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Integration and globalisation according to Romania: the state must go on

Integration and globalisation according to Romania: the state must go on
27.01.2003, 00:00 6

The average salary in Romania is just a quarter of the Hungarian or Czech wages and a tenth of what the EU member states are paying. Corruption is chasing investors away. Taxation and bureaucracy are stifling the companies. Why? Why can't we be more like them? The answer came at the end of last week from President Ion Iliescu.
The man that has been leading Romania for the last 13 years is still a supporter of the state. The state must intervene in the economy, President Ion Iliescu said last Friday in Iasi, referring to Romania's long-term national strategy.
"It is Europe's duty to provide the Social-European model to the eastern countries, according to the German model, where the tax policy bears a social purpose," President Iliescu said when launching his book: "Integration and globalisation. Romanian vision," at the Al. I. Cuza University.
In other words, the state, which should be a mere arbitrator, is being encouraged by the highest-ranking politician to keep playing in the economic field.
All this, despite statistics showing that, although the private sector only holds half of the share capital in the Romanian economy, it actually accounts for two thirds of the Gross Domestic Product. Despite the bad management of the energy sector (mostly state-owned), which shows in the soaring maintenance bills. Despite the delayed privatisation, which pushed Romania's tourism revenues down to half the earnings posted by the Bulgarians, who have half our accommodations.
"As long as these types of statements are still possible, it means we still have not learned enough from our neighbours or from the European Union, where we are heading. In fact, wherever the state gets involved, the biggest problems occur, while a better social system means in fact a better economy. We can see why the thirteen years of transition have not brought enough changes. We go back to the same instincts, the same solutions," says economic analyst Matei Paun.
Just like King Midas turned everything he touched into gold, the state managed to block every economic sector it touched, as proved by the socialist experiment. We can see it in the freezing apartments of those that are still connected to the public water and heating system.
Ladislau Randjak, general manager for Romania of Greek investment fund Global Finance, says the state intervention to secure social protection is normal, but must remain "decent." However, this is not the case in Romania, Randjak says.
The massive presence of the state-owned capital in the Romanian economy explains the high taxation levels: state-owned companies are losing money and fail to pay their debts, which transfers the tax burden to the private enterprises.


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