Romania lies on the Black Sea coast, with the Danube as its southern border. The Carpathian Mountains form an arc across the country, curving around the upland basin of Transylvania. Long dominated by the Ottomans, Romanovs, and Habsburgs, Romania became an independent monarchy in 1878. After World War II, this was supplanted by a communist People's Republic, headed from 1965 by Nicolae Ceausescu. A coup in 1989 resulted in his execution and a limited democracy under Ion Iliescu. Defeated in elections in 1996, Iliescu was returned to office in 2000.

Since 1989, Romanian nationalism has increased, aggravated by economic austerity measures. The incidence of ethnic violence has also risen, toward Roma and Hungarians in particular. Ethnic Hungarians, who form the largest minority group, are partly protected by the influence of the Hungarian state, whereas the Roma do not have any similar support and tend to suffer greater discrimination.

The population is currently decreasing, due to rising emigration since 1989, mainly for economic reasons, and to a falling birthrate since the early 1990s. The latter trend is in sharp contrast to the 1980s, when the Ceausescu regime enforced a "pronatalist" policy, banning abortion and contraception; the birthrate rose, but the population as a whole did not grow significantly due to an increase in the mortality rate. Abortion was legalized in 1989; maternal death rates have recently declined. Adoptions by foreigners, spurred partly by shocking conditions in orphanages, were banned for a year in mid-2001, amid concerns about a "trade in children." Romania, the last country in Europe to lift its ban on homosexuality, did so in 1996, although public acts by homosexuals still receive harsher sentences.

Strengths

Many foreign joint ventures. Oil reserves. Tourism potential. Fall in inflation.

Weaknesses

Slow transition from centrally planned to market economy. Delays in economic reform. Low foreign investment levels. Large bureaucracy.

Profile

Romania was relatively slow to launch economic reforms, and suffered severe recession for most of the 1990s. The chemical, petrochemical, metal, transportation, and food industries are the priority areas for liberalization and structural overhaul. The reform-oriented government elected in 1996 took tough measures to curb inflation and the budget deficit. Output fell sharply, worsened by disruption to trade during the 1999 Kosovo conflict, and not until 2000 did an export-led recovery appear likely.

In the last decade, most farmland was restored to private hands, and a program was launched in mid-2000 to sell-off the remaining state farms, scheduled to be completed by the end of 2002. Agriculture, severely undermechanized, still employs over 35% of the workforce.

Romania was the first east European country to open its economy to foreign investment, allowing 100% foreign ownership from 1990. Joint ventures, while now numerous, are small in scale; larger investors are put off by bureaucracy and doubts about stability. The privatization of state-owned enterprises, a priority for the center-right government elected in 1996, was delayed by problems in the sale of larger companies, but by 2000 the private sector accounted for over 60% of GDP.

Romania is a multiparty democracy led by a directly elected president.

Profile

The 1989 "revolution" left an old communist elite in power, with no group ready to introduce reform. Only the victory of the center-right in 1996 brought more far-reaching change.

Many of the state assets privatized under the first regime of Ion Iliescu remained closely linked to the ruling clique. Now a declared social democrat, Iliescu retains the support of such conservative groups as miners and rural workers. The coalition parties in power after 1996 came a poor third in the 2000 elections behind Iliescu's PDSR and the extreme nationalist PRM; Iliescu won the presidential vote. In mid-2001 a merger of the PDSR and the Social Democracy Party of Romania (PSDR) created a new ruling Social Democrat Party (PSD).

Main Political Issues

Economic performance

Romanians have endured growing poverty, while the half-hearted attempts at economic reform failed to achieve structural change. Strikes are frequent and protests by miners have been especially forceful, notably against the center-right coalition in power in 1996–2000.

Ethnic tensions

Economic difficulties have led to increased ethnic tensions. The far right has made political gains and nationalism is increasingly accepted. Roma have been victims of violent, racially motivated attacks. Benefits given to ethnic Hungarians by the Hungarian government have provoked an outcry from the Romanian authorities and ordinary Romanians in mixed communities.

Romania's priority is building closer links with western Europe. In 1993, it signed an association agreement with the EU, and in 1995 formally applied for membership. Although not one of the front-runners with which the EU opened negotiations in 1998, it was among six "second wave" candidates which began membership negotiations in 2000.

In 1996 Romania signed a treaty of reconciliation and friendship with Hungary, although relations remain tense as Romania has resisted the demands of the Hungarian minority in Transylvania for greater autonomy. In 1997 Romania also signed a treaty with Ukraine recognizing the latter's sovereignty over parts of Bessarabia and Northern Bukovina.

The military received limited funding under the Ceausescu regime, and troops were routinely deployed as cheap labor. Romania was the first country to join NATO's Partnerships for Peace program in 1994. Since 1996 the government has actively sought membership of NATO itself. Romanian soldiers were deployed in the US-led "war on terrorism" in Afghanistan from 2002.

