile rank above 50 for the respective governance Indicator, this has a positive impact on the credit profile.

Romania has an ESG Relevance Score of ‘5[+]’ for Rule of Law, Institutional & Regulatory Quality and Control of Corruption as WBGI has the highest weight in Fitch’s SRM and is therefore highly relevant to the rating and is a key rating driver with a high weight. As Romania has a percentile rank above 50 for the respective governance indicators, this has a positive impact on the credit profile.

Romania has an ESG Relevance Score of ‘4[+]’ for Human Rights and Political Freedoms as the Voice and Accountability pillar of the WBGI is relevant to the rating and a rating driver. As Romania has a percentile rank above 50 for the respective governance indicator, this has a positive impact on the credit profile.

Romania has an ESG Relevance Score of 4[+]’ for Creditor Rights as a willingness to service and repays debt is relevant to the rating and is a rating driver for Romania, as for all sovereigns. As Romania has a record of 20+ years without a restructuring of public debt, which is captured in our SRM variable, this has a positive impact on the credit profile.

Except for the matters discussed above, the highest level of ESG credit relevance, if present, is a score of ‘3’. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or to the way in which they are being managed by the entity. For more information on Fitch’s ESG Relevance Scores, visitwww.fitchratings.com/esg.

Romania expels ten Russian diplomats. On Tuesday, April 5, the Romanian Ministry of Foreign Affairs issued an official press release announcing the formal announcement. This occurred just hours after Romanian Prime Minister Nicolae Ciuca told a journalist that Romania had no plans to expel any Russian diplomats because no such cases had been reported on Romanian soil.

The Ministry of Foreign Affairs says that Romanian authorities have declared ten people working in the Russian Federation’s Embassy in Bucharest as persona non grata on Romanian soil based on their activities and acts violating the 1961 Vienna Convention on Diplomatic Relations.

These details were sent to the Russian side during a meeting held at the MFA headquarters on Tuesday, April 5, 2022, at the request of Minister Bogdan Aurescu, the Russian Federation’s Ambassador in Bucharest, and Mr Valery Kuzmin, Secretary of State for Strategic Affairs.

The MFA emphasized its unequivocal condemnation of the crimes committed in Bucea and other Ukrainian cities, for which Russia bears responsibility.

Romania joins Germany, France, Spain, Denmark, Lithuania, and other countries in expelling Russian diplomats.

Romania and Russia’s political relationship is poorer due to the Ukrainian-Russian conflict. In a sign of solidarity, Romania has expelled ten Russian diplomats after, on April 4, the Ukrainian President gave a speech in the Romanian Parliament on the importance of hardening the sanctions against Russia. As the war progresses, official relations between Russia and Europe will deteriorate, so it is impossible to say precisely how this will affect foreign policy and beyond. Still, it is inevitable that these sanctions will have consequences.

According to a study conducted in the United States by The Bullfinch Group in partnership with Romania’s INSCOP Research, More than half of Americans support abolishing visa requirements for Romanian nationals travelling to the United States.

Despite Romania’s status as a US ally, the subject of visa cancellation has received insufficient attention. Along with Bulgaria, Croatia, and Cyprus, Romania has been removed from the Visa Waiver Program, which permits nationals of other EU nations to enter the United States without a visa.

Opinion poll results: 53% of Americans want Romania to be included in the Visa Waiver Program

When asked whether they support or oppose adding Romania to the Visa Waiver Program, which presently permits citizens of 40 countries to visit the US without a visa for 90 days or less, most Americans (53%) said they support removing Romanian citizens from the program. Only 21% of respondents favour eliminating visas, while 25% are undecided.

In terms of political options, Democratic voters are the most in favour of removing visa requirements for Romanians. Consequently, 57% of Democratic Party voters support Romania entering the Visa Waiver Program, while 15% are opposed and 28% are undecided.

Half of Republican Party voters (50%) support the removal of visas for Romanian people, while 29% oppose it and 21% are undecided.

Our data clearly shows that Americans have a very positive opinion of allied countries that support US policies around the world and that Americans do not perceive Romania as a source of illegal immigration. That is why most Americans support the inclusion of Romania in the Visa Waiver Program; the percentage of those who oppose it is significantly lower. It is also very relevant that there is absolutely no category of the population that we tested in the US in which the percentage of those who oppose the abolition of visas for Romanian citizens is higher than the percentage of those who support the abolition of visas.

