Romania - Domestic policy

Romania has made progress toward the development of democratic institutions and a market economy since the 1989 revolution, but lacking the reformist traditions in other developing countries, Romania's transition has somewhat lagged. After bottoming out in 1993, its economy rebounded, and annual growth improved. Iliescu's government's primary domestic policy is to transform the economy of the impoverished nation. One year into his presidency, the average monthly wage for Romanians with jobs was only US $150, making it one of the poorest countries in Europe. Iliescu began the privatizations that had been put off for years due to labor unrest and fear of political backlash. In 2001 his government privatized a record number of industries, notably the steel producer Sidex, an employer of 600,000 Romanians—the support of which had been the largest single drain on the national treasury—and the bank Banco Agricola, one of the first, and largest, banks in Romania to be privatized. Iliescu's government resisted union pressure to stop privatizations and layoffs and the Romanian economy grew by an estimated 4.2% in 2001, almost double of the Central European average for the year. It is expected to continue growing at this pace into at least 2004.

The IMF praised Romania in October 2002 for the country's financial and economic policies, which cut inflation, and increased exports, industrial production, and investment. Overall foreign investments in Romania in 2002 reached almost US $9 billion, with the Netherlands leading the way, followed by Germany and the United States. The US $9 million figure, however, works out to be around $410 per person, as compared with a Central and East European average of $1,600 per person.

One of Iliescu's priorities will be to combat corruption, especially if he wishes to guide Romania's entry into the EU. The United States and EU have characterized corruption in Romania as a crime that endangers Romania's development. In May 2003, almost one-third of Romania's legislators admitted they held positions or had business dealings that came into conflict with their political mandates. These revelations came on the heels of the passage of a new anti-corruption law that March, requiring holders of public office to reveal the existence of conflicts of interest. More than half of the 150 legislators were members of the ruling Social Democratic Party.