Prepared by the researcher : Muhammad Fawzi Ali – Assistant Professor – Ain Shams University – Cairo, Egyp
Democratic Arab Center
After three decades of democratic and free-market transformation, Romania has an imperfect, yet pluralistic and competitive democracy, with separation of powers, an increasingly assertive judiciary, generally free elections and unrestricted freedom of expression. Instead of a properly functioning rule of law, however, a “bazaar governance” model has emerged in which short-sighted negotiations about the distribution of public funds, clientelism and rent-seeking dominate the political business.
The modernization of the relatively young Romanian state was a political and economic process that began in the mid-19th century when Western models of democracy and a market economy were applied to a largely agrarian society. In the interwar period, the Romanian state faced the challenge of integrating the considerable ethnic diversity in the cities and the new provinces. The result was a democracy dominated by a small political and economic elite, with only superficial roots in wider society, even after the introduction of universal (male) suffrage after World War I. National mobilization became a substitute for modernization and an integration strategy in the enlarged country with its large national minorities.
Despite the massive socio-economic transformations imposed on the country by the communist regime after 1947, the post-war political system retained important shortcomings of the earlier era, particularly during the autarky-oriented reign of Nicolae Ceauşescu, a period dubbed “Sultanist Communism” by transitologists (Linz and Stepan 1996). The Ceauşescu family viewed the state, the party, and the bureaucratic apparatus as their property and not as independent institutions. This led to rampant nepotism and feigned social solidarity. By the early 1980s, this unique combination of “independent” foreign policy and a Stalinist domestic control through forced industrialization had been completely failed, leading to widespread scarcity, economic decline, and a relapse into old-style patriotic propaganda with Nazi undertones.
The collapse of the regime in 1989 in the midst of a popular uprising led to power struggles between sections of the nomenklatura (the elite who held various key administrative positions in the bureaucracy) rather than to immediate political transformation. Although Romania was the only country in East-Central Europe to experience a violent end to communism, the revolution was still seen by some as a “palace revolution” by Nomenklatura and Securitate groups. Market economy and pluralistic democracy were not exactly what the revolutionaries initially had in mind, and so the early 1990s passed without substantial systemic reforms.
A real elite shift did not occur until 1996, when a centre-right government began to implement what others in the region had been doing five years earlier: restructuring heavy industry and the mining sector, consolidating the banking system, privatizing large state-owned enterprises, liberalization of input prices and introduction of currency convertibility, return of property confiscated by the communist regime. A serious social and political resistance formed against these reforms, which included violent riots against the government, reformist parties or intellectuals. The violent protests carried out by Jiu Valley miners were most likely used by conservative forces and remnants of the old intelligence agencies to stall reforms.
The second decade of post-2000 transformation was marked by the struggle between the center-left social democrats who sought to pursue a pro-growth agenda and reap the expected benefits of EU membership (Romania joined in 2007), while at the same time maintaining authoritarian political control through their party machinery, and the center-right, which after 2005 rallied under various labels behind President Traian Băsescu (2004-2014) and pursued the rule of law agenda out of conviction or just tactical considerations.
Before the global financial and economic crisis of 2008, these political battles were being fought against a backdrop of robust economic growth, incompetently managed by successive governments in an attempt to buy social peace and build local clientelist networks. From 2010 the government opted for a tough austerity package that cost leaders the following elections but restored budget balances and laid the foundation for robust economic growth after 2013. Anti-corruption efforts have also been successful, leading to high-profile investigations and convictions of top officials, businessmen or media moguls, praised by the European Commission and other foreign partners of Romania.
Both politically and economically, Romania has made undeniable progress over the past three decades, although at the beginning of the post-communist transition it was hesitant to take reform steps and faced unusually tough structural constraints. Its development thus largely confirms the liberal, “Polish” pattern of the transformations that began in 1989 (Tausendfreund 2019). Today, the political establishment has accepted democracy, EU integration and NATO membership as goals in principle. No major political actor is questioning democratic principles or even EU membership, which continues to enjoy strong popular support. The implementation of these societal goals remains the problem, where the actual actions of some parties and/or political actors may differ from their official rhetoric. This is most visible in the area of the rule of law and the independence of the judiciary, where there have been repeated attempts to turn back the clock and restore impunity for office-holders against the judiciary. This aspiration and the power struggle it has sparked – but not other ideological differences – explains the level of polarization and turmoil we see in the Romanian political arena.
