TheMarketForIdeas

Romania has to comply quite quickly with the documents produced and published by the European Commission with regard to the future of the European Union. As authors, we are advancing some proposals according to which Romanian policymakers should see the reformation of the EU as a good opportunity to match the country’s future with the EU’s destiny. We are advocating for immediate steps to be taken if Romania will effectively contribute to a more united Union with Romania in it. All European partners should consider seriously the principles of solidarity and cohesion and sharing responsibilities for a stronger Europe. The disrespect these stakeholders felt during the last crisis was echoing in the lack of political discipline in many economic and social engagements regarding the EU as a whole and every member state individually. Romania has to take the opportunity to be closer to the decision-making process within the EU, thinking seriously about becoming a member of the Eurozone by joining the Banking Union and adopting the euro. 

Supporting policymakers 

In 2017, the Institute for World Economy has celebrated 50 years of hard research work, out of which more than 40 years in studying the incipient forms of today’s EU, the European Economic Community (EEC).

Our studies had a lot of impact and influence on enabling Romanian elites to acknowledge the necessity of recognizing the EEC as a distinctive European entity, of concluding technical commercial agreements, of enjoying the advantages of the preferential access to the market of the developed countries (1973-1985) and, later, of concluding the Association Agreement of Romania to the EU (1993).

After 1990, our research team was on the chess table with everything related to the developments within the EU – free trade area, enlargement, deepening, single market, the four liberties, creating the euro, the Maastricht Criteria, the Stability and Growth Pact, the Banking Union – delivering hundreds of recommendations on how Romania should act as a full-fledged member state of the EU.

Ten years after joining the EU (2007-2017), we have done some assessments beyond what should be seen behind a lot of good things achieved with our partners. There is still a lot to be done not only with the rest of our European partners but also with the EU’s strategic partners, such as China and the US.

The present question we have to answer is whether reforming the EU, after the lingering harsh effects of the latest crisis, is an opportunity for Romania to continue a progressive integration, to come closer to the inner decision-making process of the Union, to enjoy all of the instruments developed by the EU to strengthen internal cooperation (to be included in Schengen Area, to adopt single currency), in order for convergence to take place, touching ultimately on the living standards.

We started to study and comment on them as a “multisided offer” to the politicians, to choose among different scenarios within which Romania can match in the best way its fate with the European destiny, for a more united, powerful and democratic Europe.

Starting with the year 2015, a lot of important documents have been produced by the European Commission, mainly the Report of the Five Presidents, Reflection documents on different areas of common interests (defense, EMU, finance globalization and social standards), The Future of Europe and the State of the Union. All have the meaning to enhance the institutions and improve the functioning of the policies and mechanism of the EU in the face of many internal and external threats to accommodate to changes in the paradigms we were accustomed to working with.

As researchers, we started to study and comment on them as a “multisided offer” to the politicians, to choose among different scenarios within which Romania can match in the best way its fate with the European destiny, e.g., for a more united, powerful and democratic Europe (see Jean-Claude Juncker’s speech, State of Union, 2017).

Romania has the right and the obligation to position itself relative to the aforementioned documents in a way that produces useful and consistent national policy, in terms Alan Bennett (a British dramatist and screenwriter) dared to remind to all of his fans: “Sometimes there is no next time, no time-outs, no second chances. Sometimes it’s now or never”.

When we ask why we should not miss the sound of the EU’s silver bell, we are referring to the opportunity Romania can enjoy with our partners, for the community of states to continue realizing the project goal of the European integration process, a Political Union. 

The best time is now 

It does not matter when the Political Union will be achieved, but just to keep the compass towards that goal remains a very important issue. At present, on the eve of December 2017, we should expect that wise political decisions will be taken with Romania’s contribution in the European Council. The project of European integration is to be enhanced with what Romania thinks to be the most appropriate both for it and the Union.

