Graduation Publication

Canada and Romania: Partners in Transition

Romania in Transition

In the 1980s, Communist bloc countries gradually became open to reform. However, Romanian leader Nicolae Ceausescu took a harder line, adopting a more and more closed and repressive attitude. Structurally, Romania's economy was planned and highly centralized. It was made up almost entirely of large state-owned corporations and cooperatives. It was based on heavy industry, a sector that was difficult to reform and caused extensive environmental damage.


The year 1989 marked a brutal end to the existing regime. The December Revolution filled Romanians with a sense of euphoria. For the majority of Romanians, the fall of the Ceausescu regime meant that the Communist era was over, and that Romania would now open itself up to the outside world. However, very significant transformations were needed to turn things around in Romania. Political instability and economic backwardness, inherited from the Ceausescu regime, contributed to uncertainty about how to rebuild the economy and society. Like political reform, the economic transition proceeded slowly.

Romania sought to abandon the socialist model. It wanted to speed up the privatization of state-owned corporations. However, the transition was not an easy one. Romania's standard of living declined dramatically. Public services ran poorly. Unemployment increased. Romania's currency was devalued. The Government teetered on the brink of bankruptcy. It could not even pay its physicians any longer. In rural areas, where 40 percent of Romanians lived, farmers no longer had the means to till their land as they lacked fertilizer and farm machinery. Successive governments were unable to modernize an outmoded production system. Prices rose faster than incomes and industrial production was in complete disarray. In 1996, spurred by the International Monetary Fund (IMF), the Government set up an economic stabilization program. Price liberalization and instability in the exchange rates, along with reduced subsidies, led to an even deeper political and social malaise.

---

Reopening the Door to the Outside World

At the same time, Romania sought to reopen itself to the outside world. Like several of its neighbours, Romania made it a priority to join the European Union (EU) and NATO.

Did you know?

Romania was the first East European country to sign an agreement with the former Common Market, now the European Union.

In late 1993, Romania was admitted to the Council of Europe. At the Prague Summit in November 2002, the country joined NATO. Joining the EU was a more gradual process. Romania officially applied for admission to the EU in June 1995. Starting in 1999 with the memorandum on Romania's EU accession requirements, the direction and content of reform changed considerably. In October 2003, Romania held a referendum and as a result, adopted a new constitution that met European standards. In keeping with the EU timetable, the treaty of accession was signed in 2005. Romania is scheduled to become an EU member on January 1, 2007.

---

Canada's Romania Program

To meet Romania's demonstrated needs, Canada established a technical cooperation program. The Government of Canada has disbursed $42 million since 1991 and it has made commitments until 2006. CIDA's commitment is a varied array of some 177 projects which range from sweeping reform of political and economic mechanisms to the most pressing grass-roots social issues. The program's key objectives have remained the same during its 14 years of existence:

• to support Romania's democratization and economic liberalization by forming mutually beneficial partnerships; and
• to assist in international efforts to reduce threats to international security, especially nuclear safety.

As CIDA prepares to withdraw, it seems important to review and assess the relevance, effectiveness, sustainability, and impact of initiatives executed under the Romania program. This review also aims to measure Canada's role in Romania's democratic development and transition to a market economy.

---

Canada's Role

Canada became involved in Romania in 1990. The Canadian Technical Assistance Program in Romania was at that time managed by the Task Force on Central and Eastern Europe and came under the Department of Foreign Affairs and International Trade. In 1995, the program was transferred to the Central and Eastern Europe Branch of the Canadian International Development Agency (CIDA), the federal agency responsible for Canada's official development assistance program.

While the objectives for Romania were known, the Canadian program initially did not have a clear strategic direction to achieve these goals. The Canadian program pursued initiatives that were undertaken on an ad hoc basis. Romania's needs had not yet been formally analyzed. No programming strategy had been developed beforehand and there had been no identification of specific sectors where the Government of Canada could provide assistance.

Despite this, Canada's Romanian program contributed to that country's economic and social development in several ways. Among other things, the program encouraged the following:

• the establishment of financial institutions;
• labour market development;
• modernization of agriculture;
• smooth operation of the health sector; and
• environmental protection.

The program's watchwords were transfer of knowledge and expertise, democratic development, and good governance. In the end, thanks to existing projects, and others that were deemed interesting, the program solidly established itself in key sectors such as finance, agriculture, health, and nuclear safety.

Canada thus contributed to Romania's transition to an open, competitive economy. Canada supported projects such as the Master of Business Administration (MBA) program, the harmonization of laws, and the transformation of Romania's judicial system. Canadian know how has also been recognized in institutional capacity building and public sector reform. The Government of Canada's assistance in these areas contributes to Romania's efforts to adapt to EU standards, thus favouring its upcoming membership.

