On Wednesday the EU Parliament sent another positive signal that Romania, along with Bulgaria, is still on the right path to join the EU in 2007 or 2008. Although Bulgaria managed 25 more votes in favour than Romania (swallowing small portions is always easier) both had overwhelming support.
Whilst there were the predictable speeches in the EU Parliament from a vocal minority concerned that both Romania and Bulgaria were not doing enough in relation to judicial and administrative reform, as well as intensifying the battle against corruption, these were eventually drowned out by an overall feeling that both will join one way or another.
Both the EU Commission and Parliament are beginning to emphasise more and more that there may be a delay from 2007 until 2008 if Romania does not complete the remaining reforms required in due time. This supposed threat seems to me to be entirely artificial. If one considers the changes necessary just to improve the judicial and law enforcement systems, this could happen in 9-18 months, but confirming that what has been enacted will, firstly, be implemented and, secondly, actually work, will take far longer.
It is clear that while the last wave of countries to join the EU were also not perfect, Romania is, both economically and operationally, still some way behind most, if not all of those countries in 2004. The irony of Romania and the EU pushing through entry in 2007 or 2008 for political reasons is that it will most likely harm Romania in the longer term, rather than ensure the early deliverance of largesse from Brussels that most people here expect.
Both the former and existing Governments have not exactly devoted much time to really explaining what the implications of EU membership really mean for the average Romanian. The main reason for this is that there will be a significant number of changes that Romania must implement that will not be popular with the voters but which will be required as a pre-requisite to joining.
At the same time many of the assumed advantages, such as the right to work anywhere in the EU, will not necessarily come into force upon joining but instead only after a number of transition years. This will also apply to tariffs payable on certain products exported by Romania to ensure that the EU is not flooded with cheap products and labour.
A short trip to Hungary today to fill up a car with petrol and buy a packet of cigarettes clearly shows what is happening to the prices of some basic and popular products. Petrol in Hungary is around 25% more expensive than in Romania and cigarettes are more than double the price. Friends of mine who have relatives near Satu Mare by the Hungarian border are complaining that the price of fresh agricultural produce has risen because wealthier Hungarians are crossing the border to do their food shopping whilst filling up the car with fuel. Of course these higher prices are still cheap by Hungarian standards.
Hungary and the other Central European countries have managed to cope with all of the price increases associated with membership of the EU due to the average level of salaries that their populations receive.
Salaries in Central Europe have been way ahead of Romania for a number of years, whilst the Romanian average net salaries have not kept pace with these increases. The reduction in salary tax has helped, but there is a huge agriculture-linked segment of the population that has not seen a significant rise in their standard of living over the last 10 years and which, in a short space of time, will experience a large number of price increases for basic products as well as heating, gas and petrol.
These increases are, in fact, beginning to happen now in anticipation of EU membership and to help the Government balance the books by raising taxes to offset the so-called “flat tax” system implemented at the beginning of 2005.
These increased costs will also affect businesses going forward. Compliance with EU regulations in a wide range of fields will add to costs. By way of example, we have a television station in a Central European country that will soon have to pay millions of euros more in social security costs for former freelancers who will soon have to be treated as employees and therefore taxed in the same way.
With Romania seeking to join the EU in the next 20-32 months, there is precious little time in order to put right all of the problems the EU is still seeking action on whilst preparing the economy to absorb the changes that are currently and will continue to be imposed on it due to the requirements of the EU.
The assumed offset to these cost increases is the huge level of EU funding that will enter Romania after it joins. In fact money is already coming into the country from the EU, albeit in smaller amounts. The problem the EU has is not making the money available, but being able to rely on a system by which it can be distributed in a transparent and fair manner.
The EU is involved in a countrywide training programme with local authorities, but this is only a start. Whilst people working within the bureaucracy are earning such low salaries, the temptation of lethargy or, worse, corruption will always be present.
None of these problems are irresolvable, but to imagine that a State infrastructure that has had, at best, cosmetic reforms for the last 15 years is suddenly going to be transformed within a year or so is not being realistic. The rush for membership will bring euphoria (and shiny new passports) in the short term, but there will be a backlash that few are expecting once the realities of membership are understood.
* Oliver Meister is an English lawyer based in Bucharest working for CME, a US company that invests in television stations in Eastern Europe, including Pro TV, Acasa and Pro Cinema in Romania. He is also a director of Pro TV SA, the operator of the Romanian television channels CME has invested and is part of the management team that supervises the television station Studio 1+1 which CME owns in Ukraine