VIDEO The head of the Foreign Investors Council: „Decree 114 is toxic for business”. On demonizing the companies with foreign ownership: „It’s an opportunistic game of looking for scapegoats”

Franz Weiler, the chairman of the Foreign Investors Council (FIC), in an interview with G4Media.ro, said that the government’s adoption overnight of the emergency decree (OUG) 114 is „toxic for long-term planning and it worries investors.” Weiler points out that the independence of the National Bank is „an absolute necessity” and speaks of the need for a free and independent justice.

Franz Weiler’s main statements:

• As with the taxing of the banks, the regulation of the private pension funds, or the capping of gas prices – all these measures were taken overnight – and this is toxic for long-term planning, and it worries investors in general.
• The independence of the National Bank is an absolute necessity.
• If the legal environment becomes more and more unpredictable, with tax changes often taking place overnight, then investments are postponed or shifted to more favorable business environments
• Any business environment also depends on the existence of a predictable and dependable system of justice. There is some concerning information in this regard
• Foreign direct investments have remained relatively stable, but the composition has changed. There are fewer investments in new projects and more of the expansion of existing businesses. Let us not forget, however, that we are in fierce competition with the other countries
• Many businesses have been affected not only by this emergency decree but by the series of other decrees that have shaken the confidence in a predictable development of the economy
• There is no dialogue with the government when it comes to issues concerning the economy, and if Mr. Valcov represents the government, then that includes him as well
• There are enough reasons to believe that there is a problem with the budget. I think that the budget situation was one of the reasons behind the OUG 114
• There is only one factor affecting the budget: the fact that there has been a decline in the share of tax revenues as a percentage of the GDP over the past three years.
• Without investments in education, Romania will continue to be a provider of cheap labor, and will not become a developed economy.
• Romania does not lack funds for investments; the problem lies in the execution of the ongoing projects.
• Romania has a VAT collection gap of 39% –the amount of taxes owed and not collected – the highest rate in Europe.
• It’s not fair for a company to pay its taxes in a tax haven. If they generate value in a particular taxable business environment, they have to pay taxes in that business environment.
• About the demonizing of foreign entities by the PSD leader: „It’s an opportunistic game of looking for scapegoats to justify the lack of accomplishments.”

VIDEO Franz Weiler about OUG 114:

VIDEO About the lack of predictibility of the fiscal policies:

VIDEO About the lack of dialogue with the Government:

VIDEO About the independence of the judiciary:

VIDEO About the anti-foreign capital speech:

 

• The interview:

 

Rep: Good morning. I was just looking here and I haven’t seen any money or the gold that you are accused of taking out of the country and basically stealing it. Where are the money? Did you send it directly abroad?
Franz Weiler: This is good that you ask for, this is one of the fairytales we hear likely more or frequently. The fact is that the Foreign Investor’s Council is consisting of around 125 members, all of them are foreign direct investors in Romania and since that Foreign Investor’s Council exists for no more than 20 years, the contribution and the increasing importance for the economic development of Romania are also documented in the past. So at the moment, it’s more than one million employees that are working in companies with foreign capital.

It is also important to say that it is foreign capital, not foreign companies. These companies are managed and directed by Romanians. So these are pure Romanian companies. Employees are Romanians, taxes are paid in Romania. So there is a lot of technological development done, lots of skills and expertise were imported and Romania used to be in a very good position when it came to foreign direct investments as a starting point. Unfortunately, this has diminished over the time.

Rep: You used the verb “used to be”. The Emergency Ordinance number 114, “taxation of the greed”, as the Government used to call it… how would you describe its impact on the Romanian economy?
Franz Weiler: That term is a really euphemistic one. Also, the banking tax on turnover, which is a major part of the ordinance you mentioned is – you know, we are not talking about taxes and how the taxes within a country works, this is solely to the subject of the governmental decisions, but certain principles needs to be respected in order to provide a stable and a predictable environment.

