Feature

• Managing Wealth

• EU Accession

As a small class of wealthy individuals emerge in Romania, The Diplomat looks at the ways in which they can manage their riches

What does a hard-working business person want to do once he or she has made a load of money?
Stick it in a current account with an interest rate related to inflation?
Or allow the money to start working for itself?
Well, banks in Romania are beginning to offer this second service through more advanced finance products so that, in order for rich clients to manage their wealth, they no longer need to jump on a jet plane and travel to Switzerland, Frankfurt or the British Virgin Islands.
The threshold to become a private banking client in Romania is between 75,000 and 100,000 Euro. In central and
eastern Europe (such as in Prague and Budapest), the limit for private banking clients is the same, but in Austria the threshold is one million Euro.
Around 50,000 citizens constitute potential clients for private banking services, according to an ING Bank survey. Most of them are concentrated in Bucharest and they do not make use of advanced financial products and services, such as bonds and titles, preferring to invest in real-estate, business assets and material treats such as yachts or cars.
Private banking services in Romania are free, but abroad the clients may pay around one per cent of the initial invested amount or of the profit gained, according to Anca Craciun, deputy executive director for private banking in BCR.
However the service is still in its infancy.

“Private banking in Romania is, for the time being, at a very low level, since its packages are limited,” Radu Ghetea, president of the Romanian Banking Association told The Diplomat. “There are not very specific products or services.”
Instruments available on the domestic market are: foreign exchange, Eurobonds, Romanian state government bonds and Romanian treasury bills, interest rate deposits and municipal bonds.
In the west many services are based on funds.
“Funds in Romania were very unsuccessful, like the National Investment Fund FNI, Gelsor and Caritas,” says Ghetea. “They were based on pyramid-style schemes that had a bad reputation, so people do not trust funds anymore. Important elements missing from the banks are pension, mutual and investment funds, from which one may insure a long term investment with a good return.” Foreign banks find solutions for wealthy clients through their Finance, Insurance and Advisory departments and branches abroad. However legislation on derivatives are yet to develop.
But this situation will not last. “Some well known banks, involved mainly in private banking, are shopping around in Romania,” Ghetea adds. “Within a few months, I am sure some will step in and offer services at the same level as abroad.”
Recent changes in the Fiscal Code, such as the flat tax, have created an opportunity for people with money to make more, especially as the income tax has decreased from 43 to 23 per cent at the top level.
Ghetea thinks that Romanians do not yet, on the whole, know what they want from private banking. “They simply want to know how much they are going to make,” he says, “and how they can make more than the three per cent they receive for the Euro deposits or a little more than what the stock exchange is offering.”

HVB BANK: SURPRISED AT THE
PICK-UP RATE
HVB Bank Romania has a few hundred private banking clients, says Liliana Damianov, Private Banking division manager at HVB Bank. The bank has been running these services since July 2003 and collaborates with overseas specialists Bank Privat and Scholler Bank. With the backing of an international reach, HVB Bank uses updated information, follows the evolution of markets and provides access to different local and international financial markets.
“When we first started developing the Private Banking service, I, like the others, thought it would be too early for Romania, but three months later the results exceeded our expectations,” Liliana Damianov, Private Banking division manager at HVB Bank.
Private Banking services in HVB Bank Romania are addressed to clients with liquidities of 100,000 Euro or more. “Practically, but technically, we can also assist clients with 75,000 Euro accounts,” she says.
Future development plans of HVB Bank include consultancy services on real-estate.
“The Private Banking client is, on average, a 50 year-old family man, who is under time pressure, in a busy and demanding job, who chooses to delegate most of his services out, from cleaning and child care to investment consultancy,” says Damianov. “80 per cent of our customers are Romanian and we usually approach them first. But clients from abroad come directly to us (from Ireland, Pakistan and the west coast of USA, for example). These are sophisticated and well-informed clients, familiar with opportunities offered by ROL through its recent strengthening. They send their children to study abroad and the choice of investing is theirs. We show them the options. They usually invest their money for, on average, a 12-month period.”
Clients can be demanding and unusual requests made to HVB Bank include information on how to invest in golden ingot, rare coin collections, evaluate a large construction project, prices of second-hand cars in eastern Europe and even the contact details of the Bucharest City Hall.
Obstacles to providing better services include unclear regulations which hold up investors and foreigners wishing to bank in Romania. Damianov says the delay in regulations to allow foreigners to hold accounts in ROL has upset the bank's forecasts. Initially, a flood of Euro was expected in the country as foreigners brought in their cash and switched to ROL, but this has been held back.
“A second obstacle is the free access to investment products from abroad,” she adds. “The National Bank (BNR), through currency regulations, liberalised investments made by Romanians abroad, but when a financial institution tries to offer these kinds of instruments in Romania, they needed authorisation from the National Securities and Exchange Commission, which has not yet issued clear directives on how the instruments can be applied.”

