News release issued on 9th of November, 2011: during the 3rd quarter, Petrom registered record profit of EUR 275 million, having all chances to exceed 1 billion of profit for the entire year.
Why have you never protested in front of the central OMV-Petrom headquarters?, I asked, at a reunion, some young trade unionists gathered from all corners of the country to get trained. A few of them got it. There’s more politics and needs of protest in one litre of gas than in a whole demonstration in Victoria Square.
Petrom was privatised seven years ago and owns about 30% of the market (the following two players own about 20% each) and is, therefore, making the pricing policy. We have fuel prices similar to those in most European countries. Only that the dependency on oil imports is up to 54% in Romania, while the European average runs around 83%. Gas and diesel price, no taxes added (!) is higher than the EU average. And taxes in the EU are higher than in Romania. We are basically paying for more expensive gas without even benefiting indirectly from it in the form of a larger contribution to the state budget. These outraging data is what flares everything up.
Naturally, we should be picking a fight with state representatives, with the Government, for wasting our money and pumping up gas price. But we’re paying taxes within normal limits, lower than the EU average. The problem resides with e private players and unreasonable price manipulating policies. How to attack a corporation of such size? The first step would be through the government, unless it wasn’t so doubly helpless. One through the famous privatisation contract (still classified) of which we however learnt of some unbelievable clauses disclosed by people with access to it: a former AVAS (Authority for State Assets Recovery) president said there there’s a clause in it preventing taxes to be amended for the following ten years.
The second failure/ helplessness resides in the fact that we are still represented in the board of Petrom, by representatives who fail to do anything: they have the right to oppose measures taken there (golden share). Appointment made by the government are not only biased, but also “business wise” – there are representatives there who are more dedicated to the OMV than their role as censors for the common consumer’s benefit. One example is the mysterious Mr. Gheorghe Ionescu, known as “Bebe”, appointed in the Board by Videanu, on behalf of the Ministry of Economy (owner of 20% of the shares). Bebe Ionescu’s wife is a business partner of the former minister. The favouritism network is broad, and “Bebe” has been in time the key-character in all sort of commissions and strategic committees in the public-private area. He is also father to the famous lover of the most famous daughter: EBA [Elena Basescu]. These people can only think in terms of profitability, exemptions, and privileges. How would anyone expect Bebe to ever have a pro-consumer position?
One approach is the following: the state is not interested to prevent possible abuses from Petrom because he benefits from it. About 7% of the budget incomes come from the taxes we pay on fuel. This is the interpretation of Moise Guran (whom I, nevertheless, congratulate for the outrage expressed on public TV on hearing yesterday’s news on the record profits records this year during the 3rd quarter) but it ignores one dimension. Namely, that the state is content with little. If it were so diabolical and interested, it would press Petrom for increasing the tax share and cut of the price with no taxes added. But this opinion comes from a literature graduate, not a specialist.
Emil Boc accuses the ruinous contract concluded by Nastase’s government:
Please ask the two more often about the contract with Petrom. And see where the 99% oil resources of the country are – with Petrom. And 53% of the natural gas resources of the country – with Petrom. Ask them until when royalties cannot be counted – until 2014. Then ask them which are the Romanian royalties compared to other countries. And ask them how was it possible to conclude such a contract which is detrimental to the interest of Romania and Romanian people. Unfortunately, others who plundered greatly the national economy are taken today for great teachers”.
In his turn, Năstase claims that it is provided in the contract the possibility of intervention of government representatives in the Board of Associates. Only that we don’t know exactly when there’s a “situation of crisis”:
In a situations of crisis, the Board members will consider the consumer’s interests , as well as Romania’s national interest, aiming for a balance between these and the interest of the shareholders
They are both right, and have both committed fatal errors in their time. Not to mention a Parliament that endorsed this privatisation unanimously. Well, the problem is specifically caused by such unanimity which was also the trigger of the “transition towards the market economy”. It is for it that we are paying now, without the least elements needed to express criticism, namely transparent data on the privatisation, delivered by economists, jurists and other specialists – the state has not provided any safety reserve for debate and contend.
The chapter on control from the Competition Council reveals its own helpless grin from the authority. It’s been on for about 6 years and in the best case scenario, a long day off, sometime, the state might charge a penalty amounting to 10% of their turnover from the largest three “competitors” on the fuel market turning out to have settled their prices (which went up by 20% during the past one year and a half). The one supervising the kick-off for the control, the head of the Competition Council in 2005, Mihai Berinde, resigned and after one year started working for Petrom, namely the subject of his investigation. He left after having worked for 17 years exclusively in the public sector, owning a big fortune, so we can’t say he only did it for money, haha.