Outside the narrow circles of mainstream politicians, commentators and the heavily clientelist media (particularly the oligarchic TV networks), the intensity of social conflicts tends to be low, although rhetoric becomes more confrontational during election campaigns. Political conflicts have so far cut social and cultural cleavages rather than crossing them, limiting the risk of social fractures. Ethnic conflict and resentment towards the Magyar minority in Transylvania appears to be on the wane, as evidenced by the disappearance of the traditional xenophobic Greater Romania Party (PRM) and the failure of other, younger extremist parties to try to take its place. In Romania, neither left nor right-wing extremist political groups have been represented in the national parliament for about a decade. This now also applies to representation in the European Parliament: No Romanian MP belongs to extremist fringe groups. Part of the explanation lies in the fact that the nominally socialist PSD has traditionally organized campaigns marked by strong xenophobic, pro-clerical and anti-Western undertones, making it difficult for other conservative right actors to outdo them.
The Magyar Party (UDMR) has most of the time participated in governing coalitions as a junior member or made arrangements with various governing coalitions of right and left provenance, which contribute to the development of consociational democratic practice. The 2014 election of a “double minority” – an ethnic German Lutheran, Klaus Johannis – as President of Romania confirmed this trend. Hate speech and intolerance by the media and some public authorities has instead been directed at sexual minorities, who are socially stigmatized and have few vocal advocates. Sometimes, especially in election campaigns, this rhetoric turns into anti-EU and anti-modernization discourse.
The Romanian Orthodox Church is nominally independent of politics, but often benefits from government financial support, such as budgetary support for the National Orthodox Cathedral, which was consecrated in December 2018 to mark the centenary of the country’s post-World War I unification. Religious education was introduced as an optional subject in schools in the 1990s, but the impact of this change has remained largely symbolic.
In the past two decades, after the painful labor disputes of the 1990s, there have been no open conflicts or violence, despite the harshness of the crisis and austerity policies. In the vast majority of cases, public violence and abuse remains verbal and confined to a narrow range of politically inspired events. Overall, the weak appeal of extremist parties is notable, but the current Western political trend toward illiberal populism and a more confrontational style is gaining traction in Romania as well. The major citizen protests of 2017-2018 against the government and its anti-law policies confirmed what some social researchers had predicted: that there are two halves of the nation, one more professionally mobile and civic-oriented (including the 3-4 million Romanians from the diaspora, most of whom left the country after visa liberalization in 2002), and one more dependent on agriculture and the state. While the second half is usually mobilized by the party’s clientelistic machinery, particularly in poor rural areas, and prevails in votes, the other half of society mobilizes in various other forms to keep the authorities in check. This process creates a great deal of friction, which fortunately has so far been able to be managed within the framework of democratic institutions. Even if the public debate in politics and the media was charged and polarizing, the major street protests of 2017-2019 were remarkably peaceful, even by Western European standards.
The dominant political conflict in recent years has concerned the anti-corruption agenda. The fight against corruption, which became more and more visible and successful after 2005, became the main issue that determines politics in Romania. It has become the factor that can predict how coalitions will be formed and what kind of formal and informal alliances will be formed in Parliament. This momentum stems from an initiative that began in 2005 to create new institutions and investigate high-level political corruption cases. The effort was not only backed by the EU and other international partners, but was even made a condition of Romania’s EU accession in 2007, formalized in the Cooperation and Verification Mechanism (CVM).
