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Power Struggles and Progress in Romania

September 19, 2012

The good news is that Romania has been moving toward positive change and reform for some time, and going forward I think the long-term outlook for the economy is good.
-Mark Mobius, executive chairman, Franklin Templeton


Bordering the Black Sea in Southeastern Europe, Romania offers visitors a variety of beautiful and dramatic landscapes concentrated in a relatively small land area, including modern cities and medieval villages, sweeping mountain vistas, broad plains and sandy beaches. Romania may also be one of the more attractive investment destinations in emerging Europe today, but its political environment has been characterized by some power struggles as dramatic as its scenic views. The most recent political turbulence in Romania provides an example of how politics and power struggles can thwart economic progress, but now that some of the political uncertainty has been removed, I believe Romania should be able to move forward in a productive way.

This summer, Prime Minister Victor Ponta and President Traian Basescu were locked in a battle for authority which caused Romania's currency (the Leu) to fall to a record low against the Euro. This impeded the country's efforts to sell debt, and undermined investor confidence. In July, the Parliament, led by Ponta's coalition, the Social Liberal Union (USL), suspended Basescu from office and sought impeachment based on accusations of unconstitutional behavior.

 

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