Strategicus Consulting

Rodica Pricop

January 21, 2011

Published in Nine O'Clock

The dramatic austerity measures imposed by the Government have not yielded the expected results, that is if we can accept that the political forces that have been leading this country since 2009 ever had any intention at all to help Romania come out of crisis. By looking closely at the way in which economic and social policies have been pushed in the last two years, as well as their ravaging impact on the population and local business environment (except for banks and multinationals), the systematic refusal of many top authorities of the state to observe the laws, the conclusion is that it is very possible that the plan may have been exactly the opposite: to push the country into the most serious economic crisis in its modern history, for the purpose of justifying the abdication of rule of law principles as enshrined by the Constitution and of installing an oligarchic political regime with international ramifications, driven by purely economic interest. The argument that such a scenario is totally excluded as Romania is a EU member state does not stand because, as unfortunately history teaches us, major crisis can bring about dramatic changes of regime at any time, as the president of the European Commission was warning shortly after the financial crisis had been officially acknowledged in Europe, in 2009.

But let us return to the painstaking failure of economic recovery measures foreseen by many economists and commentators. Only the uninformed who allowed themselves to be convinced by the authorities that the solution to crisis is a shock treatment could now be surprised by the fact that the extreme method is not paying off, but, on the contrary, has deteriorated the situation even further.

IMF representative Jeffrey Franks now says he is disappointed by the fact that the economy is not coming back after two years of implementation of the stand-by agreement. What a surprise! I would say it couldn't have come back, as long as, together with the EUR 20 billion international financial package granted under its supervision, the IMF has also brought in Romania a guaranteed formula for long-term economic failure: dramatic decline of living standard, surging unemployment, fall of consumption, fall of productivity and increased taxes. The consequence? Romania has joined in their vicious circle many other states that have implemented the same method over the years: regress or, in the most fortunate case, economic stagnation paralleled by increased dependence on international financial assistance and, more importantly, on loans from the banks to which the Romanian state has become a loyal customer. The Financial Times was recently noting that a maximum austerity "experiment" was being conducted in Romania and Latvia. Reality shows that, in terms of economic redress, the experiment has failed, with the failure carrying unimaginable social consequences two years ago.

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