Weekly review: a wrestle with Russia and a post-crisis regained investment grade

Weekly review: a wrestle with Russia and a post-crisis regained investment grade

 

By Daniel Stroe – Bucharest

Looking tensely at neighboring Ukraine and preparing for the worst, Romania received renewed guarantees from NATO this week that the Alliance was ready to step in and defend its territory. The assurances came after a fierce barb trade between Bucharest and Moscow which had the EU and USA intervene and side with Bucharest. Amid a growing debate on the Ukrainian crisis, Romania got some positive economic news.

The week started with a row between Russian deputy-PM, Dmitry Rogozin, who vented out his anger after his plane was banned entry in the Romanian air space. Rogozin was on his way back to Moscow after he had participated in May 9 celebrations in Tiraspol, the so-called capital of Transnistria, a strip of land lying between Moldova and Ukraine. Rogozin is among the Russian officials blacklisted by the EU following Russia’s role in stoking violence in Ukraine. “Well, gentlemen in Romania, we will son explain everything to you, who you are and what we think of you” Rogozin wrote on Twitter after finally landing in Moscow using a commercial flight.

He had previously written on Twitter that “upon USA’s request, Romania closed its air space for my plane. Ukraine doesn’t allow me to pass through again. Next time I will fly aboard a TU-160”, a Russian strategic bomber, Rogozin wrote. The Romanian Ministry of Foreign Affairs condemned Rogozin’s “very serious statements”.

Reacting to Rogozin’s statements, Romanian President Traian Basescu pointed out he cannot “consider Rogozin’s statements as an official position of Russia”. “We need to find out how much vodka Rogozin had drunk before making such statements. This is a typical Rogozian statement, lacking respect for anything that doesn’t represent Mother Russia. He is still stuck in the Stalin era-like way of thinking. This is Rogozin”, Basescu said. Rogozin fired back on Monday and asked Basescu how much he had drunk before getting the courage to ban his plane from entering the Romanian air space. But the SUA supported Romania’s decision to ban Rogozin’s flight. “It is encouraging to see sanctions work” Duane Butcher, US chief of mission in Bucharest said.

As the Ukrainian crisis flares, the Romanian Government decided to write off a 1 billion lei (220 million Euros) debts of 15 state owned defense companies, weeks after supplementing the defense budget by 700 million lei (16 million Euros). Receiving NATO secretary-general Anders Fogh Rasmussen on Friday, PM Victor Ponta said he would raise the defense budget to 2 % of the GDP as of 2015.

Meeting PM Ponta and state security officials on Tuesday night, Romanian President Traian Basescu warned again one of Russia’s objectives is to federalize Ukraine and thus expand its influence area to the Danube’s mouth, the former border line with the Soviet Union. He also pointed out that pro-Russians around the city of Odessa, about 140 km away from the Romanian borders, are currently regrouping to attempt new destabilizing actions. The Russian embassy rejected this scenario while the Government in Moscow denounced what it called an intensification of the anti-Russian rhetoric in Bucharest, warning bilateral relations wouldn’t improve this way. In any case, in Bucharest, Rasmussen pointed out again NATO would defend every inch of its territory. The same message is expected to be brought by US Vice-President Joe Biden who will start a two day visit to Romania on Tuesday.

On Tuesday night, Romania officially joined the “F-16 family” in a ceremony attended by PM Ponta, Defense minister Mircea Dusa and officials of the manufacturer Lockheed Martin Corporation. As of 2016, Romania will receive 12 midlife-upgrade F-16s. On Wednesday, official statistics in UK showed there had been no invasion of Romanians and Bulgarians after the labor restrictions were lifted on 1 January. British populist politicians and tabloids had warned about a surge in the numbers of workers from the two countries in search of jobs, turning this into a widespread debate with no concrete elements in it. But numbers showed there were 4000 less Romanians and Bulgarians in January-March 2014 than in the same period last year. But the anti-immigration agenda is likely to keep holding a central role in the British populists’ campaign for the Euro-elections.

Amid turmoil in neighboring Ukraine which worried Romania from a financial perspective, authorities in Bucharest got good news as well. The country regained its investment credit rating from Standard &Poor’s after six years, raised to BBB- from BB+ amid economic growth and the Government maintaining fiscal discipline. Also on Wednesday, the Romanian Government said it was expecting a 3.5 % economic growth over the first quarter of the year. The week ended with the ongoing internal debate on the Government seeking to transfer shares of the Constanta Port to local authorities which the opposition and President Basescu says it is illegal and serves only party’s interests.