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Romania

Capital Bucureşti
Time Zone EEST (GMT+2)
Country Code 40
Mobile Codes 71,72,73,74,75,76,77,78
ccTLD .ro
Currency Leu nou (1EUR = 4.1 RON)
Land Area 238,391 sq km
Population 22 million
Language Romanian
Major Religion Orthodox Christianity

Creating Romania’s Foreign Trade: Interview with Ambassador Adrian Constantinescu

In this remarkable new interview, Adrian Constantinescu, the outgoing Romanian ambassador to Macedonia, recounts the highlights of almost 40 years of academic, governmental and diplomatic experience- with emphasis on his specialty, foreign trade negotiations.

One of a handful of figures who helped guide Romania’s economy out of the depths of communism during the 1990s, Ambassador Constantinescu also shares his insights on the economic and political exigencies now facing Western Balkan countries aspiring to do what Romania did- join the European Union. This long, lively and often humorous interview, conducted by Balkanalysis.com Director Chris Deliso, is peppered with anecdotes and interesting details deriving from Ambassador Constantinescu’s wealth of experience.

……………………

Chris Deliso: First of all, I would like to thank you for taking the time to speak with us today. For some background I would like to start off by asking: how did you become interested in diplomacy in the first place, and economics? Considering that the period in question was a fairly unfriendly one for the market economy in Romania, no?

Adrian Constantinescu: This is a long story! I am a trained economist by background. In 1971, I graduated from the Academy of Economics in Bucharest, from the Faculty of Foreign Trade. I was only about 22 years old. After graduating, I started to work in the Institute for World Economy in Bucharest- it was kind of a combination of an ostrich and a camel.

CD: Huh? What does that mean?

AC: It’s a Romanian saying- it sounds better in Romanian, I guess. I mean to say that the institute offered a combination of applied research and theoretical research. The latter was fundamentally under the Council for Science and Technology, a government body. As for the applied economy part of it, we were under the head of the Ministry for International Trade.

Western Balkan states should “take efforts to raise productivity and to increase the competitiveness of their products,” Ambassador Constantinescu believes.

Some Novelties

CD: So, all that said, can you explain how these institutions were allowed to function during Romania’s hard-line Communist period and the rule of Ceauşescu?

AC: Well, despite all of the negative things Ceauşescu is known for, at the same time he did bring some novelties. The kind of stress he put on the field of foreign trade and international cooperation was one example. Romania was the first communist country to recognize West Germany, in 1967. And it was one of the first, maybe the first after Yugoslavia, to have institutionalized relations with that most dreadful representative of world capitalism, the European Economic Community.

CD: (Laughter) Indeed.

AC: I am quoting from memory of what Ceauşescu said. In this context, the institute was sort of an island of knowledge in an ocean of ignorance. Why? Because it was meant to help the development of international economic relations- it was not seen as an interdependent body, but as a branch apart. That’s why in this institute was kept the best economics library, and it was the first Romanian institution to be linked in real time with the Reuters economic quotations and so forth. We had some kind of terminals where we could find the quotations from the London Stock Exchange, the New York Stock Exchange, etc.

CD: Why was Ceauşescu interested in economics? Was it a personal interest, or something from the party in Romania at the time, or something else?

AC: No, Ceauşescu was interested in this kind of economic relations personally. This was not so, however, in the case of his wife, who was completely opposed to the international part of it.

Running into Difficulties

CD: She was more isolationist…

AC: Yes, and also ignorant of the outside world in general. I was one of those who suffered from this ignorance, too. Not because I was a dissident. I cannot pretend I was a dissident actively. I had a huge problem, though, to get my doctoral thesis published because Madame Ceauşescu was completely against this idea of openness brought about by the participation in the world economy and trade. She was a very introverted person, and this affected how she looked at the world.

CD: So… her opposition to foreign trade was more personality-driven than ideological in character?