Brett Loyd, president and CEO of The Bullfinch Group

According to Remus Stefureac, CEO of Strategic Thinking Group, the survey might help Romania gain admission to the Visa Waiver Program.

Data show very clearly that the share of the US population, registered voters from all political quarters (Democrats, Republicans or independents) who support the abolition of visas for Romanian citizens is more than double the share of those who oppose it. The findings may further contribute to the efforts to persuade members of the US Congress and the US administration to include Romania, one of America’s most reliable allies, in the Visa Waiver program.

Remus Stefureac, head of Strategic Thinking Group

The Bullfinch Group conducted a nationwide opinion poll in the United States in partnership with INSCOP Research as part of a research project sponsored by the think tank STRATEGIC Thinking Group. Data was collected through phone interviews from February 19th to February 23rd, 2022.

Since 1997, Romania has been a strategic politico-military partner of the United States, supporting US interests worldwide. Washington does not grant visa-free travel to all EU member countries on its territory is an unresolved issue, to the detriment of Romanians and other countries such as Bulgaria, Croatia, and Cyprus. As a result, visa reciprocity between the EU and the US has not been fully realized.

Following the Russian-Ukrainian armed war, more than 50,000 Ukrainian refugees have crossed the border into Romania. Romanian officials and Romanians from all over the country have rushed to help those leaving crisis zones.

According to Valahia News, hundreds of projects have been started by ordinary people who want to help Ukrainians enter Romania. Some offer to lodge, while others provide transportation, translation, or even pet care to Ukrainians.

Thousands of people packed their stuff into suitcases, left their homes and lives behind, and fled to the border searching for protection when the war in Ukraine broke out. Many have taken them away to save their children, wives, mothers, sisters, or friends.

Romanians use social media to donate and offer assistance.

The lines to enter Romanian territory are several kilometres long, and more than 50,000 Ukrainians have already crossed the border. Twenty-five thousand of them continued their journey to other countries, while the other half expressed a desire to remain in Romania until the situation was resolved. Many Romanians did not hesitate to open their houses and seek new methods to help the Ukrainians in need.

Citizens have launched a slew of projects. The number of people ready to aid Ukrainians in any way they can grow on social media platforms, whether through financial or moral support for Romanians’ solidarity with Ukrainian migrants.

The Facebook group, „United for Ukraine”, has over 50,000 members, many of whom are willing to assist in any way they can.

With the common border, it was clear that the wave of people heading to Romania would be a major one. With the Russian invasion, the group has grown, we are over 53,000 members now, over 4,000 compelling offers of help: volunteering, accommodation, food donations, clothes, transportation. Solidarity is exceptional and gives you hope for such a mobilization. Romanians in the country and in the diaspora write that they provide the keys to their homes to Ukrainian families. There are foreigners living in Romania who want to help, pensions, restaurants, companies that provide what and how much they can. It is proof of humanity that motivates us, especially when we see what happens only hundreds of kilometers away from Romania.

Vlad Gheorghe, founder of ”United for Ukraine” Facebook group

Romanian officials are also involved in helping refugees.

Romanian authorities responded quickly to put up mobile camps complete with tents, mattresses, and electricity. Local monasteries give mothers with young infants special attention. Ordinary Romanians, astonished by the catastrophe that has exploded so quickly over the border, have provided the vast bulk of assistance. Romania can accommodate up to 500,000 Ukrainian refugees, according to government declarations.

Gabriela Firea, Romania’s Minister of Family, UNICEF representatives, and directors of social assistance and child protection departments from five counties on Romania’s border, took steps to locate locations where refugee children may be lodged.

The departments of social assistance and child protection (in Romania) will work together with UNICEF Romania representatives and specialists from the ministry to ensure that there is everything needed for these children at the border.

Gabriela Firea, Romanian Ministry of Family

Marius Budai, Romania’s Minister of Labor and Social Solidarity, also stated that Ukrainian citizens who want to work in Romania do not need a work permit for nine months. Their right to temporary residence in Romania is extended for Ukrainian citizens employed on a full-time contract. At the same time, the head of Labor emphasized that Ukrainians working in Romania might apply for refugee status throughout the nine months.

Companies, non-profit organizations, and ordinary people come to the rescue.