ING BANK: WORKING WITH THE LIMITATIONS

Private Wealth Management department in ING Bank was the first private banking service offered in Romania, according to the Dutch financial firm and is a combination of asset management services and those for VIPs. This service includes banking operations like deposits, payments, withdrawals and professional consultancy on where to invest.
“We are limited by the possibilities offered on the Romanian private banking market, such as the currency regime: although the ROL is internally convertible, Romanians can also change Euro into ROL and USD, and the main products are deposits, so people have to decide which interest is better,” Misu Negritoiu, deputy general manager ING tells The Diplomat. “Investments in instruments from the monetary market have been limited, because most treasury certificates on the market were not available for individuals. Also, there are very few bonds on the market, so people have no other choice other than buying shares: the riskiest products.”
Negritoiu believes the market should offer more combinations of instruments and says clients are frustrated by the fact that they cannot do something more with their money, particularly when investing abroad.
“Another possibility is to invest on international markets, in bonds, corporate bonds and investment funds, but here we also hit other restrictions, maintained by the latest currency regulation: any Romanian citizen or company willing to make a transaction abroad has to ask for approval to open an account from the BNR; the bank liberalised investments abroad, but short term transactions and investments up to one year are rather limited.”
The threshold to become an ING private banking client is 100,000 Euro, but the firm says this could rise. “We currently have around 500 clients, with and 85 per cent of them are Romanians, an average 45 years of age, usually entrepreneurs, managers and even football players or coaches,” adds Negritoiu. ING says it does not grant preferential interests to private banking clients, but offers them professional financial consultancy.
Starting from January 2006, regulations on investments abroad will be relaxed and this will see banks re-orientating further towards private banking services. So sign up now while the threshold is still low if, of course, you have the money

RAIFFEISEN: PROMISING
CONFIDENTIALITY

Raiffeisen Bank Romania offers access to international markets, through the group's specialist Kathrein Bank in Vienna, according to Dana Lupu, manager private banking department. In Romania, Raiffeisen works with its sectors in capital, investment and brokerage. The clients have different risk appetites and investment potentials. “The key to private banking is based on confidentiality, relationships, anticipating the clients' needs, flexibility and high quality services,” says Lupu.

BCR: AIMING FOR A PERSONAL
TOUCH

Since opening its private banking services last year, Banca Comerciala Romana (BCR) has signed up 1,000 customers, mostly Romanians, and hopes to increase the number by 20 per cent this year. Through its daughter companies, BCR Securities, BCR Asset Management, BCR Asigurari and BCR Leasing, the Group aims to fulfil customers' expectations on risk, return, time-frames and liquidity.
“Each private banking customer with more than 75,000 Euro in their accounts benefits from assistance of a personal relationship manager and special cost conditions,” says Anca Craciun, deputy executive director for the private banking division within BCR.
There is also a Priority banking segment for clients with accounts of 40,000 to 75,000 Euro, who have potential to grow.
The customer has access to personal counselling regarding asset management, personalised offers and services built on identifying their risk profile, to special cost conditions, and negotiation of interest rates.
“Our clients are quite conservative and still prefer a medium and low risk,” says Craciun, “which could be explained by the fact that there are no financial instruments on the market that can foresee a very high risk.”
There is the capital market, which last year and early this year offered high returns on investments. But it is hard to convince clients to enter this market, says Craciun, due to the money and risk involved and the market's lack of maturity, so they prefer deposits.