While the danger of both Euroscepticism and the illiberal political movements has been presently averted by a series of election results in some important EU member states – such as the Netherlands, France, Germany –, we think that Romania has to consider political decisions built on the latest proposals made by Jean-Claude Juncker. The possible scenario 6 can provide incentives regarding how the EU member states should cooperate together, with what intensity and what support European Commission can deliver.

Romania has the right and the obligation to position itself relative to the aforementioned documents in a way that produces useful and consistent national policy, in terms Alan Bennett dared to remind to all of his fans: “Sometimes there is no next time, no time-outs, no second chances. Sometimes it’s now or never”.

In our opinion, the best political message is to support a more united Europe, Romania working together with all the member states. Such an opinion is based on sound considerations: Romania has to assume a new proactive attitude to reach the decision table of the EU and to be involved directly in the decision-making process of the Commission with relevance to its own interests.

It means that, in light of Brexit, the Eurozone will enjoy more attention from now on as the core of the EU and Romania has to seriously consider becoming a member state of the Eurozone. To start that process is what we see as an essential move for its stability and predictability for our partners.

It should be remembered that the fate of the euro, during the critical times of the financial crisis, was linked with the fate of the EU. All the measures put into practice immediately (high liquidity disbursed by ECB) were serving the salvation of the common currency. We are quite united in our opinion regarding the choice to be made by Romania, because reforming the EU has to be considered as a “new deal” with a so-called multispeed EU (it has been always such) and the opportunity is working in favour of Romania but in the limited span of time we have at our disposal.

We are expressing a real concern about different speculative subjects developed by media, emphasizing more our national helplessness with regard to different issues related to the preparedness of the country to face the challenges of the Eurozone and euro adoption. But, in our opinion, a lot of those speculative topics discussed every day can reach a resolution only by serious debates exactly on the future involvement of Romania with the EU. Romania should leave its peripheral place for a core one within the Union and to act more proactively in the concert of the EU’s decision-making process.

The opportunity window is narrow enough to lose it and a constructive and positive approach, more in an academic style and rightly courageous in political arguments, is required to focus less on the complexity, difficulties, risks, unpreparedness etc. and more on improving our proximity to the EU. All fears can be assuaged and challenges prevented or overcame if Romania can get out from under the shadow of indecisiveness and political indolence. Fighting alone with the coming threats, as if it were outside the EU, is not a solution for its future. 

Avoiding hesitation 

We think that the experience of those more than ten years of full EU membership of Romania are providing to any good negotiator a lot of arguments for promoting both Romanian and EU interests on a more reciprocal basis and responsibility in implementing the common mechanisms for a profound cooperation.

We have to leave aside not only too many doubts or fears but even some theoretical economic theses. In globalization we cannot evoke endless cascades of theoretical approaches when the world is moving on political reasons. It is not the task of the academic researcher in trying to discourage any positive attempt for more action needed both at home and abroad. A better institutional capacity and capability to tackle with the issues of a genuine political project needs a good political backing.

The opportunity window is narrow enough to lose it and a constructive and positive approach, more in an academic style and rightly courageous in political arguments, is required to focus less on the complexity, difficulties, risks, unpreparedness etc., and more on improving our proximity to the EU. All fears can be assuaged and challenges prevented or overcame if Romania can get out from under the shadow of indecisiveness and political indolence. Fighting alone with the coming threats, as if it were outside the EU, is not a solution for its future.

All criteria and technologies to be implemented to be closer with the EU’s inner circle need a political decision first just to create the institutional responsibility of making them work. The time is ripe since the debates for more or less Europe are in full swing. We dare to call the opportunity opened and Romania has to recognize for itself the necessity of a “European Momentum”. It is the only way to pave the way towards a better future in modernizing the country, in increasing its economic potential with all the implied long-term benefits.

Responding to the goals of reforming the Union is crucial also for the continent and global stability. Securing the peace is an absolute priority in our time. That is why Romania has to take into account and corroborate all the potential anchors strengthening its bonds to the EU and NATO.

