October 23, 2001

"WAITING FOR AMERICA"

Mr. Bing, Mr. Moore; Members of the Board; distinguished guests; ladies and gentlemen:

I'm very pleased at your invitation to speak to the American Chamber today. So many of you have reached out to provide me a wonderfully warm welcome over the month that I've been in Bucharest. I thank you for that. "In fiecare zi", I've learned with delight of the incredible strength and talent reflected in the U.S. business community. I'm proud to serve with all of you, and with other fellow citizens, as ambassadors of the United States to a country not only rich in history, but of vibrant potential.

Waiting for America

One of the things that has surprised me in my brief time here is the number of Romanian citizens who've approached me and said, "We've waited for America for 50 years", or words to that effect. The first time, I smiled and put it out of my mind. The second time, my face probably reflected the puzzlement I felt. After a third time, I asked an embassy colleague what was meant by the comment. I learned that it was an allusion to the sad postwar history of this country - or, more positively, a reminder of what Romanians hope their tomorrow will be.

In some ways, the phrase shouldn't have surprised me. There was a similar sense in the Czech Republic that America had been the saviour on the horizon at the end of World War II but had stopped short of salvation. Indeed, there actually are markers in the western part of the Czech Republic showing where General Patton's advance halted as the war came to an end.

Here like there, I guess there's a sense that history might have been different had the war lasted a few more weeks, or had Allied troops been faster, or had we all recognized the different sense of security the Soviets had in mind. That sense of history is poignant, particularly for someone like me, whose career has focused on ending the lines of division that crept across Europe, and between peoples, during the Cold War.

America is Here

So the historian in me understands the feelings behind the phrase. But when 1 walk the streets of Bucharest, I recognize there really is no need to wait for America - America is here. You can see it all around us. My favorite restaurant, McDonald's, seems to be at every corner. So is Coca-Cola - thanks, I guess, to Robert Bing! American hotels have anchored themselves here, and American movies are everywhere - the trappings of a culture that is, in fact, increasingly international.

America is here as well in the form of Peace Corps workers, and missionaries, and exchange professors, and a widening trickle of tourists. It's here in the form of an active and growing embassy, with an incredible array of programs. Most of you see only a small part of what we do at the embassy. Our focus, in fact, is very broad. It targets:

And America is here through the vibrant presence of AmCham. Among you I've met a number of stalwart pioneers, who came here in the late 80s or early 90s, and who've seen some fairly astonishing changes not only in the electricity supply but in the way this country works. I've also met more recent arrivals - though none as recent as me - who've come to an already changed Romania and are eager to see it change further.

And you are changing this country. U.S. companies are contributing new technologies to galvanize this economy. New management styles and ideas to empower and train employees. New and mutually beneficial approaches to labor/management relations. Enhanced safety for employees, and stronger environmental protections. And U.S. companies have brought social responsibility to the communities in which they work, serving as positive role models for the private sector in Romania.

So when I call you America's ambassadors. I really mean that. In your everyday lives, you share with this country the positive outlook for which Americans are rightly known. You're also sharing the powerful management tools of tomorrow to a country too often mired in yesterday. Individually, your companies play a vital role in Romania's development. As an organization, AmCham has a crucial advocacy role for the business ethics, practices, and values that America so proudly represents.

Our Partnership

I've talked to many of you about the business climate in this country. Certainly it's been positive enough for you to take the plunge, and for many of you to enjoy a steady profit stream. But even those who are doing well have told me that you could achieve more if the climate for your- investments here were better.

So, my friends, could Romania. The simple truth is that this country could be so much more than it has become. Romania has immense natural resources, and talented, well-educated people. What it needs is an irrefutable commitment to tackling the problems that impede investment if Romania's economy is to advance the goals and hopes of its citizens. Let me elaborate on a few of the problems I have in mind.

The most important issue, of course, is corruption. Romania is widely perceived as a country that is, shall we say, "ethically challenged." How can the public trust the judiciary, when magistrates are arrested for accepting bribes to manipulate cases in favor of defendants? How can an adoption cost $20,000 or more? And how can companies operate efficiently when asked for payoffs to win contracts or to secure necessary services?

Without determined and clear-cut action to combat corruption, Romania's people and economy can never achieve their potential. Nor can your companies! And based on the comments I've heard on Capitol Hill, without a better track record in tackling corruption. Romania will be a question mark when NATO leaders debate whether this country deserves to be invited to join a trans-Atlantic Alliance of values.