BRD: OFFERING AN
INTERNATIONAL FOCUS

BRD Groupe Societe Generale has some saving and credit products for top clients such as its brokerage division, BRD Securities, which has relations with European markets including London and Paris. After opening its specialist private banking agency last spring, the bank plans to create a new investment fund. Clients in Romania can also be orientated towards the products in the Societe Generale Group, with its global subsidiaries.

Going for gold

Premium card products have the space to increase massively

Romania saw its first bank card ten years ago when Banca Romana pentru Dezvoltare (BRD) launched its Prima brand onto the local market.
Unaffiliated to any of the international card associations, it was unique to BRD and remains the only one of its kind in Romanian financial history. Since then, more than 90 different types of card have been issued in Romania.
As the market and the target clients became more demanding and sophisticated, new types of card developed. From Salary cards to Gold and Platinum, a consumer can now find in almost every bank's portfolio the right choice. Still, Romania is far from reaching the level of plastic usage in other new European states and there are still around 30 towns where there is no ATM.
“Relatively new to the Romanian market, premium card products in Romania have attracted the attention of more customers and banks interested in gaining clients with above average income, especially with their specifically designed products,” Catalin Cretu, Area Manager for Romania and Bulgaria, Visa International CEMEA told The Diplomat. “This is a positive sign that the Romanian card market is continuing its segmentation trend and that the market will mature.” By the end of 2004, there were 788 Visa Gold cards (0.02 per cent of the total number of cards), but issuing companies are convinced that due to its great development potential, there will soon be a major increase in the premium card offer. Premium products should represent ten to 15 per cent in the card portfolio of any bank in a mature market, according to the card executive.
In Romania, Visa Gold cardholders made 16,855 transactions by the end of 2004, 70 per cent of which were in merchant locations. Also, three quarters of the value of the transactions represent electronic payments in shops.
MasterCard has said that the number of transactions made on Gold or Platinum cards under its brand in Romania is below one per cent of the total card transactions, although in volume, it reaches around 15 per cent, compared to 25 per cent in countries in the region. The average value of a single payment by a customer on a Premium card is 150 Euro, compared to 100 Euro on Business cards and 45 to 60 Euro on standard ones.
“The card market in Romania has developed very much and I really appreciate the way Romanians have adopted this new product,” says Radu Ghetea, president of the Romanian Banking Association. “We are actually going to skip one phase, the use of cheques: practically we have jumped from a cash-based system to an electronic one. This saves commercial banks a lot of headaches in the processing and transport operations.”
In Romania, consumers now have a choice of different providers and services.
BCR, with the largest number of ATMs, offers a MasterCard Gold card in Euro. The customer recieves a credit limit equal to the collateral deposit they make at the bank. Also the card-carrier receives a package of services for travel abroad: emergency, travel, medical and legal assistance and also accident insurance.
BRD offers the international credit Gold MasterCard in ROL for individuals, but this cannot be used for Internet purchasing. The credit limit ranges between 3,000 to 10,000 Euro and in ROL, it depends on the collateral deposit. The bank also offers a package of assistance services, like travel, legal and personal as well as insurance, medical and hospitalisation charges, in case of an accident during travel abroad and civil liability insurance.
MasterCard will also grant to a Gold cardholder access to a series of emergency services as well as discounts for reservations on hotel chains abroad.
Banca Transilvania launched its Visa Gold card last month and the bank is expecting to issue up to 5,000 by the end of the year. As we went to press, the firm had issued 200, exceeding expectations according to Gabriela Nistor, manager for the card sales and product development departments. The product is addressed to top management clients, with net incomes exceeding 1,600 Euro per month. The credit limit ranges between 5,000 and 10,000 Euro, on a 55 day grace period, with a 28 per cent interest rate. Card holders of Visa Gold receive medical travel insurance (up to 50,000 USD) and insurance for lost luggage (up to 500 USD). The high expectations of Banca Transilvania are based on the fast growing trend that is anticipated for this particular card segment, according to the bank's management at the official launch of the product.
