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Minister Niculescu, Ambassador Brummel, Ladies and Gentleman.  Greg, Mark, thank you for having me speak here today.


At each Investors Days, my predecessors have noted Romania’s progress in the past years.  I, too, will continue this tradition and note some highlights since 2013.  From capital market regulation improvement to its progress towards energy security, Romania continues to work on bettering the business climate. 


The IPO of state-controlled electricity distributor Electrica was a successful test case of investors’ appetite to invest in the Romanian capital market and in Romanian energy assets.  Romgaz’s November 2013 IPO on the Bucharest Stock Exchange and listing of its GDRs on the London Stock Exchange positively affected Romgaz’s stock price and liquidity.  The successful IPOs of Romgaz, Electrica, and Nuclearelectrica have shown that Romanian and international investors believe in the future of these assets.  Fittingly, in November 2014, Romania’s Financial Supervision Authority (ASF) passed a regulation allowing all companies listed on the Bucharest Stock Exchange to issue GDRs on foreign stock exchanges.  This is a positive move that will deepen capital markets here.  Building on the influx of private capital, independent corporate governance should be the STANDARD, not the exception.


Romania has made progress in restructuring its SOEs.  We look forward to seeing more progress over the coming year, as it works together with key international institutions.  The success of professional management at Transelectrica and the ongoing and promising insolvency reorganization of Hidroelectrica, which is estimated to post the highest profit in its history this year, shows that professional managers can make a difference.


State owned entities can operate profitably, on par with their private sector peers, as long as managers are well chosen, qualified, and allowed to function independently, free from government and political interference.  Such profitability benefits the government, because well-managed, profitable companies are not a drag on the state budget and free up resources so that Romania can focus on the investments needed to face long term challenges. In my conversations with government officials, they continue to talk the talk of improving corporate governance and managing the potential value of SOEs for future privatization efforts.


While I’ve been in Romania for only four months, I’ve already traveled to this beautiful country’s four corners and had unique experiences in each region.  In Iasi, I met with the management and workers at the state-of-the-art Delphi factory.  There, I learned how a private enterprise rightly identified the opportunities that Romania has to offer even in remote parts of the country.


In Timisoara, I was struck at how, with the help of EU structural funds and World Bank-backed loans, the city is revitalizing the downtown and modernizing its transportation and public utility infrastructure.  In Poiana-Brasov, I saw the entrepreneurial spirit in action, in both traditional businesses and new development.  From the beaches of Constanta, I have looked out over the Black Sea and the port of Constanta and saw the unmistakable signs of progress, commerce and opportunity.  Increased trade opportunities and the prospect of offshore natural resources could be a boon for the sun coast and for the country.


Romania IS a country of opportunities, rich in both natural and human resources.  But to take advantage of these opportunities Romania must continue to progress in key areas.


To quote Thomas Edison, one often misses opportunity because “it’s dressed in overalls and looks like work”.  This stands true for Romania.  I am not going to do a detailed analysis of Romania; you all have done it prior to investing here.  However, I would like to give you a bigger picture highlighting why sustainable long term investment and reform are essential to continue Romania’s advancement. 


The EU’s study on “Demographic Challenges for European Regions” singles out Spain and Romania as the members that will be affected most negatively by demographic changes over the next 30 years.  According to the study, these changes are attributable to lower educational attainment, occupational status and income, as well as factors such as the availability of infrastructure, housing, and health care.  Population change will also impact regional growth, not only through a shrinking working age population, but also through greater employment in low income sectors, such as subsistence agriculture.


According to Eurostat projections, Romania’s population is projected to steadily decline to 18.5 million by 2040.  At the same time, Romanian’s population aged 65 and over is expected to increase from 23.9 percent in 2013 to 32.7 percent in 2030 and to 41 percent in 2040.  We all know that Romania’s population is aging.  The trend is similar throughout the EU, but it is more worrying for Romania as its skilled labor force is one of its main assets.  Furthermore, the integration of marginalized communities remains a challenge.  It is imperative that Romanians effectively integrate all of its citizens into the formal economy.


