The figures of the disaster you don’t see on TV / How Ciucă and Ciolacu get away with the serious crises of their government

Two key news stories have slipped under the radar of major news broadcasters. In places where they have been mentioned in passing, however, you won’t see much debate about the responsibility of the Ciucă government for figures that give economists and the public the creeps.

The first news was published on Tuesday, exclusively by Economedia.ro: Romania is borrowing money at record interest rates of almost 8% on a long-term basis.

A deep silence settled over this news. When they were in the opposition, Marcel Ciolacu and the PSD leaders accused Florin Cîțu, then finance minister, of „pawning our children’s future” and „putting Romania in debt for three generations”.

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At the time the PSD leaders were screaming at the liberals, calling them to task about what they were doing with the money they borrowed and complaining that the interest rates were too high. Now they are nowhere to be seen on the same issue.

The Ministry of Finance is led today by Adrian Câciu from the PSD. But the discussion has suddenly disappeared from the public arena, even though the interest rate at which Romania recently borrowed more than half a billion lei has reached a record high, unheard of in the last 17 years at least.

All countries are borrowing today at significantly higher interest rates because of the pandemic and the war in Ukraine, but Romania is the record holder in the region. On the same day, the Central Bank raised its monetary policy interest rate from 3% to 3.75%, with the direct consequence of increasing loan payments to debt holders and the cost of borrowing from banks.

The rate hike was much lower than the market expected, a sign that the Central Bank is rather chummy with the government and does not risk a direct collision. Instead, the Bnak’s Governor, Mugur Isărescu, is taking a swipe at those who have criticised the Central Bank for not taking more aggressive measures and recommends they drink a cup of lime tea.

The high interest rate says something about the poor performance of the Ciucă government, about the lack of confidence in Romania’s economy and about the delay in reforms in key areas that would further reduce spending by an oversized state that can still afford to pay fat special pensions or well-paid party sinecures.

These high interest rates not only reflect instability in the region, the war in Ukraine or the effects of the pandemic, but say something essential about the distrust of the way Romania is governed today. By contrast, any government that manages to borrow at low interest rates immediatly boasts that the money borrowed from the market at reasonable costs is the result of confidence in that governments’ policies.

The second news item tthat should be flushing on TV screens today: Inflation rate climbed to 13.8% in April / Gas prices rose by 85%, and that of potatoes by 41%. 

Here things were a little better, and the News channels couldn’t avoid a phenomenon felt keenly in the wallets of all of us: purchasing power is collapsing dramatically. We’re not Turkey yet, but month after month we see money loosing its value in the shopping cart at the supermarket

Here, the TV news channels have been careful to help the government propaganda a little by identifiying the enemy of the markets, the speculator. It is because of the greedy tomato and cherry seller that prices are rising in the country, and no mention of government incompetence is made. What’s more, the government is discussing an Emergency Ordinance (OUG) to combat speculation, a brutal intervention in the markets reminiscent of ominous Emergency Ordinance 114 issued by the illustrious three of Dragnea, Vâlcov and Teodorovici.

It is the job of economists to explain in detail the causes of galloping inflation, how much of the responsibility lies with the government and how much is the result of external crises. But one thing is obvious even to non-specialists: the Ciucă government and those before it, Cîțu and Orban, did not cut spending so that the state could adjust it in line with productivity and thus limit the need to borrow to finance its budget deficit.

Incidentally, Romania is under infringement proceedings in Brussels for the excessive deficit, so it has limited room for maneuver. It can therefore no longer play with increasing the deficit to cover its expenditure, but neither does it cut spending, on the contrary, it increases it through a series of promises and populist measures.

But party money and government contracts have pushed all the above topics off the TV agenda. The PNL and the PSD have invested millions of euros in a press that today seeks and recycles any other subjects in order not to disturb the Government.

Prime Minister Ciucă, PSD President Ciolacu have an easy pass at every public appearance, they are no longer publicly held to account for the government’s counter-performance in the economy because no one asks them.

The news broadcasters cover anything else night after night, except the signs of Romania’s multiple crises. Luckily for them the war in Ukraine fills the void and keeps the public occupied with the dramas of others.

This is also where the opposition could play a more important role in sounding the alarm on the growing problems in the economy. This is not happening for several reasons. Firstly, the two parties, AUR and the USR, have completely different agendas.

The AUR is constantly peddling scandals and promoting a sovereignist, populist, anti-Western and overtly pro-Russian agenda, which gives it some visibility, while the USR PLUS is massively boycotted in the media and their messages rarely make it to critical mass anymore.

On the other hand, with all the censorship and media boycott, the party is also partly to blame. USR PLUS leaders seem to spend all their energy on internal strife. Their public outings are rare, their offline impactful actions almost non-existent, they each play their own score mostly in their Facebook bubble, which is why even the party’s audience is hovering around 10% in the polls.

At times like this, it is the role and duty of the opposition come befofre the public with its economic experts and presents detailed analyses of causes and solutions, and speculate to the fullest on these importat themes like galloping inflation or state borrowing at huge interest rates, bring out their leaders from the centre and local leaders in press conferences all speaking with the same voice, and organise street actions to convey to the public that they are aware of the real problems and have solutions.

But as long as the press is anesthetized with money and the opposition is weak, disconnected from reality and short of leaders, the PSD-PNL-UDMR coalition will pass through the worst economic and social crises like gees through water.