Despite Resources, Romania Faces a Rough Road to Economic Recovery : East Europe: Tourism and agriculture, counted on to revive nation, both have dim outlooks.

The drive from Bucharest to the Black Sea coast is a three-hour ordeal of bumping over rutted roads choked with smoke-spewing trucks, horse-drawn carts and wayward livestock.

Once there, Western sun seekers are treated to a low-cost vacation in hotels where the coffee machines are idle for want of filters, the bathroom tiles are crooked and crumbling, and bands of beggars and money-changers accost visitors at every corner.

Tourism is one of two cornerstones the new government expects to prop up Romania’s sagging economy. The other, agriculture, is an equally dubious source of rescue in view of Europe’s already flooded food markets.

Romania has virtually no foreign debt, a wealth of natural resources and a plentiful and ready work force that Western investors could employ at a bargain rate. Nonetheless, despite what appear to be major advantages over other westward-looking nations of Eastern Europe, Romania has the toughest road to travel to pull itself back from the edge of economic ruin.

Leaders of the governing National Salvation Front have declared their intention to steer the nation toward a free-market system. But they have made clear their preference for a slow dismantling of the socialist system in hopes of softening transitional blows for a population bruised by half a century of tyranny.

The late dictator Nicolae Ceausescu’s Draconian practice of exporting food to pay off foreign loans drove the nation to the brink of starvation. His bulldozing of villages to build agro-industrial collectives destroyed the most productive farm sector--the private plots tended by rural peasants.

Romania suffers the worst case of industrial gigantism in a region renowned for prestige projects that wasted resources and polluted the environment. The 44-mile Danube-Black Sea Canal, vacant of ship traffic, and the nearly complete House of the Republic, a Pentagon-sized palace that Ceausescu intended as his government headquarters, stand out among the projects that robbed Romanians of a bearable living standard.

Even by Eastern Europe’s low standards, Romanians are poor. Only 1% of the population owns a car. The nation’s 23 million citizens use a quarter of the electricity consumed per capita in Czechoslovakia. Overall per-capita consumption is the equivalent of $67 per month at the inflated official exchange rate, less than one-tenth the U.S. average.

Conditions were worsening even before last December’s anti-Communist revolt deposed Ceausescu and threw the nation into political chaos. Industrial production fell more than 2% in 1989, farm output dropped 4.3%, and national income plummeted by nearly 10%.

Even sharper declines have been reported this year because of the distraction of the revolution and the volatile election campaign that culminated in an overwhelming Salvation Front victory. Last week’s rioting, in which six people were killed and more than 500 injured, seems certain to have a negative effect on the economy.

Perhaps the hardest-hit sector is the tourism industry, which officials in this coastal resort claimed provided 75% of the nation’s hard-currency earnings in recent years.

“Foreign bookings this summer are down 80% from last year,” lamented Pompiliu Dimancea, general manager of the state-run Litoral travel network that owns Black Sea resorts like Mamaia, just north of the port of Constanta.

Another Litoral executive, Ion Nichita, says the cash crop of coastal visitors has failed this year because of the revolution.

“Romania has the same image as Beirut. People think there is gunfire in the streets. It’s only natural that they don’t want to come here on vacation,” Nichita said.

Officials are using the lull in Western traffic to reorganize in hopes of catching the wave of Western visitors to the East next season. Most of the hotels along the white-sand strip south of the Danube Delta need air-conditioning, more modern plumbing and dependable food-service equipment.

Ice-cream makers, coffee machines, juice squeezers and other appliances purchased during the 1970s buildup had to be sidelined for lack of spare parts or regular supplies, Nichita said.

That situation could change, however, if the new government continues its policy of selective application of resources.

As the interim governing force before the May 20 election, the Salvation Front controlled all funds. It bought food and energy on credit to show immediate improvement in the sorry lot of the Romanian consumer.

Interim Prime Minister Petre Roman contended in a recent interview that his nation is well-positioned for recovery.

He said the front made no promises of a “bright future” but that Romania’s rich agricultural heritage and tourist attractions would be relied on to lead the rescue.

Farm output suffered under Ceausescu’s rule, but Romania was known as Europe’s granary before World War II. The soil was so rich in some regions that the Nazis shipped it back to Germany by the trainload.

The rolling farmland north of the capital and the wheat fields that stretch along the coastal plain are dotted with peasants from daybreak to dusk, a sign that new incentives for increased output may be working.

Romanians can sell their privately raised produce at market prices, and the government has made vast stretches of land available to those who want to plant it. But the effect of that diversion of labor from the state collective farms will not be known until fall.

Western diplomats based in Bucharest noted that the new government is under pressure to show steady improvement in living standards and that a bad harvest could spell political disaster.

Reflecting the ambiguity that afflicts the new government, Ioan Popescu, an agronomist in Constanta, said farmers will be allowed to sell their produce at market prices but that food costs will not rise for the consumer and subsidies will be phased out.

Specific steps for economic recovery were never outlined during the election campaign, as the candidates concentrated on ideological warfare. The result has been a confusing array of declared intentions without credible statistics or arguments to back them.

Front politicians have called for putting 30% of Romanian business in private hands by the end of this year--a feat their own economists scoff at as unlikely even in five years.

A top official in the Agriculture Ministry, Victor Surdu, boasted that Romania could produce enough food to feed 70 million people. But no one has undertaken a close look at the hard-currency market for farm products, which the European Community is struggling to keep afloat in an ocean of output.

Romania has enacted one of the more liberal foreign investment laws, ostensibly allowing up to 100% foreign ownership while encouraging joint ventures over outright sales. Deputy Prime Minister Mihai Draganescu has said Romania hopes to retain at least a 25% share of most projects involving foreign investment.

Some prominent West German firms, such as Siemens electronics and the Daimler-Benz automotive works, are negotiating major deals with Romania, Salvation Front officials claimed. But completed contracts have been few despite a fourfold increase in Western business visits this spring.

A British businessman in Bucharest to scout opportunities in agriculture said the biggest argument against investment is the threat of further political instability.

“Who knows if there will be another revolution like the one in December?” he said. “No one wants to put his money down in such circumstances.”

Officials also have predicted that as many as 50,000 privately run firms could be in operation by year’s end--an equally questionable projection in view of Romanians’ dearth of cash to start their own businesses.

“No one in the country has made enough money--at least legally--to buy into the state tourist industry,” observed Maria-Venera Coitu, a travel bureau manager in Constanta. “For now it will remain a state monopoly.”