Finansbank also issued a Visa Gold ROL meant for national and international usage. The grace period is up to 30 days and there is an unlimited credit period on the condition that a customer pays back every month to the bank at least 15 per cent of the total credit limit used. The interest rate for the loan is 30 per cent annually. If the credit limit is exceeded, the bank charges 50 per cent on the overdrawn amount.
Cardholders travelling abroad have access to services such as emergency cash disbursement (if the card is lost or stolen), legal and medical assistance, assistance during the travel (in case the travel has been paid with the card).
HVB Bank offers two international gold cards: MasterCard Gold Private (ROL/USD) and Visa Gold (ROL/USD), both of them usable for Internet transactions.
HVB Gold cardholders will have access to travel insurance at AIG, substantial discounts to Crowne Plaza hotel in Bucharest, AVIS rent-a-car firm and airline firm Austrian.
Because of the risk of theft, the transaction limit on the card is 2,000 USD per day. But this limit can be negotiated as a special service. The card has international insurance for lost luggage, health and travel. HVB Bank currently has almost 2,250 clients of Gold cards, both private and business clients.
Banca Romaneasca has in its card portfolio a VISA Gold (ROL/USD) available to any Romanian with a solid and stable financial position. The holder of a VISA Gold card issued by Banca Romaneasca has access to insurance and assistance services available abroad: emergency card replacement, emergency cash withdrawal, reporting lost or stolen cards, general information upon request, life insurance, partial or permanent disability insurance, emergency medical costs insurance, insurance against loss and delay of registered luggage, against flight delays and third party insurance (injury). There is also 24/7 assistance services around the world including emergency medical transport, medical repatriation, dead body repatriation, coffin-related costs reimbursement and legal assistance following car accidents.
It is also possible to have two extra cards, issued in the names of third persons, based on the same card account, and legal and medical assistance services during trips abroad.
Banca Tiriac offers two American Express international cards in USD, one Corporate Gold, and another in Platinum. The cards can also be used over the Internet and must be supported by a 10,000 USD and, respectively, 35,000 USD in collateral deposits made by a Romanian resident. The special services included on these cards refer to travel services, programmes for luxury hotels, discounts for plane tickets, travel insurance and membership rewards.
Banca Tiriac is one of the few banks on the Romanian market offering its clients the American Express 'charge card'. “We have seven years of experience in this field and we are still looking to orientate clients towards the kinds of cards with supplementary services,” says Mioara Georgescu, head of card department.
At Romexterra Bank the credit line is between 5,000 and 10,000 Euro for the VISA Gold product in ROL, depending on the collateral deposit. The bank plans to allow customers to find out information about the balance of their account over the mobile or fixed telephone, SMS and by e-mail.
ING Bank offers the Visa Gold in ROL and USD. A customer has to deposit a minimum of 10,000 USD before receiving the gold card.
Raiffeisen Bank offers the MasterCard Gold in ROL, with a credit granted between 2,500 to 6,000 Euro equivalent in ROL and the Visa Business Gold in ROL.
Unicredit and Eurom Bank have issued Gold cards under the brand of MasterCard in ROL and Euro, while ABN Amro Bank offers one of the only Business Gold Cards.
Romanian International Bank has issued the RIB MasterCard/Eurocard Gold in ROL and USD. “Its credit limit is over 5,000 Euro, based on a client's income or a collateral deposit,” says George Priboi, Credit Cards Manager within Romanian International Bank. It is addressed to residents and non-resident individuals, for international use, valid for two years, while a customer has to pay back monthly a minimum of ten per cent of the credit used.

by Magda Galbau

Journey's end?