AC: Yes exactly, and she imposed this view whenever she wanted to on her husband. I can explain why I had this problem. My thesis was about export incentive mechanisms, which was a very fashionable topic at that time. It was the first such work that was done in Romania. I was analyzing the whole international experience, and putting this under a theoretical approach. I was the first person in Romania to write about export incentive mechanisms [under the] categories budgetary, financial mechanism, and fiscal mechanisms.

CD: So how did this get you into trouble with the authorities?

AC: In my approach, I was trying to, as we say in Romanian, sort of kick the saddle in order for the horse to understand. It was not possible to criticize the regime directly, so we had to discuss these things indirectly. My thesis was considered ‘wrong’ because it was not directly about the party’s policy for stimulating foreign trade.

CD: Fantastic! What a concept!

AC: Finally, they decided I could go ahead because I added one chapter about Romania- and the negative effects of stimulation there! If you did not fulfill the export strategy, you were penalized in your salary. But there was one final hurdle: this was the fact that I had failed to include a quotation from the marvelous work, theoretically and practically, of the great leader, Nicolae Ceauşescu.

CD: Fantastic! This was a rule then?

AC: The [thesis supervisor] didn’t say anything about this. How could I do it if he didn’t say? The idea came from the editor. He said, ‘you know what? You should write two or three pages for the preface. For 180 pages, you need 6 quotations. Just put all the quotations from Ceauşescu in the preface. That should do.’ It took me two years. but I was able to clear the hurdle.

Getting To Work

CD: So you successfully navigated the waters of communist politics with your thesis. What happened next?

AC: After my experience in the World Economy Center, I then graduated in 1981 from Bucharest University’s Faculty of Law. These two degrees plus a PhD helped me tremendously for the diplomatic activity that was to come after the revolution. Before that, I was not qualified to serve my country on a long-term basis. Why? Because one of the greatest scandals was that I had relatives abroad.

CD: Aha! I see you were very dangerous indeed. Had they been political asylum-seekers or something like that?

AC: No, they hadn’t just fled the country or anything- they had just left, by reason of marriage, in 1978. But I was blocked for 3 years from traveling abroad because of that. In that time, we needed an exit visa to leave the country, you know. For us in Romania, it was one of the harshest systems.

CD: What were you doing precisely then, after you graduated? Did you start in the foreign ministry then?

AC: No, no that came later. First I stayed on the economics side for many years. My activity in the Institute was 19 years in all. Starting at the age of 28, I was chief of the Department for Economic Organizations International and Economic Mechanisms, namely, to be more precise, relations with GATT and later preparing for the Global System of Trade Preferences for Developing Countries, such kind of topics.

Calculating the Benefits

CD: What did this entail, precisely?

AC: We were, I was, that is, specialized in international trade negotiations and in this capacity we were preparing for the Ministry of International Trade all the potential alternatives for negotiations. In other words technically all the possible alternatives were made by me and my team- they were coming with the politics, and we were coming with the real things. We were calculating, as we didn’t have computers then, we were writing out by hand all the pluses and minuses [of specific alternatives], and on this basis recommending which ones would be most profitable for Romania.

CD: So they did listen to you, to some extent? I mean, during communism there was some possibility for interacting with the political leadership?

AC: Well, the political decision-makers could take or not take these recommendations. But we had to make a good case for it. So this reminds me of another interesting phrase once made by our director, who was a very clever man, Mr Majescu, who told us immediately, ‘be very careful. When you put something in writing, everything should end up with conclusions and proposals, not with confusion and presuppositions. In Romanian it sounds better, I guess.

A Surprise Call

After the revolution, I joined the Ministry of International Trade in 1990. They had wanted me previously, but I couldn’t quality for those [political] reasons. But then I qualified, and one evening in 1990 I was surprised by a call from one of my colleagues… the man who was going to be proposed as deputy minister of foreign trade, Napoleon Pop, that I join his team. He proposed for me to take over as the director of the section for international economic organizations. In July 1990, immediately when the new government came after the first democratic elections in Romania of May 20th, we had a new, real parliament. After this, the Ministry of International Trade was the only one which was dismantled, albeit for just a few hours.

CD: Why?

