THE BLOG
03/12/2013 05:03 GMT | Updated 01/02/2014 05:59 GMT

Romania in the Global Economy - Or Not

Last month the Romanian government's Joint Special Commission issued its report on the Rosia Montana gold and silver mine. The 90-page report summarised the findings of two months of debate, hearings, and submissions for a project that has generated some controversy and a great deal of interest in our country.

This has been no ordinary debate. Although the apparent topic is a gold mine it has become clear that this is actually about something much bigger.

The issue is the potential revival of Romania's once proud mining sector which, before 1990, employed over a million people in direct and indirect jobs. It is about the economic health of our nation. And it is about our country's ability to participate in the global economy of tomorrow.

Ultimately this is a debate about our future economic path, and the sort of country we want to be.

Today we are known as the second poorest country in Europe. Unemployment is high and average monthly wages are less than €390 per person. We suffer from a poor reputation in western European countries because of fears of uncontrolled worker migration by Romanians in search of jobs.

When we joined the EU in 2007 Romanians had high hopes for a new era of jobs and prosperity. We anticipated major new infrastructure, investment and we hoped to see an immediate uptick in standards of living and the economy.

But the impact of EU accession was not as profound as we wished and believed it would be. The timing coincided with the global financial crisis and the expected roads, bridges, hospitals, schools and jobs did not appear overnight.

Yet we have a skilled and educated workforce. We have significant and diverse resources. And we have the desire to become a great nation within Europe, maybe even one day the second richest not the second poorest.

So what is the answer?

Put simply we urgently need to grow our economy. Growth can only happen in two ways and we need to do both - we need to attract our fair share of foreign investment, and we need to help local businesses of all sizes to act as an engine of economic activity.

Roşia Montană will be the largest gold mine in Europe and will produce approximately 500,000 ounces of gold per year.

There are no economic risks to Romania in developing the mine, but the benefits are tremendous - $24Bn in economic impact assuming gold is sold at $1200 per ounce, with a positive impact on the environment and local heritage.

In a few years, if the world sees that the investment in Roşia Montană has been a good one, then other investors will come knocking at our door. This one project will herald the revival of Romania's once proud mining sector. And it will signal to the world that Romania is 'open for business'.

No wonder then that over the past few months there has been an active national debate about this project in parliament, in the news, and on the streets.

In any debate there will always be those who take radical positions. Some people will say they want nothing to do with foreign investment and economic progress. That is their opinion and they are entitled to it.

But for those people who believe that our future path lies in economic growth and participation in the global market the questions we really have to ask ourselves are how do we embrace foreign investment, what are the implications, and where does this path lead?

Investors require predictability. They need to know that when a government makes a deal and a partnership is established that the host nation as well as the investor sticks to the terms and delivers the benefits. When somebody offers them the rights to build a railway, open a power station, dig a mine, or finance a new technology investors need to know that a predictable, and transparent process takes place.

And investors require commitment and partnership. By aligning incentives, and by making sure that risks are rewarded, everybody benefits. A fair profit for all will encourage more and more investment. In turn, investment enables us to protect and preserve the environment and our cultural heritage. It is a cycle that repeats itself.

So Romania has announced its intention to introduce improved mining legislation from which a new gold and silver mining sector can emerge, bringing jobs and wealth for the nation.

Developing our industry is a strategic choice for Romania. It promises to bring real benefit - investment, technology, skills transfer, environmental rehabilitation, sustainable development, and the preservation of our heritage.

We are encouraged by government rhetoric around foreign investment and look forward to actions following words.

Dragos Tanase

rosiamontananews.com