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This gesture clearly boosted his popularity, marking him in stark contrast to other MP's that allegedly hid their misdeeds under the cloak of parliamentary immunity. He did not appear to have financially benefited from the fleet sale and any misdoings on his part appear to have been procedural, if that.

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Constitutional lawyers now say that, with his election to the presidency, the "Fleet File" charges against Basescu will be suspended, as a sitting Romanian president can only be prosecuted for crimes of "high treason. C Since the mid's, Basescu has been a stalwart advocate for economic reform, including transparent privatization of state-run enterprises, fiscal reform, and economic modernization to attract foreign investment. During the presidential contest, Basescu reached out to the domestic and international business community, holding forums with leading business groups and pledging to institute market-oriented reforms.

Liberal economic reform -- including major changes to the tax code -- remained a central component of PNL-PD's campaign platform. Political analysts are now watching to see if he will succeed in putting together a government capable of implementing this program. Post's submission in "Patterns format," updating last year's "Patterns of Global Terrorism" report reftel follows: Romania is a staunch ally of the United States in the global war against terrorism, providing full public and diplomatic support for US goals to counter terrorism.

In , about 1, Romanian troops served at any one time in Iraq and Afghanistan, and Romania has promised to maintain its commitment of troops through mid Romania has made its airspace, ground infrastructure, and naval facilities available to US and NATO forces engaged in the global war against terrorism and senior government leaders have promised to continue to do so in the future. The Romanian Government has established internal mechanisms to combat terrorism, including adoption of a "National Anti- Terrorism Strategy" and guidelines to prevent the use of the Romanian financial and banking system for the purpose of financing terrorist acts.

As part of its national strategy, Romania adopted legislation in that delineates the responsibilities of Romanian government institutions in battling terrorism, providing a clearer framework for interagency coordination and cooperation. Bucharest is the site of the Southeast European Cooperation Initiative, a regional center that provides law enforcement training and intelligence sharing on transborder criminal activities, including terrorism, for 12 member countries in Southeastern and Central Europe.

Romania has fully ratified all 12 UN counter terrorism conventions. Romania has adopted adequate legislation to address financial crimes and terrorist financing. Nevertheless, its strategic location bordering Ukraine, Moldova and Serbia makes Romania vulnerable to money laundering and other financial crimes that potentially finance terrorist organizations. Romania's weaknesses include the lack of timely reporting of suspicious transactions and other evidence of criminal activity by Romanian banks and insufficient resources funds and personnel directed by the Romanian government to prosecuting financial crimes.

In the following addendum, post includes relevant developments during , which demonstrate Romania's commitment to battling terrorism: - Romania adopted on November 25 Law , a "Law for Preventing and Fighting Terrorism," as part of its National Anti-terrorism Strategy. The law delineates the responsibilities of Romanian government institutions in battling terrorism, providing a clearer framework for interagency coordination and cooperation.

The legislation also aims to provide a unified juridical approach to terrorist activities, including establishment of clear definitions of terrorist activities. This law provides for a special procedure to authorize electronic interceptions for threats against national security, including terrorist acts. Governmental institutions with competence in the field of national security must forward a written request for authorization to the General Prosecutor of Romania. If the request is found to be justified, the General Prosecutor submits it to the President of the High Court of Cassation and Justice.

The final decision is made in chambers by a group of specially designated judges, after a careful analysis.

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The warrant cannot exceed 6 months, but it may be extended several times for 3 months in justified situations. The extension must also be decided by special judges designated by the president of the High Court of Cassation and Justice. The law also provides that in exceptional circumstances when a present and clear danger to the national security occurs governmental institutions may begin to intercept communications without the proper warrant issued by the judiciary.

The request for authorization must be submitted within a maximum of 48 hours from the commencement of the interception. The new management has taken aggressive action to increase the efficiency and security of the office and to improve its relationship with law enforcement institutions, other FIUs, and the banking industry.


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Reforms have included new procedures and time limits for analyzing and reporting suspicious transactions. The directorate is authorized to create a database from which it can develop proactive investigations of offenses within its jurisdiction.

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Romania has now ratified all 12 UN anti-terror conventions. The Protocol concerns penal measures aimed at fighting terrorism, including definition of crimes, establishment of sentencing guidelines and definition of extradition rules. Not for Internet distribution. The BNR now limits its interventions on the forex market and refrains from announcing when they will occur in advance.

The Leu Romanian for "lion" is gaining strength, causing anxiety for exporters and prompting more interest in tools to hedge currency risk. Increasing Unpredictability in Foreign Exchange 2. Since then, the ROL has appreciated 6. This amount is well within the IMF- recommended range of reserves equivalent to four to six months of imports. These robust reserves, coupled with a surplus of currency in the forex market originating from foreign remittances, foreign direct investment, and interest income on the BNR's reserves increased the Bank's comfort level with a freer float. Handling Hot Money 3.

