IMF dictates shock program to Romania

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IMF dictates shock program to Romania
By Andrei Tudora
18 May 2010

Coming out of talks with an International Monetary Front delegation last week,
Romanian Prime Minister Emil Boc unveiled an austerity package that is the
precondition for the country receiving the next outlay of a 20 billion euro loan
package. Even though cuts were expected, the ferocity of the planned attack sent
ripples of shock and anger through the population.

The main points of the austerity package include a 25 percent cut in public
salaries, a 15 percent cut in pensions and a 15 percent cut in unemployment
benefits. These measures, taken to offload the debt the government owes to the
international bankers onto the backs of the working class, would have been
enough to condemn a large portion of the population to misery. But the plan
continues with provisions to dismantle virtually everything that was left of the
welfare state.

During the past 20 years, Romania, one of the former Eastern European buffer
states, has been subjected to a continuous barrage of free-market “reforms”,
involving deregulations, privatizations of state assets and factory closures.
Successive social democratic and right-wing administrations have presided over
the impoverishment of the population, all the while providing international
companies with a cheap, well-qualified workforce as well as state subsidies and
tax exemptions.

Romania has been a target of the IMF. Previous IMF dictates were observed by the
notorious “anti-communist” CDR coalition government of 1998-2000, a government
that is best remembered for the shameful role it played in the attack on Serbia
by NATO forces in 1999, its destruction of the mining sector and huge
privatization programs. But the scale of the new attacks is unprecedented even
by these infamous standards. Among the population there is increasingly the
feeling that the political establishment has this time bitten off more than it
can chew.

The new austerity package include a 25 percent cut to child benefits, a 15
percent cut to benefits for caring for a disabled person, the elimination of
benefits for young families, the elimination of compensatory payments for sacked
public employees, a freezing of benefits for single parents, the abolition of
transport subsidies for students and the elderly, and the removal of energy
subsidies for households.

A brief look at the numbers shows the extent to which the new measures affect
working people. An average monthly public sector paycheck in Romania is about
400 euros and would drop to about 300 with the new cuts. And while an average
rent is around 300 euros, the maintenance cost of a household will increase, due
to the withdrawal of energy subventions, from between 133 to 268 percent,
depending on the city, i.e. an average of 250 euros.

The government also seems oblivious to the fact that pensioners, who were
already struggling to make ends meet with an average pension of 160 Euros, will
find it literally impossible to make a living with the 15 percent cut.

The dramatic drop in living standards is accompanied by the decay of the public
healthcare system. The 25 percent cut to child benefits will certainly affect
the infant mortality rate, which is already the highest in Europe. Many of these
infant mortalities happen in the first year of life and are caused by treatable
infections and malnutrition.

The immunization program has also been disrupted and the Cantacuzino National
Institute, which produced vaccines, recently closed down production, with
parents desperately scouring pharmacies to buy anti tuberculosis BCG vaccines.
On April 22, health workers from the institute held a spontaneous strike to
protest the situation, but were given no answers and remain uncertain as to
whether the Institute will be shut down completely.

The government has also decided, in compliance with the IMF deal, to finalize
the process of decentralizing healthcare. This implies the closing of 150 out of
Romania’s roughly 400 hospitals and passing the rest over to local
administrations. Since the advent of the financial crisis, many of the local
authorities have been unable to pay even the salaries of city hall employees and
have announced plans to privatize the hospitals. The government has also
declared that the surviving hospitals will have their debt to the state budget
erased before being handed to local authorities, a move aimed at eventual
privatization.

Hospitals have been left in a state of decomposition for years, with patients
and health workers buying medication and medical materials themselves due to the
almost total lack of funding. The situation reached a critical point in April
and May of this year, when more and more managers, including in the capital
Bucharest, reported that their hospitals can no longer perform surgeries or
receive emergency cases.

Another government proposal is the introduction of co-payments in the healthcare
system, without, as originally planned, exempting pensioners or social benefits
recipients. These measures, however, are tailor-made for the dwindling private
healthcare sector. The private clinics, many of which are already occupying
buildings formally belonging to state hospitals and have been able to recruit a
low wage workforce from the public system, are set to take over “decentralized”
hospitals, or parts of them. These privatizations would then drag the private
insurers behind them.

Millionaire businessman Adrian Dumbrava, owner of a medical center chain, has
said that he has “already received offers from local authorities to take over
hospital units after decentralization as a concession or on a public-private
partnership”. The Health Minister’s spokesperson, Oana Grigore, lauded the
developments, impersonating a private insurer: “The insurer can come to the
person and say: you give me 2 lei a month, I will pay the equivalent of the
co-payment in case you need medical services.”

The government spokesperson seems to have grasped the issue quite well. In
November 2009, Theodor Alexandrescu, the general director of American Life
Insurance Company (ALICO), a subsidiary of AIG Life, was talking about the steps
needed to reform the state healthcare system: “The first and most important is
the introduction of co-payment.” The emerging picture is a familiar one, only
this time applied to an entire national health system: devaluation followed by
private takeover, in a process in which business interests become
indistinguishable from government authority.

The murderous implications were amply revealed in March and April, when
thousands of HIV patients were left for weeks without medication. Many of them,
infected in Romania’s hospitals in the early 1990s, had already undergone
multiple schemes of treatment, and this delay means that for many of the
affected the virus could prove fatal.

The government’s economic plan has already provoked an angry response from the
population. Scenes of desperate pensioners breaking through police enclosures
and daily street protests by public employees sent a shock wave through the
government. President Traian Basescu accused the pensioners of being
“infiltrated by violent elements” and threatened that he would not allow “Greek
relations” to predominate in the country.

Trade union leaders are increasingly fearful that this time they will not
succeed in containing the workers and are pleading with the government to
negotiate. One union leader was uncharacteristically candid in front of TV
cameras, pleading with the Prime Minister to talk to them, because “we are the
only way that these feelings [of the population] can be democratically
expressed. God forbid that they should take other forms.”

Workers have vowed to take to the streets every day, until May 19, when 40,000
are expected to participate in the largest rally since 1989.

http://wsws.org/articles/2010/may2010/roma-m18.shtml

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