Bilateral Funds Disbursed by Central and Eastern Europe Branch in Five Key Sectors

---

Reforming the Notarial Profession: a Success Story

Thanks to an initiative by the Chambre des notaires du Québec (Quebec Board of Notaries), one of the technical cooperation program's most recent projects was to reform Romania's notarial profession. This initiative reflects CIDA's wish to help build Romania's institutional capacity. The project had the following basic objectives:

• to modernize management and administrative procedures;
• to encourage the rule of law by building the institutional capacity of the Union of Notaries Public in Romania;
• to recommend changes in the union and to improve its organizational structure;
• to train notaries in sound notarial practices; and
• to improve privatization processes.

The Quebec Board of Notaries organized seminars and consultations in Romania to reach these objectives. The Board also hosted short-term studies and training for Romanian notaries in Canada. Moreover, Quebec notaries submitted seven documents on various topics of interest. They also submitted a book of recommendations. In addition to these activities, the Union of Notaries Public in Romania created a website. This demonstrated the union's adoption of the principles of transparency and access to information.

---

What are the project's concrete results?

• Civil society and government institutions are more aware of the role that notaries play.
• More notaries have private practices.
• The representative of the Romanian Union of Liberal Professions has liaised with the Quebec Board of Notaries.
• Notarial opinions have been considered in discussions of the Civil Code, especially estate and financial law.

---

Promoting Gender Equality

Romania's notarial profession reform project stressed training for women notaries, to give them the experience and support they need to maintain their position in the profession. Thus, part of the project involved drafting a document examining the role that women play in the profession.

Did you know?

Romania has asked the Chambre des notaires du Québec (Quebec Board of Notaries) to execute a project in Romania, like the one developed in Ukraine

The project also made an effort to include women in all of its activities. Some activities were specially designed for women; for example, a member of Réseau des femmes d'affaires du Québec (network of Quebec businesswomen) organized a conference.

Promoting entrepreneurship and leadership among women notaries was always a key consideration when organizing seminars and other activities during the project. Organizers thus sought to encourage Romanian women to take better advantage of beneficial opportunities.

Sharing Canadian Expertise

Environmental Management of the Hydroelectric Sector

In its strategy to reform the hydroelectric sector, Romania has sought technical assistance and institution building expertise from CIDA and its Canadian partners through the local partner, Hidroelectrica.

Phases I and II of the hydroelectric sector's environmental management project mainly aimed to ease Romania's transition to a market economy, by privatizing key sectors including electric power. The Government of Romania previously controlled the sector.

Apart from helping to develop the market economy, the project had public interest objectives. In particular, it introduced Hidroelectrica to modern environmental practices in the hydroelectric sector. The project thus familiarized Romanian partners with various environmental protection measures such as cleaning up waterways, preventing erosion, stabilizing river-banks, preventing water pollution, acting to clean up spills, and protecting plants and wildlife.

This awareness plays a fundamental role in Romania's development. Poor hydroelectric practices pollute waterways, creating a threat to nature and people.

The project's activities focused on three key themes: environmental management systems, watershed management systems, and communication networks.


Key project results include the following:

• Hidroelectrica improved its performance in the energy sector:
• by reducing waste in management costs;
• by saving on consumption of energy and materials;
• by achieving lower distribution costs; and
• by establishing a framework to continually improve environmental performance.
• Hidroelectrica obtained its ISO 14001 certification which deals with environmental management.
• Ten Hidroelectrica subsidiaries can now apply new-found techniques to manage their facilities. (There are 120 subsidiaries in all.)
• Environmentally friendly facilities will attract more and more investors.
• The hydroelectric sector has improved its transparency and governance.
• Women now have better access to decision making positions in a traditionally male-dominated sector.

Bucharest Stock Exchange

Since 1992, Canada has executed a series of economic projects as part of its technical assistance program in Romania. Canada has sought to ease Romania's transition to a market economy by creating an enabling environment for private sector development, as well as business and investment opportunities.

The Bucharest Stock Exchange was one of the flagship projects. It consisted of technical assistance to the National Bank of Romania to develop the Bucharest Stock Exchange, with a supervisory authority.

Apart from economic development, this project aimed to create an enabling legal environment to develop a market economy, by harmonizing Romanian laws with international standards. The project thus helped the Government of Romania and the National Bank to implement legislative provisions for institutions such as the Romanian Securities Commission and the Bucharest Stock Exchange. The tools provided to the Government to develop new regulations form a vital component of the economic and political transition.

