IV. POLITICAL ENVIRONMENT Nature of Bilateral Relationship with the United States U.S.-Romanian bilateral relations began to improve following the overthrow of the communist Ceausescu dictatorship in December, 1989. However, the U.S. was dissatisfied with the imperfect March, 1990, national elections and the lack of movement toward substantial economic reform. The U.S. also took a dim view of the June, 1990, coal miners' actions against anti-government demonstrators in Bucharest, and their intervention of September, 1991, which brought down the government of then Prime Minister Petre Roman. Following these events, however, the government of Prime Minister Teodor Stolojan began to address more effectively Western concerns regarding democratic pluralism and a market economy. Foreign observers considered the local elections of February, 1992, and the national elections of September, 1992, to be free and fair. The private sector has grown to account for about 30 percent of the GDP. Both the current government of Prime Minister Nicolae Vacaroiu and the opposition parties advocate a foreign policy based on Romania's integration into the West, and Romania was the first country in the region to sign NATO's Partnership for Peace. Despite the considerable costs resulting for Romania's economy, the Romanian Government has diligently enforced the UN sanctions against Serbia- Montenegro. As Romania's policies have evolved, the U.S. has also moved to improve and strengthen bilateral relations. The U.S. established an AID mission and provides assistance, including a growing Peace Corps contingent, to help Romania build democracy and restructure its economy. A Military-to- Military program has enhanced defense cooperation, and Congressional restoration of Romania's MFN status in October, 1993, has given impetus to trade and commercial relations. Major Political Issues Affecting Business Climate In the past and, to a considerably lesser extent, at present, the business climate has been affected by the perception of Romania as a country where former communists are to be found at various levels of political and economic decision-making bodies; several extremist parties are represented in parliament, where they have an influence disproportionate to their size; human rights are not yet fully observed; and the intelligence services have not been subject to adequate parliamentary control. However, as the State Department's 1993 Human Rights Report for Romania pointed out, Romania has made and is continuing to make significant progress toward the consolidation of a democratic political system and the establishment of a market economy. In the fall 1992 parliamentary elections, the opposition won 47 percent of the seats in parliament, with national minorities well represented. Observance of human rights has improved significantly. Although further progress still needs to be made, particularly in ensuring respect for the rights of the Roma (gypsy) minority, the Government of Romania (GOR) established a Consultative Council for National Minorities in April 1993. In June, 1993, a parliamentary joint committee was set up to oversee the activities of the domestic Romanian Intelligence Service, whose Director is subject to parliamentary approval. Although the transition to a market economy has been slow, the GOR's program for economic and social reform, passed by parliament in March, 1993, indicates its determination to restructure and modernize the economy, encourage privatization, and create a better and more inviting environment for foreign investors. The U.S. Congress recognized Romania's efforts by restoring MFN in October, 1993, and the IMF approved a major stand-by assistance program for Romania in April, 1994. Brief Synopsis of Political System, Schedule for Elections, and Orientation of Major Political Parties Political System: Romania is a constitutional republic with a multiparty parliamentary system. Parliament is bi-cameral; the lower house is the Chamber of Deputies and the upper house if the Senate. The President, elected by universal suffrage, serves for a four-year term. The Presidency is non-partisan under the terms of the Constitution. The head of the government is the Prime Minister. The President designates a candidate for the office of Prime Minister following consultation with the political parties represented in parliament. The candidate Prime Minister and his Cabinet must be approved by parliament in a vote of confidence before they can assume office. In September, 1992 presidential and parliamentary elections were held. Ion Iliescu was elected President with 61 percent of the popular vote. In November, 1992, President Iliescu's designee for Prime Minister, economist Nicolae Vacaroiu, won a vote of confidence from parliament for a Cabinet composed of technocrats and members of the Party of Social Democracy of Romania, which won a plurality in the parliamentary elections. Schedule for Elections: Romania's next scheduled elections will take place in the fall of 1996. However, parliamentary elections could occur earlier in the event that the current government loses a vote of confidence in parliament and no new government can win a confidence vote within 60 days. Orientation of Major Political Parties A) Parties which support the current Government: Party of Social Democracy of Romania (PDSR) won a plurality in the 1992 elections taking 28.2 percent of the votes for the Senate and 27.7 percent of the votes for the House, and is currently the governing party. During the campaign, the PDSR advocated continued economic reform, but at a relatively slow pace, and called for social protection measures to ease the transition to the market economy. It considers itself to be social democratic in orientation. Party of Romania National Unity (PUNR) won 8.1 percent of the vote for the Senate and 7.7 percent of the vote for the House. The PUNR was formed in response to the establishment of the Magyar Democratic Union of Romania, is nationalist in orientation and opposes any concessions to Romania's ethnic Hungarian minority. It has supported the current government in votes of confidence. Romania Mare Party (PRM) won 3.85 percent of the vote for the Senate and 3.9 percent of the vote for the House. It holds highly nationalistic, xenophobic, and chauvinistic views. The PRM has supported the current government in votes of confidence. The Socialist Workers Party (PSM) won 3.19 of the vote for the Senate and 3.04 percent of the vote for the House. It calls for a mixed economy and is on the extreme left of the Romanian political spectrum. The PSM has supported the current government in votes of confidence. Democratic Agrarian Party (PDAR) is represented only in the Senate, for which it won 3.31 percent of the votes. It focuses on agricultural issues, and advocates the devotion of more resources to that sector, as well as the formation of agricultural associations. It supported the current government in votes of confidence in the past, but is currently showing signs of disaffection. B) Parties which oppose the current Government: The Democratic Convention (CDR) parties: The CDR was established as an electoral coalition of opposition parties prior to the local elections of February, 1992. In the fall, 1992, national elections, it won 20.16 percent of the vote for the Senate and 20.01 percent of the vote for the House. Its main constituent parties -- the National Peasant Party- Christian and Democratic, the Liberal Party, the Civil Alliance Party, the Social Democratic Party, and the Ecological Party -- hold different views on some issues, but are united in advocating more rapid and thorough going political and economic reform. Magyar Democratic Union of Romania (UDMR): The UDMR, which is a part of the CDR, but ran separate slates in 1992, won 7.58 percent of the vote for the Senate and 7.45 percent of the vote for the House. The UDMR was formed to promote the interests of Romania's ethnic Hungarian minority, focuses on issues of concern to that ethnic group, and advocates collective minority rights. Democratic Party (PD-NSF): The PD-NSF won 10.39 percent of the vote for the Senate and 10.19 percent of the vote for the House. It has a social-democratic orientation but, like the CDR parties with which it cooperates on most issues, advocates more rapid reform.