The explosion at Crevedia - the corruption from the depths bursts

The explosion at an illegally operating LPG station in Crevedia, a disaster that has so far resulted in four deaths and 54 injuries, revealed last month the corruption within the Romanian state and the inefficiency of the work of some public institutions that must to deal with the control and supervision of companies operating in certain economic sectors.

We can also talk about the inefficiency of the civil servants' activity in the case of the cancellation of the procurement procedure for the four marine corvettes that were intended for the Romanian Naval Forces. The announcement regarding the cancellation of the procedure due to the non-conclusion of the contract by the association designated as the winner was made by the officials of the Ministry of National Defense on August 7, a week before the day of the Romanian Navy.

The employees of the Constanţa County Police Inspectorate proved to be just as inefficient in their work, who allowed this summer in certain seaside resorts that some people who were intoxicated or under the influence of psychotropic substances to drive their cars, in fact which resulted in the tragedy in the town of 2 Mai, where a drugged young man drove his car into a group of eight people on the side of the road, killing two and injuring the other six.

In August, the publication of the budget execution for the first seven months of 2023 showed us that we are facing a budget deficit of 2.43% of GDP, which puts us off track to reach, at the end of the year, the deficit target of 4 .4% of GDP previously agreed with the European Commission. In order not to endanger the European funds allocated to our country, the members of the Government thought of a set of fiscal measures and a reform of the public system, which they discussed at the end of last month in Brussels with European Commission officials, following in September to move on to the implementation of these measures.

The draft emergency ordinance on the reform of the public system caused controversy, and ANAF employees and local public administration officials protested in front of the Government headquarters, requesting that the situation be analyzed in each authority and each public institution before the cancellation of some vacancies and merger of some institutions.

Also last month, we recorded the official visit of Ukrainian Prime Minister Dennis Smyhal, who agreed with Prime Minister Marcel Ciolacu to double the amount of Ukrainian grain that is transited through our country, from 24 million tons to 48 million tons.

• Crevedia - the shadow of the tragedy at Colectiv

The event that marked the month of August is the Crevedia tragedy. On Saturday, August 26, there was an explosion at an LPG station that had been operating illegally since 2020 in that locality. The explosion occurred while two employees were transferring gas from one tank to another. It was followed by two other strong deflagrations, which initially led to the destruction of 10 nearby houses, the death of two people (husband and wife) and 58 injuries, 12 of which were very serious, some of them being transferred to hospitals in Belgium, Germany, Norway, Austria and Italy. Later, two more seriously injured people were added to the list of deaths, who were intubated in the intensive care units of Bucharest hospitals. Of the total number of injured people, 43 are employees of the Ministry of Internal Affairs - 39 firefighters, two policemen and two gendarmes.

After the Crevedia tragedy, Prime Minister Marcel Ciolacu ordered the verification of all LPG stations in the country by mixed teams made up of employees of the IGSU, ITM, Police, ISCIR, ANAF and other authorities with control powers.

Following the checks carried out, more than 2,000 deficiencies were discovered and fines of more than 1.3 million euros were applied, in total.

"Total deficiencies found - 2,150. Total measures ordered - 1,519, of which withdrawal of authorization or approvals at 11, suspension of activity at 60 and closure of activity at 12. Total contraventional sanctions - 1,797, in the amount of 6,545,307 lei", State Secretary Raed Arafat said recently , the coordinator of the Department for Emergency Situations, following the checks carried out.

Following the above situation combined with the Crevedia tragedy, Prime Minister Marcel Ciolacu requested the amendment of the legislation, so that those who do not have an authorization or operating permit are also liable criminally. Currently, in such situations the company only pays fines.

The tragic event at Crevedia was possible because, from the year 2020 when ISU canceled the authorization for the LPG station and until the explosion, no authority with control powers sent its employees to check whether or not the original activity was still being carried out in that space. Even if the company from Caracal, the owner of the work point at Crevedia, deleted this work point from the Trade Registry, everyone in the commune, including the mayor of Crevedia, knew that gas transfers between tanks take place in that area. This was complained on several occasions by some of the victims, but neither the National Police, nor the Local Police, nor the mayor of Crevedia took any action against the respective company, led by the son of the social-democratic mayor of Caracal, Ion Doldurea.

Basically, the Crevedia case revealed the existing corruption in the system and the inertia of civil servants in some state institutions. The tragedy also revealed the fact that eight years after the drama in the Colectiv club, in Bucharest there are very few beds for burns and almost no ward or hospital dedicated to the major burns, despite the promises made in 2015 and 2016 by the political class after the event in the Capital which resulted in 63 deaths and which led to the fall of the Ponta government.

• Constanţa County Police Inspectorate, decapitated by the Minister of the Interior

The tragedy in Crevedia was preceded, by a week, by the drama in the town of 2 Mai in Constanta, where, at dawn on August 19, a young man driving under the influence of drugs and alcohol drove his car into a group of eight people , who were traveling on the side of the DN 39 road, two of them dying on the spot as a result of the impact, and three being injured.

