THE WEEK IN REVIEW

The epidemiological situation in Romania

In Romania, the epidemiological situation got much more serious this week, with negative record rates of 15 per thousand new infections, and over 300 coronavirus deaths in 24 hours. The positive test rates are a few points over 20%, and the average rate nationally is 6 to a thousand infections in most counties. In several localities, including the capital Bucharest, figures are much higher, 10 to a thousand and over. Hospitals are overwhelmed by COVID patient admissions, and EC units are full. The authorities approved the purchase of 500 high capacity oxygen concentrators, and decided to activate the EU Civil Protection Mechanism. That allows them to purchase a type of medication used to treat COVID-19 cases, because within two or three weeks it could be distributed to hospitals. The state of alert has been extended by 30 days, starting October 10. At the same time, it was decided that in localities with a higher that 6 per thousand incidence, it is compulsory to wear masks indoors, in shops, at work, in public transportation, but also in select open public spaces. The high number of cases has provided a boost to vaccination. About 30,000 people per day are joining the list of the fully vaccinated, which now has on it 5.5 million.

The Florin Citu government falls under censure

The Liberal government led by Florin Citu failed the test of the censure motion filed by the Social Democratic opposition. Toppling this government, say the Social Democrats, is meant to take Romania out of the political, social, and economic crisis. It was achieved with the help of the second tier coalition partner, USR-PLUS, which recently joined to become simply USR, and which holds Florin Citu responsible for the break-up of the coalition. The recent addition to Parliament, the ultra-nationalist AUR, also helped. President Klaus Iohannis, scheduled for Monday consultations with parliamentary parties, but said he was skeptical about a fast solution. For the time being, the main parties are holding on to their diverging positions, stuck in a political deadlock. For the Social Democrats, early elections are the only solution, and dismiss out of hand the version in which the Liberals and the Hungarian Union can have a minority government. Social Democratic leader Marcel Ciolacu proposes a technocrat government until early elections are held. The USR insists on rebuilding the coalition with the Liberals, but with another PM. USR chairman Dacian Ciolos would accept Florin Citu in a future government if the Liberals make a point of it. At the same time, the Liberals insist on Citu as PM, according to former finance minister, MP Dan Vilceanu. In his opinion, the coalition cannot coalesce again if the USR sets conditions. In the opinion of the AUR, right now there are only two possible solutions: a technocrat government, or early elections. The Hungarian Democratic Union wishes to rejoin a coalition alongside the Liberals and USR, but for now they do not believe in early elections.

In search of solutions to the fast rise in energy prices

EU leaders, gathered in Slovenia, have not reached an agreement on a response to the rise in energy prices. After the meeting, President Klaus Iohannis specified:

“We had an initial discussion on energy prices, especially electricity, and convened to put all measures on the fast track. The Commission made a commitment, which we hope they will live up to, to come up with an approach and some solutions in one week at the most, because we cannot cross this winter with rising prices.”

EuroMPs, who also discussed rising energy prices, deplored the fact that measures to cut down on fossil fuel consumption did not account for the lack of sufficient renewable energy sources. They also complained about the fact that nuclear energy has been marginalized, and that Europe is being held ransom by Russia with energy. In Romania, the exploding prices for power and gas coincided with the complete liberalization of the energy market on July 1. On Monday, the government agreed to subsidize power and gas bills for home consumers to the amount of 0.68 RON per kilowatt, but the continuing rise in prices on the European market calls for a new intervention, says Minister of Energy Virgil Popescu. One issue that keeps being brought up is setting a price ceiling for power and gas, which is supported by interim PM Florin Citu. Such a decision, however, can only be made by a fully vested government. In the opposition, the Social Democrats reminded everyone that they had filed such a bill in the Senate as far back as two weeks ago.

Economic forecasts

The Romanian National Bank is worried about energy prices, and said that they expect that the 5.6% rate of inflation they predicted for this year will be higher, as prices go up. At the same time, a recent WB forecast for Europe and Central Asia states that the Romanian economy would grow by 7.3%. The main short term difficulty is controlling the crisis, limiting its social, economic, and health consequences. The response of the government, with EU support, as well as the evolution of the vaccination campaign, would be critical for recovery. Other challenges are posed by the low rate of absorption for European funds, which raises questions as to the ability of the country to take advantage of new recovery funding – the report goes on to state. The World Bank expects the Romanian economy to grow next year by 4.8%, and by 3.9% in 2023.