The great failure in regulation of property

The fact that the present government is coming to an end and the crucial issue of ownership is still not regulated is its most serious failure, much worse than its failure in reform or economic growth, because the property issue was not just a commitment by the majority of political forces in the coalition, but the prerequisite for any real reform and healthy and durable economic growth.

The failure has precise causes: 1. PD never wanted to deal with the problem, in fact, it always sought to remove a solution as soon as it appeared. It was a systematic, programmed approach to derail Romania from its way to Europe, tragi-comically because it came from parties which, in what they say, are brimming with “Europeanism” and the wish to see Romania inside Europe.

2. The Democratic Convention, which elevated the issue into an electoral, ideological and doctrine standard, was more keen on power, on ministerial and parliament seats, than on the property issue, and accepted PD’s every fickle, instead of breaking the coalition apart, not today, when the show is almost over, but as soon as PD’s true intentions surfaced, three years ago, when other parliamentary arrangements were possible.

We should say directly that the issue of property, on which ultimately hangs Romania’s pathway into Europe, deserved even early elections, let alone a few chairs.

So, once again, the Peasants, who stuck to the property issue, have no excuse, because, after all, they are at fault for the failure, because they have loved their chairs so much for the last four years that they forgot about centuries-old property.

Mr. Constantinescu is equally off-line. Because he had to take a stand as early as 1997, to demand clarification and take none of the PD blackmail about leaving the coalition to preserve the chimera of stability he waved abroad in the name of a hypothetical admission to NATO, which so far has remained a hypothesis!

As for the Liberals – Peasants’ colleagues in the Convention – they had an ambiguous position nowhere else than in ownership issues. Namely because private property is the sacred foundation of Liberalism, which they are struggling to prove they are promoting in Romania. The prolonged delay in passing a law on nationalised houses, its ambiguity and, particularly, the deliberately hazy manner in which the Ministry of Justice, under Liberal control, drafted and promoted the public domain Law, which leaves room for all possible interpretations and therefore to discretionary politics, unfortunately make a bad joke out of the Liberal attempt to change the Constitution so it guarantees not only protects, but private property too.

This is where private property regulations are after almost four years of Peasant-Liberal-Democratic rule.

In the housing sector, the coalition has failed to impose its Parliament majority to adopt a new legal regulation replacing the one inherited from the Iliescu regime. This inherited regulation formally accepts the principle of retrocession, but in practice it limits it to the infrequent case when the former owner (or his legal successors) live in the house or apartment in question. And as we all know, nationalisation or expropriation were not done for their own sake, but namely to draw former owners out of their homes. Obviously, another limitation might have been chosen, such as retrocession in kind of only one housing unit, with compensation for the rest, to avoid the complicated economic, political and social problems caused by retrocession. But the absurdity of the regulation adopted under Iliescu does not stop here. The regulation entitled those who lived, as to the date of enforcement, in nationalised houses that previously belonged to identified owners, to buy that property, despite the natural claim former legal owners lay on it. It must be pointed out that such a regulation in fact legalises theft; because it is theft to sell something that has been confiscated from someone else. Ceausescu himself, who was dominated by despise of private property, never dared do it.

The draft initiated by the Justice Minister, a Liberal, to change these regulations, attempts to make peace in both camps, and leaves the housing issue, which is a matter of principle, in ambiguity. And there should be nothing unclear about principles. What is actually attempted is to make the draft “edible” for PD, but it is not to be understood that the party’s leaders will ever cast a favourable vote on the matter, because they never considered losing, in the name of the restitution principle, the comfortable milieu of the housing they arranged for themselves in the Primaverii district.

After three years of failure, a land retrocession law finally went through. The general impression, however, is that many coalition MPs have accepted the land retrocession principle within certain limits, only because they were certain that the law, adopted very late, will lack the time to be enforced during this mandate and will therefore be subject to all amendments the present opposition, headed by PDSR, promised to bring in as soon as it returns to power. The fact is that, unless applied, president Constantinescu wasted his time endorsing the retrocession law with so much fanfare. And, lacking land retrocession, Romania, which already has 3/4 of its land in private hands, will not have a land market, in spite of the approval, albeit late, of a law on the juridical circulation of land for its normal sale. This fact also stands in the way of competitiveness and efficiency in agriculture.

