ROMANIA SET TO SIGN EU ACCESSION TREATY

UNCLAS SECTION 01 OF 03 BUCHAREST 000872

SIPDIS

SENSITIVE

DEPT FOR EUR/NCE - WILLIAM SILKWORTH

E.O. 12958: N/A
TAGS: PGOV PREL ECON SOCI RO
SUBJECT: ROMANIA SET TO SIGN EU ACCESSION TREATY

REF: A) 04 BUCHAREST 3496; B) 04 BUCHAREST 2306; C) 04

BUCHAREST 690


1. (SBU) Summary: Romania will sign its EU accession treaty
April 25. Full EU membership is slated for 2007, barring
significant backsliding in key areas such as judicial reform
and the fight against corruption. While EU accession
remains at the top of Romania's foreign policy agenda and
enjoys widespread public support, implementing needed
reforms, especially in Justice and Home Affairs, competition
and agriculture, will prove a significant challenge for the
new government. Most EU contacts opine, however, that
Romania's 2007 accession remains a "done deal," despite
lingering questions about the country's preparedness. End
Summary.

EU Membership Tops the Agenda
--------------

2. (SBU) Romania is poised to sign its landmark EU
accession treaty April 25 at a ceremony in Luxembourg,
following the European Parliament's expected stamp of
approval April 13. With negotiation chapters closed, the
treaty sets the stage for full Romanian EU membership, along
with neighboring Bulgaria, in 2007. Romania's center-right
National Liberal Party (PNL)-Democratic Party Government
(PD),led by President Traian Basescu and PM Calin Popescu-
Tariceanu, remains staunchly committed to securing Romania's
2007 European Union (EU) accession, viewing it as the
country's single most pressing foreign policy objective. In
fact, Romania's 2007 accession enjoys widespread support
across the political spectrum and, after Romania's 2004 NATO
membership, is viewed by many within the GOR as the final
step in solidifying Romania's western orientation after
decades of communist rule.


3. (SBU) The Romanian public voices similar optimism--a
Eurobarometer survey released February 14, 2005 indicated
that Romanians hold the highest degree of trust in the EU
(74%),followed by Lithuanians (68%) and Hungarians (64%) of
all thirty countries surveyed. Additionally, between 50%
and 70% of Romanian respondents expect the EU to play an
active and positive role in solving issues such as
terrorism, foreign affairs, the economy, crime,
environmental protection, healthcare and education.


4. (SBU) Despite these positive marks, the survey also
revealed that over 42 percent of those polled have little
knowledge of EU institutions, while only 11 percent of
respondents indicate they are well-versed on EU affairs.
The general public's dismal level of EU knowledge contrasts
sharply with the government's official discourse in Brussels
and EU capitals, where Romanian officials are regularly seen
making the rounds and courting favor from their EU
counterparts. PM Tariceanu openly acknowledges that the GOR
must step up its public information efforts, especially as
Romania moves to implement tough political and economic
measures required by accession.


5. (SBU) However, skeptics note that with Romania's
predominantly rural population, getting the word out on the
EU will be an uphill battle. Many of our contacts tell us
that ordinary Romanians only perceive the "up side" of EU
accession and either do not understand - or do not want to
candidly acknowledge - that EU accession requires meaningful
political and economic reforms. In a society in which 35
percent of the population still relies on subsistence
agriculture using archaic techniques, analysts predict the
agricultural sector will be especially hard hit by EU-
mandated reforms. Equally important, Romanian's SMEs and
unrestructured, overstaffed companies will be confronted
with tough competition on the EU single market, forcing them
to become more efficient and competitive, possibly costing
jobs, or to succumb under EU pressure.

2007 EU Accession: A Rocky Road Ahead?
--------------

6. (SBU) Although Romania's EU accession--tied to
neighboring Bulgaria's--remains largely on track for now, it
will face significant EU scrutiny in the run up to 2007 (Ref
A). EU concern about lagging Romanian progress in meeting
accession requirements, especially Justice and Home Affairs,
Competition, Environment, and Agriculture prompted the
December 2004 addition of a "safeguard clause," that could
delay Romania's accession for up to one year, should the
European Commission's opinion of Romanian progress take a
steep downturn to conclude that Romania is unable to meet
its membership obligations. A decision to delay would
require a qualified majority vote by the European Council,
based on a recommendation by the European Commission. While
less severe, two other potentially penalizing clauses, the
"Internal Market safeguard clause" and the "Justice and Home
Affairs safeguard clause" allow the Commission to force
Romania into compliance with EU requirements up to three
years after the accession treaty enters into force.


7. (SBU) During a meeting with PolChief, the local EC
representative office's DCM affirmed that the EU will keep a
close eye on Romania's progress in meeting accession
requirements through a series of monitoring reports. The
first monitoring report, due in May, "will serve as the
bellwether for any potential accession delay," according to
Simmons. The report will assess Romania's progress in
enhancing the administrative capacity of the Competition
Council, enforcing legislation on state aid and anti-trust,
and ensuring effective controls of any future state aid. On
difficult Justice and Home Affairs issues, EU monitoring
requires development of a strategy and action plan for
reforming Romania's overburdened and tainted judicial
system, a subject which will also be tackled in the report.


8. (SBU) With corruption at the top of EU concerns, the
monitoring report will assess Romania's progress in
enforcing anti-corruption legislation and the effectiveness
of the country's National Anticorruption Strategy---which
has recently come under heavy fire from domestic non-
governmental organizations and international observers alike
for its scant progress in catching and prosecuting the "big
fish." Additionally, the Schengen Action Plan for visas
must be fully implemented, along with effective measures to
clamp down on human trafficking, and increase border
controls, a key issue once Romania and Bulgaria become the
EU's eastern border in 2007. The EU also requires passage
of legislation by the end of March to reform the police and
gendarmerie, two entities often plagued by corruption and
lack of professionalism.