Many non-governmental organizations (NGOs), businesses, and individuals in Romania have launched initiatives to assist Ukrainian nationals leaving the country’s civil strife. Some offer lodging and meals, while others provide transportation, primary products, or pet support and assistance.
At its centres in Veresti and Burdujeni in Romania’s Suceava region, Fight for Freedom provides lodging and meals.

Stefan Mandachi, a well-known local businessman known for his social efforts, is offering free lodging and meals at the Spartan restaurant in the city centre.

Several organizations have also offered assistance and support to Ukrainian individuals bringing their pets to Romania. Save Our Paws Association in Iasi, Clubul de Excelenta Canina Patrocle Brasov, Casa lui Patrocle, MegaDreams Pet Taxi in Iasi and Fight for Animals in Baia Mare.

The Romanian United Fund also initiated a fundraising effort for Ukrainian refugees arriving in Romania, with the backing of the Romanian Embassy in the United States.

Ukrainian nationals arriving at the Siret customs point who wish to get to bus or rail stations can take a free bus ride provided by the international transport operator Romfour. They can also offer free transportation to Italy (every Friday) and discounts on other foreign routes (such as France or Germany).

Grecu & Asociatii also assist Ukrainian refugees with legal aid, guidance, and accessible counsel.

In light of the Ukraine crisis, the Local Code for Romania Association recently declared that it is working on developing an ecosystem of digital solutions. They aim to provide qualitative information on the current situation and impacts of the war and approaches to handle the vital requirements of refugees, local authority resources and competence, and civil society support in Ukraine and Moldova. They will provide information on available lodging places, resource and volunteer management, and institutional actors’ participation in this crisis.

Mamprenoare, a young, female entrepreneurial platform that volunteers to translate messages and human-to-human conversation, has organized in Cluj and Iasi with moms from all over the country, offering to support women and children who have just crossed the border.
Several Romanians from counties such as Cluj-Napoca, Neamț, Timișoara, Constanța, Argeș, Vas, Neamț, Bucharest, and others have declared that they will provide free accommodation for families with children, including those who bring pets. Many people who wanted to help were astounded that mothers with children were forced to flee their homeland. Several businesses, organizations, and public individuals have volunteered to open a spirit agreement for Ukraine’s war networks.

We provided a few initiatives to consider for fellow Ukrainians arriving at the border. However, hundreds, if not thousands, of small projects, ranging from people to businesses, governments to associations and non-governmental organizations, aim to assist those who have escaped the fighting. In any case, all Ukrainians need to know is that they are more than welcome in Romania.

Photo source: Vlad Ilas

U.S. Vice President Kamala Harris will visit Romania on March 11 over Russia’s invasion of Ukraine. U.S. officials will meet Romanian President Klaus Johannes in Bucharest at 2 p.m. local time. According to an official White House press release, the U.S. Vice President’s visit to Romania aims to strengthen Romania’s ties with the U.S. in response to unprovoked and unwarranted Russian aggression.

Vice President Kamala Harris will travel to Warsaw, Poland and Bucharest, Romania on March 9-11. Her visit will demonstrate the strength and unity of the NATO alliance and US support for NATO’s East Side allies in the face of Russian aggression.

White House statement

According to Valahia News, Kamala Harris will meet with Romanian Prime Minister Nicola Ciuca and other European NATO leaders to discuss Russia’s invasion of Ukraine. Security protocols for the arrival of the U.S. vice president are strict, and authorities advise residents to avoid the city centre. Police also advised against driving on Romania’s national road DN1, which connects Bucharest to the northwest of the country, between 12:00 and 15:00 local time on March 11.

The authorities involved have in view for the instituted security measures to interfere as little as possible with the population’s daily activities. Thus, for participants in traffic, there will be measures to improve the flow of traffic and, in this context, the Bucharest Road Police Brigade requests drivers respect the signals and indications of policemen. Drivers are recommended that on Friday, in the interval between 12:00 and 17:00 hrs, they avoid travelling on National Road 1, in order to prevent the formation of traffic jams.

The Bucharest City Police General Directorate

The official statements after the visit are to be broadcast at 15.30 local time.

The official statement by Kamala Harris during her visit to Bucharest

Harris wanted to thank the Romanian people for the way they welcomed and sheltered Ukrainian refugees. She praised the Romanians for „showing extraordinary generosity and courage at this moment”. In addition, the U.S. Vice President assured Romania that the U.S. and NATO would defend every inch of Romania.