The sources of distress the EU is confronted with, such as illiberalism, migration or terrorism, are of high interest to the European leaders and the only way to cope with them is deepening the mutual cooperation. The debated issues on different basic unions (banking, fiscal, energy, defense, political) needed for the security or better functioning of the single market and the euro have to reach their implementation step by step. That implementation needs, in turn, more energetic actors. We consider that Romania has to join them, through trans-party political decision and trans-electoral cycle action, to participate in the project of a union which helps to accomplish the others.

We list some political reasons why Romania, as a member state of EU, can be an actor contributing to the enlargement of needed unions by making the right choices.

1. As the future of Romania cannot be separated from the political European project, its active participation defined in terms of deeper cooperation is paramount also to the European security or global stability. By joining NATO (2014) and the EU (2017), Romania is associated with the grandeur of the European political project insuring economic progress and common security. Romania’s task is to be able to “deliver” more through its direct involvement in deciding the future fate of the EU, engaging from inside the club in the reformation of the EU with a loud and credible voice.
2. Romania is in great need to continue its modernization in many areas of common interest for it and the Union and to be able to raise structural funds. For Romania, enjoying common policies in different areas of solidarity remains important in overcoming its own disparities.
3. Brexit, irrespective of the diplomatic words used for describing the constructive and friendly atmosphere of the evolving negotiations, has to end with solving some issues, the difficult one being the bill of the divorce. This will affect the economically weaker members of the EU.
4. Romania has to show that it can sustain its macroeconomic stability fulfilling the Maastricht criteria and almost all economic indicators included in the European Semester assessment. Promoting it for a deeper integration, the good results can be consolidated in terms of a greater stability. Romania is prepared technically to join the Schengen Area and it is complying with the rule of law requirements. Romania can do its part to address global risks as a strong member of EU.
5. Romania is encouraged by Mr. Juncker’s “scenario six”, where he says that his vision is rooted in decades of first-hand professional experience working for the European project. Maybe his proposals are too ambitious for Angela Merkel who is ready to amend more promising ideas desired by him and French President Emmanuel Macron. But Juncker’s speech deserves our attention in many respects. Juncker, from the high tribune of the European Parliament, rejected a multispeed Europe in favour of uniform steps to be taken by all EU members and this would mean for a member state such as Romania the expansion of the Schengen Area with its inclusion.
6. As to the euro, Juncker said that the common currency has to unite and not to divide the Union. It means that the euro is to cover the entire space of the Union and not only a group of “select” member states. Juncker’s vision that the EU will focus on strengthening the euro for its existing members makes the Eurozone more attractive for outsiders. The member states that want to join the euro and are able to do so would be helped with a promising euro accession instrument, offering technical and even financial assistance. In the meantime, completing the Banking Union is a matter of urgency in terms of reducing the remaining risks to the financial stability of the member states and its functioning means that risk reduction and risk sharing go hand in hand.
7. It should be observed that steps to be taken from top to bottom, e.g., from politics to techniques, are the way in which Juncker sees a Union of values, freedom and equality that can reunite its member states in a strong Union with fewer disparities in speeds of integration. Notwithstanding the possible controversial outcome of Juncker’s speech, Romania has to defend the principles of such a vision just to reduce the subversive critics holding back a firm march to improve integration process.
8. The European Commission is in stand-by after Junker’s speech, probably waiting for the decisions of the December 2017 European Council dealing with the future of the Eurozone. It is time for Romania to express its willingness to become a Eurozone member.
9. It is obvious that Romania and the EU as whole are confronted with limited political and economic resources, in spite of the steady recovery we witnessed after the latest round of elections. This creates a helpful environment for the future of the political negotiations for a road map of the EU, not excluding new dimensions of economic and political competition.
10. Romania has to embark rapidly on such a competition and such a repositioning has to come along with a credible offer and resources to justify it. A new national political consensus is again needed. We call it a structured political consensus because it has to refer not to a belonging which has been accomplished, but to a new stage of European integration in which Romania should engage to overcome its peripheral position revealed by many ranking indicators. (Unfortunately, they are keeping Romania in the last place within the EU even after 10 years of full-fledged membership; recommendation is for the political class to tackle the matter within the described opportunity.)