Romania's route to EU accession has been fraught with dissent, confusion and compromise, and the destination is still to be reached

After tough last minute negotiations Romania has signed the treaty for joining the EU, but there are still tests by the European Commission and each EU member state that must be passed before the Balkan state can secure entry.
The European Parliament only approved the accession following the European Commission's assurance that the elected body would have power over accession budgets and closer consultation on whether to delay Romania's entry if the country fails to fulfil its promises.
However, challenging the nation's entry date of 1 January 2007 has come from members of Germany's opposition, the Christian Democratic Union, who have the power to block the treaty of accession.
This places Romania in a more precarious position than it would have wanted. The country cannot relax, as EU enlargement commissioner Ollie Rehn said.
Last year the EU inserted a safeguard clause into negotiations with Bulgaria and Romania, allowing member states, based on a proposal by the European Commission, to postpone the date of accession by one year if the nation sacrificed liberty, democracy, human rights and freedoms.
This unprecedented condition raised concerns over what the purpose of such a clause was, if there was not a readiness for its initiation.
“The safeguard clause is not there to be used,” head of the delegation to the European Commission in Romania Jonathan Scheele told The Diplomat. “It is there to ensure that it is not used. It's the nuclear deterrent argument.”
But resistance to the entry date has come from unusual quarters. Senior figures who did not back 1 January 2007 include Traian Basescu, on his campaign trail for the presidency.
“We are not prosperous enough, nor are we are prepared enough for the integration shock in 2007,” he told The Diplomat last November.
Earlier this year MEP Markus Ferber of the German EPP-ED group (European People's Party and European Democrats) asked for the reopening of the Romania's negotiations in the Justice Chapter.
Meanwhile Hans-Gert Poettering, leader of the same EPP-ED party, the largest single group in the European Parliament, had backed calls, along with Daniel Cohn-Bendit, leader of the Green Party, to postpone the Parliament's vote for entry closer to the 2007 entry date.
“No one can say Romania is ready to join the community,” said Cohn-Bendit. “Press freedoms, corruption and other issues need to be resolved.”
However while Basescu has changed his mind, Ferber also seems to have softened his stance.
“In its last report, the Commission clearly says that there still exist deficits, especially in administrative reform,” Ferber told The Diplomat. “These deficiencies have to be tackled. We are not, however, talking about 'freezing' or blocking Romania's application. Once all the requirements have been met, Romania will be able to join the European Union.”
It seems no prominent grouping, either in the European Union or the new Romanian government, now sees renegotiation as an option. “Although in the time to come the conclusion might be that a big opportunity has been missed,” says British academic and Romanian analyst Tom Gallagher.
Following the April vote, Rehn will involve the European Parliament if there is a decision to be made on postponing the accession date to 1 January 2008 and a voice in budgetary decisions on treaties of accession.
“We have succeeded in upholding the budgetary powers and rights of the European Parliament, this is a huge success for parliament,” Poettering said after the vote, which approved Romania's entry by 497 votes in favour. There were 93 against and 71 abstentions. At the same time, Bulgaria emerged in a more confident position, with 522 votes in favour, 70 against and 69 abstentions.
In reaction, minister of foreign affairs Mihai Razvan Ungureanu argues for: “a necessity for Romania to be attentive to messages sent by the European Parliament.”
There is now some debate over whether securing a majority of MEPs in favour of Romania came at the expense of giving the European Parliament more control in accession policy.
“The vote has not been a demonstration of strength by the European Parliament,” Ungureanu replies, “but a sign of maturity of its 25 states. The Parliament has now shown that it has incredible political vigour and this is why I plead for close parliamentary relations [between Romania and the EU]. The EU is growing up.”
But one senior MEP, with a history of interest in Romania, admitted to The Diplomat that the 15 April vote was 'about getting more power for the European Parliament'.
“But they didn't get it,” the MEP said. “If you look at the small print, you can see that they will only be consulted on issues.”
This seems to be the case. In terms of budgets, the amounts have not changed. Leonard Orban, Chief Negotiator with the EU said that Romania will receive the already established 11 billion Euro package until 2010. Between 2007 and 2009 the EU will also award Romania 560 million Euro to cover the cash flow and to reduce pressure on the state budget.
Also Scheele does not see this as acquiescing power to the Parliament.
“The European Parliament is not concerned with how much money Romania or Bulgaria receives, nor does it want to call into question what was agreed in the negotiations, but simply ensure that this did not create a situation which affected one of the things the parliament has fought for, for many years, which was that it should have the last word on the budget.”
But one argument is that because of Romania's failure to fulfil its entry conditions confidently, such a vote on the country's future could have been seized by the European Parliament as a chance to wrestle more power for itself from member states and the European Commission.
Scheele disagrees: “This had nothing to do with any individual country.”
The head of delegation adds that the European Parliament is not in a better position to chose the future of Romania than it was six months ago. “We haven't changed the formal institutional rule of game,” says Scheele. “The European Parliament cannot unilaterally change the negotiated treaty once it has given its assent.”