AC: Everybody working there got his dismissal, and it so happened that the minister proposed for international trade, whose name was Constantin Fota, accepted this position- provided that the prime minister agreed with him to nominate his own deputies, and for them to nominate their own directors, and to keep or fire people as they saw fit.

CD: Aha. So I imagine he agreed?

AC: Yes, the new prime minister agreed. All the directors except for one were dismissed. That is how I came into the picture. But having worked with this division for a long time, I knew all the people. I kept half of those who had been there, and the other half I let go. I was head of the organization for one-and-a-half years when, one day, the minister called me and said the following: he said, ‘just pack your things, you are going to Geneva as minister counselor and at the same time resident chief negotiator for Romania in the Uruguay Round!’ That was the eighth round of global trade negotiations and the outcome of this round was the declaration of the WTO.

CD: Wow! That must have been a big surprise. And exciting, I should imagine? How were the working conditions like in Geneva? What kind of new challenges did you have?

AC: I was there from 1991-95. The WTO was decided in 1994 at Marrakesh. The job was very difficult at the beginning- we Romanians were just beginners when it came to trade policy, whereas many of the other countries were quite advanced. Like the other former communist countries members in GATT had to adjust our trade policies, and at the same time negotiate what had not yet been adjusted. This reminds me of a scene that flabbergasted everyone in the room.

‘Romanian Bargaining’

CD: ‘Flabbergasted’? Did you just say ‘flabbergasted’?

AC: Yes, why?

CD: It’s just unusual, people always tell me that it’s a very American word that no one else uses.

AC: Well, as we will get to, I later spent time in America- maybe I picked it up there? I don’t know. In any case, the scene we were involved in that, yes, flabbergasted everyone in the room- this occurred in the Uruguay Round’s negotiations in the agricultural field. It happened like this.

We Romanians were being compelled to make all the non-tariff barriers, subsidies and state aid, etc., be transformed into tariffs and customs duties. At the same time, we were to take into consideration the rates applied by the EU, having in mind the fact that we were going towards the EU. In order for them not to pay others for our admission, we had to be as close as possible with the rates for customs duties. These were the constraints. So, how could we fulfill these requirements? The starting point for everything was situated before the revolution. The state monopoly on foreign trade had meant nothing counted except the political decision by the state. Now, how were we to quantify this, to transform state control completely into a figure?

CD: So what did you do?

AC: Well, we went in front of the other countries negotiating, and put on the table the following offer: across the board, the rate will be 750 percent!

CD: (Laughing) 750 percent?

AC: Yes. For a minute, there was complete silence. They thought – even the interpreters, they were not sure they had heard it correct – that it must be a mistake. Because this is what I call negotiations when you are in the minority- just to surprise everyone, and then calm them down. Then we started to negotiate for real. It was an official offer- they had to take it into consideration, even if it seemed ridiculous. Keep in mind that already then the EU had rates going over 200 percent for some countries. We were not yet members so we could negotiate.

CD: What did you do then with your negotiations? Did you go down?

AC: Yes, we gradually came down to what we had actually wanted in the first place, 140, 160 percent, in there. Still, it was very much appreciated by the EU that we finally took it to be as close to their rates as possible. Some other Communist countries started by offering 20, 40 percent and were not successful. They were not clever enough to start with a high level and go down. That was my idea.

CD: Very interesting. But I can appreciate that it must have been a difficult place for Romania to be in, with that kind of background.

AC: I hate to give something without obtaining something in exchange. Another example from that time I was involved in was the Romania-New Zealand negotiations. They wanted us to accept duty-free import of… what is that fruit they have-

CD: Kiwis?

AC: Yes, kiwis. And we wanted to give them what they asked for, it was not a problem for us. But, I wanted to get something in exchange. So I proposed that they accept in return free import of canned beef, which is what we were exporting at the time. They were surprised. The ambassador said to me, ‘but, why?’ So I invented the following: ‘you are in the other hemisphere, so the seasons run opposite ours. This means you export in winter, but my poor Romanian producers of apples will be hindered by this, because there will not be apples during the right season, and they cannot be preserved for the winter. My poor farmers are working very hard already, and now you come up with your kiwis! It’s too much!’

