The case of Roşia Montană: Why did we win when it was assumed that we should have lost?

The international arbitration court regarding foreign investments decided on Friday to give the Romanian state a win in the case filed by the Canadian company Gabriel Resources regarding the stoppage by the Bucharest authorities of the investment in the Roşia Montană quarry. The decision of the arbitral tribunal is a surprising one, given that since the end of January the representatives of the Ciolacu government and some political leaders have repeatedly stated that the sentence will be unfavorable to us and that we will have to pay compensation ranging from 2.5 billion dollars and $6.7 billion.

For the time being, according to the procedure of the arbitral court, we are widowed by the publication of the reasons for the decision, for 20 days, reasons that could be partially published after this period, only if both parties in the process agree.

What is certain is the fact that Romania will not pay even a cent to those from Gabriel Resources, moreover the Canadians will have to pay 1.4 million dollars as court costs.

However, why did we win a trial that the authorities in Bucharest considered lost according to the statement of February 1, 2024 by Prime Minister Marcel Ciolacu, a statement later repeated by the head of the Government, but also by the Minister of Finance, Marcel Boloş, as well as by some political leaders?

The above question is legitimate, because only in the courts of our country have we seen so far, decisions that are totally opposite to the expectations of the parties, sentences that seem without a logic, without having solid reasons behind them. ICSID may have a strong rationale for the decision, but for now it is inaccessible to the public and it is not known whether it will be fully accessible. In the temporary absence of this motivation, taking into account what is happening in the judicial system in our country, we could speculate about the favorable result announced with trumpets and trumpets two days ago by the authorities in Bucharest.

According to the darkest scenario fanned out ten days before the decision by representatives of the Ministry of Public Finance, our country was to be sentenced by ICSID to pay 6.7 billion dollars to those from Gabriel Resources. Taking into account that the estimated Gross Domestic Product for the year 2024 amounts to approximately 350 billion euros, i.e. 383 billion dollars, the compensation that was to be paid to Gabriel Resources would have amounted to almost 2% of the GDP, which would have represented a millstone for the Ciolacu government, taking into account the excessive budget deficit procedure we are in at the European level. Basically, the government would have had to borrow from the market to pay that amount, and this would have led to the deepening of the budget deficit by 2% and the Ciolacu government exceeding the 5% budget deficit target assumed for the end of 2024 with the Commission European and included in the state budget law approved by the Parliament in December 2023.

Such an unfavorable sentence led to the darkest financial scenario for the Ciolacu Cabinet in the current election year, because it would have jeopardized all the agreements agreed by our country at the European level from a budgetary point of view, but it would also have had a negative impact on to other open procedures, including Romania's accession to the OECD, an accession process that is ongoing with the support of the World Bank, an international banking institution alongside which ICSID operates..., i.e. exactly the international arbitration court that won of our country after a process that lasted almost 9 years.

Under these conditions, it is possible that an important word was given by that particular institution, which is periodically financed from the Romanian state budget for the consultancy provided in the OECD accession process and which cannot afford to see its plans turned upside down of an unfortunate event as it was initially announced to be in the case of the ICSID judgment regarding the Roşia Montană file. The OECD accession process of our country could not be interrupted or suspended due to a budgetary incident of 2% of GDP, especially since it is in a fairly advanced phase after in December 2022 Prime Minister Nicolae Ciucă submitted to the headquarters of in Paris of the organization the document of more than 800 pages which marked the beginning of the road to accession.

The working hypothesis above can be real, as long as we don't have the reasons behind the unexpected decision from Bucharest, our politicians being in the last months of total pessimism regarding the Roşia Montană file, as demonstrated by the search for the culprits requested on February 1 by Prime Minister Marcel Ciolacu, by the announcement regarding the holding of a referendum in case of an unfavorable decision, but also by the search by the Minister of Finance, Marcel Boloş, for solutions regarding the reopening of the mining sector from Roşia Montană.

However, we cannot rule out that the members of the arbitral tribunal had solid evidence on file regarding the innocence of the Romanian state regarding the mining project initially desired by Roşia Montană Gold Corporation and Gabriel Resources, or the fact that the Romanian state had a team of exceptional lawyers who they managed to convince ICSID that the wound is in the court of foreign investors and not at Victoria Palace.

Under these conditions, we are waiting for the Bucharest authorities to tell us why we won the Roşia Montană case, given that they were singing the burial praises of the state budget.