The question of whether a party or a politician stands up for or against a strong, pro-active and independent anti-corruption prosecutor’s office, as demanded by the EU, has been the main fault line in Romanian politics over the past 15 years and almost replaced the left-right axis of party competition. The main parties have all used anti-corruption policies as a reference in election campaigns and also as a strategy to eliminate political opponents. In recent years, the conflict over the anti-corruption agenda has increasingly coincided with the dominant opposition in Europe between pro-European progressives and Eurosceptic populists, meaning that it could gain greater structural depth. This constellation of conflicts also put the Romanian governments, which after 2012 tended towards populism in general, on a collision course with the European institutions and in particular the European Commission, by intensifying mutual accusations between Brussels and Bucharest. Developments peaked in early 2019, when Romania took over the rotating EU Council Presidency. There were discussions about the activation of Article 7 of the treaty on the one hand and legal action against two EU commissioners for “falsifying the CVM report” on the other.
The anti-corruption efforts also shaped the relationship between the governments and the presidents. During their tenure, the latter were largely supporters of strict anti-corruption measures and effective anti-corruption institutions, while the cabinets and parliamentary majorities rejected this. Many complaints forced the Constitutional Court to become more active, which further underscored its semi-political character and put additional strain on the constitutional order. Increasingly, ministers and the ruling coalition devoted time and energy to defending party leaders against prosecutors by reformulating laws, manipulating institutions to politically control the judiciary, initiating administrative procedures to replace the Attorney General, or orchestrating media campaigns against judges on pro-government television networks. There have been threats to issue broad amnesties or pardons to leaders under investigation and to impeach the President if he continues to thwart such efforts.
This conflict took a significant toll on government activity, with the result that policy development and implementation took a back seat – much more so than in the pre-accession period. Frequent changes of ministers prevented the consistent implementation of policies. In this regard, the period from 2017 to 2019 marked a peak, with four prime ministers and countless ministers being replaced, for reasons largely related to intra- and inter-party struggles over judicial reforms. Important infrastructure investments came to a standstill due to a lack of capacity in ministries and authorities. In general, the politicization of the public service and the opening up of opportunities in the private sector and in Europe as a whole over the past decade have resulted in a gradual erosion of public administration, if not outright misselection of administrative staff. Whatever their plans, ruling parties cannot rely on the technical capacity of institutions to implement policies beyond public sector pay and pension increases.
Overall, the ability to learn from – or even remember – past programs and policies is reduced. Institutional memory in the central government is weak and depends on the fate of individual officials who may have run such programs in the past. Policy-related learning at the top is limited because self-interest and partisan calculations take precedence over sober evaluation of policy effectiveness and net results. Postponing regular selection procedures for senior positions in the civil service and appointing temporary heads of institutions or services under “secondment agreements” appears to be a common strategy to make them sensitive to political directives, pliable and easily interchangeable.
The overall picture of Romania after three decades of freedom is that of an imperfect, yet pluralistic and competitive democracy, with separation of powers, generally free elections and unrestricted freedom of expression. Its enduring flaw is a corrupt political class that still sees the state as a source of retirement income, despite the increasingly assertive judiciary over the past decade. There are three main channels through which parties and the ruling class gain illicit access to public resources, which they divert to political gain and/or private gain. First, the territorial allocation of public resources, mainly in the form of transfers from the state budget to local governments or other forms of support for local communities that buy the loyalty of mayors and other locally elected officials. Second, the process of centralized and municipal government procurement, which is the logical next step after budget allocations: If the transfers are clientelist and discretionary, the chances that the public contracts paid for with money from these central government grants reach the best performing firms are slim. And third, state-owned enterprises, i.e. public economic enterprises that report to central or local government, where nepotism and politicization are also rampant. Most of the resources are drawn from these three areas to build parties, to finance illegal political-economic interest groups or to enrich oneself.
When this happens, other areas of public life are affected in a variety of ways. The price of goods and services financed with public money increases due to the high uncertainty of clientelist transfers; Rules governing party funding are ignored or circumvented, election campaigns become unbalanced and unfair, fueling public cynicism and distrust; the mass media are also involved in patronage by various political-economic groups, which reduces the space for open debates; finally, the societal distribution of resources is distorted, since not all groups have the same power to play by the informal rules of patronage politics.
