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Cristian Grosu / Sins of the Romanian strategies: A government program for national security

de Cristian Grosu 16.11.2016

cristian-grosu-11-1With the 51 (plus the one that is now preparing, 52) strategies for Romania’s development prepared in the last decade – all made in detail – one thing is clear: we have no “luck” in strategies!

In the following, we present 4 of the reasons why there is no way for the strategies and so-called country projects to be achieved, and outline the most realistic and stringent government program for a country caught off guard by the new international context. And how this program for next year could avoid the governing and human errors that would undermine it.

So, first of all:

All country strategies built so far started from the assumption – wrong – that the state will produce the money needed for their financing:

a- the programs have not started from a list of priorities that would create the foundation needed for the entire construction.

Every government initiated what it wanted, how it wanted – even the main criterion for prioritizing was the award of the government contracts to political clients. A random example is the digitization of Romania.

Normally – as every citizen does at his home and with his household – one should first look realistically at the money expected to be received, then list the projects relevant for the development basis within the amount correctly forecasted.

What ministers and prime ministers do not make at their home, made with the public money and projects.

b-, All measures listed in a strategy started from the false assumption that there will be a continuity of the “vision” (that big word in Romania) for future governments. At least from their own experience, parties and governments should have been aware that this is not the way that things work in a country where policy makers do not fight for power to run the country to one direction or another, but exclusively for getting access to resources.

The small example of the pact for Education (i.e. the system which provides the most precious resource – the workforce and its quality) – signed by all parties and then disintegrated by the interests from this area is enough, I believe.

c-, All strategies started from the false assumption that Romania is a closed state, not exposed to the geopolitical convulsions and competition of the national economies in the EU.

Neither of the strategies has started from the answer to the most unimportant question (which cursdeguvernare.ro tried to snatch during a conference on this subject): What role do we give to the Romanian economy within the EU economy?

Leaving aside the fact that a basic marketing principle was always ignored: when targeting a market do your calculations about how that market will look like after you play in it; and how many will resist such changes.

d-, All measures from the strategies have started from a narrow view of the future – or, rather, they approached the world through the terms of the present without envisioning the stakes of future economy.

Small example: facilities granted for the IT industry (which are really visible) ignore that only a quarter of the products of this industry from Romania are created under own intellectual property – which means that we provided “toll manufacturing for high-tech” work the same as we were working in the 90s under toll manufacturing contracts for the Italian “jackets” and the underwear and shirts of the European brands. Namely, without encouraging creativity and research in these areas, we provide facilities to other economies

Another example on the same note: half of the VAT cut had effect on the real price and translated to expatriate profit of large retailers.

*

The above being said, let us make two more remarks, as prerequisites of a realistic and, above all, simple government program:

1-, Romania is not in the fortunate position of being forced to create sophisticated strategies. Things that it misses are so basic that a complex strategy would be like a pearl on a bald head.

2-, Romania is in the war – the component of internal economic balance takes place – and is more devastating – than the damage that the bullet or the bomb can make: the increasing severe divergence between Romania from this side and beyond Carpathians Romania.

Based on these two prerequisites, a realistic governance plan would involve seven directions of the measures planned and implemented simultaneously, as budgeted and effectively implemented actions – beyond economic philosophies to which – let’s be honest – we should not have time now to look:

7 effective and urgent governing directions to preserve Romania on the European map

Because in this context – of December 2016 – that is all we talk about, ultimately.

1-, not breaking through Carpathians on at least three routes, in terms of infrastructure, put the historical difference between regions back on the table, today, A.D. 2016.

The Romanian state should put the infrastructure problem on the CSAT’s agenda (like the fight against corruption and the deforestation): this proposal of ours launched one year ago was laughed at, but now, seeing the map of the region with Russia present everywhere should freeze laughter on everyone’s lips.

The only deal that Ceausescu kept without hesitation in relation to the USSR was about the absence of highways to cross the Carpathians: he also feared both the West and Hungary.

