ELECTORAL CAMPAIGN "The austerity program proposed by Băsescu-Boc and the IMF agreement of 2009 - acts to undermine the Romanian economy"

Reporter: Do you think that in 2009, we actually needed the loan that Romania took out from the international lenders? Why did we get to the point of having to call upon the international financial institutions, when the government had previously raised wages?

Mircea Coşea: From my point of view, the 2009 agreement raises major questions. I don't think that the answer to those will come from a potential political probe of the National Anti-Corruption Department. The answer must be awaited following a deep analysis of Romania's situation at the time, based on statistical studies as well as the political constraints that existed at the time. Such an analysis has not been done and I have no information that there were plans to start it by a specially created Parliamentary Commission. Perhaps the future parliament will do that, but it is not likely because that would entail adopting a cross-party and international vision. In my opinion the austerity program passed by the Băsescu-Boc government and the 2009 foreign loan agreement represent acts of undermining the Romanian economy with long term destructive effects.

Here a few of my arguments:

1.The decision was eminently political (see Băsescu in that regard) without impact assessments and public consultation;

2.Romania could have supplemented the collected funds by eliminating the discriminatory protection that the ANAF grants to the political cronies and to the foreign capital;

3.There is an inadequate spending of the budget funds through cronyism and corruption (see the way the funds were used by minister Elena Udrea), as well as the use of the funds for the restitution of properties for the political clientele;

4.The loan was predominantly intended to support foreign capital banks, perhaps in exchange for the promise of the creditors' Troika to provide foreign political support to Băsescu and Boc.

It is imperatively necessary to review the position of the National Bank of Romania on the loan agreement of 2009 and the austerity program, as there is information that the NBR had a crucial influence on the decisions that were made.

Reporter: Is there a possibility that Romania will resort to new loans from the international financial institutions next year?

Mircea Coşea: There is that possibility and there will probably be interest from the lender Troika for that to happen, in order to impose a tighter control on the budget policy, as long as it is not common at the EU level, and the Fiscal Governance Treaty (2012) is not working as expected, especially after Brexit, and possibly after the Italian referendum and the new difficult situation of Greek finances. If the Cioloş government remains in place after the elections, the likelihood of a new loan becomes even greater.

Reporter: Romanian businesspeople claim that the current government places them at a disadvantage over foreign firms. Moreover, current German finance minister Wolfgang Schäuble recently said that the discussion about the conflict between the domestic and foreign companies needs to be avoided. What is your comment on the attitude of the Cioloş government concerning domestic businesses?

Mircea Coşea: It is obvious that the position of the technocratic government is not supportive of domestic capital. On a declarative level, they are in favor of Romanian companies, but in practice it hasn't turned into anything concrete. It is hard to expect from this government a policy supporting Romanian companies as long as deputy prime-minister Borc is the direct representative of foreign capital, and finance minister Anca Paliu Dragu has been incapable of removing from her statements and stance as a minister the influence of the IMF/EU management concept, doing everything she could to freeze the wage hikes in order to provide foreign capital with an edge through the low cost of labor. One example is precisely the fact that the technocratic government has granted state aids to companies that are predominantly owned by foreign shareholders and has disregarded the Romanian ones, according to the Professional Association of Domestic Investors in Romania. Another example is OMV Petrom, which it is said to be investigated by the DIICOT on charges of tax evasion of approximately 250 million Euros, and yet it gets paid a state aid of approximately 90 million Euros. In my opinion, the technocratic government will be perceived by history as a tool used by foreign capital to destroy the competition that Romanian companies could have represented, by continuing the process of keeping Romania into a state of neocolonialist dependency on the "hard core" of the EU. I cannot say whether this policy against domestic capital is the result of an ideology passed by a government heavily influenced by the institutions in Brussels and by the principles of NGOs financed from abroad, or if there actually were direct financial payouts made to some of the ministers of the Cioloş cabinet to get them to promote such anti-national policies.