We take seriously, and are prepared to act on, the words we speak when we say, ‘An attack on one is an attack against all

Kamala Harris official statemennts in Bucharest, March 11, 2022

In his return, Romanian President Johannes called for a more substantial NATO force on the eastern flank. Kamala Harris did not mention any additional military measures compared to what was announced after she visited Poland. In Poland, she said that the United States would bring Patriot missiles into the country.

25.2% of the Romanian population agrees to Roexit, according to a recent research

One out of four Romanians adopts the idea of ​​decomposition of UE and agrees with an eventuality of Roexit for a better future in Romania. The question regarding the perseverance of Romania in UE is present in the mind of numerous Romanians. Should Romania leave the EU? One out of four Romanians adopts the idea of ​​decomposition of UE and agrees with an eventuality of Roexit for a better future in Romania. The question regarding the perseverance of Romania in UE is present in the mind of numerous Romanians. Should Romania leave the EU?

This is the conclusion of an opinion poll conducted by Inscop, one of the most prestigious Romanian institutes, during January 11-18, 2022.

Romania’s EU exit: a win or a loss?

As Valahia News mentioned, even though most Romanians reject the prospect of a Roexit, a study done by Inscop Research in collaboration with Verified at the initiative of Strategic Thinking Group found that more than 25% of Romanians want Romania to leave the EU.
Looking back on Romania’s position in the EU and examining the Union’s consequences for economic and social life, 40.8% of Romanians polled provided a negative response, claiming that its membership in the EU had brought its disadvantages.

The role of the EU in the country’s economy

Asked if Romania should leave the EU, 29.4% of Romanians answered in the affirmative, claiming that Romania’s situation outside the EU would be better from an economic point of view.

Do EU rules please Romanians?

The overwhelming majority of Romanians surveyed (68.4%) feel that the EU’s rules harm Romania’s interests and that Romania must defend its national interests even when it disagrees with EU standards.

Given the growth of nationalism among Romanians, the percentage of people who believe the EU impacts Romanian interests is unsurprising. While the AUR (Alliance for the Unification of All Romanians) is a nationalist party, its leaders have never stated that Roexit is their goal. Many Romanians, however, conflate nationalism with the desire to leave the EU.

Romania in Schengen area

Asked, „Why do you think that Romania has not yet been admitted to the Schengen area, the free movement zone in the European Union, without border controls, although most agree with the accession of our country? „50.8% claim that the reason is the problematic economic situation of the country, while 42.1% of the population consider that Romania did not meet all the employment criteria.

Romanians’ desire to leave the country

The percentage of Romanians who would prefer to live and work in the country has increased to 77.7%, indicating that the flood of Romanian emigration is slowing.

The high emigration rate resulted in a significant labour shortage in the area. As a result, the government authorized 100,000 working licenses for foreigners outside the EU for the first time to fill the vacuum and assist entrepreneurs.

Multinational or Romanian company?

69.9% of the Romanians interviewed state that they prefer to work in a Romanian company in Romania, while only 26% choose to work in a multinational company in Romania.

The quality of the products from the Romanian market

71.8% believe that foreign companies on the Romanian market sell inferior products in terms of quality compared to products they sell in other countries. 24% disagree.

Is the Great Union with the Republic of Moldova still a viable option?

When it comes to the Union of Romania and the Republic of Moldova, 74.5% of respondents want the idea of a Greater Romania to become a reality, while 21.1% are opposed. On the other hand, according to the most recent opinion polls in Moldova, only 30% of Moldovans favour unification with Romania.

According to Valahia News, the findings of this INSCOP study demonstrate the spirit and rise of the nationalist movement when it comes to West vs East. More Romanians, inspired by the nationalist nature, are struggling against Western influences detrimental to Romania’s condition, particularly during the epidemic years.

According to Valahia News, personal remittances from Romanians working abroad exceed direct investments in the country. This is the first instance of this happening. Romanians who work in foreign countries are the largest foreign investors in the country, but this is not good news at all.

This shows that investors have lost faith in the Romanian economy. Romania is currently borrowing at the highest rate of the European Union which is 5.37%. Romanian borrowings were at this high-level last year when the interest rate was 5.433%. Germany, for comparison, borrows money at negative interest.

With energy prices rising rapidly, inflation is on the rise and has already reached 7.80% as of November. 