In this sense, one can say that the post-communist transformation in Romania is complete with a pluralistic, competitive politics and the institutions of procedural democracy. However, the end state of the transformation process is not, as expected in 1990, some kind of idealized Western European state, because a crucial element of this model is still missing: a properly functioning constitutional state. In a report published in early 2019, the Expert Forum, a think tank, put all the elements described above together into something that comes close to everyday reality in Romania (and other Balkan states): the “bazaar governance” model, i.e. a political system with very short time horizons, based on spot market negotiations for the distribution of public funds between the parties and in which rent-seeking is most likely to occur, i.e. the generation of income based on political privileges and without corresponding productive services in return (Expert Forum 2019).
- Economic Transformation
Romania’s current economic situation gives the impression that society and the private sector have overtaken the state in the convergence towards Europe over the past three decades. The resulting dissimultaneity created tensions between the rapidly rising expectations of citizens – particularly the 3-4 million who wanted to immigrate permanently or temporarily to the EU after visa liberalization in 2002 – and what the public sector and the political elites were able to implement reform policies.
There has been real and tangible convergence in terms of gross domestic product (GDP) per capita and living standards. In 1990, Romania started on par with countries like Ukraine and Moldova with per capita GDP levels below US$2000 per capita; three decades later, the gap is visible: the two non-EU countries stagnated at US$3,000 while Romania surged past US$10,000. This is a combined effect of 1) the sectoral reforms imposed on the country in preparation for EU accession and thereafter; 2) the free movement of labor; 3) the re-evaluation of domestic assets within Romania, which became more interesting and therefore desirable due to the increased predictability of the rules within the Union space; and 4) the inflow of EU structural funds. Although grievances are often raised by citizens, even infrastructure and social services have improved – and it was hardly to be expected otherwise since Romania was not Hungary in the 1980s, but a regime of Stalinist oppression and scarcity.
Unemployment remained remarkably low after the crisis – below 4% at the end of 2019 – reflecting the under-recording of the unemployed in subsistence agriculture and labor migration to Western Europe (European Commission 2020). On the other hand, the activity rate tends to be significantly lower than in Western Europe, mainly due to early retirement and underemployment in rural households, which is a long-term problem and threatens the stability of the public pension system.
After several years of hesitation, immediately after 1990, the political and economic elites accepted the goals of the market economy in principle. All important political actors agree to consolidate the market economy as a strategic, long-term goal of transformation. No relevant political or social actor challenges the fundamentals of the market economy in Romania, even if some of them tolerate selfishness and rent-seeking to a much higher degree than others. The basic economic policies to deal with the global financial and economic crisis were largely guided by the international organizations (EU, IMF), which acted as anchors of discipline in governance.
Overall, the experts agree that the country has done better than one might have expected over the past two decades, especially in the area of macroeconomic stabilization. This is particularly true in view of the bitter political polarization – before 2005 left-right, after 2005 for or against fighting corruption – with permanent conflicts between the presidents and the parliamentary majorities over the rule of law. Pre-accession privatizations in strategic sectors such as banking and energy severely limited the scope for market manipulation and rent-seeking: private ownership is high, around 91%, with foreign banks, mainly Austrian, Italian and French, owning 76% of the total Romanian banking assets.
After joining the EU, the institutions of the market economy were consolidated. These include freedom of trade, currency convertibility, strong regulators that crack down on monopolies and state aid, and fully implement EU rules. While Romania was rightly criticized in the early stages of the transition process for assigning too much of a role to the state in economic development, since then legacies of over-regulation have coexisted with virtually unhindered forms of business practice outside of the control of authorities and regulations. Legal and illegal migrant workers, who mainly work in other EU countries, make a significant contribution to the livelihood of families in poorer regions with their remittances.
The Romanian Central Bank is relatively strong, politically independent and committed to currency stability. It has withstood and occasionally resisted pressure from the government or populist politicians in parliament, citing its achievements in rigorous anti-inflation and strict banking supervision. Aggregate public debt remains moderate, below 40% of GDP in 2019, and the country has met the Maastricht criteria for several years (European Commission 2020). The question of joining the eurozone returned to the agenda of political debates in early 2019, albeit with an imprecise calendar ranging from four to 11 years.