WHO CAN STILL STOP ENTRY?

ALL THE EUROPEAN UNION MEMBERS Every EU country must now decide whether to allow Romania into their club by ratifying the treaty of accession, in a parliamentary vote between now and 31 December 2006. The country's rocky road to a positive vote means that some analysts have argued that European countries could use their affirmation of the treaty as a means of gathering concessions from the European Union. “I do not think that some member states are trying to put pressure on the EU,” says Markus Ferber. “On the contrary. We are dealing with what is at heart a fairly straightforward procedure: the EU has certain conditions attached to membership. As soon as those are met, Romania will be able to join.” But Germany's opposition Christian Democratic Union (CDU) has been the most vocal critic of Romania's readiness. CDU's First mayor of Hamburg Ole von Beust has declared that he doesn't want Romania to become a “bottomless sack” for European funds. The party has tabled delaying Romania's integration into EU by blocking the treaty. To ratify the agreement the German Government must have the support of two thirds of the Bundestag. This would be impossible to obtain without CDU support, for the party occupies almost half, 248 seats, out of 603 in the chamber. Commenting on this threat, Jonathan Scheele says: “The German parliament has to weigh up what is in the best interests of Germany and the EU.” But if the CDU exercises its power in this manner, it could put the party in conflict with its representatives in Europe, the EPP-ED, who have already negotiated in favour of Romania and are the strongest individual party in the European Parliament. Such a vote would also have an affect on Bulgaria's joining and, especially, on Turkey's ambitions. THE COUNCIL OF THE EUROPEAN UNION Romania's failure to meet any of its eleven conditions of entry could encourage the European Commission to trigger safeguard action. On paper these are being completed, but Tom Gallagher argues that Romania has a “tradition of acquiescence to foreign recommendations and demands, while in practise seeming to ignore them or frustrate their implementation.” The European Commission will publish monitoring reports on Romania in November 2005 and 2006. “This is the first time the commission can state whether it wants to take safeguard action or not,” Scheele adds. If it recommended such action, a decision would be taken at the December 2006 meeting of the European Council. “That is an important moment,” says Scheele. Broadly a two thirds majority of the Council of the European Union, made up of foreign ministers of each member state, could block entry. If the European Commission is going to propose safeguard action, this would probably need to happen before spring next year, argues the head of delegation “as there has to be some unwinding before accession.”