According to the former Romanian Prime Minister,Mr. Florin Citu, Romania may be required to request an emergency loan from international financial institutions:

“There is one more thing, of vital importance. The confidence of the investors in Romania’s Government. Without their confidence, in the current global context, Romania could be forced to ask for an emergency loan from international institutions.”

Florin Citu warned the country’s new leaders about two options for resolving the situation, both of which fall under the purview of the National Bank of Romania: weakening the local currency or increasing the monetary policy rate even further.
In any case, it means hard times for the typical Romanian worker. Meanwhile, these harsh policies may be able to give a needed boost to the Romanian economy.

DO YOU NEED LOBBYING SERVICES?

Romania’s new Government was empowered on November 25th. The ceremony took place at the Presidential Palace, in the presence of Romana’s President Klaus Iohannis. The new Prime Minister is Nicolae Ciuca.

The new government coalition comprises the Social Democrats, the Liberals, and the Hungarian minority party. The cabinet was voted with a comfortable majority of 318 votes, with more than 80 more than the required minimum of 234 votes. USR and AUR lawmakers voted against it. Ciuca Government Ministers took the oath in Cotroceni. This new Government puts an end to the political crisis that lasted almost three months.

The Ciuca government will have 20 ministries to which the position of general secretary of the Government will be added. Compared to the previous Government, the Ciuca Government has two new ministries: the Ministry for SMEs and Tourism and the Ministry of Youth and Family.

Another concern when considering the new Government is the rotation principle, applied for the first time in Romania: the present Prime Minister must quit in May 2023 and leave the Social Democratic prime minister’s office, who will head the government until elections are held in 2024.

Experts immediately sense a rift between the former political opponents, and predictions suggest that this Government would only last a year.

With the new Government, those in charge need to think about the right solutions to get over the economic issues and the pandemic problem.

DO YOU NEED LOBBYING SERVICES?

Lobbying in the European Union, also known as European interest representation, is the activity of representatives from various interest groups or lobbies attempting to influence the European Union’s executive and legislative bodies through public relations or public affairs work.

The European Commission has released its second rule-of-law report, which contains updates on how lobbying regulations have evolved in EU nations in the ten months since the previous report. ‘Lobbying is a legitimate act of political involvement,’ according to the Commission, and ‘it must be supported by strong openness and integrity standards to guarantee responsibility and inclusivity in decision-making.’

​What is lobbying?

By definition, lobbying is any action aimed at influencing the development or execution of policy or the decision-making process in relation to legislative or regulatory activities, either directly or indirectly. The world we live in has an impact on all policies. We, as citizens, have a say in the laws we live by, whether by voting in a new government, writing to your local representative, or supporting causes. In this context, lobbying refers to the organized involvement and advocacy provided by professional public affairs practitioners, sometimes known as lobbyists.
It’s an elaborate field, and people who work in it need to be well-versed in politics, business, communication, and legislation. It necessitates a transparent and ethical foundation at its heart.

​Updates on lobbying rules in the European Union

In Romania, the lack of lobbying rules for MPs continues to be a problem. In terms of codes of conduct for members of Parliament, GRECO has lately emphasized the lack of enforcement of the rules, as well as the lack of regulations on how members of Parliament interact with lobbyists, as well as clearly defined limitations on gifts, hospitality, favors, and other perks.

Lobbying in Belgium

In Belgium – in terms of lobbying rules for members of Parliament and rules for contacts between persons with high executive duties and lobbyists, there are still some gaps. Everyone who intends to influence the policy-making and decision-making process, as well as its execution, will be obliged to register, whether directly or indirectly.
The register will cover a wide range of companies and organizations, including law firms, trade unions, non-governmental organizations, religious representatives, trade associations, think tanks, and academic institutions, in addition to professional consultancy agencies, in-house lobbyists, and independent consultants.

Lobbying in Austria

In Austria – Lobbying legislation is being looked into. While a legislative framework for lobbying exists, its breadth and the information made publicly available in the lobbying register are restricted, as stated in the 2020 Rule of Law Report. The Court of Audit proposes that the Lobbying Act be reviewed to see how international lobbying norms may be taken into account more completely, including the establishment of a legislative footprint. In autumn 2020, the Federal Ministry of Justice will convene a working group to study legislative framework changes.

