ECONOMY

Romania’s ailing energy sector seen as the biggest obstacle to EU entry

BUCHAREST – Reform of Romania’s ailing, communist-era energy sector is the biggest obstacle to its joining the European Union in two years’ time as planned, Romania’s new centrist government said yesterday. Romania and its Balkan neighbor Bulgaria will join the wealthy 25-member bloc on Jan. 1, 2007 following accession talks last year, subject to their undertaking wide-ranging reforms. «The most difficult is the energy chapter,» Romania’s Deputy Prime Minister Adriean Videanu told Reuters in an interview. «Countries like Spain had 15 years to open their energy market; Romania has much less and it will be very hard for the population,» he said. Romania has committed to a 2.5-billion-euro ($3.3 billion) overhaul of its energy sectors, including slashing state subsidies to debt-ridden firms, freeing electricity and gas prices and upgrading infrastructure through sell-offs and modernization. Videanu said his government would start adjusting energy prices upward from April or May, but would subsidize utility bills of low-income households to soften the blow. Rising fuel costs are a key concern in a country where winter heating bills can often exceed an average monthly salary of about 150 euros. Videanu, in charge of economic policy in the four-party coalition government formed after inconclusive Nov. 28 polls, said he was confident Romania would join the EU on time. «I’m convinced we will make it in 2007,» he said. «We have a strong and efficient government team.» Videanu said commitment to EU membership in 2007 was a common thread holding together the government, which some analysts fear will not be stable enough to last its term. The coalition includes the centrist Liberal/Democrat alliance and smaller ethnic Hungarian (UDMR) and Humanist (PUR) parties. «Beyond our political debate, this is our common political interest,» he said. Young reformist Cabinet The new Cabinet, packed with young, Western-educated reformists, is seen as more eager to tackle the harsh, quick reforms needed to join the EU. The former ex-communist government had been praised by the EU for stabilizing the economy but criticized for dragging its feet on structural change, social issues and the fight against corruption, which affects all walks of life in Romania. Videanu, whose centrist alliance campaigned on a tough anti-graft ticket before the elections, said measures were already being taken to ensure all citizens and institutions respected the law. «Justice and home affairs (reforms) are also difficult because public administration does not work well in Romania,» he said. «Competition is another important chapter that we must implement.» He criticized the way the previous government concluded agriculture talks with the EU, saying production quotas were too high for Romania to meet, meaning subsidies would be lost. For example, Romania’s domestic sugar production – forecast at 30,000 tons in 2004 – is unlikely to reach the EU minimum of about 110,000 tons to win any subsidies in the near future. «Personally, I don’t like the way the agriculture chapter was negotiated. It’s a field that could give Romania a competitive advantage but the quotas given to Romania we cannot (achieve),» Videanu said.k