Romanian PM wants US to build up Balkans

WASHINGTON, May 23, 2000 -- (Reuters) Romanian Prime Minister Mugur Isarescu said on Monday it was time for the United States to concentrate more on building up the Balkans economically as a way to further isolate the Milosevic government in Serbia.

Isarescu, a banker and nonparty technocrat who took over as head of his struggling country's coalition government in December 1999, urged Americans to think of the Balkans more in terms of economic needs than of ethnic and political strife.

Building up the Balkans, through the Stability Pact set up to stimulate the region after the 1999 Kosovo war, would help draw a contrast to Serbia, where strict sanctions on President Slobodan Milosevic have dragged the economy down.

It was "important to show clearly that the countries which share the basic values of democracy and free markets are recovering strongly and their living standards are increasing," Isarescu told a forum organized by the Centre for Strategic and International Studies.

Isarescu, in the United States to promote financial help and investment in a country still struggling to reform the moribund economy left by decades of communist rule, painted a positive picture of Romania's economic prospects.

He said the 1.5 percent GDP growth for this year would be surpassed, adding, "Perhaps we will have more than 2-3 percent." In the medium term he expected 5 percent to 6 percent annual growth in real terms.

Exports were up 25 percent in the first quarter of this year compared to the same period in 1999, he said, adding there were expected to be increases of more than 50 percent in trade and in the construction and processing industries this year.


"I do believe a critical mass of the reforms has been done and from now on we are entering into a sustainable and strong economic growth," he said.

U.S. investment was already up by 50 percent compared to 1999, said the Prime Minister, who is imposing tough domestic policies, including a wage hold-down, to help secure more international financing.

The Romanian leader held talks with U.S. Secretary of State Madeleine Albright on Monday afternoon, and the State Department said both officials "expressed their dismay at the increasing repression in Serbia, and discussed ways the U.S. and Romania can strengthen our support of Serbs struggling for democracy."

Isarescu was also to meet U.S. government economic leaders as well as IMF and World Bank chiefs before leaving for New York on Thursday.

Isarescu introduced an economic strategy in March, welcomed by the European Union, which called for noninflationary and sustainable growth and has the backing of all political parties, trades unions and employers.

Isarescu has acknowledged the difficulties of implementing tight policies in an election year, with general and presidential polls due in November.

But he has stressed the need for strong structural changes, pointing to specialists' assessments that 25 percent of the economy was rejuvenated, 35 percent was inhibited and 40 percent was not viable.

He stressed Romania's strong desire to join both the European Union and the North Atlantic Treaty Organization. Bucharest had hoped to be considered as one of the first former Warsaw Pact countries to join in 1999 but was disappointed.

He said NATO members, led by the United States, should place more value on Romania's contribution to stability in the region and its efforts to reform its military to make it compatible with the alliance.


"Kosovo would not have been successful without the cooperation of the democratic southeast European nations," he said, referring to support by Romania and other Balkan states for NATO's bombing campaign against Yugoslavia last year.

He stressed how much such cooperation was costing, mentioning specifically the disruption of traffic on the Danube River, a main trade artery between southeast Europe and the rest of the continent.

He urged Western states to separate the policy of sanctions from the need to clear obstacles, including fallen bridges, obstructing the river.

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