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COUNTRY BRIEFS


BILATERAL RELATIONS

Australia and Romania share a relationship based on commercial linkages and community ties. According to the 2006 census, there were 12,950 Romanian-born people living in Australia, with the majority residing in New South Wales and Queensland. It is estimated that there are a further 16,000 people living in Australia who are of Romanian descent.

Diplomatic relations between Australia and Romania were established in 1968. Australia is represented by an Honorary Consulate in Bucharest. Australia's non-resident Ambassador to Romania is based in Belgrade. Romania has an Embassy in Canberra, a Consulate-General in Sydney and an Honorary Consulate in Melbourne.

Australia's two-way trade with Romania has fallen from A$249 million in 2008 to A$61.7 million in 2010. This decline was largely the result of decreased demand for Australian exports. Australia's trade in services with Romania is negligible. Main exports to Romania were medicaments, plastic plates, sheets and films while main imports from Romania included clothing, rubber tyres, treads and tubes, and telecom equipment and parts.

Bilateral Agreements

Romania and Australia have concluded an Investment Promotion and Protection Agreement, a Trade and Economic Agreement (signed with full effect for Australia in July 2002 and for Romania in January 2003) and an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion, signed in 2001.

High level visits

Prime Minister Kevin Rudd attended the NATO Summit in Bucharest in April 2008.

An Australian Parliamentary delegation led by Senator Alan Ferguson, the then Chairman of the Joint Standing Committee on Foreign Affairs, Defence and Trade, visited Romania in April 2003. A NSW Parliamentary delegation to Romania was led by the then President of the NSW Legislative Council in July 2002.

The then Speaker of the Chamber of Deputies of the Romanian Parliament, Mr Bogdan Olteanu, visited Australia in September 2006 with a business delegation. The Romanian Deputy Minister responsible for relations with the diaspora, Christian Niculescu, visited Australia in October 2001, principally to meet with the Romanian community. Then President Emil Constantinescu visited Australia in September 2000 for the Olympic Games. Romania's then Defence Minister Mr Ioan Mircea Pascu, visited Australia in April 2000.

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POLITICAL OVERVIEW

Under the 1991 Constitution (revised in 2003), Romania has a presidential political system. Under this system, an executive President is elected directly for a maximum of two five-year terms and acts as the Head of State. While in office, the President must renounce all party positions and affiliations. The President is the Commander of the Armed Forces, represents the State in foreign relations and may take part in Government meetings to discuss issues of national interest.

The 2009 Presidential election went to a runoff on 6 December, with incumbent President Traian Basescu claiming a narrow victory. Basescu was sworn in for a second term on 16 December.

The legislature comprises two chambers: the Chamber of Deputies (332 seats) and the Senate (137 seats). The Constitution gives Parliament a central place in the system of state authorities. It has power in exceptional circumstances to dismiss or suspend the President.

The President appoints the Prime Minister based on parliamentary elections, most recently held in Romania on 30 November 2008. A single constituency voting system was used for the first time, with run-offs between the two leading candidates as necessary. The system replaced the use of party lists, where citizens voted for a whole list of party-nominated candidates, rather than a single candidate. However, parties are still required to cross the threshold of 5% of the total vote to obtain representation in Parliament.

Following the elections, Democratic Liberal Party (DLP) leader Emil Boc was sworn in as Prime Minister on 22 December 2008. However, Prime Minister Boc's ruling coalition, consisting of the DLP (115 seats and 33% of the vote), and the alliance of the Social Democratic Party and the Conservative Party (114 seats and 33.6% of the vote), collapsed in September 2009. Following the Presidential elections in December 2009, re-elected President Basescu once more designated Emil Boc as Prime Minister on 17 December. Prime Minister Boc's Government consists of the Democratic Liberal Party and the Hungarian Democratic Union in Romania (HDUR), as well as independent MPs and representatives of eighteen national minorities. Parliamentary elections are due in November 2012.

Foreign policy issues

Romania's overriding foreign policy priority remains strengthening relations with other European countries and the United States through its membership of both the European Union since 2007 and NATO since 2004. Romania attaches strategic importance to its relations with the US and sees its "anchorage" as being in the EU. For Romania, security is perhaps even more important than its EU membership.

Romania hosted the Bucharest NATO Summit in April 2008. There is strong public support for Romania's NATO membership, which is seen by Romanians as an important guarantor of stability in its immediate region, both in a strategic sense and also politically and economically. There are also hopes that closer integration with regional and international organisations such as NATO will attract further foreign investment. Romania has made modest but significant contributions to military deployments in Afghanistan and Iraq. Romania also has an agreement with the US on American access to Romanian military facilities.

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ECONOMIC OVERVIEW

Romania has a population of 21.4 million (2010 est.), GDP of US$252.2 billion and an estimated GDP per capita of US$11,767 (2010). Principal export destinations are Germany, Italy, and France, while the main import sources are Germany, Italy and Hungary (see Romania - Fact Sheet). Romania's economy is largely based on services, which contribute 52.6 per cent of GDP. Industry constitutes the second largest sector at around 35 per cent, followed by agriculture at 12.4 per cent (which provides employment for about 29.7 per cent of the labour force). Unemployment was estimated at 8 per cent in 2010 with a downward trend. The IMF projection for 2011 is 6.6 per cent.

With nearly 3 per cent of the population living on a minimum income of $40 a month, Romania had the fastest economic growth rates in the EU until a real estate and credit bubble burst in 2008.

Romania's GDP contracted markedly in the last quarter of 2008 as the country began to feel the effects of a global downturn in financial markets and trade, and GDP fell more than 7 per cent in 2009, prompting Bucharest to seek an emergency assistance package from the IMF, the EU and other international lenders. Romania has shown commitment to its IMF safety belt, pushing through unpopular austerity measures to bring down its budget deficit to 3 per cent of GDP in 2012. Macroeconomic gains have only recently started to spur creation of a middle class and address the country's widespread poverty. Corruption and red tape continue to handicap its business environment. In 2010, drastic austerity measures led to a further 1.9 per cent contraction. Romania has now struck a fresh deal with the IMF to replace the current 20 billion Euro ($27.65 billion) bail-out, reassuring investors it is still committed to fiscal reform.

The economy is expected to return to positive growth in 2011.

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Last Updated: April 2011

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