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A republic on the Balkan Peninsula in southeastern Europe, Romania has a coastline on the Black Sea. Area: 237,500 sq km (91,699 sq mi). Pop. (1995 est.): 22,693,000. Cap.: Bucharest. Monetary unit: leu, with (Oct. 6, 1995) a free rate of 2,192 lei to U.S. $1 (3,466 lei = £1 sterling). President in 1995, Ion Iliescu; prime minister, Nicolae Vacaroiu.

Romania's domestic and foreign policy in 1995 was marked by its efforts to meet the conditions for greater convergence with the structures of the European Union (EU) and of NATO. Military units from nine countries, including Romania, took part in the first-ever NATO exercise in Romania between September 11 and 14 under the Partnership for Peace program. On June 22 Romania applied for full membership in the EU, which it hoped to achieve by about the year 2000. EU norms were the starting point for much of the new legislation introduced into the Romanian parliament, and in March special "European Union" departments were set up in each ministry to ensure that existing laws met EU practice. In June a parliamentary committee for European integration was set up.

Western governments, however, continued to be concerned that the government of Nicolae Vacaroiu, a coalition of the left that also included some ultranationalists, was encouraging unrealistic expectations in the population and that while proclaiming support for European integration, it was dragging its feet over reform. Romania was behind other countries in the region in complying with some of the conditions of the association agreement signed with the EU on Feb. 1, 1993. No antimonopoly laws had been introduced, for example, and laws identifying and authorizing state subsidies had yet to be framed. A competition law, drafted in 1993, had been blocked in the parliament since December 1994. A bankruptcy law apparently was passed by the parliament and promulgated by the president, but no details of it were immediately made public.

The most graphic sign of this legislative lethargy was the belated passage of the law on the privatization of commercial enterprises, which came into force on June 19 after two years in gestation. Privatization coupons were distributed to all persons over the age of 18. Under the scheme, Romanians could swap the coupons and previously distributed preshare vouchers for up to 60% of some 2,500 enterprises. The remainder would then be sold for cash to Romanian or foreign investors. The value of the coupon was set in June at 875,000 lei.

Despite the slow pace of reform, a major part of the basic legislation necessary for a market economy was in place and prompted the appearance of a dynamic private sector. The government continued to achieve notable success in reducing inflation, bringing it down from 62% in 1994 to a year-on-year average in April of 34%. Total industrial output in the first five months of the year showed a 10% increase over the same period in 1994, although much of this remained in factory warehouses. State-sector wages were increased in spring by 8%, but unemployment continued to rise at a rate of 11%.

An Amnesty International report in May accused Romania of failing to uphold its international human rights obligations, particularly in respect to the Roma (Gypsy) minority. The status of the Hungarian minority in Transylvania remained the major obstacle in concluding a Romanian-Hungarian treaty. Pres. Ion Iliescu attempted to dispel suspicions that Romania was the reluctant party by calling for a "historic reconciliation" between Hungary and Romania in a speech delivered in Vienna on August 30. He appealed to the Hungarian government to sign a document based on reciprocal support for each country's efforts to join the EU and NATO and for relations to be based on principles set out in the UN Charter and in the Organization for Security and Cooperation in Europe documents. The Hungarian prime minister gave a cautious welcome to Iliescu's proposals. Doubts about Iliescu's ability to deliver reconciliation were fueled, however, by a statement of Gheorghe Funar, leader of the ultranationalist Romanian National Unity Party (PUNR), a government coalition partner. In a speech in late June, Funar sought to exploit nationalist sensibilities among the mixed population in the Transylvanian capital of Cluj by calling for the removal from the city of a statue to a Hungarian king. (DENNIS J. DELETANT)

This article updates the Macropædia article BALKAN STATES: Romania.

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