The project reached its aims by executing targeted activities:

• The project organized training workshops for Romanian personnel administering the new institutions.
• The project developed regulations to help these institutions run more smoothly.
• The project developed software (Stock Exchange Management System-SEMS) and provided necessary training in its use.

Finally, this project appears to have been a success. It created vital institutions and also set up an internationally recognized exchange system to operate the Bucharest Stock Exchange.

Did you know?

As a result of Canadian investment, the Bucharest Stock Exchange was established and now operates independently. Ten years after the project started up, the Stock Exchange has been able to adapt to a fast-changing financial environment. You can find an overview of its activities at www.bvb.ro

---

Reforming the Agricultural Sector

Grain grading is a project involving three phases. Through this project, the Société générale de surveillance (SGS) Canada Inc. joined with its Canadian and Romanian partners to support Romania's National Commission for Grain Grading (NCGG) in reforming the agricultural sector. This mainly involved helping the Commission:

• to organize activities;
• to meet international grain quality standards; and
• to manage the grain grading system.

To this end, among other things, Canadian partners provided advisory and training support for grain grading system administrators.

Phase I of the project began in 1994. It aimed to further the privatization and restructuring of Romania's agro-industrial sector. Among other things, this involved improving access to capital, which would help restructure the agricultural sector and build Romania's capacity to penetrate the international market. The development of Phase I highlighted the need to build the capacities of local specialists and existing institutions (such as the Ministry of Agriculture and Romcereal) to adapt to an open-market economy.

To develop a new legislative framework for agriculture, and to design a grain grading system, Phase II of the project created a complex professional association, partnered with the Ministry of Agriculture.

Finally, Phase III of the project involved creating a commission for grain grading. The commission is responsible for managing the grain grading system. Thanks to Phase III, the project was a huge success. Phase III helped establish a new legislative framework. It also built the institutional capacity needed to operate the grain grading system. This ensured the project's long-term sustainability and achieved positive results for the reform process.

Did you know?

The Cadastre and Property Registration project helped create an institution to improve land and real estate markets to promote investment. The success of this project allowed the newly created National Office for Geodesy, Cadastre, and Cartography to obtain $50 million from the World Bank.

---

CAPA/World Vision

The CAPA/World Vision microcredit project reflected CIDA's wish to help foster a market economy. This project helped develop a non-banking microcredit enterprise in Romania. CIDA supported World Vision Canada and MEDA (Mennonite Economic Development Associates) in the effort to set up CAPA (the Creditar, Asisenta, si Pregatire pentru Afaceri Foundation), which now covers Romania's four key regions: Transylvania, Oltenia, Muntenia, and Dobrudja.

The CAPA/World Vision project aimed mainly to create a private lending institution, giving small and medium-sized businesses greater access to loans. This institution favourably complemented CIDA's efforts to privatize the financial sector and to establish a stock exchange.

To ensure the project's sustainability, World Vision and MEDA provided young Romanians with examples of non-banking microcredit enterprises. Young Romanians then adapted these models to Romania's specific legal and economic characteristics.

An Ophthalmologist with a Vision

Dr. Camelia Bogdanici is an ophthalmologist. She is dedicated and passionate about her work. She practises her profession at Saint Spiridon Hospital in the town of Iasi. She sees patients and does surgery, especially for children. She completed specialized studies in Germany, Israel, Belgium and the United States. These studies helped her to improve her techniques and become a reputable surgeon. Apart from her practice, she is also a professor at the Medical and Pharmaceutical Institute in Iasi.

In 1996, Dr. Bogdanici and her husband founded the firm Stereopsis which markets prostheses, contact lenses, and other essential items. In 1999, she opened her own private practice.

Over time, the demand has diversified. Dr. Bogdanici has had to expand her staff to deal with emergencies. To remedy this situation, Stereopsis approached CAPA and obtained $2,000 to expand its team and hire a new physician.

Dr. Bogdanici is not only a successful entrepreneur and physician, but she also plays a role in her community. With World Vision, she takes part in a program that offers outpatient services and surgery to poor children. Since the project began, practitioners have treated some 200 children.

Thanks to CAPA funding, Stereopsis was able to obtain an instrument designed for eye retraining exercises for children. Stereopsis is the only firm in Romania to have this technology.

Dr. Bogdanici and her husband continue to work very hard, but they say their clients' satisfaction is the best reward they could ask for.

A Taste for Business

If you pass through Dacia, and crave something sweet, people are bound to recommend tasty treats from the local pastry shop, run by S.C. CASIM S.R.L.