Reporter: There are voices that claim that this year, tax receipts saw a significant decrease, not so much because of the VAT cut, but predominantly because of the low degree of tax collection. Morever, Ionuţ Dumitru, the president of the Fiscal Council, recently said that Romania will have the lowest tax receipts in history due to the tax cuts. On the other hand, ANAF officials claim that multinationals should pay their taxes in the countries where they make their profits, as they currently prefer to export their profits, including through transfer pricing method. How can the tax collection rate be improved?

Mircea Coşea: 2017 will be a difficult year in terms of tax receipts as well. The cut of the VAT and other "electoral presents" will put pressure on the budget. One of the reasons for that, which I want to emphasize is the direct result of the policy of the ANAF of the last few years when, in order to miraculously increase the collection rate, it has destroyed about 200,000 companies by freezing their accounts and pushing them into bankruptcy. This diminished the tax base. Taxing multinationals is more easily said than done. The proposals by "Moscovici" (EU commissioner) to tax output (meant to eliminate tax havens) are not yet operational, and Romania will not be able to do that in the absence of a European directive voted in Strasbourg.

Reporter: How would you describe the attitude of banks that prefer to lend to the state, rather than financing companies?

Mircea Coşea: As long as the state is a constant, important and fair customer when it comes to repaying loans, banks won't have any interest in financing the real economy. The competition on the banking market between the state and the real economy is to the detriment of the latter. A better structured budget policy would reduce the state's need to borrow, which would cause banks to focus on lending to companies. We also need to emphasize the fact that the lack of predictability of the Romanian economic policy is also causing a reduction in the banks' interest in lending to companies, due to the inability to correctly assess risk, and an increase in the price of lending to counter the risk caused by unpredictability could not be borne by companies.

Reporter: Can the "First Home" government program lead to a new bubble of non-performing loans?

Mircea Coşea: On principle, any program similar to "First Home" can generate a speculative bubble, especially in a time where the system for the financing of the real estate market is unpredictable as a result of the indirect negative effect which the introduction of arbitrary measures like the two "Piperea-Zamfir" laws can bring about.

Reporter: What is your opinion on the recent laws pertaining to the banking sector - the law of giving in payment and the conversion of CHF-denominated loans?

Mircea Coşea: As I have repeatedly stated, these laws introduce arbitrariness and discrimination on the real estate market, which makes me have my reservations where they are concerned, even though I support the need to help a category of borrowers that has been truly and directly disadvantaged through flawed lending practices. I am convinced that we don't yet know and we cannot assess all the perverse effects that they could have in time, but they will definitely occur.

Reporter: What is your opinion on the monetary policy led by the NBR in the 26 years after the Revolution?

Mircea Coşea: I am against putting the NBR on a pedestal of genius and heroism for its fight for macrostabilization. The NBR obviously had and has the talent of promoting itself as such, but that image hides huge failures in meeting the monetary policy objectives it has set for itself over the last 26 years. What should also be discussed is the way it has carried out the role in managing the banking sector, about the part it played in the disappearance of the Romanian banking capital and about its rigidity when it comes to practicing monetarism in the influence it had on some important governmental decisions.

Reporter: According to a study recently coordinated by Daniel Dăianu, the major development gap between Romania and the Eurozone is the essential obstacle in switching to the Euro. Is Romania ready to join the Eurozone?

Mircea Coşea: Romania will have to join the Euro if it still wants to be a member of the EU, but it shouldn't turn that into a country project, like some analysts are saying. In my opinion, we now need to reassess the schedule for the joining of the EU. We do not yet know the evolution of the system after the deep (serious) changes in structure and direction of the EU, we don't know how the EURUSD exchange rate will evolve after the US elections, nor do we know the evolution of the price of the major commodities in the context of the major decisions made by producer organizations (oil, gas, copper, coffee). I am also adding the fact that in the conditions of the upward trend of Romanian foreign trade focusing outside the EU area, preserving the national currency could be a benefit.

Reporter: Right now there are two currents in Europe. On one hand, the European institutions want a deeper integration, on the other hand there is an increasing number of voices that say that the breakup of the European Union could happen (Brexit, the rise in the polls of far right parties, disagreements over immigrants). What is your opinion concerning the future of the European Union?