How can Romania face these demographic challenges?  The key word is investment: investment in a public health system that ensures widespread access to good healthcare for a healthy, productive workforce and healthy children who are ready and able to learn from the day they enter school; investment in education, to provide these children with the skills that the labor market needs; investment in infrastructure, to make it easier for the companies that decide to establish a production base here to ship their goods and create jobs; the investment of time, effort and commitment to create the stable, transparent and predictable business climate needed to foster private investment, foreign and domestic, and investment in justice and rule of law.  Besides education, no investment returns more to GDP than effective investment in justice programs.


Contract enforcement, transparency and a level playing field, - these are the foundation of a good business and investment climate.  In his book, The Locust Effect,” Gary Haughan cites a World Bank study titled “Where is the Wealth of Nations?”  This study investigated how different kinds of capital contribute to economic development.  While national resources and built capital are important; the vast majority of wealth comes from intangible capital of institutions – education, governance, property rights, justice systems etc.  Of these intangible capital resources – rule of law institutions – including the criminal justice system were the most important institutions for generating economic development. 


Vice President Biden, Assistant Secretary Nuland, Mark Gitenstein, Duane Butcher and I don’t talk about this issue because it’s interesting, we talk about it because it’s critical to Romania and its future.

Speaking of Romania’s future, Romania’s youth need the prospect of well-paying jobs that will incentivize them to stay here rather than take their skills abroad.  They need the confidence that the taxes they pay are spent wisely, and that they and their offspring can live in a corruption-free country where decisions are made transparently, predictably, and based on stable and sound economic reasoning.


Romania’s youth know that the country will only realize its full economic potential with the inclusion of all citizens.  Therefore, the Government of Romania must show that it views economic and social inclusion, anchored in the rule of law and transparent decision making, as the foundation for deepening democracy and building sustainable economic growth.  Social and economic inclusion is necessary to capitalize on successful reforms – this is a critical link in continuing to improve the business climate and making any improvements permanent. 


Romania should also look for ways to revitalize and encourage entrepreneurship.  Ensuring the protection of intellectual property, encouraging business development and valuing the ability to risk, fail, learn from mistakes and try again would all greatly benefit Romanian society as a whole.  Employment is driven by small and medium sized enterprises.  In my country, for example, nearly all job creation over the past 30 years has been spawned by companies in business for less than five years.  Unleashing the creative power of individuals is one of the most formidable weapons in the fight against economic stagnation. 


Today I’m pleased to say that my embassy will do its part – by announcing the Embassy’s “Entrepreneur of the Month” initiative, our way of recognizing Romania’s amazing entrepreneurs. Working with our partners, we will identify one exceptional entrepreneur every month starting January.  Our aim is to highlight entrepreneurs in all sectors of Romania’s economy, from Tourism to Agriculture to Health.  We will also reach across all regions in this beautiful country for this project, from ecotourism projects in the Carpathians to high tech manufacturers in Iasi.


Doing the right thing at the right time is the greatest challenge for every nation.  Short term political expediency must not derail long-term reforms.  Shortsighted economic and fiscal decision-making negatively impacts long term economic ‎development and sends the wrong signals to current and potential investors and partners.  Rule of law, stability in business climate, and consultations with stakeholders are the bedrock on which to build a dynamic and resilient Romanian economy.  Romania has the fortitude necessary to confront these challenges.


To paraphrase Vice President Biden’s statement during his May visit, when thinking about the global marketplace, modern day economic investors want to do business where they’re treated fairly, and where there is transparency.


Romania and the United States are allies who have a strong, deep, strategic partnership.  We encourage Romania to progress towards steady enforcement of the rule of law, and to fight corruption.  We will continue to support Romania to ensure transparency, consultations, predictability and sound and stable governance, the key ingredients that foreign and Romanian investors, private and state-owned, need in order to invest and prosper.  AND, we will continue to encourage Romania’s efforts as it faces up to its demographic challenges. 


We will do it because, as vice-president Biden said, “It’s no longer just what we can do for Romania, it’s what we can do together.”


Thank you.