Two measures at this point: building with money from the public budget of 50-70 km highway breakthroughs on at least one route to Moldova and 2 routes to Wallachia -Oltenia. After that, each of them should be “fed” with EU funds, at the ends built by the state.

Without this measure, Transylvania will be isolated, not so much in terms of the “assiduousness” of its people (these differences are nonsense – a simple calculation shows that the benefits of its connection with the West are much more than the economic results), but in the access to investments. Recent years’ figures related to the internal divergence show the trend: the differences do not decrease but increase from year to year.

Turkey has built in three years a top super bridge over the Bosphorus, as the country knew its economic interest: Why could not Romania be able to break through Carpathians in three years, though having much more at stake than Turkey?

All eyes should turn towards the Carpathians, three works considered strategic, three connections created with the European investments and economies, considered all together as a matter of national security.

That is not the time to go again into details – but Vasile Iuga – one of the experts in the development of Eastern Europe, presented in a conference organized by cursdeguvernare.ro two maps to the audience: one showing that all routes in the region bypass us both via north and south (from road to energy infrastructure) and one showing that Trajan first built in Dacia 4,200 km of roads in the 10 years after the conquest (breaking through Carpathians in 4 places) as he knew 2000 years ago that you cannot control a territory if you cannot get where you want, when you want, in how much time you want. We have built in the last 25 years 10 times less than Romans did in just 10 years by using their muscles.

Romania’s infrastructure does not only have an economic component, but also one of national security. And even the economic component has now a national security meaning: three road sections of 50-70 km each in 3 years, built with money from the budget are essential!

Otherwise, I for one would finance Hungary, if I were evil and bellicose and imperialistic and aggressive as Putin, for land acquisition and business in Transylvania: after all, it is not new theory that civilized Europe ends at the Carpathians

2-, When your workforce flees abroad and leaves the economy without employees – from house painter to doctor, from bricklayer to PhD holder (“real” PhD holder- not Ponta and Negoita – as they are not leaving anywhere) that is a problem of national security.

a- create an algorithm for dual vocational education – following Germany’s example – operational (carefully!) in all the counties from the country. A concept to be disseminated to the basis of young people’s society who see their escape in fleeing the country to work here and there as non-qualified workers.

Some companies have managed – somehow against the Romanian logic – to create such a system for their own benefit: creating a system – based on an existing algorithm – that encourage companies to train their own workforce.

From this point of view, we are a polarised country: any semi-literate secondary school student would like to go to university, any young man from the countryside or small towns drops out.

I wonder how many politicians showing off every evening on TV are aware of this part of the Romanian “youth” and the profound contempt they have towards the specific professions: to become a tradesman is for many of them synonymous to failure …

Within a week, in the presence of this project’s beneficiaries, an optimised program for any town having workforce related problems could be structured – a program costing about as much as the amount stolen in education during a month.

b-, we will never equal the allocations for research granted in the Western countries: a distinguished diplomat was telling me a year ago how Romania, Slovakia and Bulgaria obtained in 2013 – following tenacious diplomatic efforts – an additional amount (for 3 countries!) to their European funds, from cutting a few percent of the research funds allocated to the Netherlands…

Including an amount on the list of priorities – and controlling its spending! – allocated to the “strategic” research areas and levels is the only guarantee that we get the chance for increased added value in the next 5 years.

c-, order in universities! And when we say “control of money spending” allocated for research, we do not simply refer to the research projects and their applicability:

We also talk about taking the universities out of the clans that have taken them in tenancy and lavish projects, but also funds, university degrees and sinecures of teaching hours.

A general observation – related to the latest strategy on workforce that I read: not one mention indicating the possibility that working Romania of the years 2017-2018 might look different than 2016’s Romania- although only in 2015 Germany granted 215,000 work permits to Romanians!

And we are making plans and strategies as if in 2-3-5 years we can count on the same workforce!