Before the accident, which took place around 5:00 a.m. on August 19, on the night of August 18 to 19, the respective young man was stopped in traffic twice by the employees of the Traffic Police, who, although they ascertained the condition in which he was, they did not withhold his license and let him continue to travel with the vehicle provided.

Following the tragedy, the Minister of the Interior Cătălin Predoiu sent the Control Corps to the headquarters of the Constanţa County Police Inspectorate to check carefully whether its employees fulfilled their duties, according to the procedure in force, on the night of August 18 to 19, 2023.

As it emerged from the checks carried out that the work procedures and duties in this case were not respected, the Minister of the Interior ordered the dismissal of the deputy head of IPJ Constanţa, Chief Commissioner Marin Dincă, the head of the Constanţa Traffic Police Service, Chief Commissioner Stoian Constantin, the head of the Mangalia Police, Chief Commissioner Dragoş Cristea and the head of the Vama Veche Police, Chief Commissioner Radu Vachente.

Before their dismissal, the head of IPJ Constanta, Adrian Constantin Glugă, resigned from his position.

The only good news in this case is that it happened after the so-called Anastasia law came into force, which provides for a prison sentence for those who, while driving under the influence of alcohol or drugs, commit accidents resulting in the death or injury of others people. In addition, Prime Minister Marcel Ciolacu requested the amendment of the Penal Code in order to increase the prison sentence for such cases.

• 2.43% - budget deficit at seven months

The budget execution for the first semester published by the Ministry of Finance on August 29 shows that the budget deficit reached 2.34% of GDP in the first half, i.e. 37.21 billion lei, compared to 1.67% of GDP in the first part of last year (23 .51 billion lei). The first semester deficit clearly shows that the deficit target of 4.4% of GDP set with the European Commission for the end of this year will be exceeded. And this is confirmed by the fact that the deficit reached 2.43% after seven months, in the conditions that the Government did not make any payments for the national investment programs through which it financially supports the companies in our country, and in the conditions that the first payments for the increased teachers' salaries were only made after August 1, although the increase entered into force on July 1, 2023.

According to the execution of the general consolidated budget for the first six months, total revenues amounted to 242.74 billion lei, while expenses totaled 279.96 billion lei, 16.5% more compared to the semester of 2022.

Of the total expenses, those for personnel amounted to 63.08 billion lei, up 8.1% compared to the first six months of 2022, expenses for goods and services were 36.09 billion lei, up 12.8% , and social assistance expenses were 97.77 billion lei, an increase of 11.3% compared to the same period of the previous year.

For subsidies, the Government paid 8.95 billion lei, especially for subsidies for transport, energy and for supporting agricultural producers.

Spend investment funds, which include capital expenditures, as well as those related to development programs financed from internal and external sources, were worth 32.8 billion lei, up 56.1% compared to the first semester of 2022, and the expenditures with interests were 15.95 billion lei, higher by 2.83 billion lei compared to the same period last year.

The above financial situation led to the postponement of the first budget rectification that should have taken place, according to customs, during August, because the Ciolacu government first wants to reform the public system, which would bring a substantial reduction in budget expenses, and take some fiscal measures, which bring more income to the state budget, to reduce the deficit.

The respective measures were discussed with European officials, in Brussels, at the end of last month by the Minister of Labour, the Minister of Finance and the Minister of Investments and European Projects, but also by Prime Minister Marcel Ciolacu, on the first day of September.

Among these measures, according to information published by media sources, would be the cancellation of vacant positions in the public administration and in public institutions, the increase of VAT to 19% with the exception of food and medicine, progressive taxation, the increase of income tax to 20%, a new threshold for taxation of micro-enterprises and the partial cancellation of some tax facilities granted to companies and employees in IT, construction and agriculture.

According to Prime Minister Marcel Ciolacu, these measures will be taken by assuming the responsibility of the Government in Parliament, after which the first budgetary rectification will take place, and the second rectification will be carried out towards the end of November.

• BNR increases the inflation forecast

Also in financial terms, if at the beginning of the month, on August 7, we recorded the decision of the BNR Board of Directors regarding the maintenance of the monetary policy interest rate at the level of 7%, after a few days we noted that the central bank revised its inflation forecast for the end of 2023, estimating that it will be 7.5% compared to 7.1% as estimated at the beginning of the current year.

Regarding the monetary policy rate, in the meeting of August 7, the NBR also decided to maintain the interest rate for the lending facility (Lombard) at 8%, but also to maintain the interest rate related to the deposit facility at 6% per year.

In justifying their decision, the members of the Board of Administration showed that the implementation of the package of fiscal-budgetary measures under discussion, but not adopted for the time being, would be likely to accentuate the correction of the current account deficit, together with the reduction of the budgetary one, with favorable repercussions including on the costs of financing the economy and the behavior of the exchange rate of the leu, the members of the Council argued on several occasions. At the same time, the fiscal adjustment program would facilitate a somewhat earlier return of the annual inflation rate within the target range, by weakening and more quickly exhausting the inflationary pressures of the fundamental factors, thus contributing to ensuring the stability of the economy.

