The terror attacks in Madrid have forced the Romanian authorities to publicly tackle a fact that everybody is already well aware of: increasingly more Romanians are going to work abroad and, without their money, Romania would face economic collapse. However, the administration is still a stranger to the economic reality.
"There is a huge pressure (about the lack of jobs, i.e.) which we cannot withstand at the time being and that is why we came up with the solution of going and working abroad. It was extremely important that, periodically, for a brief period of time (...), we managed, in a way, to provide some jobs by allowing Romanians to go and work abroad." Speaking to the people of Vanju Mare on Wednesday, Premier Adrian Nastase publicly opened the issue of the Romanians' massive work-related migration, practically admitting to the authorities' failure to attract job-creating investments.
The Romanian economy is facing a dramatic shortage of foreign investors, which prompted the two million Romanians that are now working abroad (legally or not) in Spain, Italy, Germany and Austria to apply a perfectly simple logic: if the foreign investors don't come here, we'll go to the investors.
Heeding the principle "We won't sell our country" (famous slogan back in the '90s), the authorities did no go ahead with the privatisation process and did not make way for foreign investment in the economy, so that, between 1990-1996, not even one percent of the state-owned companies crossed over to the private sector. Furthermore, in the first seven years after the '89 Revolution, Romania attracted only 1.3 billion dollars in foreign direct investment, with the exact same amount logged in 1997 alone.
On the other hand, until 1996, Hungary, the Czech Republic and Poland had attracted foreign investment amounting to $12 billion, $6 billion and $5 billion.
Ever since 2000, foreign investment has exceeded one billion dollars every year, going as high as 1.5 billion dollars last year, but the gap accumulated between 1990-1996 could not be bridged. The foreign direct investment currently amounts to 10 billion dollars in Romania, compared to some $25 billion in Hungary, more than $30 billion in the Czech Republic and 40 billion dollars in Poland.
On top of everything, large investments are always attracted by Romania's neighbouring countries: Hyundai is building a 700 million-euro plant in Slovakia, Whirlpool and Gillette are each investing more than 100 million euros in Poland-based plants. That is exactly why there were no Polish people on the trains to Madrid - they have plenty of jobs right at home, because the foreign investors have been persuaded by the authorities that the countries were worth investing in.
Economic growth is also beginning to rely on money sent back home by the Romanians working abroad, so that this indicator is getting almost irrelevant for Romania's real development.
"The money sent back home by the people working abroad has probably done more to finance the payment balance than the foreign investment. Without this money, the current account deficit would probably have climbed another 4-5%, which would have triggered big problems," says economic analyst Daniel Daianu.
sorin.pislaru@zf.ro
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