Lobbying in Bulgaria

In Bulgaria – Lobbying continues to be unchecked. Although lobbying regulation is included in the national action plan in response to the 2020 Rule of Law Report, more tangible actions must be implemented.

Lobbying in Denmark

In Denmark – Contacts between policymakers and lobbyists to influence policymaking are still uncontrolled. Ministers and special advisers are not bound by any lobbying regulations, except from general rules on secrecy and conflicts of interest. Furthermore, there is no obligation for interest representatives to report on their actions. As GRECO points out, growing lobbying’s effect on decision-making needs more guidance and openness.

Lobbying in France

In France – The HATVP has suggested a change to the lobbying laws. The HATVP is in charge of keeping track of the lobbying registration. The rate of disclosures received by registered lobbyists was 90% in November 2020. In 2020, the HATVP proposed that, as advised by GRECO, the lobbying statute be changed to cover lobbying individuals (rather than just organizations) starting contact with high officials. To yet, the government has made no suggestion. The HATVP’s mission was extended in 2020 to include oversight of the execution of the incompatibility and revolving door restrictions. An incompatibility is found in 10% of the controlled instances on average.

Lobbying in Finland

In Finland – lobbying is still uncontrolled, and legislation to create a transparency registry is in the works. A study on lobbying activities in Finland was recently released by the Ministry of Justice. Lobbying is identified as a common technique that is often hidden from view in the study. A special parliamentary working group is continuing to work on legislation to create a transparency registry, with the goal of improving decision-making and increasing public confidence. Lobbyists who influence decisions at the federal level, excluding municipal and regional governments, will be required to register as a first step, however, the scope of the requirement may be expanded subsequently.

Lobbying in Germany

In Germany – in March 2021, new federal legislation establishing a lobby register for interest representatives was passed, and it will go into effect on January 1, 2022. The bill attempts to make the government decision-making process more transparent. It establishes guidelines for lobbying efforts directed towards the German Federal Parliament, the German Government, and other ministries. However, the most prominent lobby players in Germany, such as trade unions, employer organizations, churches, and religious communities, are excluded from the required registration requirement. The Parliament will oversee the electronic lobby register, which will be operational by January 1, 2022.

Lobbying in Greece

In Greece – in comparison to the preceding reporting period, there has been no change in lobbying regulation.

In Hungary – Lobbying regulation is still in its development, and there is no method for enforcing it. Lobbyists are not required to register or disclose their contact information. Employees of state administrative organizations may only contact interest representatives regarding their job after alerting their superiors, who may ban the meeting, according to a 2013 Government Decree. Meetings with interest representatives must be documented, but they are not required to be made public. In the case of members of Parliament, GRECO has suggested a clear set of regulations for dealing with lobbyists.

Lobbying in Italy

In Italy – there is no legislation prohibiting lobbying of government officials, however, many proposed bills have been submitted to Parliament. Based on the experience with the Ministry of Economic Development and the Ministry of Labour’s Transparency Registers, the draft legislation offers a basic framework for dealing with interest representatives. There is no mention of a ‘legislative footprint,’ but the government has committed to forming a working group to develop a unified national transparency register, which will include public agendas of all decision-makers disclosing meetings with lobbyists, according to the 4th National Action Plan for Open Government.

Lobbying in Spain

In Spain – Lobbying laws are currently being debated, with the development of a transparency register set for 2022.
Lobbying is currently unregulated on a national level in Spain.
The proposed law was open for public comment from April 28 to May 28, 2021, and is likely to include a definition of interest organizations, a required register for interest representatives and members, and a code of conduct controlling members’ and lobbyists responsibilities, among other things.
A system of sanctions and revolving door restrictions between top officials and government staff is also anticipated to be implemented.
By October 2021, the draft should be completed and authorized by the government in the spring of 2022.

Lobbying in Slovakia

In Slovakia – Slovakia has promised to produce a proposed lobbying law by November 2021.
The Government Office’s procedure is still in its first stages.
Several attempts have been made to pass laws, however, lobbying in Slovakia remains unregulated.
As a result, there are no legal definitions of lobbyists, lobbying activity, or lobbying goals, as well as no meaningful fines or legislative imprint for abusive lobbying.
In 2021, a Code of Ethics for Members of Parliament will be introduced, as well as a legislative regulation on post-employment norms (‘revolving doors’).

