21 September 2012
Romania has been mired recently in the deepest crisis seen in the last twenty years. Prime Minister Victor Ponta and President Traian Basescu fight an embittered struggle over political power, which has affected the financial stability of the country. Foreign investors are getting anxious and repercussions are seen in the solar sector.
Basescu lost popularity when he enforced a draconian austerity policy. His opponents blame him for being ruthless and authoritarian. For months the press had reported about endless struggles and insults within the government. Finally by the beginning of July the parliament under Ponta suspended President Basescu. To do this it simply rescinded the veto right of the Constitutional Court. The EU saw this act as a violation of the constitution, but Ponta promised a referendum to prove that the suspension was the will of the population. Everywhere in the country posters invited the voters to decide for or against Basescu. The President promised to immediately resign if the majority of people wanted that.
At that time Paul Voicu from the renewable energy consultant company Ibcoenerg was still very optimistic that the inner turbulences in Romania would soon be solved and the situation would calm down. He sees that the media has overhyped the situation within Romania and abroad. Seen from inside, he assured, nothing had changed and the Romanian solar industry would not be affected. He is convinced: Every president, no matter if it is Basescu or someone else, will support the green energy law, which had been modified only weeks before. Also Robert Cruceru, Executive Director of the Romanian Photovoltaic Industry Association (RPIA), that has played a major role in this modification, confirms: “There is no risk that a new government would change the green certificate system because it was supported by all political parties.”
The law is supposed to stimulate the development of renewable energy in Romania. “So far we can only talk about the potential of solar power”, says Robert Cruceru. It is not very much developed yet, but he notices a strong activity on the market. “Solar will definitely be developed to a very important segment of the Romanian economy, ”Cruceru believes. That opinion is shared by Voicu who even thinks that beside agriculture renewable energy is the second important sector to attract large foreign investments. Elsewhere the boom is already over and nowadays the numbers are already shrinking, but Romania is just starting the sustainable energy business and it promises very good profits. Romania has agreed with the EU that a certain quota of the total energy production will come from renewable energy – and these capacities have now to be built.
The reluctance of banks
Voicu regrets that so far the big investors are mainly from abroad, because most local banks, he thinks, are reluctant to finance big projects. Ibcoenerg works with companies from Germany, the UK, Spain and Italy, from the Czech Republic and Slovakia, or from Greece, one of Romania’s strongest business partners. Even easier is the access for Chinese and Korean companies, according to Voicus: “They are willing to take more risk.” And that according to Voicu that is the main topic during any decision making process of going to the market: How much risk is one willing to take?
But how much risk does it mean to invest in Romania nowadays? Voicus optimism that the situation would quickly stabilize again unfortunately has proved to be wrong: The referendum didn’t bring any clarification. 80% of the voters voted against Basescu. But only 46% of all citizens entitled to vote participated – 50% plus one voters are necessary to make the election valid. So instead of calming down the situation it became even worse: Pontas party Partidul Social Democrat (PSD) believes that the high number of Romanians living abroad has led to such a disastrous turnout. Basescu wants to stay in power and even to claim against the PSD. In fact, concerns exist that the PSD tried to falsify the results of the referendum. The whole political system seems to tumble in instability. All parties, including the opposition, are said to be corrupted. The government doesn’t hesitate to break constitutional laws. And now it is even blamed for acting simply criminal: The final decision about the referendum has to be made by the Constitutional Court – and its president called the EU for help because several judges and their families had been threatened.
Solar sector seeks stability
In the meanwhile it cannot be denied that the political chaos has had a very bad affect on the economy. The International Monetary Fund by the beginning of the year 2012 had estimated an economic growth of 1.5%. Now it corrected the number down to 0.9%. Robert Cruceru understands that the investors get nervous because the political crisis lasts longer than expected and that also the solar sector might suffer from the fact that some investors might prefer to postpone their projects until the government has stabilized. Nevertheless he is sure that the best strategy for Romania’s economy is not to pay too much attention to the political power games. Cruceru says: “Romania is a pretty secure place. We are part of the EU and we can’t act that foolish on a longer term.”
Written by Renate Zoeller, a German freelance journalist and author who focuses on Eastern Europe.