Mircea Coşea: I think that there are two elements that influence the current situation of the EU: the Brexit and the blocking of the free trade agreement with the US. the immediate consequence is the strengthening of the leadership role of the Germany-France pair, with an emphasis on Germany. At the moment, I do not think that the team in question has any interest in reducing the extent of the integration by creating a "hard core" (Germany, France, Italy, Holland), which the other member countries would gravitate around. The most important problem to the new leadership is finding a stable, long-term form of "cooperation" with Russia - the sole and essential source of energy and the biggest market for capital investments. The intra-EU volume of investments will probably decrease as will that of European grants. In both cases, Romania will be negatively impacted. I think it is a crucial time for Romania to go from a passive to an active policy within the EU, by promoting policies or points of view that directly favor it.

Reporter: What do you think will be the effects that Donald Trump's election will have on Romania?

Mircea Coşea: In the very short term, I see no immediate effects.

Reporter: What is your opinion concerning the citizens' preference for Brexit, and for Donald Trump respectively? How would you describe the distance is increasingly being talked about between the elites and the common people?

Mircea Coşea: The distance between the elites and foreign institutions, on one hand, and citizens, on the other, is the expression of a global phenomenon that is increasingly obvious: the rise in inequality. For now these inequalities (proven by famous works: Piketty, Stiglitz, Genereux, and others) are not being tackled in any way , as the "elites" think that they can just "polish" reality and postpone some radical measures. As a result, the reaction towards a change of the geopolitical and economic system has begun "from the bottom up", through turning towards new types of leaders and through the brutal rejection of globalization through nationalism. The moment is dangerous and could possibly escalate towards social destabilization and even war if the "elites" don't start a process of reducing the gaps both nationally and internationally. Brexit and Donald Trump, perhaps other leaders of France and Germany can be elements of change but they can also be threats.

Reporter: You said a few years ago, that Romania is a state captured by a groups of interests and criminal factions. The recent fevered activity of the DNA and DIICOT has shown citizens that Romania is gripped by corruption. What chance do we have to clean up this system? What do you think the country will look like after this campaign?

Mircea Coşea: I praise the activity of the DNA and DIICOT, but with reservations. I praise it because it is necessary and it brings hope. I have reservations because I notice that it has been reduced to showing off people placed in handcuffs, but without the recouping of the damages. On the other hand, I also have reservations because the DNA or the DIICOT do not have the support of the institutions of the state. Their activity should have been carried together with significant changes in legislation and with new, more transparent and simpler policies in using the state's funds.

Reporter: Is Romania's national identity in danger, considering that the Romanian authorities prefer the deep integration with the structures of the European Union?

Mircea Coşea: Yes, I feel that Romania's national identity is in danger but not because there is any actual desire for deeper integration in the structure of the EU. It is in danger because of the behavior of every one of us as Romanians, as people who have no confidence in the country's ability to provide a better future for them nor in their own strength, as a result of domestic and foreign campaigns of systematic denigration of Romania and Romanians. Add to that the politicians' servility to foreigners, their inability to demonstrate their national dignity when promised "protection" by an ambassador or clerk in Brussels. If the national identity is in danger it is our fault, not that of the EU.

Reporter: What is your opinion on the crisis of finance-driven capitalism? Do you think that this system has reached its limits?

Mircea Coşea: I am not a supporter of the notion of finance-driven capitalism. There can be no capitalism without finance, and the development of finance is the most typical element of a market based on supply and demand. Because of that I cannot speak about its limitations. I can, however say that the current type of development of finance is debatable in the current context of the evolution of the neoliberal development model. The crisis for that type of development began some time ago (after the so-called Trente glorieuses period, 1946-1976), but it has expanded after 2007, and it is still going on to this day. The subprime crisis was its climax. Solutions haven't been found yet nor does it seem like they will be found it anytime soon. Sure there are many ideas being discussed, from the social economy model to that of the circular economy, but they are still just ideas.

Reporter: Thank you!