>X-Originating-IP: [205.252.164.216] >From: "Chris Doss" <[EMAIL PROTECTED]> >Reply-To: [EMAIL PROTECTED] >Status: >> >>Summary >> >>Propelled by a banking scandal, the Romanian government may be on >>its way out of power. The current administration, which has led the >>country in its bid for membership in both NATO and the European >>Union, suffered unprecedented losses at municipal elections May 4 - >>partly as a result of the scandal. After four years of pro-Western >>rule in Romania, the country seems prepared to consider a return to >>leaders who are leftovers of the communist era. >> >>Analysis >> >>A banking scandal threw Romanian investors into panic last week, >>resulting in the collapse of a national investment fund. An >>anonymous source leaked information to the public that led to a run >>on the bank. The information leak - apparently politically >>motivated - was the first in what will likely be a string of events >>aimed at weakening the current government. >> >>The banking scandal - combined with success at the polls in recent >>elections - will strengthen the hand of the Social Democrats, >>composed of former communist-era officials, led by former president >>Ion Iliescu. Supporters of the ruling Christian Democratic Party >>largely boycotted local elections on May 4 and, along with low >>voter turnout, helped throw the elections to the Social Democrats. >>In November, the country will hold parliamentary and presidential >>elections. >> >>By themselves the local elections cannot indicate who will win in >>the fall. But the public's awareness of the corruption surrounding >>the banking sector, however, does suggest an imminent collapse of >>the Romanian administration. If the Social Democrats can continue >>to expose government corruption, while influencing voters at the >>municipal level, they may be able to manipulate mass sentiment >>enough to position themselves for a win in November. >>________________________________________________________________ >>Would you like to see full text? >>http://www.stratfor.com/SERVICES/giu2000/060600.ASP >>___________________________________________________________________ >> >>In mid-May several anonymous phone calls to investors in the >>Romanian Commercial Bank (BCR) began a run on the bank that led to >>the collapse of its partner, the state-run National Investment Fund >>(FNI), according to Bucharest press reports. A total of 10,000 >>small investors - out of 300,000 with investments with the fund - >>reportedly attempted to withdraw their cash from the BCR. With only >>4 percent of its $164 million worth of assets liquid, the fund >>collapsed. >> >>Romania's ruling Christian Democrats say the crisis was an attempt >>by the political opposition to sway the elections. They are >>probably right, in that the crisis would not have happened without >>the anonymous phone calls. >> >>A problem had already been brewing; but it was sparked into a >>crisis by a timely leak of information to the public. Initially >>Stefan Boboc, president of the National Securities Commission >>(CNVM) denied any knowledge of FNI's precarious and illegal >>financial position. Two days later he was charged with directly >>managing the fund's questionable operations, reported the Romanian >>daily Economy Today. >> >>_______________________________________________________________ >>For more on Romania, see: >>http://www.stratfor.com/cis/countries/Romania/default.htm >>__________________________________________________________________ >> >>Boboc, arrested on June 2, is charged with abuse of power for >>allowing FNI to submit false accounting statements to hide its >>dangerous financial status. In addition to holding only 4 percent >>liquid assets, instead of the required 30 percent, FNI also failed >>to report approximately 86 percent of its shares. By law, only 10 >>percent can be unaccounted for. Romanian authorities want four >>other FNI officials for their involvement in the scandal. One of >>them, the fund's chief administrator, fled the country. >> >>The banking scandal cost the state an estimated $49 million, and >>possibly November's elections. Timed for just a few days before >>local elections, the banking crisis left the Christian Democrats >>looking corrupt and untrustworthy - with a potent real life >>reminder to voters with empty bank accounts. While voters abandoned >>the Christian Democrats, the Social Democrats gained control of >>Romania's local governments, including the mayorship of Bucharest. >> >>In addition to being the second most popular party in the country, >>the former communists now have the ability to install local >>officials, who can affect the ability of the ruling party to >>campaign. With six months before both parliamentary and >>presidential elections, the successor to the Romanian Communist >>Party may have just enough time to convince voters on a local level >>to vote for them nationally while restricting ruling party access >>to the political apparatus at the municipal level. >> >>The pro-Western ruling party is decidedly vulnerable. The Christian >>Democrats are members of the majority coalition in parliament, with >>30 percent of the seats, but the Social Democrats are not far >>behind, with 23 percent. And, in the 1996 presidential election, >>Iliescu came in a close second to current President Emil >>Constantinescu. Economic scandal and political infighting will >>likely surge as Romania edges closer to its elections. >> >>The next four years - coincidentally the term length of the next >>president - will be telling in Romania's bid for membership in NATO >>and the EU. Western leaders, although diplomatically friendly, do >>not smile on former communist leaders such as Iliescu, who led the >>country from 1989 until 1996. >> >>Iliescu says that he supports Romania's accession to the EU, but >>has so far been so demanding that his participation - not to >>mention his leadership - threatens to stall the process. For >>instance, he asserts that EU expansion is for the good of the EU, >>not Romania, and therefore Romania should be treated the same as >>all full-fledged member states. But, Romania is geographically >>pivotal to the expansion of NATO and the EU. Already, despite the >>country's economic and defense deficiencies, the Western alliances >>are eyeing Romania. >> >>By winning in November's elections, Romania's Social Democrats >>could stall NATO and EU plans for expansion. >> >> >> >>(c) 2000 WNI, Inc. >>_______________________________________________ >>SUBSCRIBE to the free, daily Global Intelligence Update. 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