US Ambassador: Romania must break the cycle of political influence in economic decision-making

Romania needs to continue its structural reforms and must break the cycle of political influence in economic decision-making, The state has to prove itself a reliable partner for all investors and must implement transparent and predictable regulation in order to build investor confidence, said newly arrived US Ambassador to Romania Hans Klemm in his first official speech. He opened the “Case for Investing in Romania” business conference organized by the American Chamber of Commerce –Amcham, on Tuesday, October 13. Klemm emphasized that Romania must focus on three main themes: security, democracy, and prosperity, which he repeated several times in his speech. He spoke of Romania’s contribution to international peace and security, as an ally of the US and a NATO member, and praised the country’s anti-corruption efforts. “Romania’s ongoing anti-corruption efforts are a testament to the country’s commitment to democratic values, and to ensuring that all citizens can prosper through honest, hard work, rather than nepotism or membership in unscrupulous patronage networks,” Klemm said. He went on, referring to Romania’s high economic potential: “Romania is blessed with considerable resources. With a highly educated, multi-lingual, tech-savvy population, Romania is well positioned to attract investors, and to serve as an investor’s launch pad for the region. Romania is also fortunate to have diversified natural resources – energy, agriculture, forestry. Lastly, Romania’s strategic location offers great potential. At the border of the European Union, it is also at a crossroad – North, South, East, and West. Realizing that Romania’s location offers the promise of increased economic ties with EU aspirant nations and beyond, smart investors would seek out a transparent, stable and predictable Romania. Romania, therefore, should seek, incentivize and secure investments that would ultimately benefit its citizens through jobs and access to secure energy.” Romania understands this great potential and the need to improve its investment climate, the Ambassador added, pointing to the Government’s efforts to increase transparency and to hold public consultations on fiscal and regulatory regime changes. But he said Romania’s work remained unfinished and that the Government and Parliament had to continue reforms focused on sustainable development and a full adherence to the rule of law. Romania needs structural reforms that will increase labor market participation, reduce regulatory barriers, encourage greater entrepreneurship, and open sectors to more international competition and investment, according to Klemm. These reforms include improvements to the country’s infrastructure, a deepening of the technical and administrative capacity of the fiscal and public administration, and the privatization of state-owned enterprises through initial public offerings. “Building and maintaining investor confidence is essential for new investments to be made and for existing investments to pay off and to expand. To ensure this, the state has to prove itself a reliable partner for all investors both at a policy level and in terms of policy implementation at a company level,” the US Ambassador said. He added: “As Romania’s regulatory climate still lacks cohesion and long-term vision, Romania must tackle this challenge by passing and implementing regulation in a transparent, predictable and stable manner. Continued improvement of, and dedication to, across-the-board consultations with stakeholders would benefit all parties. Genuine consultations will strike a balance between short-term budgetary needs and social protection, and the overarching goal of fostering the investment that the country needs to grow sustainably.” Investors will be reluctant to invest or to expand unless they feel that their voice is heard and that the authorities fully consider the effect that their decisions will have on investment, Klemm pointed out asking the politicians to break the cycle of political influence in economic decision making. “I call on Romania’s leaders to set an example for the future – put aside short-sighted political concerns and focus on the long-term good of the country when enacting new or revisiting existing legislation or regulations; stop meddling in the management of state-owned enterprises for political gain and allow these enterprises to operate according to good business practices, so that all Romanians reap the benefits; and robustly and publically defend those prosecutors pursuing corrupt actors and vocally support an independent judiciary.” He ended his speech quoting the US vice-president Joseph Biden: “It’s no longer just what we can do for Romania, it’s what we can do together” for both Romania and the United States.