November 25, 2008 / 7:11 PM / in 9 years

Richer Romanians still worry about basics

BUMBESTI-JIU, Romania (Reuters) - After Pirelli turned parts of Bumbesti-Jiu’s crumbling industrial zone into a new factory last year, residents of this small town in southwestern Romania hoped the lean years were over.

<p>A man leads his horse-driven cart near Bumbesti-Jiu, 300 km west of Bucharest in this November 13, 2008 file photo. After Pirelli turned parts of Bumbesti-Jiu's crumbling industrial zone into a new factory last year, residents of this small town in southwestern Romania hoped the lean years were over. Fears about job security and anger about being left behind now dominate Romania's political campaign ahead of the November 30 parliamentary election. Picture taken November 13, 2008. REUTERS/Bogdan Cristel</p>

After all, one investor brings another and before you know it, there is thriving industry and jobs. Or so the story went throughout Romania in recent years as foreign manufacturers poured billions of euros into the new European Union state.

But for all of Romania’s economic progress made possible by foreign cash, last year’s EU entry and four years of structural reforms, thousands of villages and small towns like Bumbesti-Jiu have yet to benefit from modernization and wealth.

Fears about job security and anger about being left behind now dominate Romania’s political campaign ahead of the November 30 parliamentary election.

Even though Romania has the EU’s fastest-growing economy and most people have yet to experience much impact from the global financial crisis, poverty and social protection are voters’ main concerns.

“Expectations have risen faster than reality in Romania,” said Sorin Ionita of the Romanian Academic Society think-tank.

Bumbesti-Jiu illustrates the pitfalls of Romania’s slow transition from communism, plagued by botched reforms and corruption that until recently have kept the country far behind its Soviet bloc peers from central Europe.

Next to new industrial hubs such as the northwestern towns of Cluj and Timisoara, some areas still cope with unreformed communist-era industries, while corruption and fraud discourage initiative and distort the impact of free-market reforms.

The town’s main employer, a state-owned ammunition factory, is shedding jobs fast as it struggles to turn a profit. Town authorities have yet to refurbish a communist-era industrial zone that could attract future investors.

“Pirelli is our only hope,” said Mihaela Dungaciu, 45, who has worked in the ammunition factory for 26 years.

On her way to start the afternoon shift, she walked along a potholed road as ducks, chickens and piglets played on the curb. A crumbling fence and guard towers separated her workplace from the gleaming Pirelli factory.

CHANGING SOCIETY

Take the road 20 km (13 miles) in the opposite direction, past a wasteland littered with rusting iron and chunks of concrete, and the county capital, Targu-Jiu, tells a different story.

Nestled in the shadows of the Carpathian mountains, Targu-Jiu shows signs of the economic growth that, at least on paper, is lifting Romania out of poverty.

Unemployment is still above the national average of 4 percent, but its first hypermarket, German discounter Kaufland, opened last year and a shopping mall is planned for 2010.

Hundreds of large retailers have sprung up across Romania in the last years, attesting to the rising purchasing power of the country’s 22 million inhabitants and a budding middle class.

<p>A man rides his horse-driven cart in a deserted industrial area in Bumbesti-Jiu, about 300 km (186 miles) west of Bucharest, in this November 13, 2008 file photo. After Pirelli turned parts of Bumbesti-Jiu's crumbling industrial zone into a new factory last year, residents of this small town in southwestern Romania hoped the lean years were over. Fears about job security and anger about being left behind now dominate Romania's political campaign ahead of the November 30 parliamentary election. Picture taken November 13, 2008. REUTERS/Bogdan Cristel</p>

Since a coalition of centrist reformists led by Prime Minister Calin Tariceanu took power four years ago, the size of Romania’s economy has doubled and gross domestic product per capita rose to 5,650 euros from 2,400 in 2003.

“The last four years were very significant for Romania, because for the first time in a long time there was hope,” said sociologist Bogdan Teodorescu.

But with average monthly pay still at 340 euros, a fraction of EU levels, and hundreds of thousands of pensioners living on less than a 100 euros a month, poverty is rampant, particularly in rural areas where most homes still lack indoor toilets.

Bridging that gap has become the mantra of the election.

“If I have a single regret, it’s that I didn’t succeed in raising pensions even more,” Tariceanu said on his campaign website (www.tariceanu.ro).

His Liberal Party (PNL) has shifted toward the left over the last year, replacing strong pro-business talk with promises of budget giveaways, higher wages and subsidies, despite warning from economists who say Romania’s key policy challenge is to restrict government spending because of its dependence on foreign cash.

Slideshow (4 Images)

LEFT REVIVAL

Tariceanu may be paying the price of failing to convince millions of the poorest Romanians of the benefits of reform. The PNL is third in opinion polls.

The ex-communist Social Democrat Party (PSD) has seen its ratings rise as voter anger grows over wealth disparities.

“We have a gut feeling that people are looking for comfort and competence in our party,” PSD leader Mircea Geoana said.

Their message resonates particularly strongly in the cold winter months, when elderly Romanians can still be found huddling in alleyways of large cities like Bucharest, begging for cash often used to pay costly heating bills.

The centrist group linked to popular President Traian Basescu, the Democrat-Liberal Party (PD-L), is also losing support. One opinion poll this week showed the PD-L ceding its frontrunner status to the PSD.

Even though its platform is full of spending plans, it is relatively restrained. Tariceanu toned down spending rhetoric as it became clear such talk was making investors jittery.

“The problem is that with economic growth, we saw two Romanias built, a young one and an old one,” said Teodorescu.

The debate over social security has taken the focus away from justice reforms and corruption, the issue that galvanized voters four years ago and handed power to the centrists.

There is little evidence that corruption, particularly among top officials, is being addressed. The EU has repeatedly criticized Bucharest’s failure to address fraud.

Few senior officials accused of graft have been to court and civil rights groups say dozens of candidates running for re-election have in the past voted for measures aimed at protecting corrupt practices in parliament.

Additional reporting by Ioana Patran; Editing by Janet Lawrence

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