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Economic Woes Have Crippled Romania's Longstanding Independence

November 16, 1986|JACKSON DIEHL | The Washington Post

BUCHAREST, Romania — Romania's communist government, long known as the most independent of the Soviet Union's East European allies, has suffered a marked deterioration in its relations with both East and West as President Nicolae Ceausescu has embraced erratic financial tactics and extreme domestic policies, diplomats here say.

The result has been the virtual elimination of this Balkan country's former role as a mediator in the Middle East and broker for Soviet Bloc diplomacy with China, Israel and nonaligned Third World countries. Moreover, its room to maneuver inside the Soviet-led Warsaw Pact has significantly narrowed, the diplomats say.

Ceausescu, who has consolidated a personal dictatorship here during 21 years of rule, became a favorite of Western governments and bankers in the 1970s when he defied Moscow on issues ranging from arms control to Afghanistan and cultivated the Soviet Bloc's only formal links with China and Israel. U.S. presidents Richard M. Nixon and Gerald R. Ford even visited the country.

Harsh Measures Imposed

Bucharest's unique position enabled it to help arrange Egyptian-Israeli peace talks and the U.S. opening to China, while maintaining strong links to the Arab world and the Nonaligned Movement.

In the last several years, however, Romania's economic exchanges and political relations with the Western industrial states have eroded as Ceausescu has imposed harsh political and economic measures on the country. Links to Arab nations have also weakened since Romania began purchasing oil from the Soviet Union rather than from OPEC.

To compound the trouble, Ceausescu's relationship with Soviet leader Mikhail S. Gorbachev appears to be the weakest of any East European leader.

"Ceausescu symbolizes all the things Gorbachev is opposing--dogmatism, lack of economic realism, personality cults," said one diplomat here.

High Profile

The 67-year-old president, glorified by state-controlled media as a genius and master statesman, has tried doggedly to maintain a high international profile in recent months, pursuing contacts with Middle Eastern leaders and proposing a plan for West and East European states to cut their defense budgets by 5%.

Businessmen and diplomats here from both the East and West say, however, that Romania's independent activity now has far less credibility than it did five years ago. "They try to play a role, but there is no role for them . . . anymore," said a West European diplomat here. "They are no longer regarded as a reliable partner by anyone."

Ceausescu's ties with the Reagan Administration remain among Romania's strongest in the non-communist world. The Administration has struggled to maintain a most-favored-nation trading status for Romania, despite growing opposition in Congress.

U.S. officials argue that Romania's policies are still important because they obstruct the complete economic and military integration of Eastern Europe by the Soviet Union and pressure Moscow to make some concessions in arms control and defense spending.

Paying Off Debts

Ceausescu's domestic policies, however, have restricted Western economic cooperation in the last five years while drawing widespread attention from human rights groups. Since 1981, the Romanian leader has been committed to paying off the nation's debts as quickly as possible. To accomplish this, he has imposed siege-style austerity on Romania's 22 million people in order to save money without limiting huge investments in heavy industries and major public works projects.

This fall, as in the last three years, diplomats and economists here predict a winter of severe hardship for Romanians, with scarce food supplies, drastic limitations on heating and electricity and a ban on private transportation.

"The degree of suffering for people will depend on how cold it gets," a senior Western diplomat said.

Larger Harvest

Western experts say the economy, crippled by the severe import and energy limitations in recent years, may be slightly improved this fall because of a larger harvest. Last year's crops were disastrously affected by severe winter cold and summer droughts.

Agricultural production is still believed to be substandard, however, and staple foods--including beef, milk, eggs and many vegetables--have almost disappeared from markets. In rural areas, bread has been rationed to about 14 ounces per day for a typical family, according to one town mayor. Gasoline is rarely available, and the lines of cars outside open stations stretch for miles.

Romanian officials frequently point out their success in paying the national debt, which shrunk from $10.5 billion at the end of 1981 to $6.6 billion at the end of last year. However, the government was still forced to reschedule $800 million in payments to banks this year, and banks and Western businesses have been unwilling to invest in the country despite its financial record.

No New Loan

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