Need to Know

May 09, 2023

The Wheels of Fortune

Romania

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Romania has emerged from its post-Cold War funk to become a more service-oriented economy that is competitive in acquiring slices of global markets, according to Harvard’s Growth Lab’s Atlas of Economic Complexity, declaring that the East European country has undergone a “structural transformation” in recent years.

Improving purchasing power parity in the country of almost 20 million people means that the average Romanian will catch up with the average European’s wealth by 2030. Such trends led Geopolitical Intelligence Services to conclude that, in a world where China has demonstrated how autocracies can deliver economic prosperity, chaotic democracies can transform economies for the better, too.

The country’s success has attracted migrant workers from far afield, much like Italy’s economic renaissance in the 1970s. “A generation ago Romanians queued for food,” explained the Economist. “Today in Bucharest the queues are back, but those standing in them are not Romanian. In one street Ukrainian refugees line up in front of an aid distribution center. In another, Nepalis, Bangladeshis, and others wait outside an immigration office to renew work and residence permits.”

The rest of the European Union has been less excited about Romania’s success, however. Austria recently blocked Romania and its smaller and poorer neighbor to the south, Bulgaria, from joining the Schengen Area – the territories where EU citizens can travel and work freely without a visa.

Austrian officials blocked Romania in protest against EU rules that have made it relatively easy for migrants from the Middle East, North Africa, and Central and South Asia to apply for asylum in the German-speaking country, reported Politico.

Saying Austria’s move was “unfair, disappointing, and unprincipled,” Romanian Interior Minister Lucian Bode hoped that his country’s application would be taken up and approved again this year, added Romania-Insider, an English-language news website that covers the country. Other Romanians protested in Brussels, the capital of the EU, saying Austria’s move made them feel like “second-class citizens in Europe,” wrote SchengenVisaInfo.com.

Austria’s snub might have larger implications, argued Stratfor, an American think tank. First, it threatens to undermine the country’s growing economy. Second, it provides ammunition to nationalists within Romania who reject the EU’s goal of creating a more democratic, free market-oriented, socially liberal bloc.

Those concerns are important because Russia has been working hard to destabilize Eastern European countries like Romania which were formerly Russian vassals. The Robert Lansing Institute, for example, cited a Russian espionage plot to revive Romanian claims to Ukrainian territory. Russia is also destabilizing Moldova, Romania’s neighbor and close ally, added CNN.

So far, Romania, a NATO member, has officially sided with Ukraine. But Western European countries might want to think twice before giving Romania time to rethink that stance.

This story originally appeared in the May 09, 2023 newsletter, The Wheels of Fortune.