First of all, I do not think that any kind of fiscal decisions should be an Emergency Ordinance. All of these should be well discussed, communicated, an impact study prepared and then decided. So the banking tax, among others, like, for example the regulation we got in the Pension Pillar II, regarding the capping of the gas prices – these are all measures which came over night, which is toxic for any kind of long-time planning and which is worrying our investors, in general. So taxation needs to be predictable, it needs to be done in dialogue with the stake-holders, we need to prepare an impact study and we need to know what are the consequences of such taxes. Taxes need to be based on rational, on commercial-rational, it needs to be done in a way that the companies can really carry these taxes and it has to be respected that companies need to stay profitable at the end. They need to be measured according to the commercial potential of their businesses. All of these were not respected with the OUG 114, and I’ve spoken, in the meantime, with many companies that were affected by that – not only directly affected, but also by the unpredictability of the system and they have postponed or cancelled, for the time being, their investment decisions. Take a look at the business report of one larger energy company…

Rep: Petrom…
Franz Weiler: They postponed a decision of a multiple billion investment in Romania because of this legislation. And many others have done – on a smaller scale – but they are following this path.

Rep: Since you’ve mentioned Petrom, I have one question about their public report. Petrom just quoted the political risk as an important risk in that public document. Do you also feel that there is such a risk for the business environment?
Franz Weiler: Unpredictability is always toxic for business environment. And with the number of fiscal changes which are amounting to 200 only in the last two years – and all of them are coming with emergency ordinances – are nearly not discussed before – not in a consensus, not in a dialogue prepared, no impact studies prepared, and many of them are afterwards corrected, do not show efficiency, take no effect or just add confusion in the market, they bring additional administrative burden so all this environment is toxic for investors. This is not only for foreign investors, this is also for Romanian investors. Capital doesn’t have a name, yes?

Rep: Do you fear this emergency ordinance might cause some foreign investors to actually leave the country?
Franz Weiler: At the moment, I don’t see that. Companies operating here, in Romania are not leaving Romania on a large scale but what we see also in the foreign direct investments in the last years it was kept relatively stable but the composition has changed. So there are no greenfield operations founded anymore, it’s more on expanding existing businesses. So people who know the markets are still trustworthy to a certain extent have maybe postponed the one or the other decision for investment, but on greenfield we are in a fierce competition with other countries. And we see that potential investors are deciding now in favor of other countries than Romania, which is a pity because we used to be in a very strong competitive position in the past.

Rep: How come this business environment had displayed lately such a unity, a thing not seenin the last years?
Franz Weiler: I think that it is unifying if you have a common problem. And so many businesses are affected not only by this emergency ordinance but the series of emergency ordinances which are destabilizing their trust into the predictable development of the economy that to find common grounds on this topic was unifying the different association and main chambers of commerce so there is a variety of different types of associations and communities acting together.

Rep: And also Romanian businessmen and foreign investors…
Franz Weiler: Also, the largest voice in this area is the CDR – Coaliţia pentru Dezvoltarea României – where different organizations are having a common platform. Actually it was founded in order to have a common voice – one voice to have a dialogue with the government and with the governmental institutions as the quality and the content of the dialogue was deteriorating over the last two years and it is really, from our side, always an open door for dialogue and all the experts we provide for dealing with problems and different measures which could help in order to solve and settle things – this is more or less ignored. It’s a real pity, because there is a value which is available for free and it’s not used.

Rep: Did you held talks with the Government in the last month, in January, since the Ordinance entered into force?
Franz Weiler: So there were no formal talks. We had a couple of publications, we gave statements, we gave lectures in order to express that we have serious concerns of the impact of such regulations. We tried constantly to stay in touch through the platform of the CDR and we do hope that it will come to a certain exchange of opinions at least and that the impact this particular OUG will create could be avoided, you know?, the negative consequences of it could be avoided.

Rep: Prime-minister Viorica Dancila announced in an interview that this emergency ordinance might be changed in the near-future. Do you have any idea what changes the Government wants to make?
Franz Weiler: So we have no clear indication. We gave a statement from the CDR – which of these parts of the Emergency Ordinance are most concerning and we do hope that this will be taken into account when the government is considering a change in the OUG. But we have no indication whatsoever what exactly that could be.