A number of problems have existed since joining the EU. For example, the quality of management in SOEs, particularly in the energy and commodities sectors, where politically motivated interference and personnel decisions are widespread; or tax evasion and the size of the informal sector, which is a symptom of weak public institutions designed to deal with such problems: total government revenue from taxes, duties and social security contributions is only about 30% of GDP, which is one of the lowest tax rates within the EU (European Commission 2020). Public procurement channels, which in principle comply with EU rules, remain a breeding ground for patronage and organized corruption. While there are rules prohibiting monopolies, the Competition Council and other market surveillance institutions, which in principle and overall correspond to EU rules, have been more cautious in their practice to date than an effective competition policy would require.
The main societal divide threatening social cohesion and coherence, as well as political peace in Romania, concerns the growing socio-economic gaps between urban and rural populations, and between the winners and losers of the post-communist transformation: agriculture produces only 6% to 7% of GDP despite nominally employing 30% of the country’s workforce. The disparities are regionally visible: while the Bucharest-Ilfov developing region exceeds the average EU per capita GDP, the predominantly rural regions in the north-east and south-west of the country have barely reached half of it.
- European Integration and Outlook
As shown in the previous section, Romania has benefited enormously over the past two decades from rapprochement with the EU and from accession in 2007. The mere fact that the Union is ‘there’ as a model of prosperity and good governance has inspired Romanian society. According to the November 2019 Eurobarometer survey, their trust in the national government is low (30%) but high in the relevant EU institutions (57%, above the EU average of 43%), as is the optimism of Romanians on the future of the Union (71%). Most of the benefits of membership came naturally through joining the space of free movement of capitals and people, and importing institutions and rules.
However, fewer benefits came from the EU structural funds, which the country was not able to use effectively enough after accession: absorption of structural funds remained low even in the second program cycle after accession, and the quality of absorption for some programs was questionable. The worst performers in using EU funds were not private companies or local governments, but the central ministries responsible for the major strategic projects. With the exception of direct aid funds in agriculture, the interest of potential recipients of EU funds does indeed seem to have waned recently, especially in local government and central ministries: while the funds are welcome in rhetoric, in practice there are many counter-incentives for their use, such as the availability of softer and less transparent mechanisms for local investment with money from national budgets, which many mayors see as attractive substitutes.
External pressure and conditionality have eased since the country joined the EU, and there is a sense of drift. One gets the impression that, paradoxically, the capacity for strategy and implementation has decreased, not increased, over the last decade after the global economic crisis. These failures were caused by a lack of administrative capacity, incessant high-level political bickering and apparent clientelism in the country. The increasing tensions between Bucharest and the European Commission, which became fully visible in late 2018 and placed the country in the category of “rebellious anti-rule of law from the East”, reduced Romania’s ability not only to draw on community support but also to offer a new agenda in line with its interests while holding the rotating EU Presidency in the first half of 2019.
The power struggles erupting in the country over the rule of law and the diminished credibility of its leaders contributed to Romania abandoning any ambition to be an active player in Southeastern Europe or the Black Sea region. Romania has failed on regional issues, such as the Ukrainian crisis or helping Moldova on its European path, as the fractious nature of its political elites has been a constant source of distraction from more substantive engagement abroad. While Bucharest has remained a staunch NATO ally in good times and bad, and for the most part a disciplined actor within the Union, it has developed few ideas of its own and demonstrated little assertiveness. Overall, unlike some other new EU member states, Romania lacks both the standing and the political ability to exert influence in the European Union.
European Commission. 2020. Country Report Romania. 2020 European Semester: Assessment of Progress on Structural Reforms, Prevention and Correction of Macroeconomic Imbalances, and Results of In-Depth Reviews under Regulation (EU) No. 1176/2011. SWD (2020) 522 final. 26.2.2020. Brussels: European Commission. http://europa.eu.int/economy_finance.
Expert Forum. 2019. EFOR annual report: The Bazaar governance. Bukarest: Expert Forum. https://expertforum.ro/en/annual-report-2018/. Accessed: 21. Aug. 2022.
Linz, Juan J., and Alfred Stepan. 1996. Problems of democratic transition and consolidation: Southern Europe, South America and post-communist Europe. Baltimore: Johns Hopkins University Press.
Tausendfreund, Rachel, ed. 2019. Reassessing 1989: Lessons for the future of democracy. Berlin: GMF-US.
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