Mrs. Ecaterina Vrabie established the shop in the mid-1990s. She had 15 years of experience in pastry making, but she needed funding to develop her business. She received a CAPA loan to upgrade her production equipment. Her enthusiasm, confidence, and business sense convinced CAPA members to help her grow her business. Mrs. Vrabie is a business woman who has been successful in partnership with other women. She has succeeded by setting specific goals: to increase her output, to procure modern equipment, and to offer products to access new markets. Her investment has paid off well. "We're meeting our children's needs and paying for their education," Mrs. Vrabie says. "We're also putting money aside for emergencies or to reinvest."

Today, S.C. CASIM S.R.L. employs seven people, all women. Products are sold in-store, and there is also a telephone ordering system for celebrations and special events.

---

Fighting HIV/AIDS

The HIV/AIDS epidemic in the region continues to grow. It has become a social development priority for both CIDA and the Government of Romania. HIV/AIDS prevention is an urgent priority for Romania. The negative impact of HIV/AIDS is not only medical, but also economic and social. Moreover, children represent seven out of eight Romanians living with HIV/AIDS.


In 1998, CIDA joined forces with UNICEF to focus on HIV/AIDS among children and young adults, and on protecting their rights. The child welfare and protection project was a follow up to the project on HIV/AIDS prevention, adolescent health, social services, and the system to monitor the Convention on the Rights of the Child. This project aimed to make youth less vulnerable to HIV/AIDS. Romania thus had to improve its policies and the structure of programs to protect youth living with HIV/AIDS.

The project's short-term objectives were the following:

• to establish a network of trainers and a training program;
• to organize communication activities to prevent HIV/AIDS;
• to provide greater support for families through various social services;
• to build the capacity of non-governmental organizations (NGOs) and the Government of Romania to address problems relating to HIV/AIDS; and
• to establish a system to monitor HIV/AIDS and to ensure compliance with the Convention on the Rights of the Child.

The project generally achieved most of these objectives. The network of trainers and the training program expanded. A number of national communication activities were organized. A number of families received support. NGOs and the Government built their capacity to address problems relating to HIV/AIDS. As at March 31, 2000, however, some initiatives had not been completed. These included the systems to monitor HIV/AIDS and the Convention on the Rights of the Child.

However, the ministries of health of Canada and Romania, and NGOs in the two countries, established solid ties, thus improving Romanian expertise. Moreover, although the monitoring system had not been put in place, the Government nevertheless built its capacity to monitor compliance with the Convention and to do research on children at risk.

This project has had a significant outcome. The Government of Romania has recognized that HIV/AIDS is not only a health problem, but also a social problem that requires a multisectoral solution. The creation of a multisectoral solution led to a new partnership between government departments and civil society. This lent more weight to the cause.

The project generally put Romania on the right path to achieving its objectives: to reduce the incidence of HIV/AIDS and improve the quality of life of children living with HIV/AIDS.

---

Nuclear Safety

The nuclear safety project was executed at the very start of the technical cooperation program, in 1992-1993, at the Government of Romania's request. Canada's Department of Foreign Affairs and the Atomic Energy Control Board worked together, so that AECB could establish and deliver an advanced training program on nuclear safety and regulatory activities. This project especially aimed to ease Romania's technological transition. Indirectly, it aimed to speed the transition to a market economy. Technological advances, including nuclear safety and activities to regulate nuclear energy, were deciding factors in Romania's production capacity and transition to a market economy.

The Government of Canada was committed to this project because it feared another accident like the one in Chernobyl. Another such incident would have hit the nuclear reactor industry hard and perhaps even wiped it out altogether.

Nuclear safety training projects have thus been developed to avoid such a future scenario. In practical terms, 12 Romanian specialists have been specifically trained. They in turn will be able to train qualified regulators. This will help ensure the project's sustainability.

---

Small Grants with Major Impacts

Projects aside, Canada's assistance program has involved two other types of mechanisms to support Romanian initiatives. One is the Canada Fund for Local Initiatives (CFLI). The other is the program to support governance in the northern Balkan countries. These small grants have more flexible criteria and more limited objectives. They have had major direct and concrete impacts on the lives of their recipients.

CFLI aims to complement other CIDA projects. It supports small-scale projects that require the involvement of civil society. Over the years, more than $800,000 has been disbursed to the program to execute these many small-scale projects, supervised by local CIDA officers.