Rep: Do you feel that the business community still has a partnership with the Government?
Franz Weiler: From our side, sure. But a partnership requires dialogue and a discussion. We do not question whatsoever that the Government has the last say. But it should be done on an educated way and decisions should be made knowing all the consequences. And we will be ready to provide input and to provide expertise from our members. There are really high-level experts working on various topics of economic environment. And to listen to those experts would be a really good idea.

Rep: How is the business community relationship with Mr. Darius Valcov which is one of the main promoters of these fiscal changes? Do you feel you are respected by him?
Franz Weiler: We do not have really a dialogue here. So, at the moment, as I said, Mr. Valcov is appointed for a certain role in the government, so we have to accept that a person is in charge on behalf of the government. We have, here, also, some turbulences in the past, triggered by public comments and we are not a political organization. We do not want to comment on political issues. We are strictly limiting ourselves to economic questions. So when it comes to economic questions, there is no real dialogue with the Government and if Mr. Valcov is representing the government, this includes also him. So we are receiving emergency ordinances, you know? But even so, when we are talking about 114, this is really one of the last examples but this is a series of many of those decisions in the past two years where the announcement of such wordings were done over the weekend, some were hidden on the website – it’s no transparency there – so it gives us the impression that it is on purpose not discussed before it comes into force.

Rep: But why this? I mean, how can you explain this kind of behavior?
Franz Weiler: So we are still a little bit puzzled by this fact here. We have good arguments. Maybe this is not so welcomed sometimes, we have seen that effect-driven management of a economy would be more beneficial for the entire society than something which is driven by ideas not validated, not checked, double-checked whether the symptoms which they are dealing with are cured or not. In general, we see that the belief in simple solutions for complex topics is here the driver. We see also that complex problems which are diagnosed by the Government correctly are not treated well, when it comes to solutions. I remember just a reminder on the emergency ordinance for the split VAT. So we have a clear symptom here, Romania is the last in the European Union on efficiently collecting VAT, so we collect a little bit above 60% of which is available and then some party believes with the split of the VAT this problem could be cured. So this was not the case here, so it created a lot of problems, it created a lot of administrative burdens, we have stated that and we predicted that this will not solve the problem and it happened. And now we have to live with it. On the other hand, when the World Bank was starting or initiating a process or a project with substantial funds behind to increase the efficiency of the tax-authorities and the execution of the existent taxes or laws, this project was somehow sleeping and then it died. Silently. And this is something the business community does not like. You might mean we are not so happy to pay taxes. Yes, maybe not. But we are interested in the function, in properly function of the execution of existing laws, and this was a chance, yes? We lost an opportunity here.

Rep: Speaking of projections. The Government predicted a 5.5 percent economic growth for this year, significantly bigger than the European Commission’s forecast. What’s your forecast for this year?
Franz Weiler: My personal forecast is closer to the European Commission forecast, so it was a quite neutral objective technical forecast so I believe we will land rather there, with the European Commission set these days, when they predicted the European economic forecast for 2019 and 2020, so which means I think 3,8 also, as predicted. Which is still good, yes?

Rep: If this is the correct forecast, it will jeopardize the government targets for this year’s budget. Many voices are very concerned about the very rigid structure of the public expenditures. What do you think about it? Do you see it in the same way?
Franz Weiler: Yeah, there are good reasons to believe that there is a problem on the budget situation. Also, we have seen that – I think one of those reasons for the Emergency Ordinance 114 was also the budget situation. So we officially ended up below the conversion’s limit in 2018 so this is, let me say, a very longing on the point here, so this mix is always a little bit suspicious whether this was a realistic figure, which is sustainable for the future budget as well, so the budget situation is driven by one fact, that the tax-income percentage in GDP was, in the last three years, declining. So Romania’s one of the few countries where this happens. And we’re one of the most competitive ones when it comes to the tax-rates in European Union and to our neighbor countries and still we could not attract here a sufficient sustainable development of the economy. The economy was booming but it was all based on consumption. And that was also, to a certain extent, fueled by various measures of the government in the last two years. But that’s probably not helping us for the future. It makes the economy more vulnerable for the upcoming decline in the world economy. So we have seen the global decline, it’s not worrying, we see this always, that it’s coming in waves, this is all the economic cycles, but everybody knows that it will come. And if you act cyclical, then you will have a problem in the moment when it’s slowing down a little bit.

