President Traian Basescu's impeachment left a stain on the country's image, analysts say.
By Paul Ciocoiu for Southeast European Times in Bucharest -- 30/08/12
Romanian President Traian Basescu returned to his office on Tuesday (August 28th). [Reuters]
President Traian Basescu's return to office on Tuesday (August 28th) after a two-month suspension engineered by Prime Minister Victor Ponta gives Romania’s government an opportunity to focus on the pressing tasks it faces -- a fragile economy, joining Schengen and the rule of law.
The distraction caused by Basescu's impeachment and the long debate over the validity of a national referendum threatened to derail the nation from democratic and economic reforms.
"Romania was already regarded as a vulnerable country by foreign investors. This political crisis has shown their fears were not groundless and proved Romania is a difficult country," Aurelian Dochia, an expert with the Romanian Centre for Economic Policies, told SETimes.
The effects are even more serious since the foreign capital injected into the Romanian economy was already decreasing, Dochia said.
"As of 2009 … foreign money has been decreasing, down from the 2007 record of 9.7 billion euros to several hundred millions we expect this year," he said.
The first effect of the political turmoil was a record low of the national currency against the euro, which affected many Romanians. "About 60 percent of the bank loans are in euros. Secondly, the national currency devaluation also reflects in a raise in prices," Dochia said.
Amid the deepening crisis, National Bank Governor Mugur Isarescu warned that Romania depends on international markets, which "will drastically penalise us."
A similar warning came from the head of the IMF delegation, Eric de Vrijer, who pointed out the crisis could imperil the economic progress made over the last years thanks to austerity measures. In the same context, the forecast for this year's economic growth was decreased from 1.5 percent to 1 percent in August.
"Foreign investors' trust is earned in time. It normally takes seven to eight years. This crisis has dissipated part of their trust," Dochia said.
Dochia's comments were confirmed by foreign investors.
"In a time when efforts should be made towards the facilitation of economic growth and foreign investments, uncertainties and undetermined expectations in the political scene may have exactly the opposite effect, threatening the country's level of competitiveness and the relevant performance indicators" the American Chamber of Commerce in Romania said in a statement released to SETimes.
The crisis has also delayed Romania's hopes to join the Schengen borderless area. Bucharest, along with Sofia, was hoping for a partial accession this fall. Opening the borders for Romania and Bulgaria is now excluded, Hans-Peter Friedrich, the German minister of interior, warned in July.
"Within a country's efforts to join Schengen, we also have to look at the rule of law situation," he explained.
"The best we can hope for now is a new accession schedule," Cristian Diaconescu, former Romanian minister of foreign affairs, told SETimes. "It will take between three and five years to fix these problems that have affected the country's image because we have shown these are system vulnerabilities."