Rosapepe and Kast ‘Romania’ article in Wall Street Journal – December 30, 2009

From Ceausescu to the New Italy
Romania has one of the world’s highest ratios of bad press to real achievement.
By JIM ROSAPEPE AND SHEILAH KAST (Wall Street Journal, Dec. 30, 2009)

The recent election in Romania, in which President Traian Basescu was re-elected with 50.3% of the vote, underlined why, 20 years after the fall of Ceausescu, Romania has become the new Italy.

In both countries, politics are hard-fought, polarized, and periodically bizarre. The comedy and melodrama of Italian Prime Minister Silvio Berlusconi are well known. But the failed impeachment of Mr. Basescu and the odd bedfellows and political pillow fights of Romanian politics are rarely noted outside Bucharest.

The parallels are remarkable. Both countries reclaimed democracy when they executed their dictators Benito Mussolini (April 28, 1945) and Nicolae Ceausescu (December 25, 1989). Both emerged from dictatorship flat on their backs economically and with many friends in the West fearing they would not sustain democracy. And within 20 years, with support from America and Western Europe, both became firmly democratic, much more prosperous, and economically and militarily relevant members of the European Union and NATO.

Today, both continue to punch above their weight classes in areas such as artistic and design creativity, peaceful relations with their minorities and neighbors, corruption, and culture (Herta Muller, born in Romania, won the 2009 Nobel Prize in Literature).

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What a difference a democracy makes.
With nearly 22 million people, Romania has the seventh-largest population in the European Union. Even though it emerged from communism in a deeper hole than almost any other former Soviet satellite, it has come a long way in a relatively short time. It has attracted more than $100 billion in direct foreign investment. For five of the last six years, its growth rate was almost 7%, one of the highest in Europe, East or West. In less than two decades, it has become the 11th largest EU country by nominal GDP and eighth largest in purchasing-power-parity terms. Prior to the recession of 2009, it had become the tiger of the Balkans.

They call themselves Romanian for a reason. Unlike those of its neighbors in the Balkans, Romania’s language and culture are Latin. Like Italy, it traces its roots to the Roman Empire. In the second century, Emperor Trajan conquered the native Dacian population of what is now Romania. That’s why three-fourths of the Romanians who have gone abroad to work, as southern Italians went north in the 1950’s and ’60s, are in Italy and Spain. They talk (sort of) the same language and send more than $6 billion a year back to their families, building new homes, and outfitting them with new washing machines, ovens, and televisions.

. Like Italy’s, Romania’s political geography was split for centuries between Germanic culture (Austria in both cases) and Mediterranean influences (the Spanish in southern Italy; the Ottoman Turks in southern and eastern Romania). And predictably the Germanic areas are more modern, prosperous, and clean than the southern ones. The ethnic German mayor of the overwhelmingly Romanian city of Sibiu, Klaus Johannis, was re-elected to a third term last year and became a respected, serious candidate for prime minister.

But when Western Europeans think of Romania, two things likely spring to mind: vampires and corruption. The latter stereotype, at least, is not unfounded. In Transparency International’s recent survey of corruption, Romania ranked 71st. That’s well below the U.S. (19th), but only eight slots below Italy. But, as corruption did not hold Italy back from becoming the 7th largest economy in the world, neither has it stopped Romania from having one of the fastest growth rates in Europe. And significantly, for those who claim Romania and Italy are “too corrupt” to be successful, Transparency International ranks both less corrupt than Brazil, China, India and Russia, the “BRIC” countries that are said to be driving the world economy.

For much of the past decade—until the world-wide slowdown this year—Romania’s biggest economic problem was a labor shortage. The car maker Renault makes its popular Logan in Romania, and ships it all over the world. European and American manufacturers—from big firms such as Alcatel, Siemens, and Ford, to family-owned companies from Italy—are making Romania the workshop of Europe. Microsoft, Hewlett-Packard, and dozens of IT companies are profiting from Romanians’ longstanding software skills.

Today, Romania is what Romanians like to call “a normal country.” Shopping centers line the roads outside most cities, middle-class families vacation in Greece and Turkey, students work and study in London and Paris, and credit cards, mortgages, and consumer loans are the coins of the realm.

By this year, the country had become more “normal” than was good for it. With foreign banks taking over the financial system and rising incomes driving expectations, Romania had its own real-estate bubble. When 70% of Romania’s exports go to the EU, a recession in Germany means a recession in Romania. Also, the boom in foreign investment drove up the value of Romanian currency, and too many Romanians borrowed in euros and Swiss francs. But mortgage debt in Romania is just 4% of gross domestic product; in the U.S., it is 104%, with a lower home-ownership rate.

Outside of Romania, and sometimes even inside, good news travels slowly. Romania has had one of the highest ratios of bad international press to real achievement of any country in the world. Despite its remarkable progress since 1989—a free press, a democratic political system, peaceful relations with its neighbors and among ethnic groups, and an economy that grew rapidly—the foreign snapshot is still too often dominated by abandoned children, corruption, and chaos.

Those who look closer see more. One diplomatic colleague told us, “Like my own people, I find the Romanians stronger on spontaneity than discipline. And as the Italian ambassador to Romania, I myself am caught between two spontaneities!” Now, 20 years after the collapse of Communism, Romania’s spontaneity is paying off, just as Italy’s did in the 20 years after World War II.

Mr. Rosapepe, former U.S. Ambassador to Romania, and Ms. Kast, former ABC News Correspondent who reported on the post-communist transition from Moscow, Tbilisi, and eastern Europe, are co-authors of “Dracula Is Dead: How Romanians Survived Communism, Ended It, and Emerged Since 1989 as the New Italy” (Bancroft Press, 2009).