Shortly after my post on Romania’s paradox of plenty, the recently appointed Romanian Prime Minister came out with another mind-boggling announcement: the government had secretly sold Cupru Min, Romania’s largest copper mine, possessing over 60 percent of the country’s copper resources, to Roman Copper Corp., a Canadian Company, for a mere $200m (US). Quite pleased with the deal, the Prime Minister emphasised that the copper mine had been a black hole for the government, which it finally managed to sell for four times its value.
These are misleading overstatements. While the precise value of Cupru Min is unclear, its worth is estimated to be between $6b and $14b (US), whilst the agreed profit sharing deal with Roman Copper only gives Romania 6 percent, or roughly $400m (US). Admittedly the mine is not the best example of profitability, but this is more a matter of limited investment than profit potential.
Nevertheless, this time, the deal quickly fell through. After a citizen protest, the government annulled the contract over a squabble about transparency – a new (and refreshing) stipulation. But the rule of law helped too. The protesters appealed to the Romanian Constitution, and in particular Article 135 2 (b) and (d) (which stresses that the state must protect Romania’s economic interests and exploit its natural resources in accordance with national interests) and Article 136 3 and 4, which emphasizes that ‘public interest riches’, including underground resources, such as copper, are the exclusive object of public property. According to the protesters, both articles make the government’s actions illegal.
This is good news. Perhaps the legal argument can buttress the ongoing protests over selling off state industry, allowing judicial challenges at the national and European level. If selling natural resources considered public property is considered illegal, this could fundamentally reshape the discussion around other important fights over the Rosia Montana Project and widespread shale gas drilling.
But while the current contract’s annulment is important and positive news, we must still ask why the government orchestrated a deal in secret in the first place. One of the reasons has to do with the loan agreements with the IMF, World Bank and European Union that require privatising nationally owned companies. Unfortunately this means selling its natural resources on the cheap, for only a modest boost in GDP.
This needs addressing. Romania has national elections this year, and given the ongoing anti-government protests, the parties currently in power need to do a better job demonstrating to the Romanian people that they are worthy of their trust and votes. Focusing on economic growth in a country where most of the population remains desperately poor can be an effective way to demonstrate the government’s worthiness; but it must be economic growth with long term prospects – not just quick cash.
Raluca Besliu is a masters student in Refugees and Forced Migration Studies at Oxford.