CD: (Laughing) That’s a good one-

AC: He was surprised. But finally he said yes, and we got our duty-free beef exports accepted. It remained a classic case of Romanian bargaining. We had to- it was very difficult for us to negotiate, for example, with the Japanese. There were only three of us on our negotiating team, and in front of us, about 28 Japanese experts, each specialized in something different. You can imagine! We had to do whatever we could to get any kind of advantage.

CD: What else did you do to try and survive in those conditions?

AC: We tried to think of anything we could. For example, we were interrupting negotiations, saying we had to consult the capital, when in fact we didn’t… or summoning delegations at 10 in the evening, when they were very tired- whatever we could do.

Channeling Proposals

CD: It sounds like you had a lot of fun there.

AC: Well, Geneva was my first posting, as it were. This kind of interaction was what I enjoyed most. When I finished it I left my son behind, and maybe it was for his own good, because he was in his last year of high school, and if he had gone back to Romania he would have lost a year readjusting.

CD: After that, did he stay there? Or return to Romania?

AC: No, he continued his studies there and obtained two diplomas, in economics and computer science. Now he is 34, and chief operating officer of a financial holding company in Switzerland. And, I am proud to say, the youngest executive in Switzerland not born there.

CD: That’s great to hear, congratulations. But you say that you left Geneva… so where did your career take you next?

AC: After four and a half years in Geneva, I almost came back to Romania as director-general for European integration and multilateral economic relations under the Ministry of International Trade. But here comes another funny thing: at that time, the minister, Dan Ioan Popescu, was channeling through me all the proposals which might have something to do with Romania’s international economic pledges and obligations. He wanted to be in line with all these international rules and regulations, and knew I had the knowledge about them from my work.

Well, among these issues one day something came with respect to a trade-dumping affair with the US. Namely, the US administration trade representative wanted us to undertake an obligation whereby we would promise to practice so-called minimum pricing for products. That means selling prices under production costs, and this is very important. Such prices harm the national industry of the importing country.

Solving the Problem

CD: What was the issue, or let’s say the product involved in that case?

AC: I don’t remember exactly, except that it was some metals product. So when I was asked [should we do it], I said no. If the Romanian state does this, I argued, it would mean recognition of the fact that foreign trade remained a state monopoly, and the state would thus be interfering with the economy. The decision for America was made in the ministry with a so-called memorandum to the minister, and he sent it to me. The division was very angry with me and the deputy minister in charge there – one of my former university colleagues in fact – said, ‘if you are so clever, why don’t you go and solve this problem!’

CD: So you did?

AC: Yes. I had never been to America until that time. I was a little bit nervous, as you can imagine. But, I went to Washington and for the hearings of our position I showed them that I knew from Geneva some practices of the American negotiators, when it came to negotiating the anti-dumping [policy] at the WTO. I knew their arguments and tactics.

Another element that was very helpful for us then was that we were in the same ‘basket’ with South Africa- at that time apartheid had just ended, and Nelson Mandela was in power, and this was very important for the Americans. This anti-dumping investigation was with both us and them, and we had to be treated together. So Romania actually benefited because the US wanted to help South Africa and was thus willing to give them more [than they might otherwise have]. In any case, I convinced the American side to drop the anti-dumping case by citing their own arguments, and we used their own arguments in our favor; of course, we realized that the South Africa relations issue would help us, but we did not mention it.

Another Surprise

CD: Wow. That must have been an enormous victory-

AC: Yes, and it was quite complicated too. In trade-dumping cases, the politicians are under pressure from industries. The [Romanian politicians] were not convinced but were under pressure. After coming back from Romania, I was congratulated, and not even one year later, I was called by the minister. He said, ‘pack your bags and go to America!’ It was a total surprise.

CD: Wow! What inspired them to increase their representation there?