11. The three principles on which a more united, stronger and more democratic Union should be based suggest why, for Romania, the formula of more Europe with Romania in it is the best. We have to succeed in embracing the proposed fourth scenario with a rapid shift to the fifth one, e.g., from doing less more efficiently to doing much more together. The alternative is seriously described by Juncker. We have two options, to reunite us around a positive European agenda or for each of us to remain where we are. So, the European Momentum is a historical one for Romania, a challenging one, which means either isolating us or going for a new stage of European cooperation.
12. Beyond any risk, adopting the euro is a strategic political target which needs an immediate tactical approach, keeping in mind that we should be interested in reforms of EU governance that enhance its strength and resilience to help nominal convergence and real convergence at the level of EU. Convergence, either nominal or real, is a dynamic process and the question is whether we are waiting for it to be improved while Romania remains at periphery or whether we will strive to be closer to the hard core of the EU.
13. Surely, the process of real convergence has to be advanced, but we have to understand that initiating any real process requires a starting point when a political decision was made and its implementation pursued. This requires a devoted professional team, politically supported, to reach the target. Being in the EU, the real convergence of Romania is to be accomplished as a continuous process with common responsibilities. At present, a “wait and see” policy for what Romania can do or what will happen with the EU is a catastrophic political attitude.
14. At present, the matchmaking of two things is compulsory: the reforms of the Union and the good (still) shape of Romania’s macroeconomic stability. In both cases, we are confronted with the clock running out on good governance: the window of availability for the opportunity to be accessed is closing and Romania’s stability can be put to the test in a short time.
15. For Romania, maintaining the macroeconomic equilibrium is paramount and the task is in the hand of the political and economic decision makers. This goal means sustaining economic growth in the long term for more convergence, and high growth to be translated into a rapid catch-up process. In an interdependent world, we cannot do it alone and to become a closer partner to the EU by aspiring to the Eurozone is obviously more helpful.
16. Looking ahead, Romania is not prepared to overcome a possible new international crisis announced by many, just because it needs more instruments to absorb shocks or mechanisms to manage the effects of a crisis. In this respect, we have the choice to go either to the EU or the IMF. We believe that, as a member state, Romania has to address the EU which nowadays is better prepared to help. For that, we have to become member of the Banking Union and founding member of the future European Monetary Fund. Addressing difficulties with the IMF usually affected our progress in deepening European integration.
17. By contributing to and benefiting from the schemes and mechanisms developed by the Banking Union to prevent and reduce the risks, its resilience fund, the best oversight rules and, finally, the decisional process which refers even to the Supervisory Board within the Eurozone etc., Romania may sustain its macroeconomic stability with an impetus on improving convergence standards, a prerequisite to become a full member of the Eurozone. Before joining the Banking Union, we have to do some important homework, for the national banking system to be better capitalized and supervised, with less pressure on Romania’s fiscal situation.
18. We need to think strategically and establish the various targets while considering the present steps in order to reach the targets. It is obvious that the monetary integration is more than adopting the euro because it implies fiscal integration. We think that Romania can demonstrate its interests in the future fiscal integration and in taking early steps for achieving a Financial Union at the Eurozone level. The credibility of such an engagement is given by the role of the central bank in maintaining the financial stability by guaranteeing its single target – price stability.
19. Considering the mutually reinforced correlation between nominal convergence and real convergence by a dynamic compromise in macroeconomic policies, oscillating, in fact, between domestic stability and external vulnerabilities, we consider that entering the ERM II will be a good move for supporting macroeconomic stability of our country.
20. The success in ERM II for at least two years, implying the elimination of a pro-cyclical fiscal policy, will confirm the economic convergence sustainability and advance the contribution of Romania to the functioning of the single market by moving one step closer to the adoption of the euro. If we block ourselves now because of the costs (contributions to different resolution funds as instruments to minimize risks in a potential new crisis), these costs will be greater later.