Rep: With so much money from the budget spent on increased wages and pensions this year and the next year, can we realistically expect significant public investments this year?
Franz Weiler: We have seen that in the attempt to finance some part of the consumption drivers for the economic, the long-term sustainable part of investment was declining as well. Since years we were on the low level and it’s further declining in the last two years so I believe that if we do not think now about the next ten to twenty years in the development, then this will cause a lot of problems in the future. A consumption to even economy is not sustainable. We have, in our project “Va urma” analyzed the effect of investments in infrastructure’s various factors. What do we need to do in order to make Romania the number 10 in GDP ranking in European Union? And it is achievable. But you need to have a sustainable growth rate over the years, you need to remove everything what is against this target. It is for the well-being of the Romanian population and it is healthy economy as a basis for that development. So if it would, today, invest significantly into the infrastructure, the productivity would jump. It would be the most efficient and fastest effect for the economy, does not come over night, but it comes in two-to-three years. And the second most important is to take care of education. So this comes in 15 to 20 years. We have a state in which the pupils of 15 years have a high percentage of functional illiteracy. So this is a problem.

Rep: It is a problem for the economy, it’s a problem for themselves, but also for the whole economy.
Franz Weiler: I think first on the people with paid chances for their life. So this is building the pure part of the population of the future. So if we do not invest in the education, Romania will not manage to change from the cheap workbench from the past into a skillful experienced in development economy in the future.

Rep: Which adds value to every investment.
Franz Weiler: Yes. It’s about productivity, it’s about GDP per capita, we are, again, one of the last in the queue so we need to increase the value per capita in Romania. And this is only possible if you are a lot competitive on offering cheap labor force. So a realty middle-class in Romania is a must for the future. And this comes with education and this comes shorter with investments in infrastructure and everything. This is from highways to schools and to make a little facilities and healthcare system. This is all infrastructure.

Rep: Coming back to the budget, the Government seems to have problems in closing the budget as the mayors told publicly two days ago after the meeting with the government officials. Do you expect new taxes or the increase of some taxes one of these days, or this year? There were rumors about this.
Franz Weiler: So if you have a budget problem, you need to find a solution, yeah?

Rep: You got to raise taxes and put some new…
Franz Weiler: Or to decrease the costs… I believe there is a mixture needed, I am not promoting higher taxes, because it would have been not necessary to bring us to a problematic budgetary situation. But there are good costs and there are bad costs. And we need to save on the bad costs side, which do not bring a value and we need to increase our costs for investments and for future sustainability and development of Romania. So from somewhere you need to take the funds. There are different sources for that. So, for example, for the infrastructure investments in the current budget in period of the European Union there were 6 billion euro available and my latest information maybe it’s around 11 percent we have used of this budget. This is not, we do not a problem with funds for investments. We have a problem with executing those projects. Here we need to work on. We need to increase the utilizing the available funds, that they are invested wisely, strengthen the capability to run projects efficiently and successfully and then we will see whether there is enough room in the budget to finance everything or is there a need in order to increase the income. Again, here, I would rather go for efficiency of tax-collection system, I would recommend to run the World Bank’s project finally, because it’s all about the quality of execution at the end. So the VAT gap is 39% is not collected from the due-taxes – this is the highest rate in Europe, by far the highest rate. The whole Europe has a problem with that, but Romania has a bit more of it. If it would just come to the European average, this would bring a lot of additional revenues.

