Financial Transparency Coalition

Last month, Transparency International released a study (via Corruption Currents) citing how Romania is susceptible to corruption. These conditions create a potential breeding ground for corruption that could not only adversely affect the Romanian Government, but the European Union as well.  They focused on four major issues:

• The extensive use of emergency ordinances
• Low level of accountability for corruption
• Low level of trust of people in the parliament
• A major gap in implementation of laws by the government

If corruption continues to remain high, and the government fails to address it, Romania will struggle to further integrate into the European Economy.

Illicit financial outflows due to corruption, kickbacks, and trade mispricing have been increasing in Romania since 2006. A study by Global Financial Integrity has shown that in the year 2005, when Romania signed the EU adherence treaty, the country’s illicit financial flows declined to a three year low. However, as the graph below shows, illicit financial flows increased significantly at the same time as Romania was integrating into the European Union. Prior to accession, Romania was asked to enact reforms to curb organized crime, corruption, and food safety. Corruption remains one of the biggest drags on Romania’s economy.

Romania has shown that it does address corruption occasionally with the arrest of Former Prime Minister Adrian Natase, who was charged with taking part in organizing a conference to illegally collect money for his 2004 Presidential campaign. He was convicted to two years in prison.

This is a good step forward in creating accountability in the government. However, the amount of money flowing out of Romania indicates that they may be wise to follow Transparency International’s suggestions not only to combat the systemic level of corruption, but also to create a stronger, stable country that all Romanians and the rest of the European Union member-states can be proud of.