However, the members of the Council emphasized once again the importance of attracting and efficient use of European funds, especially those related to the Next Generation EU program, which are essential for achieving the necessary structural reforms and the energy transition, as well as for increasing growth potential and strengthening the resilience of the Romanian economy.

Regarding the increase in the forecast to 7.5% regarding the inflation rate at the end of this year and to 4.4% for the last quarter of next year, from the 4.1% originally forecast, the governor of the BNR, Mugur Isărescu stated that the scenario of basis on the trajectory of inflation was built on the basis of the legislation in force at the time of the projection without including the impact of the fiscal consolidation measures recently discussed by the authorities. The governor of the central bank also stated that, in the coming period, it is possible that the higher inflation in our country will be determined, at least partially, by the service sector due to the increase in the prices of these services through the perspective of the increase in employees' salaries.

• The Navy is running out of corvettes

The Ministry of National Defense gave a poisoned gift to the Romanian Naval Forces eight days before August 15, Romanian Navy Day. Thus, on August 7, MApN officials decided to cancel the procurement procedure started in 2018 for four corvettes intended for the Naval Forces. The cancellation of the procedure occurred four years and one month after the respective contract was awarded to the Franco-Romanian association Naval Group-Şantierul Naval Constanţa, a competitor that had made an offer of 1.2 billion euros, 50 million euros lower than the one submitted by the Damen company . During the four years and one month, the contract was not signed by the Franco-Romanian association because that was not satisfied with certain contractual terms and would have wanted, in particular, the increase in the offered price, in view of the increase in the prices of raw materials, materials and equipment following the overlapping crises of the last three years.

After the cancellation of that purchase, the Ministry of National Defense did not offer any solution for the continuation of the navy endowment program. Even on the occasion of the Romanian Navy Day, on August 15, no solution was presented, in the official speeches given, neither by President Klaus Iohannis, nor by Prime Minister Marcel Ciolacu, nor by Angel Tîlvăr, the Minister of National Defense.

If President Iohannis did not refer at all to the endowment of the Naval Forces and Prime Minister Ciolacu conveyed that the Government will continue to deal with the necessary equipment for the Romanian Army, Minister Angel Tîlvăr said that he regretted "the fact that the multirole corvette endowment program could not be completed however, this project will certainly not be abandoned and will find a form of materialization in the future", after which he reviewed the other endowment programs intended for the Romanian Naval Forces: systems of mobile installations for launching anti-ship missiles, submarines Scorpenes, missile carrier upgrades, H215M helicopters and mine hunters.

The latter become necessary, in the current context of the war in Ukraine, taking into account that Ukrainian mines arrived near the Romanian coast due to storms in the Black Sea, one of them exploding last month when it came into contact with a pier near the beach in the Costinesti resort.

• Galati, Brăila and Constanţa ports - available for Ukrainian grains

Our country will double the storage, transit and export capacity of Ukrainian grains, according to the political statement signed on August 18, in Bucharest, by Prime Minister Marcel Ciolacu and his Ukrainian counterpart Denys Shmyhin.

"Romania will continue to be involved in facilitating Ukrainian grain exports to international markets. We hope that more than 60% of the total volume of grain exports from Ukraine will transit through Romania. We set an ambitious target together: doubling the volume of Ukrainian grain transit, from 2 million tons per month, to 4 million tons per month. In this sense, we will develop the existing transport and transit capacities, in this case the Sulina canal and the Port of Constanţa. We signed a political declaration on strengthening bilateral cooperation and ensuring a viable transit, as well as on the continuation of the projects we have in the works to increase rail, road, river and sea traffic. (...) The results of the efforts to improve this infrastructure can already be seen: we have increases of 200% at some of the main transit points, respectively 500% in the South Constanţa Port", declared Prime Minister Marcel Ciolacu.

Regarding the transit of Ukrainian grain through our country, the head of the government in Kyiv, Denys Shmyhal, stated, after signing the political statement, that the border infrastructure, the transport infrastructure destroyed by the Russian Federation on August 16 in the Rhine ports and will be rehabilitated Ismail and that the border crossing points between Romania and Ukraine will be expanded to facilitate the transit of grain from the neighboring country.

We remind you that, this spring, Romanian farmers complained of losses of at least 50 million euros due to the price losses they faced because last year and at the beginning of this year part of the Ukrainian grain that was supposed to be transited were actually imported by some producers in the agro-food industry in our country, due to the low price, which did not contain any customs duty. The European Commission offered support of 10 million euros, later supplemented with another 10 million euros, and, following the scandal caused by Poland, Slovakia, Romania, Bulgaria and Hungary, it suspended duty-free imports twice, until September 15, 2023 customs of Ukrainian grain in the European Union. At the moment, at the level of the EU Council, the European Commissioner for Agriculture intends to propose a new suspension of these imports until the end of the current year, a measure requested by Poland, Slovakia, Bulgaria, Hungary and Romania.