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U The BNR has defended its choice of allowing the ROL to float wider and more often as discouraging inflows of speculative or "hot" money. Although Romania officially has always discouraged speculative foreign investments, they were not seriously considered a threat until recently. Historically, this so-called "hot" money naturally avoided Romania due to high investment risk.

U Improved economic conditions set the stage for increased hot money in the Romanian economy. BNR Governor Mugur Isarescu predicts that speculative investments will total approximately Euro one billion by the end of Speculative investors have been particularly eager to exploit the high interest rates offered on ROL accounts through local banks.

Investors can easily benefit from the Speculators exchange hard currency for ROL, invest in interest-bearing ROL accounts controlled by local brokers, then withdraw the money with the intention of quickly exchanging it for hard currency and then exporting the profits. While exchange rates were stable due to central bank intervention, this positive spread was assured.

Today, with increasing exchange rate volatility, long-term bank investments, particularly those exceeding six months, may become less attractive for speculators if the ROL reverses its climb. Investments with short-term maturities become more desirable; investors gain both higher interest and benefit from the current ROL appreciation trend. U Foreigners resident in Romania will also soon be able to join the group of potential speculators.

Currently prohibited from opening ROL accounts on their own, foreigners will be able to open local currency accounts in U The BNR decided to discourage speculative investment by opting for a freer ROL float, rather than choosing to place restrictions on local banks, such as mandatory investment terms, interest-free short term accounts or early withdrawal penalties.

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Although decreasing the spread between high interest rates on ROL accounts and low rates on hard currency accounts would also mitigate speculative investments, large cuts are unfeasible at this time due to relatively high Romanian inflation rates. Nevertheless, the BNR has begun a process of lowering interest rates, which now stands at However, recalcitrant local commercial banks have avoided following the BNR's lead to cut their own interest rates on loans, due to a dearth of competition and risk associated with the domestic lending market.

Keeping Inflation at Bay 7. U In addition to a desire to discourage speculative investment, the timing for the BNR's decision may also be linked to a desire to apply downward pressure on the inflation rate, targeted for nine percent. At the nine- month mark, the inflation rate stood at 6. A rapidly strengthening ROL has served to keep inflation under control by making imports cheaper.

Exporters Concerned about Impact U Not everyone is happy about the new managed float. Foreign imports are becoming cheaper for the Romanian population and Romanian export goods are becoming more expensive on foreign markets, hurting local manufacturers. The National Association of Exporters and Importers ANEIR recently declared that Romanian exporters lost seven to ten percent of revenue within one month as a direct result of the switch.

Bank analysts are taking a more conservative stance, preferring to wait for two to three months of data to analyze to what degree the new forex policy affects exporters. ANEIR is calling for dramatic cuts in interest rates to slow ROL purchases from speculative investors, which are a major factor in the currency's appreciation. U In addition, Romanian businesses are becoming increasingly interested in currency hedging strategies, although this is mainly coming from more sophisticated, medium- and large-sized firms.

This growing interest is apparent on the Sibiu commodities exchange where ROL-Euro futures contracts have increased from ten in June, to almost during the month of November. Exporters who deal mainly in Euros, importing Euro-denominated inputs, and selling finished products priced in Euros, are virtually immune from the switch, although salaries and local utilities continue to be paid in ROL, which will have a negative effect on profits.

He has called on Romanian exporters to better prepare export strategies and examine ways to become more competitive. He has also has insisted that lower inflation resulting from the new policy will greatly benefit Romanian businesses in the long term. The BNR agrees with this assessment and has described the earlier ROL depreciation against major currencies as an implicit subsidy for uncompetitive Romanian exporters that could not continue.

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But Consumers are Happy U While exports decline, imports are surging as Romanians eagerly purchase cheaper products from abroad, including machinery, textiles, minerals and automobiles. Embassy's discussions with a major U. Low cost imports are also benefiting Romanian businesses by allowing them to purchase tools and raw materials for lower capital costs, which will spur growth.

However, as imports increase and exports fall, the trade deficit is widening. What the Future Holds U Capital account liberalization will advance in April , with the anticipated availability of ROL denominated bank accounts for foreigners.

This will allow foreigners to benefit from high interest without requiring the services of a middleman. This move may unleash a renewed ROL buying frenzy as speculators move into these accounts. Soon afterwards, The Romanian government will create a secondary monetary market in which domestic T-bills, certificates of deposit and mortgages will be traded and which will likely also be open to foreign residents.