Romania's Collapsed Economy
ROMANIA'S overthrown leader, Nicolae Ceausescu, has left his country the most creditworthy of all transforming East European economies - its slate virtually wiped clean of external debt. But this legacy comes at a cost of retarded industries, empty store shelves, and a hungry, cold population - the results of an austerity program that cut off almost all imports and an energy-saving program that extracted enormous sacrifices from Romanians.
The government's abuse of citizens included an allotment of one 40-watt light bulb per apartment for the entire winter of 1987. Police squads punished violators by cementing their light sockets.
``Freedom from foreign influence,'' a constant refrain in Ceausescu's speeches, translated into Draconian measures by 1981, when Bucharest announced that the country would be debt-free in 10 years. The government paid down its $10.2 billion debt to nearly zero by 1988. To accomplish this, it cut back on all nonoil imports and exported everything it could to earn hard currency.
Food perishables, raw materials, and manufactured goods were all exported at the expense of domestic needs, a policy that ``left the country deprived of heat and scrounging around for food,'' says a senior economist with the US Treasury Department. ``It's really a tragedy, because the country is very rich in oil [with the largest deposits on the continent outside of the USSR], natural gas, and timber.''
Fuel conservation for the rest of the economy became an obsession when, in 1982, heavy industry took precedence over agriculture. By embarking on an energy-intensive steel, chemicals, and oil-refining export program, the government expected to generate hard-currency earnings strictly for paying off its foreign debt.
``The government doubled its oil-refining production capacity during the latter 1970s, precisely when huge price increases were forcing other countries to cut back on their oil consumption,'' says Ronald Linden, director of the University of Pittsburgh's Center for Russian and East European Studies.
For the past five to seven years, he says, more than half of the refineries lay idle while the other half have refined oil strictly for export. ``Things got so bad in 1987, the government restricted the hours of heat, television use, and turned off streetlights throughout most of the urban areas,'' Mr. Linden says. ``The use of private cars was banned for months at a time. After all this, the government announced that electricity use had to be cut by a further 10 percent. The government employed countless other drastic and intrusive measures.''
Raymond Taraf, a professor of political science at Tulane University, says Ceausescu had ``pulled the plug on hospitals, allowing them only four hours of electricity a day, so power could be funneled to industrial plants.''
Such methods caught the attention of the human rights organization Helsinki Watch. ``Although we don't ordinarily deal with economic deprivations as part of our mandate, we noted the extreme nature of austerity measures arbitrarily imposed by Ceausescu, including food, light, and heat deprivation,'' says Geri Laber, executive director of Helsinki Watch.
The country's future prospects have much to do with its past.
Eugenio Lari, World Bank director for Eastern Europe country operations, says ``the tremendous domestic savings and slashed imports have retarded economic change in the country.'' He recalls from his last visit to Romania in 1987 ``heated debates among local enterprise managers and rigid, dogmatic government officials concerning the centralized economy.''
Devoid of spare parts and rife with irreparably damaged machinery, Romania's industrial base collapsed in late 1987, says the US Treasury economist, when imports were slashed even for the export-oriented industries.
Romania ``will need substantial investment and/or aid from abroad to readjust their economy,'' Mr. Lari says.