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Romania Defence and Security Report Q3 2011
Business Monitor International, May 2011, Pages: 62
The Romania Defence and Security Report provides industry professionals and strategists, corporate analysts, defence and security associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Romania's defence and security industry.
Romania has a very high security risk rating for conflict – 98 out of 100 – because despite the risk of clashes in neighbouring regions, Romania has the support of NATO and of the EU. The state is also at low risk of terrorist activities. Where the country’s security is more at stake is from its own internal problems with organised crime. Our risk rating for this is just 65. Romania was criticised by the EU in 2010 over its poor handling of corruption. If EU warnings and recommendations are not heeded, Romania may suffer more than just penalties, as the EU reserved the right to enforce legal sanctions.
In the face of numerous no-confidence votes (all so far have failed), the current embattled coalition government is unlikely to be dislodged before the 2012 parliamentary elections and will ride out widespread public discontent and the challenge of a new centre-right political grouping in parliament.
Romania was one of the hardest hit countries in emerging Europe during the 2008 global economic downturn. The country has had to face a gaping fiscal deficit. Unavoidable fiscal austerity (due to a loss of investor confidence) in order to rein in this deficit saw the Romanian economy contract by 1.3% in real terms in 2010. However, we now expect the domestic economy to show gradual improvement over the course of 2011 and into 2012. Such recovery will primarily be catalysed by strength in the export-related industrial and manufacturing sectors, as opposed to broad-based economic resilience.
The country’s defence industry has tentatively grown throughout the last few years. Romania is keen to meet EU and NATO criteria so it can full join the rest of Europe and this means spending money on tired, out-dated equipment. The country spent an additional RON19.164m (EUR4.5m) to allow their King Ferdinand frigate to join the NATO missions enforcing the UN arms embargo towards Libya (Reported by ACTMedia, March 24 2011).
Romania’s defence marketplace was established to supply communist-era customers and so it has had to go through a huge transformation process. It still has much to do to compete more internationally. However, the restructuring and privatisation that has and will continue to characterise the defence industry has been highly successful in attracting interest from foreign firms. Joint ventures with the larger Romanian companies have continued and we expect privatisation, modernisation and increasing foreign involvement to drive defence exports in the longer term.
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