Thick fog also surrounds central, county and local public administration. We still don’t know what belongs to the public domain and what is in the state’s private domain and, in each case, where delimitation becomes an issue. For instance, what land within city premises belongs to the city hall as private (estrangeable) land? What is the regime of land plots hosting water and sewer pipes? Who is responsible for in-city lakes? Who owns the land under and around electricity posts? How can the city hall deal with people who wish to use buildings or land plots it owns? Beyond the abuses, the already famous Puzdrea case is a significant sub-product of public-domain grey areas. Abuses themselves are now encourages by these grey areas.

The law promoted by the Ministry of Justice does not contribute at all to eliminating these problems. Because, beyond the principally correct regulations, the law remains evasive about concrete aspects. The key to this law is an annex that would inventory everything that must be in the public domain. The annex, hidden behind the complexities of practical cases, mentions only solution samples and not concrete solutions. Therefore, not coincidentally, to ultimately enforce the law, the Finance Ministry, charged with drafting the methodological norms, demanded inventories from local officials to establish delimitation rules in the public domain. Everything is stuck in this stage. But beyond this remains the dramatic and utterly negative fact that the final regulatory decision will be left to public administration authorities at the central, county and local level, so it can be influenced, out of any principles, by personal or group interest. Whereas avoiding the discretionary character is the key to good legislation in Romania.

Not to mention the tragedy in privatisable industrial property, which is the same at the end of this government as in the beginning. Through laws adopted in 1990 and 1991, privatisable capital in those state enterprises readily renamed into “commercial companies” has been left without an owner, following the so-called withdrawal by the state from the administrator position, triggering a grave dissolution and degradation process, which always comes when an owner is absent. The so much incriminated SOF is described by the law not as the representative of state ownership in the case of non-privatised capital, but only as a shareholder. A happy shareholder, the happiest in the world, which loses nothing when companies in its portfolio lose money and which no creditor – whether supplier, bank or the state budget itself – can by law demand explanations for those companies which fail to pay their financial obligations. Why wonder that owner-less enterprises suffer losses and arrears? Well, if no one is responsible, you ought to be a fool to actually stay out of losses and pay off debts! And it remains a fact that the post-1996 government, although it often amended privatisation laws, never approached the crucial issue of lack of ownership in privatisable state enterprises. The explanation can only be that political forces in the coalition, just as those before 1996, had no interest in dealing with the problem, perhaps as they imagined that ambiguity might pay off. And, useless to say, what isn’t clear doesn’t sell. So expect large-scale privatisation about the time of the Second Coming!

At the end of its mandate, the coalition is leaving the property issue in roughly the same stage it took it over when it got started, because, summarising, a normal law on nationalised houses has no chance of being approved, the land retrocession law will not be applied and will be subject to change in the future parliament structure, regulations on delimitations in public domain, if adopted, will be under the ruining incidence of discretionarism, clientelism and corruption, and privatisable industrial property will remain without an owner, and thus will never be privatised.

It has to be clear that the property issue should not be solved imperatively. We can carry on as usual and, as we’ve always gone from bad to worse, we can only expect worse.

Another matter open to discussion is Romania’s planned Euro-Atlantic integration, which has the unanimous support of Romanian politicians. The Euro-Atlantic world has property among its core values, like a sacred element in a religion. It is not certain that this world accepts Romania’s membership, but it is certain that if Romania does not grant the same status to property in its own set of values – promoting retrocession of private property and clarifying the regime of privatisable property – the world we say we want to join will only need the slightest excuse to say we have no business there. And Romanian politicians can anyway persevere in dragging on with the property issue, but then, they display less resolution about Romania’s Euro-Atlantic integration.