In an interview with Money Channel, Chiriţoiu, the head of the Council, spoke very seriously about the 3-4 people in charge of the report. It should be a case of flagrant abuse of law for a handful of people to efficiently refer to court the entire monopoly mechanism created by the petrol-station giants. But there’s some hope. The report was submitted with the European Commission and we were guaranteed that it clearly shows how the market was impaired by agreements between the main players. A firm European answer will come around Christmas.
Needless to say how impaired is the perspective itself – an idea market that might be infected by some, that would be the problem. Upholding the law for the sake of free market turned into a sort of a democratic excessive protection racket for capital: large mobile phone operators were also fined, for instance – was this reflected in the final report of profits or in a better arrangement of the “market”? We can’t tell, let us hear it from the same market specialists lecturing us every day about how impure capitalism is in Romania.
The news that Petrom will register a record profit this year , humiliating even the mother company, a billion Euro for 2011, is no good news to anyone, and especially not to the highly praised small and medium-sized enterprise owners. It is a declaration of power.
During the same 2011, with the disclosure of this accomplishment amazing especially during a year of crisis, the OMV Petrom Head, Mariana Gheorghe announces that the lay-off programme will be continued – 15% of the employees (over 4000) were laid-off last year only. The privatisation contract also mentions the reorganisation programme. However, Mariana Gheorghe says: “this does not mean that there will be no lay-offs in the years to come”. This same Mariana Gheorghe is a member of the Foreign Investors Council’s Board, the association having submitted with the government last year a proposal for the amendment of the Labour Code. As you are aware, the amendments were performed quickly and nearly to the letter according to the requests expressed by the Foreign Investors Council.
Who Are We Fighting Against?
Small sized movements sporadically take place in Romania, inevitably touching upon anti-corporatism, anti-monopoly. One of these, an extremely dynamic movement is the one regarding Rosia Montana. But small stakes can’t be compared to the situation in the energy field (and it’s not only companies like Petrom, Rompetrol or Lukoil; the consumer is seriously threatened on the electricity market as well). Not to mention the banks, where we already lost small battles, such as the regulation of some money making nonsense committed during the economic boom. The slogan is always to following: behave, or the investors might leave.
The lobby of Rosia Montana Gold Corporation was, for example, covered in writing. But this is infinitely smaller than the power of large energy, mobile phones and so many other companies. Those entering the fight against RMGC must be aware that their fight is extremely small in comparison to the stakes we could aim for. In order to have an Occupy Bucharest or Cluj or Timisoara, we must define more clearly what we are fighting for, and to do so we must look into the extremely intricate area of the public-private partnerships, where state power dissipates into the corporate area. The essence of the Occupy Wall Street movement also resides in this: the naïve yet powerful finding that the FED is private. Maybe we should sit down, analyse things and see that the fight is much more difficult that saying, “Down with Boc! Down with Năstase!” Clearly, state power levers remain significant but are no longer essential. The power must be forced to at least admit how much of the power it lost during the past ten years (this strident repetition is intended). Comic appeals like that of Traian Băsescu to central European authorities, be cautious now in taking capital away from the non-Euro zone, no longer have any point. It’s a deceitful appeal, already taking populist-nationalist shapes, just another nuisance we don’t need right now.
Indignados-occupy movements in Romania must localize their ideology – which does not necessarily relate to either heritage or ecology. Stakes are much bigger and we must refrain from the rhetoric of “small but factual matters” which led in Romania to a sort of aesthetics of protest incomprehensible to wider groups of possible indignados. This is the reason that I started myself (a philology graduate) to write about economic pressures and markets. Because there’s a huge debate void here, because power is here and because this is where citizens lost the most – when they hit the Victoria Square they’re asking Boc for money to pay their instalments but never take the question further and ask “why do I have such big instalments?”
And there’s also the problem of small stakes that ravenously brought in by media (or political opposition, finding itself in an unbelievable message drift. Like the personal identification codes at the referendum. So much anti-institutional hatred, so much critical momentum, so much frenzy. With such energy we’d be able to change three governments. But no, we were only satisfied with intimidating some poor guys from the National Statistics Institute. The accomplishment of the revolutionary Romanian people was the undermining of a mere referendum. All the frustration was wisely directed towards visible structures of the state – just as we are outraged by police officers while failing to see the dangerous force that has developed among security guard companies. Protest is something conveniently filling our leisure time. Economy, on the other hand, is the field of specialists, we can’t disturb it with plain questions, with ethical questions, it’s out of one’s league.
Let us which to each other, on the occasion of reaching a profit astounding Europe, a serene-logical-impossible “Occupy Petrom”! If we hope for efficient protests with the least chance of changing the system for the better in the near future, we much undertake bigger stakes, and do it publicly, although amateurishly.
Translated by Sanda Watt