Economic Woes Have Crippled Romania’s Longstanding Independence

Romania’s communist government, long known as the most independent of the Soviet Union’s East European allies, has suffered a marked deterioration in its relations with both East and West as President Nicolae Ceausescu has embraced erratic financial tactics and extreme domestic policies, diplomats here say.

The result has been the virtual elimination of this Balkan country’s former role as a mediator in the Middle East and broker for Soviet Bloc diplomacy with China, Israel and nonaligned Third World countries. Moreover, its room to maneuver inside the Soviet-led Warsaw Pact has significantly narrowed, the diplomats say.

Ceausescu, who has consolidated a personal dictatorship here during 21 years of rule, became a favorite of Western governments and bankers in the 1970s when he defied Moscow on issues ranging from arms control to Afghanistan and cultivated the Soviet Bloc’s only formal links with China and Israel. U.S. presidents Richard M. Nixon and Gerald R. Ford even visited the country.

Harsh Measures Imposed

Bucharest’s unique position enabled it to help arrange Egyptian-Israeli peace talks and the U.S. opening to China, while maintaining strong links to the Arab world and the Nonaligned Movement.

In the last several years, however, Romania’s economic exchanges and political relations with the Western industrial states have eroded as Ceausescu has imposed harsh political and economic measures on the country. Links to Arab nations have also weakened since Romania began purchasing oil from the Soviet Union rather than from OPEC.

To compound the trouble, Ceausescu’s relationship with Soviet leader Mikhail S. Gorbachev appears to be the weakest of any East European leader.

“Ceausescu symbolizes all the things Gorbachev is opposing--dogmatism, lack of economic realism, personality cults,” said one diplomat here.

High Profile

The 67-year-old president, glorified by state-controlled media as a genius and master statesman, has tried doggedly to maintain a high international profile in recent months, pursuing contacts with Middle Eastern leaders and proposing a plan for West and East European states to cut their defense budgets by 5%.

Businessmen and diplomats here from both the East and West say, however, that Romania’s independent activity now has far less credibility than it did five years ago. “They try to play a role, but there is no role for them . . . anymore,” said a West European diplomat here. “They are no longer regarded as a reliable partner by anyone.”

Ceausescu’s ties with the Reagan Administration remain among Romania’s strongest in the non-communist world. The Administration has struggled to maintain a most-favored-nation trading status for Romania, despite growing opposition in Congress.

U.S. officials argue that Romania’s policies are still important because they obstruct the complete economic and military integration of Eastern Europe by the Soviet Union and pressure Moscow to make some concessions in arms control and defense spending.

Paying Off Debts

Ceausescu’s domestic policies, however, have restricted Western economic cooperation in the last five years while drawing widespread attention from human rights groups. Since 1981, the Romanian leader has been committed to paying off the nation’s debts as quickly as possible. To accomplish this, he has imposed siege-style austerity on Romania’s 22 million people in order to save money without limiting huge investments in heavy industries and major public works projects.

This fall, as in the last three years, diplomats and economists here predict a winter of severe hardship for Romanians, with scarce food supplies, drastic limitations on heating and electricity and a ban on private transportation.

“The degree of suffering for people will depend on how cold it gets,” a senior Western diplomat said.

Larger Harvest

Western experts say the economy, crippled by the severe import and energy limitations in recent years, may be slightly improved this fall because of a larger harvest. Last year’s crops were disastrously affected by severe winter cold and summer droughts.

Agricultural production is still believed to be substandard, however, and staple foods--including beef, milk, eggs and many vegetables--have almost disappeared from markets. In rural areas, bread has been rationed to about 14 ounces per day for a typical family, according to one town mayor. Gasoline is rarely available, and the lines of cars outside open stations stretch for miles.

Romanian officials frequently point out their success in paying the national debt, which shrunk from $10.5 billion at the end of 1981 to $6.6 billion at the end of last year. However, the government was still forced to reschedule $800 million in payments to banks this year, and banks and Western businesses have been unwilling to invest in the country despite its financial record.

No New Loan

Earlier this year, a lonely effort by banks in Kuwait and elsewhere in the Arab world to syndicate a new loan for Romania--its first since 1981--collapsed.

Some Westerners observe that Romania’s economic relations with the Soviet Union may be equally frayed.

Romanian exports to the Soviet Union nearly doubled last year--while sales to Western countries fell 12%--as Bucharest began exchanging meat, vegetables and other goods for Soviet oil. But there are signs of a dispute over prices in the five-year contract for delivery of Soviet oil to Romania.

Ceausescu also has publicly expressed resistance to Gorbachev’s prized program for the joint development of high technology by the Soviet Union and its six Eastern European allies.

He was the last Warsaw Pact leader to hold a meeting with Gorbachev in Moscow. When he finally went, in May, he stayed only six hours. Gorbachev has not visited Romania.

Diminished Role

Soviet Foreign Minister Eduard Shevardnadze, who visited Romania for a Warsaw Pact meeting in October, told reporters that “to say there are no problems” between Romania and the Soviet Union, “no one would believe.”

Diplomats here note that under Gorbachev’s leadership, Romania’s unique role in Soviet Bloc diplomacy has been steadily diminished. Its status as the only bloc country with good relations with China was undermined this fall by the visits of Polish leader Wojciech Jaruzelski and East German leader Erich Honecker to Peking.

Its unique relations with Israel were undercut when Poland upgraded its ties with Israel earlier this year.

Some diplomats say these developments may effectively cut away key underpinnings of the country’s relative independence and leave Romania more vulnerable to Soviet control than at any time since the 1950s.

“He is giving Gorbachev a chance in this country he never would have had,” a Western analyst said. “Romanians may not like Russians, but conditions are so bad here that by comparison, Gorbachev must be beginning to look good.”