I will begin with the bad. On current trends we are doomed. IfRomania maintains the current rate of growth in its public debt, wewill, within two to four years, hit the same brick wall that Greecehas recently become acquainted with. This will lead to sharpspending cuts, diminishing already insufficient outlays to criticalsectors such as health, education and infrastructure. Pensions, inmany cases barely enough to survive on, will become even tinier.Poverty, already a significant scourge in Romania, willblossom.
Our political class has shown an uncanny capacity to simply notcare or worry about the future. The money it spends is laced withpopulist appeal, catering to special interest groups, if not totheir own pockets. Fiscal discipline is hamstrung and budgetaryexpenditures are nearly solely composed of expenses as opposed toinvestments. The fiscal burden is one of the lowest in the EU,which is ridiculous given the tremendous need for investmentRomania faces. Speaking of investments, they hardly exist, most ofthe funds going to fund public servant salaries and benefits,pensions and acquisitions of consumables. Not focusing on investingrobs us of the long term returns and benefits (i.e. revenues) whichwould ultimately fund the initial as well as ensuing investments.Merely spending guarantees that we are wasting away one ofRomania's few advantages: a low public debt to GDP ratio.
This will not change. It will not change because there is noincentive for the ruling class to change its ways. Its interestsare self centred and short term. Eat today what you can, for whoknows what tomorrow will bring is their mantra! This is true acrossthe board; no parliamentary party is exempt from this.
The electoral process is not a solution, as the system is gamed insuch a way so as to prevent an authentic alternative from seeingthe light of day. It will take decades, if not generations for thisto change. And sadly we do not have the luxury of waiting thisout.
No, Romania is doomed. Doomed to failure and poverty. Doomed toseeing its brightest and most disciplined continue to leave. Doomedto being increasingly irrelevant and dependent.
But perhaps all is not lost. We are a country of unrealizedpotential. Romanians when challenged, even by the best, tend torise to the occasion. This is true in London, New York and Paris.Sadly this is not often also the case in Bucharest.
The indolent and kleptocratic nature of our political elite mightalso hold the key to our salvation. The recent troubles faced byGreece and to a lesser degree by Portugal, Ireland, Italy and Spainmight, with a bit of luck, lead to an environment where Romanianscan excel in Romania, as well as abroad.
Let me explain: the EURO is born out of a fundamental structuralparadox. At the core it is a monetary union, without the politicalclout to enforce budgetary discipline or set a common level oftaxation. Inevitably some states will exploit this loophole to thedetriment of those that are making the necessary sacrifices. As ishappening now with Greece and others, those profligate spenderswill soon come to depend on the generosity of those who maintaineda prudent and wise approach to public finance, and that generositywill not come without a price in terms of sovereignty.
Put differently, the Euro's intrinsic contradiction holds theanswer to its survival: increasing degrees of political union,including joint fiscal and budgetary policies are the only remedywhich will tame the current imbalances threatening its existence.Furthermore, leaving the EU is not an option as the economic costwould be such that it would be unacceptable from all points ofview. The EU has no path to exit the club because none is required.Leaving would be similar to a patient unhooking their IV prior toan operation meant to correct a life threatening condition - thepatient would risk death.
Romania's political class has squandered its chance to prove thatit can govern the country. And given that it is unlikely todisappear any time soon, it must soon face facts and surrender thevestiges of power to a more competent supra-national authority. Ofcourse this will not happen overnight and not without a fight. Buton present trends it is inevitable - sooner or later theirincompetence and greed will put them in a position of incapacity tofurther exercise their power.
Already such approaches are being mooted in the case of Greece.Other nations in similar situations are only a step away fromfacing the same music. The EU has turned a corner. As I havepreviously written, 2008/2009 will in fifty years be seen as aturning point, not unlike what 1989 unleashed. Clearly China hasstarted on a path of increased self-affirmation and importance,challenging the existing unipolar order. The EU, as well, will beforced to accept ever deeper integration if its members are to havea chance at economic and political survival. In this lies Romania'ssalvation, and the more incompetent and greedy our political eliteis, the sooner we are to get there.
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