Romania
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| Objective |
SO Number |
FY 2004 |
FY 2005 |
FY 2006 |
| Expanding the Market-Driven Private Sector |
186-0130 |
10,170 |
9,950 |
7,137 |
| Improved Local Democratic Governance |
186-0230 |
7,255 |
7,550 |
6,000 |
| Child Welfare and Women's Health Care Reform |
186-0340 |
5,635 |
6,050 |
4,300 |
| Transfers |
|
4,775 |
3,450 |
2,563 |
| Total (in thousands of dollars) |
27,835 |
27,000 |
20,000 |
|
The Development Challenge:
Economically Romania lags behind most of its neighbors in Europe that have graduated from AEEB assistance. The European Union (EU) granted Romania "functioning market economy" status with some reluctance and included several serious caveats in its 2004 report. However, significant economic growth in the past year of eight percent and the notable privatizations that have been completed, such as the huge state oil company Petrom, and two large electricity generating companies, are signs that the Romanian economy is heading in the right direction at an increased pace. Romania has concluded negotiations to join the EU, and it is committed to meeting the requirements for joining in 2007. Still, the EU is monitoring Romania closely. By 2007 Romania will need to significantly de-bureaucratize the business environment and considerably lower corruption to enable increased foreign investment, and raise the competitiveness of Romanian products. USAID plans to stay fully engage in assisting Romania through the EU accession in 2007.
The democratic transition has stalled since 1997 and there had been backsliding in several areas during 2004. The freedom and independence of the press declined as the party and government then in power continued its practice of directing advertising revenues to docile media outlets, and pressuring foreign owners of local newspapers to reduce critical coverage of the ruling party, the government, and its leadership. The government failed to investigate effectively a series of physical attacks on journalists. The virtual domination of the media by the ruling party, and the use of state funds for the political campaign by the ruling coalition had reduced the likelihood of free and fair elections.
However, the change in government in 2004, first after the local elections in June, and then after the national elections in November and December, surprised most political pundits and many in the Romanian electorate. The election of a political alliance running on a strong platform, and of a President from the democratic opposition were the most concrete signs in several years that the democratic transition is taking place and a pro-democracy electorate is prepared to turn out and to exercise its power.
The Government of Romania (GOR) passed judicial reforms at a rapid pace in order to close the EU chapter on judicial reform. However, the rapid pace has caused substantial confusion in the courts and created an atmosphere of subjective interpretation and implementation. Moreover, there were disturbing signs of politicization of the judiciary, as indicated by selective prosecutions of politically connected figures. Civic groups who have raised concerns and issues have either been ignored, or worse, threatened.
The provision of social services continues to be plagued with endemic corruption with health care particularly affected by pervasive corruption. There is much that the U.S. can do to help Romania develop better policies to reform the social sector, provided that the GOR is genuinely committed to fundamental reform, which has not been the case in past years. Reforms include the expansion of reproductive health services, increased resources for preventive health care, and improved efficiency and quality of hospital services.
The USAID Program:
USAID Romania's bilateral program will receive its final installment of funding in 2007. The USAID portfolio has three groups of activities to facilitate the economic, democratic, and social transitions in Romania.
Improving the troubled business climate, by reducing red tape and corruption, is essential to making Romania more competitive. Strengthening small businesses is an important goal of USAID's assistance. Business associations, chambers of commerce, and government agencies are being helped to improve their services for small businesses. Micro-lending services are being provided in 23 of 41 counties. New financial instruments are being developed to provide long-term capital and to encourage new companies to list shares, issue bonds, and trade debt instruments. In agriculture, U.S.- funded programs help the privatization of state-owned irrigation systems, reform subsidies, improve food sanitation standards, and draft legislation for a market information system that will make Romanian agriculture more competitive. As water becomes an increasingly scarce resource, USAID also helps the National Water Authority to improve water management, enabling Romania to move closer to the EU's requirements.
As investment, both local and foreign, accelerates, USAID - funded training in the oversight of the financial markets will become even more critical. Anti-money-laundering and other fraud-detecting measures at the National Securities Commission, Anti-Corruption Prosecutor's Office, and the National Bank of Romania are being improved. SEED funded training is helping the staff of the National Securities Commission and the National Bank of Romania to increase their supervisory capacity.
USAID programs assist local governments to improve the delivery of services, strengthen financial management, increase their responsiveness to constituents' needs, and open decisions to citizen participation. The program is helping civil society organizations to monitor and improve local government performance, and increase participation in local politics. To further decentralization, advisors continue to recommend changes in legislation governing local governments. The democracy programs also promote the rights of ethnic minorities, and press for expanded opportunities for Romanian youth through active civic involvement.
USAID programs improve child welfare, family and reproductive health, and infectious disease services. Their objectives include improving legislation and the quality of services; developing professional associations in child welfare and reproductive health; and educating the public and policy makers. The programs increase community child welfare services provided by non-governmental organizations (NGOs), in partnership with local governments. This growth of community services has facilitated the closure of hundreds of state-run "homes" for children. USAID assistance is contributing to increased access to and quality of family planning services, pre- and post-natal care, and prevention of sexually transmitted infections, including HIV/AIDS. USAID funded activities increase the early detection of breast and cervical cancer, and help fight domestic violence.
Other Program Elements:
USAID/Romania's portfolio is supplemented by several AID/W and AID/regional projects. Some of these activities contribute directly to Mission strategic objectives, while some are special initiatives. They include: Agro-industry Competitiveness; DCA Mortgage Finance; Southeast Europe and Regional Electricity Market; Regional Energy Efficiency; Regional Mortgage Market Development; Balkan Infrastructure Development Facility; Trans-Balkan Romania Fund; Small and Medium Enterprise Financial Facility; Corruption Assessment of Romania; Fiscal Decentralization Initiative; Local Government Information Network; Tuberculosis Control; RiskNet HIV/AIDS Program; Rational Pharmaceuticals Management; Radiology Training for Early Detection of Breast Cancer; Drug Information Center; Global Fund for HIV/AIDS, Malaria and Tuberculosis.
The USAID Bureau for Economic Growth, Agriculture, and Trade manages the Micro and Small Enterprise Development (MSED) and Development Credit Authority (DCA) Loan Portfolio Guarantee (LPG) Projects. Through these projects, USAID helped the Moldovan banking sector to increase its lending activity with SMEs and agriculture entrepreneurs. Seven banking and non-bank financial institutions are participating. Over 1,000 beneficiaries have received loans totaling more than $13 million. Agroindbank's new program targeting start-up SMEs and agriculture businesses is an example of the new interest of banking institutions to these sectors is Moldova.
Other Donors:
Coordination of USAID assistance with that provided by other donors is an important element of the program. USAID assistance covers niches and issues not addressed by the other donors. It also provides technical assistance to help Romania use significant assistance funds provided by the multilateral donors. USAID works closely with the EU, the United Nation agencies, the multilateral banks, and other donors to ensure coordination and avoid duplication. The EU is the main donor, with its funding set to rise to approximately US$1 billion annually by 2006. In its current Country Strategy for Romania, the World Bank programmed up to $995 million for FY 2002 - FY 2004.
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