The Northern Balkan Governance Support program is another decentralized fund. The program aims to fund small and medium scale local activities. Its purpose is to respond flexibly and effectively to the demands and priorities of a changing social and political environment. Its activities include capacity building, institutional sustainability, and reforming the energy, environment, government, and social development sectors. The program's partners come from every milieu. These include NGOs, national institutions and associations, and community groups. The program has had many recognized successes such as the Police and Community: Together Against Domestic Violence project.

The Centre for Judicial Studies executed this project in three regions of Romania (Arges, Dimbovita, and Prahova), with the cooperation of the Institute for Crime Research and Prevention. This project aimed to create and implement a model for support services for victims of domestic violence. This meant showing the relevance of a new judicial framework to combat and prevent domestic violence. Funded by the governance support program, this initiative followed the publication of studies showing an alarming rise in domestic violence in Romania, especially against women, children and seniors.

The results of this small-scale project were largely beneficial:

• The project made people aware of the phenomenon of domestic violence. It favoured a change in attitude toward victims and perpetrators.
• The project created a model multidisciplinary team, working together to prevent domestic violence.
• The project promoted cooperation among local forces to combat the problem more effectively.
• The project shaped a more positive image of the police, to gain people's trust.

---

Lessons Learned: Relevance, Effectiveness and Sustainability

Three types of criteria were used to assess the program's overall performance: relevance, effectiveness and sustainability. This assessment highlighted the strengths and weaknesses of Canada's activities in Romania. Partnership between Romania and Canada generally seems to have been effective in helping to build an enabling environment for reform and economic development.

Did you know?

By helping police forces to build their capacity to fight domestic violence, the Prahova police have been able to do the following:

• identify 380 cases of domestic violence;
• hospitalize 27 mentally disordered persons who created violent conflicts in their families;
• enforce the law by sentencing 301 persons for violent behaviour; and
• respond to 233 complaints of mistreatment, with the help of social workers from the Child Protection Division.

Were the priorities of the Canadian program relevant in Romania? Despite the absence of target sectors, the program met several of Romania's essential needs. At the same time, the program helped Romania progress toward an open economy. The program also helped to develop standards and policies which meet international standards. Moreover, Canada provided technical assistance in areas such as hydro-electric power and nuclear safety. This made it possible to raise Romania's level of expertise.

However, the assessment showed that the program did not promote trade relations between Canada and Romania, as initially hoped. When the program started up, Canadian interests were strongly represented. Transferring the program from DFAIT to CIDA, in the mid-1990s, instead favoured support for Romanian institutions and local self-sufficiency. Paradoxically, Romanians appreciated the CIDA program's altruistic nature. This altruism set CIDA's program apart from those of some other donors.

In terms of effectiveness, the program concretely helped to improve Romania's standard of living by transferring knowledge and skills. Individual and collective success stories abound. The various projects achieved their goals to a very large degree. However, the assessment underscored the program's difficulties in promoting Canadian trade and foreign investment. Yet expanding Romanian-Canadian relations ensures sustainability and mutual commitment.

As for the remaining criteria related to sustainability, it must be noted that Canada and Romania formed new partnerships in the public and private sectors. Projects had variable long-term outcomes. Several initiatives resulted in well-established mechanisms that continue to grow. The Hidroelectrica project and the Bucharest Stock Exchange are examples. Other initiatives changed and continue to evolve, while retaining some initial features.

---

Equal Partners

The Government of Canada sees Romania's upcoming entry into the EU as a clear sign that major changes have already occurred. The technical cooperation program is scheduled to close down in March 2006. This will mark the end of Canada's bilateral assistance program in Romania. The cooperation program was based on the principle of temporary support for the transition process. It was also based on implementation of essential economic and political reforms.

Lessons learned from the program review will serve as a basis for future relations between Canada and Romania, this time as equal partners.

Did you know?

Romania is a member of La Francophonie and will host the 11^th Francophone Summit in 2006.

---

Canadian International Development Agency (CIDA)

200 Promenade du Portage
Gatineau, Quebec K1A 0G4
Canada

Telephone:
819-997-5006
1-800-230-6349 (toll-free)

For the hearing- and speech-impaired:
819-953-5023
1-800-331-5018 (toll-free)

Fax: 819-953-6088
Website: www.cida.gc.ca
E-mail: info@cida-cida.gc.ca

July 2005

© Her Majesty the Queen in Right of Canada, 2005

Catalogue No. CD4-27/2005E-HTML
ISBN 0-662-40881-0

---

Alternate Format

Canada and Romania Partners in Transition (PDF, 335 KB, 18 pages)

Note: If you cannot access the documents that are provided in an alternate format, refer to the Help page.