Romania has large reserves of oil, but there is little left of proven gas reserves. Oil and gas production from onshore fields has fallen for 25 years and meets barely 40% of domestic demand. Since the mid-1990s efforts have been concentrated on developing offshore reserves in the Black Sea, opening up exploration and processing to foreign investors. Deposits of other minerals are small and contribute little to export earnings. Many coal mines have been shut down.

The electricity industry is outdated but does produce a surplus for export. An agreement in 2000 connected the national grid with that of Bulgaria. The removal of price ceilings since 1997, with a consequent doubling of prices, provides strong incentives to users to improve poor efficiency.

Saddled with the disastrous legacy of its communist-era industry, Romania needs help with a major cleanup. Air pollution, mainly from cement plant and power-station emissions but also from exhaust fumes and low-quality coal, is most serious in the south. Cyanide and heavy metal leaked from a gold mine in Baia Mare in 2000 created a transboundary pollution catastrophe in the Tisza river in Hungary. The Danube delta, despite serious pollution, is identified as a potential biosphere reserve.

The road network is inadequate, and traffic levels are rising. EBRD, EU, World Bank, and Japanese funding has focused on the expressway from Bucharest to Hungary, and on improving major roads. Modernization of the port of Constanta to include a container port and new grain silo is also under way.

Average life expectancy is among the lowest in Europe; in the worst polluted parts of Transylvania it is as low as 61 years. The incidence of tuberculosis is the highest in Europe. After years of chronic state underfunding, there was a shift in 1999–2001 toward an insurance-based system.

Attendance at primary and secondary schools is far below the European average. As university enrollment is no longer restricted, the number of tertiary students has risen rapidly. The government pledged in early 2000 to devote at least 4% of GDP to education, going some way to meet criticisms over the chronic underfunding of the school system.

The black economy is the primary source of income for a third of the population. Levels of tax evasion are extremely high. Romania is a source and transit country for human-trafficking.

Real incomes have been hit hard by a decade of economic decline; 40% live below the national poverty line. Most families own their own homes (often overcrowded) and many have small plots of land. Few rural homes have running water or sewerage.

The Black Sea, Danube delta, and Carpathian Mountains are the primary natural attractions, while Transylvania has a rich historical heritage. A theme park has been proposed which will exploit the Dracula legend. However, tourist facilities are generally poor. Under Ceausescu, the need for foreign currency meant that tourist facilities came before Romanians' own housing needs. Today, privatization of property and an acute housing shortage have reduced the accommodation available to visitors.

Many foreign policy tensions stem from Romania's continually redrawn borders. It retains a Hungarian minority in Transylvania. Post-Soviet Moldova opted not to rejoin Romania.

• 1859 Unification of Moldavia and Wallachia forms basis of future Romania.
• 1878 Independence, but at cost of losing Bessarabia to Russia.
• 1916–1918 Enters World War I on Allied side. At end of war, gains substantial territory, including Transylvania from Hungary.
• 1924 Communists banned in unstable political arena. Rise of fascist "Iron Guard."
• 1938 King Carol establishes royal autocracy.
• 1940 Territory forcibly ceded to Soviet Union, Bulgaria, and Hungary. Coup by Iron Guard. King Carol abdicates in favor of son, Michael. Tripartite Pact with Germany.
• 1941 Enters war on Axis side, hoping to recover Bessarabia.
• 1944 Romania switches sides as Soviet troops reach border.
• 1945 Soviet-backed regime installed. Romanian Communist Party plays an increasing role.
• 1946 Romania regains Transylvania. Bessarabia goes to Soviet Union, which also demands huge reparations. Communist-led National Democratic Front wins majority in disputed elections.
• 1947 Michael forced to abdicate.
• 1948–1953 Centrally planned economy put in place.
• 1953 Leaders of Jewish community prosecuted for Zionism.
• 1958 Soviet troops withdraw.
• 1964 Prime Minister Gheorghiu-Dej declares national sovereignty. Proposes joint planning by all communist countries to lessen Soviet economic control.
• 1965 Ceausescu party secretary after death of Gheorghiu-Dej.
• 1968–1980 Condemns Soviet invasion of Czechoslovakia; courts USA and European Communities.
• 1982 Ceausescu vows to pay off foreign debt.
• 1989 Demonstrations; many killed by military. Armed forces join with opposition in National Salvation Front (NSF) to form government. Ion Iliescu declared president. Ceausescu summarily tried and shot.
• 1990 NSF election victory. Political prisoners freed.
• 1991 New constitution, providing for market reform, approved.
• 1992 Second free elections. NSF splits into factions. Nicolae Vacaroiu forms minority government.
• 1994 General strike demands faster economic reform.
• 1996 Reconciliation treaty with Hungary. Center right wins elections, breaking with communist past; Emil Constantinescu president.
• 1997 Treaty recognizes Ukraine's sovereignty over territory ruled by Romania in 1919–1940.
• 1998 Coalition differences, prime minister Victor Ciorbea resigns.
• 2000 December, Ion Iliescu and PDSR win elections.