Another key priority should be to reduce red tape. There've been lots of studies on the bureaucracy that mires Romania's economy, and certainly there've been plenty of clear and cogent recommendations. I really have no new twists to offer on what's been said. But all of us need to say it again and again and again: Romania's red tape is choking its potential, and is creating opportunities for corruption to thrive, at every chokepoint.

A third priority is to improve the clarity and predictability of Romania's legal and regulatory regime. This is critical to the ability of any business to operate effectively. A staggering 5600 new ordinances have been published this year. Hundreds of these deal with economic matters - a challenge for each of you to absorb. And legal instability tends to breed both confusion and corruption, as businesses find themselves tempted to hire shortcut fixers to keep their operations on track.

Romania also lags in its respect for intellectual property rights - a problem that's been credited with costing American companies over $200 million in fiscal year 2000. That kind of track record has put Romania on the bottom rung of USTR's "Super 301" watch list. There is some good news in this area, as Romania's law enforcement bodies increasingly are responding to the challenge. But that progress doesn't seem to be shared in Romanian courts, which need to take-a stronger, approach.

Finally, a word about investment incentives. These can be a short-term positive to companies that are deciding whether to enter a market. When offered, incentives need to be reliable to avoid souring the budding relationship. That said, I tend to think that both Romanian and foreign companies need less red tape and greater predictability more than they need tax holidays.

Actions taken - or, unfortunately, not taken - in these areas clearly affect your profits. But they also affect your ability to contribute to the good of this country. And they contribute to the negative image that Romania has acquired abroad, through inattention and missed opportunity.

Action versus Waiting

All of us know that other, more structural reforms are also important to this country's future. Reform of the banking sector is moving ahead; it needs to be kept on track. New financial instruments such as mortgages need to be introduced, to meet the needs of Romanian citizens who otherwise can't afford to purchase property. Capital markets need greater transparency and regulation to attract investors, whether domestic or foreign. And though I don't really, understand the pension system in this country yet, from what I've heard it's far from ideal.

But the biggest empowering tool for Romania's economy would be a faster, more determined pace of privatization. Look around the neighborhood: without exception, Romania's western neighbors have waded much further into privatization waters than has Romania - and their economies are stronger for it. The goal isn't just to sell companies for the sake of selling, of course. In some cases, Romania needs to quit pouring good money after bad, into companies that will never be profitable unless radically restructured. And all of Romania's state-run companies can fare better with updated technologies and management practices. to become more competitive in an increasingly global market.

There has been forward movement, of course, in the last few months. Under Prime Minister Nastase's leadership, Banca Agricola has been put into private hands, and Sidex is well on its way. But quite frankly I would have expected more to be achieved in the first year of a government that is essentially without challenge on the domestic political scene. What on earth has happened to the other 62 or 64 companies on the World Bank's PSAL I list? And what is the government's privatization strategy for the remainder of its term?

It's critical that this country's privatization move at a more deliberately accelerated pace. And it's just as critical that American and other foreign investors know what they're getting into when invited to bid. That means privatization deals must be clear, open, and transparent - no backroom handshakes, no secret annexes, and no unspoken thank you's.

Conclusion

In tackling these problems, there can be no "waiting for America" - a phrase which, reinterpreted in today's context, can easily be translated into an excuse for inaction. America has made its voice heard in all of these areas, and we're willing to provide technical assistance wherever possible - if and when Romania decides to move forward. What we need is determined Romanian leadership in seeking positive change.

You know, someone recently asked what my "sign" is. I responded that my sign is "optimism." Despite the events of September 11, I still believe the world has an immense capacity for positive change. And I'm optimistic about the future of this country. This government is marked by strong internal coordination, across ministries. It's proven it can forge a parliamentary majority when needed. And already I've seen a growing convergence of views among Romania's Leaders of all political stripes that there really is no choice but to move ahead.

America has high expectations for this country. But time is critical. For too many years, Romania has watched while other countries have moved ahead in economic prosperity. If this government seizes the challenges I've described, I believe the people will support it, and historic changes will occur.

The prize for success in tackling Romania's economy is an upturn in foreign investment, bringing the tools needed to raise productivity and to create prosperity. I believe the prize is also a pair of golden apples - NATO and EU membership. The prize for failure? To be forever on the margins of Europe.

Between these two there really is no choice - not if the people of this wonderfully hospitable country are to have a bright future. That is what we want for Romania - peace, security, and freedom; prosperity for its people; and a proud place for this country in the trans-Atlantic world for which Romania has waited a half century or more. That is also the future that Romanians want as a new century takes wing.

So, no more "waiting for America." I'd dare say that we're now waiting for Romania. What needs to be done really is clear. I hope so much that this country, will see its destiny, and the future, for which it has waited, and which it deserves.

Thank you.