Rep: There’s an ongoing discussion at the European level about the behavior of the multinational companies, be them with American capital or European capital. There are concerns all over Europe about them avoiding taxation, or having an aggressive fiscal plan. Do you think those concerns are having a real basis, both here in Romania and abroad, in Europe?
Franz Weiler: I think that the tax-laws have to be applied for everybody in the same way. And when you take a look at the composition of Romanian economy, there are little numbers of those multinationals. Most of them are mid-sized small and middle-sized enterprises active in various countries in European Union. These are not the typical multinationals we have in mind when we talk about tax avoidance. These are the companies who have a tax-heaven somewhere in the world and they are concentrating their income and their profit-tax there. So this is not fair. If they generate a value in a certain tax-environment they have to pay the taxes of these environments. And the tax-legislation has to take care that this happens. So I’m for equal rights in the taxation and the fiscal policy, so in this I’m sure that there are gaps, until this has to be closed, because I see that our members here are not such type of multinationals, they are companies in the mid-sized and they are paying taxes so the majority of the taxes and the reliability of the taxes paid in Romania are coming from those members. They have a corporate standard, they have a corporate governance, none of them would dare to avoid tax-payments on illegal race. So this is a no-go.

Rep: But they were explicitly accused of Mr. Valcov, Mr. Dragnea and other government officials that they are taking money out of the country and taking them abroad by avoiding the taxation here.
Franz Weiler: Particularly in the European Union and companies acting in the European Union with headquarters in the EU have very limited chances to practice this kind of tax-avoidance. So we have, here, standards applied, we have audits applied, we have the tax-audits from ANAF applied. If somebody is not behaving according to the rule, then this have to be executed. We are committed to be compliant with the legislation. And the majority of our members is the same. So I have no single example from within our members where this was a problem. Again, the taxes in Romania, the unpaid taxes in Romania are – if you do an analytics, where the problem is, really – you will find, probably, that we have still a huge amount of bankrupted companies where taxes are not paid, where social contributions are not paid. So, if you deduct all of those things and look who is a reliable tax-payer in Romania you will find out that foreign companies are among them.

Rep: Which will be the acceptable fiscal measures to fight against the evasion and aggressive fiscal planning when it comes to the foreign investors?
Franz Weiler: Foreign investors are, by law, equal to Romanian investors. There is no difference. There is no discrimination, neither positive, nor negative discrimination at all, according to the current legal situation. So what we see sometimes is that investments are attracted by local communities because they want to offer them a support to attract an investment in their community. But this is valid for foreigners and for local investors as well. So, as I said, capital doesn’t have a nation elite, behind. The investments should be promoted in Romania. We need it. For the future development. We need to create values, we need to increase the income per citizen, we need to increase our GDP per capita in order to grow to the level of the European average. And it is mandatory to look at that in a way that it’s executed well. In order to finding cures for symptoms, we need to eliminate the root cause. And as long as we’re not collecting nearly 40% of the VAT taxes, we cannot talk about somebody evading taxes. This is just not executed.

Rep: Do you fear that the fiscal authorities are starting to hunt the foreign capital companies here in Romania? We’ve seen the ANAF authority announcing a major operation called „Iceberg”, directed to big companies. Do you have this feeling of being hunted?
Franz Weiler: We noticed independent or foreign or local investment that the auditors are looking, the financial audits are looking into the intercompany charges. So there are clear principles that are applied, that means we have clear rules on EU level for that, also, the local legislation is not so clear about that. So what we have heard, as example said, it was not allowed to deduct intercompany charges as costs, but i do not see a coordinated hunt behind that.

Rep: We’ve seen a growing anti-foreign capital speech in Romania. We’ve seen it started in early 2017, after the big protests caused by the infamous Emergency Ordinance 13. The foreign companies were accused by many PSD-leaders of organizing or at least encouraging these protests. Did you do this? Did you encourage or organize these protests?
Franz Weiler: The Foreign Investor’s Council stands for around 250.000 employees. I believe that we have intelligent and grown-up adults employed. They have their own opinions and we have little chance to influence that, even if we would like to. So there is no political involvement of companies, the corporate governance in most of the companies is even forbidding that. If a Romanian citizen decides to participate in protest and this is his own will and his own decision, the involvement of foreign direct investments is ridiculous.