 

HOW TO WIN THE ENDGAME

Beefing up the border guards, making sure its sausages do not carry diseases, along with improving Romania's bad image as a nation of human traffickers, corrupt officials and illegal work migrants are among the objective for the next 18 months.
Romania has achieved some of the 11 conditions for entry, which last December the European Commission asked the country to fulfil. In border security, it has formed an investment plan for securing the EU's external borders. In justice, it has developed a strategy plan for Judicial reform and begun to randomly distribute cases to prosecutors.
In crime, it has conducted an audit of its Anti-corruption policy and developed a strategy on Romania's status as a base of human traffic. In business, it has a plan for restructuring its ailing state steel firms.
“They are paper at the moment,” says Scheele. “The proof of the pudding will be in the eating. We will follow the implementation of the plans closely.”
There is much to do. In security, Romania has to ensure control and surveillance at the EU's future external borders, employ 4,438 border guards and introduce measures to stop illegal immigration as it becomes the EU's main façade on the former Soviet Union.
It needs to reform the competition council, which now lacks qualified staff and funds to monitor the distribution of state aid and business practices.
In crime, the National Anti-Corruption Office must show results. Scheele says the judiciary requires “a cultural change, but they are aware of individual and collective responsibi-lities.” The country also needs to fill around 18,000 vacancies in the police and 7,000 vacancies in the gendarmerie.
The nation must also carry out a charm offensive.
“Romania and Bulgaria have an image deficit,” says minister Ungureanu. “We must concentrate our efforts on leading an image campaign, aimed especially at European public opinion.”
Food processing companies and factories must meet hygiene standards, as food firms may not be able to sell their products in Romania. “We cannot afford to have food circulating on the single market that does not meet standards,” says Scheele. “This is an area where safeguard action would have to be taken.”
This was a major bone of contention for Poland's entry into the European Union. “If firms don't know how to meet the standards, they're starting to get into trouble now,” adds Scheele.
If Romania joins in 2007 there may be a new enemy to confront: ambivalence.
Take Latvia. Price rises, stricter employment laws and a migration of jobs were the worst consequences of EU accession in the Baltic country, according to an EU poll, although this was balanced out by travel and job advantages, support for agriculture, investment and access to EU funds. Nevertheless nearly half of Latvians said accession was neither good nor bad for their country.
As for the Euro, this is not likely for some time. EU enlargement minister Ene Dinga told The Diplomat Romania could join the single currency in 2010 or 2011, but national bank governor Mugur Isarescu is less optimistic, calling it possible between 2012 and 2014.
On whether Romanians will be allowed to pass from Arad to Paris without showing their passport, there is no firm plan. Either 2009 or 2010 is the target date for joining the countries of Europe that have no border controls, the Schengen area. This will depend on other member states, visa and immigrant control. “It would be slightly more complicated if Hungary was not a member of Schengen and Romania were,” Scheele adds.

WHO'S NEXT?

'A showcase for its neighbours,' was how incoming foreign minister Ungureanu chose to call Romania's debut in the European Union. If he is to be believed, then Romania should provide a template to nearby countries with EU aspirations. But is this realistic for Moldova, which is plagued by a failure to resolve its internal conflict with breakaway Transnistria? “Moldova is not an issue we are tackling at the moment,” says Jonathan Scheele. “If they say they want to join, we would reply that they are simply not ready.” Moldova, along with Ukraine, which under president Yushchenko is no longer hiding its EU ambitions, need reform, particularly in the economic sector, before the EU considers entry, states the delegate. “At the moment we are focusing on the western Balkans,” says Scheele. “We are preparing an opinion on a request by the Former Yugoslav Republic of Macedonia. The Commission will have to make a pronouncement as it did with Romania in 1997.” Negotiations are due to begin with Croatia this year, but entry is dependent on the level of cooperation that country makes with the International War Crimes Tribunal in The Hague over handing over senior figures in the military accused of criminal activity. “Albania, Serbia and Montenegro, Bosnia and Herzegovina and, one way or another, Kosovo are not in the stage of negotiations,” says Scheele. “They are all countries with a European vocation and sooner or later we would expect them to join.”