AC: I think they just realized that Romania, as a reforming country moving towards the EU, needed experts in multilateral trade. And so in November 1996, I departed for Washington, to head the economic and trade representation of Romania in the United States.

CD: How many were you at the time? Was it a big mission?

AC: In the US, we had four persons in Washington, five in New York, and one in LA.

CD: What were you supposed to be doing, with these people? To gain investment, to negotiate trade, etc?

AC: Yes, I managed to convince [American companies] to invest in Romania- my goal was to attract foreign investment and trade. Perhaps, it was due to personal relationships. I am a fan of personal relationships, because without them we cannot reach any specific goals. Diplomats in general are either very stiff or very fond of themselves. They cannot accept that they are normal people, generally speaking. When it comes to being normal, some people become very surprised about a diplomat being a normal guy.

CD: Hey, I’m not a diplomat, but I think I’m a normal guy.

AC: I tried to be professional, but stay normal. Maybe I could do this better because I had not been a diplomat from the very beginning. I was approaching everything from the standpoint of an economist. Even now probably, I act this way, despite being an ambassador.

CD: So, what were the results in the US? Did you manage to secure investments for Romania?

AC: Yes- I think it was very successful. I managed to mediate American investments in Romania, which in time amounted to $600 million. We were very happy with that.

Switching Teams

CD: That’s great. But you did become a diplomat after that period, yes? How did that happen? As you said, it is a very different mentality…

AC: It’s true that it is very different. During my stay in America, one of our foreign ministers was Andrei Pleşu. He was a character, in the sense that he was a very wise man, a former minister of culture, and not very fond of dealing with complaints or taking care of very specific quantifiable things. However, in his capacity as foreign minister, there were various specific problems I had to approach him with. He was not very pleased- he said, ‘I will remember you, because you are very stubborn and pushy.’ I couldn’t be very sure if he was joking or serious. I don’t know how to name this attitude of his. He was a pragmatic guy, and still is.

Things happened like this. Towards the end of my third year in the US, I got a phone call one day from the foreign ministry in Romania. Until then I had been working my whole career under economy. It was a call from human resources, from a clerk doing her job: ‘as you know,’ she said, ‘you have been proposed to serve as Romania’s next ambassador to Sweden- please send us your CV.’ I was completely surprised. I didn’t know a thing about Sweden!

CD: (Laughing) It seems like you have a tendency for these important things to happen by surprise-

AC: Maybe yes… well, as it happened, I passed through my hearing commission in parliament in a flash in November, and in December I came back. Then on the ninth of February, I was on the plane to Sweden!

Scandinavian Treasure-Hunting

Before I left, I was told that I had a very big problem to solve. The bilateral relations between Romania and Sweden were at their lowest level ever.

CD: (Laughing) With Sweden? How can anyone have low bilateral relations with Sweden?

AC: It was a very specific thing. At that time, Sweden was the only country with which Romania had not succeeded in resolving the issue of historical arrears between the two world wars. Out of 13 European countries, the only one we didn’t succeed with was Sweden. The situation involved some loan extended to Romania in 1930, of 60 million gold dollars at the time, and also some nationalization expropriations and concessions on the eve of the communist era…

CD: From 1930? Seriously?

AC: Yes, and because of this we had a hard time in Brussels and with the IMF and the World Bank, too. Sweden stopped us from advancing with integration in the EU and creating laws, just because of this case. And all that time they were calculating, and each and every time, the new level of arrears went up. They ended up demanding 4.3 billion dollars- it was unacceptable, of course. My problem was to solve this economic problem that was making a diplomatic problem for the country. They sent me because they thought that with my experience I could solve it.

CD: So what did you do?

AC: I had to convince them that Romania as a sovereign country could not negotiate with a small company that had somehow gathered all of these receipts, proofs, natural and legal persons’ titles and deeds from 1930. But this small company had gathered this and they were practically blackmailing the country. My biggest problem was to convince them that we had to negotiate government to government.

CD: I see- so what happened? Did you manage, with some Romanian bargaining?

