“[One of the misconceptions] is that [Romania] is one of the poor underdeveloped countries somewhere far away in Eastern Europe,” Sorin Ducaru, Ambassador of Romania to the United States, tells the European Weekly. He goes on, “Yes, the country has been going through really difficult times during the communist period and also afterwards during the transformation. Only a few people remember that before WWII it was one of the wealthiest economies in the world due to its oil reserves and agriculture.”

Other misconceptions still linger in many Western European and North American heads. Ducaru is well aware of it and says, “Even though we were part of the Iron Curtain countries, the essence and history of [Romania] is deeply rooted in the modern Western civilization that is coming from the fact that we were part of the Roman Empire.”

Today, Romania is a democratic republic, a member of NATO, and an acceding country to the European Union.
However, transition from an economy characterized by excessive centralization, state property and rigid planning, into a free market economy did not happen swiftly.

Under Communist rule, Romania’s economy was crippled. In the aftermath of WW II, the country was left with scarce resources that were drained by the so-called “SovRom” agreements (mixed Soviet-Romanian companies established in the aftermath of WW II to mask the looting of Romania by the Soviet Union), and excessive war reparations paid to the USSR.

Later on in the Communist period of the 1980s, Ceausecu became obstinate in paying Romania’s foreign debts. He managed to return over 21 billion dollars in 14 years. The real price, however, was paid by the Romanian people who suffered from tremendous domestic shortages.

After the Communist regime was overthrown in 1989, Romania experienced economic difficulties and instability. “We had a decade of a really difficult transformation,” Ducaru explains. “In the 90s we had some areas of GDP growth but most of it was either stagnant or the GDP declined because of the adjusting process. It takes time to put something under new management.” He continues, “[During this period] we went through a profound process of restructuring the economy.”

In the years to come and in terms of social security and income, it was hard for Romanians to make ends meet. The collapse of the economy brought soaring inflation rates and high unemployment. Romania's aging population poses another problem. Ducaru explains:

“We have a big number of people in retirement that have to be supported. Also, we have cases of early retirement in order to be able to refresh the public sector, public administration. We wanted to have new people in the system, not those who were tied to the former system. The same was naturally [happening] in the private sector of the economy. So we do have a problem of supporting retired people. It’s a low level of pension. This has been strenuous on Social Security and on the Medical System.”

Ducaru goes on to state that Romania underwent a major privatization that started with the setup of adequate laws and reforms concerning the transfer of state companies onto private hands. “We went through the privatization of land, small enterprises, and end[ed] with the big enterprises. This is a process that is already virtually finalized,” he declares. “The only companies that have yet to be privatized are, for instance, the electricity and gas companies and one remaining state bank.”

Since 2000, Romania has seen steady economic growth. “Last year there was an 8.6 percent GDP growth in Romania. It was the highest in Europe. This year we are expecting a growth of around 6 percent.” Ducaru explains this year’s lower

GDP as a result of severe floods that have caused havoc across Europe. Worst affected was Romania.
There are many factors contributing to Romania’s economic growth: for instance, a well-educated population, and its new emerging sectors, such as the IT sector and communication and software technology. Also strongly emerging is Aeronautics.

“The services sector is another growing industry,” Ducaru says. “Tourism, for example grew in 2004 by 50 percent compared to the year before. I think there was another growth this year despite the flood.”
Another factor would be trade, primarily with Italy, Germany, Britain, France and the Netherlands inside the European Union, and outside with the United States, but also with China and Japan. “We are actually trying to catch up with trade with the countries of the former USSR that we used to have a good trade relation with, including Russia,” Ducaru states.

“One of our focuses is to regain some of the market areas that we lost with the collapse of the former USSR.”
Last but not least, this year Romania is introducing the flat tax; set to be another boost to its economy. Interestingly enough, the flat tax, already in use in several other European nations, has been under fire. Supporters say the flat tax, a system under which all taxpayers pay the same rate, cuts out complicated bureaucracy and encourages people to work harder, earn more, and keep more of their income. But some see the flat tax as stealing from poor wage earners and cutting public spending while widening the wealth gap. Ducaru explains that with 16 percent income tax and 16 percent corporate tax it would be the lowest in Europe.

In regard to US-Romanian relations, Ducaru says: “Both politically and economically we are at an all-time high.” And he adds, “In terms of business I have to mention that in the last five years we’ve had an average growth of 20-22 percent per year in trade with the US. It is a good dynamic.”

When speaking of Romania’s future, the Ambassador concludes: “I would like this country to be anchored in the Western democratic world to which it belongs through its tradition, values and its people. I would like that never again in history we’d have to face a conflict such as behind the Iron Curtain. And I would love Romania to speak out for the region. We are already making the point for the Balkans and the Black Sea in order to connect them to the Trans-Atlantic mainstream.”