Rep: But did you notice this change of discourse at that moment?
Franz Weiler: Yes. It is, particularly, in the beginning of 2017, after this famous OUG 13 was published, the Romanian citizens were obviously upset about the attempt to settle things from the past in this way. And the attempt to question the legitimacy of these protests were simply then looking for a scapegoat. This was our impression, we did not really react on that on the first place, we thought “Ok, this is one thing that is going away and will not affect us seriously”, but in the meantime it became really a trend.

Rep: It became mainstream speech, this anti-foreign capital… what harm could it do to the Romanian business environment and broadly, to Romania?
Franz Weiler: I think this blaming game is lacking any kind of facts behind. So it is not based on hard facts and proofs and there are none. This is an opportunistic game, looking for scapegoats for failing our management. And here we do have for sure the task to come back with facts-check, that we inform about the role of foreigners, foreign-direct investments in Romania, we have a lots of content provided and we are starting also to communicate now, but we clearly allow each citizen in Romania to make his own judgements upon that.

Rep: But do you feel that this kind of speech against the foreigners – in the end – is dangerous for a country? For the people of this country?
Franz Weiler: I personally appreciate very much the peaceful mind of Romanians. Also the protests – what I have seen – there were families, there were kids, these were peaceful protests – this is the legitimate right of any citizen. And I’m not so worried about dividing a country. I’m more worried about the economic damage it does. When somebody from a company is looking for an investment opportunity and is looking for a position, an investment in a nation, in a country, that is a further research going before. And one of these topics is legal stability, climate among others. And if the legal environment is becoming more and more unpredictable, fiscal changes frequently happen overnight, then the investment decision is either postponed or it is done in a different environment. And we see that more frequently the investment decisions are taken in favor of the neighbor countries, for example. So, in this respect, when it comes to economic climate, an impact on it is for sure the problem for investment decisions.

Rep: Did you see this anti-foreign capital speech also in other countries in the region or broader in Europe, or do you think it’s only a Romanian trend?
Franz Weiler: I think we see in various countries a similar trend. It is proven that it does not help, really, for the economy and it is, indeed, a more opportunistic approach then one based on facts and ideology does not help. We need to have a cool head and check the facts and take decisions based on research and figures and not on ideological reasons.

Rep: You spoke about Romania competing with the neighbors for attracting investors. Which are the main advantages of Romania when it comes to this matter?
Franz Weiler: First of all, Romania is a big market by itself. For many companies who would like to explore these markets for themselves, for their consumers, this is an attraction by itself. It is simply a scaling effect here. Then Romania is still offering, compared to European countries, a low tax environment. There is a relatively cheap labor market when it comes to comparison with other western countries. There are skilled people available – or used to be, at least – one famous example is the IT and software business. Lately this is becoming even a problem because the labor-force is becoming a cost-resource and when it comes to skilled labor-force is becoming also more and more problematic. So all of our members are complaining that we have a lack of labor-force here. And we did a start in the CDR with one of the Big Fours and they have predicted that up to 2020, we will miss 800.000 people in Romania. And in the same moment, we lost last year approximately – there are no clear figures – but approximately estimated in this study – 250.000 people leaving Romania.

Rep: What other measures could Romania take – besides investing in infrastructure – to stop this massive emigration?
Franz Weiler: We have two different types of emigrants. They are leaving because they do not believe in the future of Romania any more, want to have a stable and safe environment for themselves and for their kids. They want to have a social system and healthcare and highways and political environment which is more favorable for them and the others are the ones that are leaving temporarily – making money and sending them back home – we have, I think, 4 billions of euro income from this source. For those, for the latter ones, this is a temporary situation. This is not damaging the country forever. They are contributing, even, to a certain extent. For those who are leaving the country forever, to not believe anymore, in their own future in this environment, this is a problematic one. These are usually the well educated ones, Romania has invested into this education and then the benefit in their professional life is coming somewhere else.