Lobbying in Portugal

In Portugal – Lobbying is still a work in progress, with efforts to create new legislation to regulate lobbying operations. Three parliamentary parties have presented legislation to alter the proposed regulations to address the issues that prompted the President’s rejection in 2019. While the parliamentary procedure is underway, no information on when it will be approved and implemented is available. The necessity to define the scope of permitted interactions between members of Parliament and third-party interests, as emphasized by GRECO, remains unresolved.

Lobbying in Sweden

In Sweden – Lobbying in Sweden is still uncontrolled. There is no requirement for decision-makers to proactively report interactions with interest representatives in a ‘legislative footprint,’ or to publish information on who attempted to influence which legislative initiatives with what resources. Lobbyists and interest advocates are not required to register in a lobby register, nor are they compelled to reveal their clients or financial details linked to their lobbying activity. Overall, however, public openness, transparency, and access to information continue to be the cornerstones of Sweden’s anti-corruption strategy.

Source: Aalep.eu

​Lobbying in Europe – still undergoes heavy challenges

The lobbying activity helps to maintain and improve the public trust, trust in the democratic institution, and the representation process of public politics. In the end, international lobbying never excludes diplomacy and vice versa, these are complementary layers that become intertwined, as the decision-making process becomes more complicated.

DO YOU NEED LOBBYING SERVICES?

Grassroots lobbying is an important term that refers to appeal to the public to take a stand before the legislature on a particular issue. In essence, it is the same as what we call in Romania „indirect lobbying„. It is called indirectly, as the influence of legislation is achieved by stimulating community members to communicate with decision-makers. Therefore, the initiators of the approach no longer act on their own, by establishing personal contacts with decision-makers, as in the case of direct lobbying, but encourage public opinion to influence the adoption of political decisions.

To be considered grassroots lobbying, an organization (such as a nonprofit) cannot announce its opinion on specific legislation and encourage its members to contact their legislators/government agency about that legislation.

Typical grassroots lobbying expenditures include:

– newspaper advertisements or press releases to support the proposed legislation,

– hiring a person to organize public meetings in order to influence action on issues being considered by the legislature,

– creating or maintaining websites, purchasing e-mail lists, or hiring someone to conduct other online activities, and

– hiring signature gatherers to circulate petitions for an initiative to the legislature.

​The benefits of Grassroots Lobbying

Grassroots lobbying has some additional benefits, such as:

• Increasing public support for an issue among constituents
• Offering solutions that the public would like to see enacted
• Enabling constituents to become politically active
• Representing the voices of the many
• Expressing viewpoints of a minority group

​Direct Lobbying and Grassroots Lobbying – what is the difference between them

You conduct direct lobbying only when your organization states its position on specific legislation to statesmen or other government employees, such as staff, government agencies who participate in the formulation of legislation or urge your members to do so. For example, a charity staff person urging a city council member to vote for an ordinance would be an illustration of direct lobbying.

Direct Lobbying consists of any attempt to influence legislation through communication with any member or employee of a legislative body, or any government official or employee (other than a member or employee of a legislative body) who may participate in the formulation of the legislation, but only if the principal purpose of the communication is to influence legislation. Communication with a legislator or government official will be treated as a direct lobbying communication, if, but only if, the communication: refers to specific legislation, and reflects a view on such legislation.

While grassroots lobbying is usually done by small, volunteer groups with little budget, the direct lobby is made by large organizations that have money and need a specific change in legislation or policy.

The differences between Direct Lobbying and Grassroots lobbying

The main difference between direct and grassroots lobbying is that, for direct lobbying, one person goes out and tries to influence a politician by using their own credentials or by offering them some sort of incentive. On the other hand, in grassroots lobbying, many people are mobilized in order to reach one goal or change in policy.

Also, grassroots lobbying is less formal and regulated than direct lobbying. The two forms of lobbying work together and they both correspond to different groups in society.

To achieve the best results, indirect lobbying or grassroots lobbying involves:

• Verbal and written communications
• Electronic and social media communications
• Attending a meeting with policymakers
• Speaking on the phone with lawmakers

​In conclusion

The lobbying activity helps to maintain and improve the public trust, trust in the democratic institution and the representation process of public politics. In the end, international lobbying never excludes diplomacy and vice versa, these are complementary layers that become intertwined, as the decision-making process becomes more complicated.

DO YOU NEED LOBBYING SERVICES?