AC: Well, I had the good luck of getting help from a group of persons who I had met by chance. And they promised to help me, provided that they would remain nameless and faceless. And so came the negotiations, which were very interesting. In the end, I succeeded, and they said I could organize the first visit of a Romanian prime minister to Sweden since 1968. So the prime minister at the time, Adrian Năstase, came to Sweden from 8-10 April 2001. It was all arranged in less than a week.

CD: Remarkable! So, you said the negotiations were successful for Romania. At the end of the day, how did you resolve the arrears? How much did you have to pay?

AC: In the end, we paid 120 million dollars instead the 4 billion they were asking for in the beginning. From my experience with Romanian negotiating, I was used to this kind of thing.

What EU Candidate Countries Can Learn

CD: So finally perhaps, drawing on all of your experience over time, and also considering your more recent years in Macedonia – which along with other Western Balkan states would like to join the EU – what advice can you give based on the Romanian experience? What kind of approaches or tactics can these states take in their membership negotiations?

AC: First, and very importantly, they have to be willing to accept compromises in the political and economic fields. This is the reality, and this is was what we did. If we hadn’t accepted compromises for specific remaining chapters like justice and home affairs, or the environment, for that matter in 2004, Romania would not be a member of the EU today.

It is the idea of mutatis mutandis – changing the things which need to be changed – the concept of learning to accept positive compromises. This is what diplomacy is. I understand this is more sensitive in some cases, like for Macedonia, the call to compromise [with Greece] over the country’s name. But if they do not compromise at some point in the present, they may miss their larger goal in future.

CD: From the economic side, though, are there specific policies or things that need to be done? For example, when you talk to the average farmer, few know how joining the EU will in fact actually affect their livelihood, export ability, and competition from imports, etc. And I imagine this goes for all industries…

AC: In economics, when it comes to compromise and negotiation, the second thing the Balkan states should do is that they should take as quickly as possible the necessary measures to align competition rules. They should also take efforts to raise productivity, to increase the competitiveness of their products- otherwise they will be flooded by products from outside.

CD: Is there something specific the Balkan EU hopefuls can learn from Romania’s experience?

AC: Yes. They have to do what we didn’t do in time. Thus they could learn something from us. And that is to ensure the highest possible degree of usage of pre-accession funds. Otherwise, they will lose money and not reach the objectives proposed.

CD: Yes, there is that issue, but what we frequently hear is that there is not enough education about how to apply, and the paperwork is enormous, meaning most small businesses can’t even begin…

AC: These governments need to develop the administrative capacity to be able to handle this and to educate. For that, they need less politicization of professional jobs, and more powerful stress put on professionalization in general. Of course, this has been a problem now in Romania. But the situation here in Macedonia sometimes reminds me of Romania, and how it was 10-15 years ago.

CD: That sounds depressing, but you’re not the first person from a former communist country to have made such a comparison to their own country. Still, the government talks about the work of ‘economic promoters’ abroad and attempts to gain investment. Does this count for something?

AC: There is a need for economic promoters, yes. But it goes without saying that there is not enough diplomacy, as people are too busy with domestic issues and politicization of local government. What is thus lost is the bigger-picture view- necessary procedures that must be followed, the need to abide by rules, regulations and procedures of te European Union and so on. And, even if it is not very visible, EU and NATO issues are going together for economic development.

CD: How do you mean?

AC: I used to give them an example. One year after Romania joined NATO, I said, the amount of foreign investment in the country amounted to the same total as it had been for the whole period from the revolution until then- that was almost 10 billion euros in one year!

CD: Wow. To what extent do you believe that more foreign investment that would come from joining these bodies would help to lessen the problems caused by ethnic and political stresses?

AC: Yes, these factors are definitely exacerbated by positions taken by different groups and parties. Some people, and I do not mean to single out a specific person or country, are blinded by their thirst for power and they seem to not pay attention to civil society, democratization and other important things. They are just eyeing their personal interest. I think is too much, and time for this region to move on from that mentality.

CD: Mr Ambassador, thank you very much for your time, it has been a great pleasure and an honor talking with you.

AC: Thank you!

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