3-, I would not include that to agriculture, but strategic investments: what the hell could it cost to start building the irrigation channel that will cross the Baragan plane? How much would it cost in terms of investments, to be ready in 3-4 years? Without strategies, no philosophies, no country projects: simply dug for the water from the Danube and Siret.

4-, The biggest handicap of the Romanian economy is not the mismatch to the European market – that is already a light part.

  • The Romanian economy has two major problems – incredibly simple and basic that consist of the answers to two questions:

First – related to the salary theme: Is it not clear to every economist that any salary increase in Romania – even the smallest one – unbalances the macroeconomic indicators for any leu remained in the economy goes to imports?

Second – Is it not clear to every economist that Romania is a country moving in consumption waves – because it does not have enough own production at least for the domestic market?

A government program should make a list of 100 products that are imported although they could be manufactured in Romania: If you had 10,000 (ten thousand) CAEN codes, could you not choose 100 of them (one hundred) to manufacture goods that can be made here and grant facilities for them? That means facilities for production, not consumption.

Costs: might these facilities be more expensive than the problems caused by the balance of payments + lack of jobs + productivity and added value provided by…manufacturing?

Private money could be found: EUR 4.8 billion stuck in “savings”: do you, party, state or government have any proposals to move this money from banks to the economy? Based on the 100 CAEN codes by which to stimulate them?

Yet aside from the light they can bring not only for rural Romania (that is lost) but even for urban Romania – a country very different from the capital cities and in any case, much larger: under 15,000 inhabitants little town Romania that has, just like Bucharest and Cluj – asphalt, electricity, gas, running water, telephone and internet – all the best things God could give in a civilized country.

b-There are too many disadvantages that domestic capital complains about because of the positive discrimination of the foreign capital.

3 steps at this point:

* – You, the state, cannot create a disparity between domestic and foreign capital – that would be perverse and against European directives: but you can apply the laws of fairness:

– Have you ever checked how much clear air the gas distributor has in the cubic meter delivered throughout the country? Get checked, and may have surprises

– Have you ever checked – as did the Czech Republic and Slovakia – the quality of products in supermarkets, with the consumer protection authority?

– Have you ever checked how multinationals compile the transfer pricing files?

Top priority measure: Do you party, state, government, have any answer to the question: why is not the domestic capital eligible for state aid – 90 of 100 beneficiaries that access these schemes have foreign capital?

5-, Agriculture. The big problem of the Romanian agriculture is not the production (there is long way till there…):

The big problem is producers’ inability to associate and access the market with domestic products – by guaranteeing a quantity that matches a retailer’s plans.

a-, Do you, party, state, government, have any plan that can be implemented in January 2017 – with the deadline for total implementation in January 2019 – which would help micro-farms know to associate in groups of 20, to deliver the processed milk with which they now feed the pigs?

Those who argue that the state has no business interfering in these mechanisms, given that “capitalism grows like the grass through asphalt”, should think again: we have passed that stage of capitalism, Europe is already full of “nationalist” support measures for domestic production – and in any case, we do not have time anymore to let “capitalism” work to its rhythm of centuries of mentality…

b-, Do you, party, state, government have any plan to fight the smuggling of agricultural products – but without privileged networks and companies controlled by intangible fellows / institutions?

5- Administration:

Until further philosophies and the big reforms in public administration – two specific measures to be taken no later than 6 months:

a-, interconnect the databases of ALL state institutions. cursdeguvernare.ro asked the opinion of the digital market analysts – it is not the end of the world, since SRI has obtained for tens of millions of euro the capacity to put together and process these data – cannot you, the state, which have the data, money and interest, do the same?

b-, the unitary pay and – attention! – the status of the Romanian state employee: from the hospital’s doorman to university professor; from the doctor to the cleaning woman in the ministry; from the clerk at the communal counter to the ANAF inspector; from the driver at the Parliament to the elementary school teacher. From the prefect to the Post Office cashier.

Let us to do all these in six months and then get down to the philosophy of administration.