Rep: Many of them are entrepreneurs who are leaving their businesses for good…
Franz Weiler: Yes. This is, for sure, a problem. In the same moment, we are losing on a demographic development, Romania is shrinking by population. We have, on the other hand, simple things: when we talk about the mortality of babies. We are, again, at the end of the queue – so we are the highest when it comes to fatalities in traffic accidents. This is a tragedy, a human tragedy, but this has, also, an economic impact. We are losing population because we are not taking care of the existing ones. We have a low birthrate in Romania, this is too low to maintain the status, and then we are bleeding, on top of that, with the emigration and we have our high accident rate – this is around… 2.000 people die every year on our streets. If you put that in 10 years, this is 20.000 people. And if you just look at what each and every person is generating in value in Romania, this is the economic damage that is done. It would be not so difficult to work on that. And I think that Romania needs to have an effective narrative for those who should remain here. And we have, for example, started also to think about keeping Romanians in Romania. We are offering them attractive positions in the companies of our members and this is, to a certain extent, effective. Not enough, but it helps.

Rep: Which are the three main threats or hardships this year for companies acting here in Romania?
Franz Weiler: I think it is not changed. It’s predictability and sustainability in the economic framework. As long as this is not reached, then it will remain as a major problem in our business environment. If you get an OUG on 29th of December when all departments, all the plans are down, then you can throw it away and start from scratch. And if this is frequently done, then this is a problem for business environment. This is for sure. This is a risk. And there are also positive things. We are still in an environment where people believe. Even with the reduced forecast from the EU Commission, we are still close on, let me say, close to 4 percent GDP growth. That’s good. But the business environment is very concerned about the near future. In the moment, when a global decline of the economy is expected, we will feel maybe a hard-landing here in Romania.

Rep: Do you think that 114 Emergency Ordinance is also affecting the independence of the Central Bank?
Franz Weiler: When we talk about the legal environment, we talk also about independence of institutions. And this is not just a National Bank. The National Bank is one of the more important ones. There is a need and it’s a good reason why these National Banks are as an independent body, are acting based on facts for the sustainable development of the economy. That’s in those statutes. Any intervention there is destabilizing the trust of the economy and so far this is one of the most dangerous acts of a government. To intervene in the independence of authorities. And we believe that the head of such an authority should be a neutral person. Independent, acting on his expertise and the expertise of the authority. There should be no political agenda behind him.

Rep: Do you feel that there’s an attack on the independence of the Central Bank?
Franz Weiler: The latest discussions that started after the OUG was published gives us some thoughts about that, yes? So I hope it’s just a political dispute and not a real plan behind, but the independence of the National Bank is an absolute must.

Rep: The justice system and its independence is causing a real concern for the European Commission and in the eyes of the Romanians for the much part of the population. Do you share the same concerns about its independence lately?
Franz Weiler: We have read the report about the Venice Commission and the CVM report and these gives, of course, lots of reasons to be concerned. We take it serious, what the Commission said to these topic and we believe that we need to have a change in the policy here. It should follow the stabilization of the legal system as it was intended, as it was done for nearly 7-8 years, and now, suddenly, it was changing the course of action. That’s for the entire economy a negative development.

Rep: But what harm could cause, to the business environment, a justice system that is not independent?
Franz Weiler: Each and any business environments depend also on the reliable and predictable legal systems. If you are on the penal side of a criminal court you will see a change, you will see permanently the fiscal, legal changes, you will see regulatory changes, regulatory interventions which seem to be not based on facts but on discretionary decisions, then you cannot predict what happens tomorrow to my investment in Romania. And the attempt – we have done a deep analyses of the potential changes of the Penal Code. It would practically release all acting authorities from any kind of liability. So that means that the business environment would be exposed to discretionary decisions and you would have no chance – to arbitrary decisions and you would have practically no chance to find a legal defense. And this is, of course, for a company depending on a predictable legal environment, a toxic development.

Traducerea: Ovidiu Harfas