Bucharest – 23 April 2023. I think of myself as a fairly recent arrival in Romania, having arrived (on a three-year posting with one of the City of London law firms) in 1996. Although I missed some of the excitements and hardships of the years immediately following the Revolution, I was in Romania to experience the culmination of two of what may be described as projects of national importance for Romania, one in 2004 and the other in 2007.
The first, in 2004, was Romania’s admission as a member of NATO. If ever the value of this needed illustration, the events in Ukraine since 2014 (and particularly since 24 February 2022) provide a stark contrast with the stability of conditions which we have enjoyed in Romania. Leaving aside local economic benefits from the stationing of NATO forces in various parts of Romania, the level of security which comes from being a member of NATO makes it much easier for foreigners to consider the country as a safe place to invest, do business and live.
The second was in 2007, with Romania’s membership of the EU following the progress made in reform so as to adopt the EU’s Acquis Communautaire, with Romanian legislation being aligned with that of the EU. Whilst this may still be argued to be a work in progress in some areas and the efficiency of absorption of EU funds by Romania has been behind that of other new member states, I think that EU membership has been highly beneficial for Romania. My own experience has been that it has been a great deal easier for clients from other EU states to do business in Romania since EU accession.
Some sixteen years have passed since Romania joined the EU and some might argue that the era of flagship projects of national importance has passed. I do not think that this is correct.
It might be argued that the next “big thing” for Romania will be to join the Schengen Area, allowing the removal of border controls with most of the other EU states. The failure of Romania (and Bulgaria) to join Croatia in the Schengen Area at the end of 2022, apparently due to opposition from the Netherlands and particularly Austria, has caused a great deal of public comment and it would be interesting to know whether Austrian-owned businesses in Romania (of which there are many) have suffered as a result, or are continuing to do so. Whilst I (as a UK citizen) can sympathise with Romanian citizens in passport control queues to enter the Schengen Area, I do not however detect that not being in the Schengen Area has a disproportionate effect on business prosperity and I have not noticed that joining the Schengen Area has been described as a project of national importance for Romania. Perhaps “nice to have” would be a better description for this?
Of far greater importance for Romania and for the business environment here in the medium- to long-term is Romania’s drive to become a member of another international structure, following membership of NATO and of the EU. This is the Organisation for Economic Co-operation and Development, commonly known by the acronym OECD. This is an intergovernmental organisation of what may reasonably be regarded as developed (or richer) countries with market economies and systems of government based on democracy. There are currently 38 members of the OECD, including the UK, the USA, Australia, New Zealand, Japan, Israel and most of the countries in the EU. In particular, EU countries which might reasonably be regarded as Romania’s peers have already joined the OECD including Poland, the Czech Republic and the Baltic States.
Although talk about Romania becoming a member of OECD can be traced back to 2012, significant progress has been made recently with the adoption of a “roadmap” for Romanian accession. In February 2023 I represented the British Romanian Chamber of Commerce at a well-attended presentation made to business organisations on opportunities for business which will come from OECD membership, organised by the Prime Minister with speakers from the OECD itself and from other OECD member states. This presented OECD accession as a third “national project” following membership of NATO and of the EU and the political will to get this done certainly appears to exist. In my experience, for the Prime Minister himself to open such an event and to stay to the end and close it is quite exceptional.
What opportunities can business expect from Romania’s accession to the OECD? Membership will not bring defence security or access to a European single market as membership of NATO and of the EU did. There are some distinct and specific advantages: for example, some investment funds will only invest in OECD-member countries. As an association of richer developed market economies, the OECD and existing OECD-member countries have a body of expertise to offer Romania, reflected in the OECD’s motto: “better policies for better lives”. As part of the accession process, 26 OECD sectoral Committees covering almost all public policy areas: capital markets, investments, social affairs, competition, public and corporate governance, integrity and transparency, taxation, trade, agriculture, small and medium enterprises, etc. will review Romania’s practice in these areas. It is to be expected that Romanian governance will be able to benefit from OECD experience and that the business environment and community in Romania will indirectly benefit from the adoption and application in Romania of “better policies” which are influenced by OECD norms and experience.
There may not be immediate transformative effects such as Romania experienced on becoming a member of NATO or of the EU, but I believe that over time, Romania’s membership of the OECD and the adoption of OECD practices in governance will make Romania a much easier place to invest and in which to do business. Perhaps the patience engendered by having to wait in queues for passport controls pending Romania becoming a member of the Schengen Area will help whilst we wait for these benefits in governance to manifest themselves. In the meantime, to those readers who are nationals of OECD member states, please do encourage your governments to support the admission of Romania to the OECD, with all the reforms in Romania that this will bring!
Neil McGregor, Vice-Chair for Corporate Governance & relations with the British Chambers of Commerce, immediate Past Chair, BRCC