6, Romanians began to live longer (life expectancy increases), but worse (healthy life expectancy decreases). Two measures at this point:

a-, we can see when the price of a kilo of apples increases from 3 to 5 lei – but it is impossible to realize when the procurement price of an encephalograph doubles.

One thing is certain: Romania is the country in Europe where the purchases of materials are the most expensive in the total healthcare budget. How? We saw after Collective – when the millions of euros spent on equipment were not operational at the time of the disaster, although they had been officially launched twice…

DIIOCT, police forces, blue helmets, prosecutors and handcuffs on the healthcare system – with a national strategic plan to recover the money that is being stolen there, away from the eyes of the uninitiated. Take the services out of the procurements for equipment and other accessories.

And: laws to facilitate funding of the local healthcare system from local resources – a municipality cannot keep now doctors by increasing their salaries – although it can decide to excessively finance even the hospital guard’s cabin!

b-, policies for keeping doctors in the country. List of locations that doctors avoid, incentive plans for establishing in these locations, bonuses for those who give up the advantages of large cities for commuting or establishing in the avoided areas and free hand given to local administration for granting them facilities by itself.

c-, the database of specific conditions, disadvantaged areas and occupations: WHO data indicate large gaps in Romania’s reporting. Not even the expensive program of medical tests started under the Minister Eugen Nicolaescu brought us any advantage: the hundreds of millions spent then have not resulted in a picture of Romania’s Health – which should have been born a vision to cover vulnerabilities

7-, It is already complicated:

  • How did the world look like two years ago when Putin invaded Ukraine and annexed half of Crimea?
  • How did the world look like two years ago when the US was tapping us on the shoulder, every 2 days, and swearing that they would jump into the fire for us?
  • How did the world look like two years ago when Europe itself was suggesting us a solution to the laziness and theft from the absorption of the European funds with that n + 2?
  • How did the world look like when Mr Ponta and Mr Dragnea were behind the eight ball without that being reflected in the euro / leu exchange rate?

And today,

  • when the two distinct Romania’s – Transylvania and the “Kingdom” – are surrounded by pro-Russians
  • when Donald Trump announces that he wants a deal with Putin
  • when Germany, France, the Netherlands (and maybe Italy – if Renzi’s referendum fails) are preparing for elections in countries with citizens tired of “so much Europe”
  • when Brexit strategically unbalances Europe
  • when Hungary is teeming with Jobick, moving free and with the state support, like the Brown Shirts of the late 20s in Germany
  • when the Black Sea ( “the soft belly of Europe” – as Mussolini called it) became de facto a Russian lake:

in just two and a half years, Europe shifted from the “more Europe” euphoria to “let’s recover as much as we can of what we have not lost yet”.

who are the allies we can count on in November 2017? Count on: not only formally, based on treaties that can be activated either one month earlier or later – one month that can make the difference between the economic, institutional and military resilience and “surrendering” to a locked Romania in a periphery which we have not managed to get out in 25 years.

This is the context in which we, those who make desperate efforts for lucidity, commitment and speed of reaction, are forced to read the government programs of the complicated 2016:

PSD – with tax cuttings to zero. Ha ha: How many of Romania’s lucid people have any idea at this moment that Romania’s taxation level in December 2016 will be the lowest that the country ever had?

And PNL – that proposes salary increases of 40-60% in the coming years. Ha ha: How many Romanians have the lucidity to realize that these salaries will remain the same from December 2016 at least till the next elections – as Romania must find solutions in the next two years to pay them? Or that, yes – they will increase by 40-60%, but only if the euro will reach 5.5-6 lei –where to find another source when overall productivity fell by 1.7% in 2016

Is there any party in this election campaign’s Romania to have made a simple calculation about how much the effective and simple steps from above cost? and start in its “strategy” from this amount and the priorities that they can cover with this money?

More about the two parties’ programs for government – in two future materials …

***

Cristian Grosu is the editor-in-chief of cursdeguvernare.ro

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