ECONOMY

Romania, Bulgaria must make huge strides to join EU in 2007

BUCHAREST/SOFIA – Delight over a European Union decision to set 2007 as the entry date for Romania and Bulgaria will soon fade as the Balkan neighbors confront big reform hurdles on their road to the West. The two EU laggards must tackle a communist legacy that appears much harder for them to overcome than for the eight ex-communist states who agreed on entry terms to the EU on Friday after a hard decade of introducing market economic structures. Corruption, poverty and questionable commitment to reforms demanded by international lenders all persist in Romania, and to a lesser extent in Bulgaria, suggesting that the two states have much to do to make membership in the wealthy bloc in 2007 a reality. «We are not prepared to join the EU in 2007. Romania will have to make huge efforts to observe the road map which runs until 2007… otherwise, everything will end up in a big disappointment,» political analyst Emil Hurezeanu told Reuters. An EU summit in Copenhagen last Friday invited Poland, Hungary, Malta, Cyprus, Estonia, Latvia, Lithuania, Slovakia, Slovenia and the Czech Republic to join in 2004. In Romania, the official line is that the country is – in the words of President Ion Iliescu – a «component of this (enlargement) wave which includes 10 plus two countries.» But critics warn the EU may still hold off on admitting the Balkan pair, perhaps making them wait for Croatia, which is expected to apply next year to join, once the difficulty of the first round of eastward expansion becomes clear. Foreign inflows vital With national output levels at a quarter of the EU average, even allowing for lower prices, Romania and Bulgaria face the challenge of raising living standards to a level where citizens can back the reforms needed to meet EU entry standards. Bulgaria has been awarded the coveted «functioning market economy» tag by the EU, but Romania has not, and both countries need steady, fast growth. Bulgaria grew 4 percent this year and expects the same rate in 2003 but ordinary Bulgarians are not yet feeling the positive effects of reforms introduced by the market reformist government of ex-king Simeon Saxe-Coburg. «Bulgarians still do not feel the benefits,» Nikolai Vassilev, economy minister, told state radio on Sunday. «Bulgaria will also have to promote policies that will bring additional foreign investment.» «Romania has to transform its energy sector and control public sector wages,» said Michael Maresse, emerging market analyst at JP Morgan in London. Excessive red tape, corruption and regional instability have put Romania and Bulgaria at the back of the investment queue. Bulgaria has attracted $5 billion in foreign direct investment since 1992, whereas the more advanced Czech Republic had more than that in just the first eight months of this year. Romania, with a population almost three times Bulgaria’s, has received only $8 billion in investment since 1991. Any hesitation by Bucharest to perform the surgical changes needed by the economy, or a return to stop-and-go reforms, will further discourage foreign investors. A delayed EU entry date for Romania may prove more realistic, Hurezeanu said. «We are very slowly heading toward a functioning market economy but corruption is still a systemic problem,» he said.