We believe that any measure which can help to achieve a stronger Europe has to be undertaken in tandem with actions for implementing the cohesion principle. That is the drive for Romania to engage more, but also to come closer to the EMU. What will be good for the EMU should be good also for countries expressing their desire to join the Eurozone. Our understanding of what commissioner Pierre Moscovici said is that “the Economic and Monetary Union is our main tool for convergence in the Euro Area…”, and, we add, it should be shared with all member states, because the promise of shared prosperity was central to the creation of the Union as a whole and not only for the Eurozone. 

Conclusion 

Any way towards a better qualitative approach of the European integration should be based a priori on strong political will of all member states and Romania has to do the same if we want to continue on the path opened by the Treaty of Rome (1957). In order that everything should happen in a scenario in which Romania is approaching the core structure of pertinent decision-making within EU, we have to touch the issue of the security of the entire EU structure needed in the uneasy geopolitical context and the crisis to come.

Our understanding of what commissioner Pierre Moscovici said is that “the Economic and Monetary Union is our main tool for convergence in the Euro Area…”, and, we add, it should be shared with all member states, because the promise of shared prosperity was central to the creation of the Union as a whole and not only for the Eurozone.

Romania is ready to be an active member in a Defense and Security Union embracing its main components: a global strategy of the EU in the security and defense domains, an action plan for defense and cooperation with NATO. Romania already has its own responsibility in choosing among the scenarios to contribute to an authentic Union of Defense and Security, in concordance with an ambition level which has to reflect its own security by participating in more common security actions.

The accession to the Eurozone is the only realistic path forward in embracing a future for the EU. Euro adoption is the real vehicle to join our partners in a battle for a stronger economic and political Union. This provides the best arguments for the political urgency in adopting the euro by all other non-member states in Eurozone and they should be negotiated for a start of the process. That will be the best incentive to be ready at the right time. The technicalities of adopting the euro are well-known in Romania, but the main political decision should be to seek to enter the ERM II as soon as possible and not wait for a complete convergence which will never be achieved, since this will always remain a process in progress and in competition.

If the EU has placed the euro ahead of a political union and succeeds in creating an advantageous single market, why cannot Romania put the euro at work for the needed convergence in every respect described by EU? The message we want to deliver is, by nature, a political rallying cry in an atmosphere of placidity. 

Note 

The article is based on a study published in 2017, “The Effects of the Globalization and their Impact on Romania”, included in the research program of the Romanian Academy.

The presentation was prepared to be delivered at the “Romania - China Bilateral Roundtable”, Institute for World Economy, Romanian Academy, Bucharest, in November 2017. 

Bibliography 

Comisia Europeană, COM(2015, 2017): Raportul celor 5 președinți, Documentele de reflective, Scenariile privind viitorul Uniunii, State of Union.

Dăianu, D., Kallai, E., Mihailovici, G. și Socol, A. 2017. România și aderarea la Zona Euro: întrebarea este în ce condiții! Academia Română.

Georgescu, F. 2017. Creșterea economică, dezvoltarea României și reducerea sărăciei. Disertație susținută la Universitatea Valahia din Târgoviște (2 iunie).

Isărescu, M. 2015. “Convergența nominală versus convergența reală”. Conferința Calea României către Zona Euro, organizată de Reprezentanța Comisiei Europene și BNR.

Lazea, V. 2016. România competitivă. Comitetul de pregătire a trecerii la euro, BNR.

Vesely, L. 2017. “Can Europe Converge on What Convergence Should Mean”. Social Europe (aprilie).

Voinea, L. 2015. O perspectivă asupra foii de parcurs pentru adoptarea euro. Comitetul de pregătire a trecerii la euro, BNR.

* * * – 7 iunie 2017, Document de reflecție privind viitorul apărării europene, Comisia Europeană, COM(2017) 315.