Accession Delay as a "Last Resort"
--------------

9. (SBU) Despite the challenges remaining, EU Commissioner
for Enlargement Olli Rehn stated during his February 28
visit to Bucharest that a one-year delay would be a "last
resort," diluting the "safeguard clause" threat in the eyes
of many political observers here in Bucharest. He also
remarked following his meeting with FM Ungureanu that "there
is an encouraging beginning, proving that the new government
takes this issue very seriously and has planned certain
strategies, but they must turn into real results." Our EU
contacts echo these sentiments, with one UK embassy official
remarking during a meeting with PolOff, that despite
remaining GOR accession challenges, the Accession Treaty is
"basically a done deal," despite lagging GOR implementation.

Focus on Implementation
--------------

10. (SBU) Our EU interlocutors confide that Basescu's
efforts to come out swinging on tough issues such as
corruption, judicial reform, and economic reform during his
first few weeks in office worked to paint a more positive
image of Romania in the eyes of many EU member states and
the European Parliament--a body which has previously taken a
particularly dark view of Romanian accession progress.
Evidencing Basescu's drive, our government contacts
highlight that a package of laws strengthening existing
legislation on graft, tax evasion and related crimes will be
presented to parliament by March 31. Since Basescu's
swearing-in and his designation of the anti-corruption
battle as a "national security priority," the GOR has
launched investigations into high profile corruption cases
and lifted immunity for former ministers, a significant
break from the previous Social Democratic Party (PSD)-led
government which frequently appeared to be dragging its feet
in the fight against corruption. EU contacts and non-
governmental organizations alike voice optimism about the
new government's energetic first steps in the anti-
corruption fight.


11. (SBU) Additionally, Romania has taken concrete steps to
show the EU that it is putting its previously rocky
financial house in order. The State Asset Resolution Agency
(AVAS) seized the bank accounts of 1392 companies whose
arrears to the healthcare budget total $136 million end-
2004, in an effort to improve budget collection and curb
state aid to state-owned and party-affiliated companies.
The Competition Council also has strengthened its grip on
state aid and antitrust legislation, ruling on the
termination of state aid for 173 companies in disadvantaged
zones, and fining three companies, one of them a major EU
hotel chain, for breach of antitrust legislation.


12. (SBU) Despite these positive steps, most observers
caution that the GOR's implementation track record is weak,
at best. The EU also is wary of the possibility of snap
elections this fall in an effort by Basescu and his team,
which now hold a slim majority in the Parliament, to gain
more secure footing and capitalize on current PNL-PD
approval ratings, hovering at 56 percent, before forging
ahead with tough EU reforms. Our EU contacts in Bucharest
express concern that instability created by new elections
could effectively block progress in implementing EU
criteria. Despite cautionary notes from the EU, public
remarks by Basescu indicate that he is pushing for early
elections between the accession treaty signing in April and
September to provide his centrist government with a stronger
mandate to fight corruption and bring Romania into the EU in

2007. However, many within Basescu's governing alliance
view snap elections unfavorably following many of their
tough electoral campaigns last fall, with even PM Tariceanu
stating that he wants elections no earlier than January
2007, banking on Romania's January 1, 2007 EU accession.


13. (SBU) Although a more distant possibility, another
pitfall lies in the possibility of "enlargement fatigue"
setting in before member states ratify Romania's accession
(Note: The treaty is set to be ratified by parliament in all
25 current EU member states. In the unlikely case that an
EU country fails to ratify the treaty, it would become null
and void. End note.) Should the integration of the EU's
newest members prove more difficult than expected, one
Embassy EU contact noted that a negative swing in political
and public opinion "could throw a wrench" in Romania's
accession timeline. On the up-side, many observers note
that new trade and investment opportunities offered by EU
Romania and Bulgaria should offset the cost of bringing the
EU's prospective new members into the union.


14. (SBU) On the Romanian domestic side, our contacts in the
European Commission's Bucharest office note that Romanian
public opinion ratings favoring the EU will likely dip over
the next one to two years as implementation of EU
regulations, such as deregulating the energy market, begin
to affect consumer's pockets, making the tough reforms
needed even more difficult for Romania's politicians to
implement. The Basescu government and press have begun to
warn the public that accession strains will be significant,
particularly as non competitive firms and many agricultural
units unable to meet higher standards are forced to exit the
market.


15. (SBU) Comment: Both political commentators and our EU
contacts in Bucharest widely assert that the decision to
grant Romania entrance into the EU was largely "political,"
despite Romania's lagging status behind current EU member
states. EU political leaders want to bring Romania into the
"European" fold sooner rather than later, even if Romania
has not strictly adhered to EU accession requirements.
Although unlikely, a one year delay would have a limited
impact on Romania's ultimate EU membership, but rather,
would be a significant political embarrassment for the PNL-
PD alliance government, and a blow for many Romanians who
view EU accession, together with NATO membership, as the
ultimate proof that Romania has fully joined the West. Not
surprisingly, internal and external pressure will weigh
heavily on Basescu and his team to fully implement needed
reforms to keep Romania on track for 2007. End Comment.


16. (U) AmEmbassy Bucharest's reporting telegrams, as well
as daily press summaries, are available on the Bucharest
SIPRNet website: www.state.sgov.gov/p/eur/bucharest

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