“Romania must be extremely careful about saying it is not Ukraine, a country where people are dying demanding democracy. Romania must reassure it is a stable economy with a stable government,” Senator Mircea Geoana said.
“The violence in Kiev amplifies the risks looming over the entire region because the investors have not learnt yet how to clearly differentiate the emerging economies in a crisis. What concerns me, as an emerging country, is any bad news, especially in terms of spillover.”
The leu lost 0.7% against the euro on Thursday, and 1% in the last two days.
Romanian analysts warn that as the Ukraine situation worsens, the interests at which the countries in the region, including Romania, borrow could increase. Unless the local government focuses on maintaining political stability and a stability of economic policies, Romania’s economy could suffer, they say.
“The heaviest pressure is now on the stock markets and currencies in the region, and the interests at which all the countries in the region borrowed should go up,” said economic analyst Dragos Cabat, managing partner of Financial View.
The turmoil in Ukraine does increase the risk of the area, so all the countries there will stand to lose but capital will not move overnight, believes Cristian Parvan, general secretary of the Association of Businesspeople in Romania (AOAR).
Parvan believes only the small businesses will have problems in Ukraine, because their market is disrupted and they will have trouble finding customers.
The small businesses are already suffering as it is.
Romanian-owned Izoterm, which makes pipes used in heating systems, halted operations at its small plant in Ukraine and is now only paying the security guards there.
“We’ve been operating there for 15 years. The economy has worsened in the last couple of years, they started ordering without paying,” says Dumitru Matei, Izoterm owner.
Everything is frozen and customers are not paying their debts, he added.
Another business, Superlit, too, was hoping to sell pipes in Ukraine, as it gets three quarters of its EUR15 million revenue from exports. The company, which owns a plant in Buzau, hoped to enter the Ukrainian market, expecting the country to join the EU someday, its officials said.
“We didn’t get to take a single step. We were in contact with a number of businessmen but considering the situation there, we decided to wait a little,” said Bogdan Nitu, the manager of Superlit.
On the other hand, Rompetrol Rafinare, one of the main exporters of the country to Ukraine, has not been affected yet, because its operations are concentrated in the south of the country, where turmoil is not as serious, its officials said.
(English version by Loredana Fratila-Cristescu)