Romanians on Rocky Road to Capitalism

Behind a wire fence and gates protected by electronic devices and German shepherds, some of Romania’s nouveaux riches lead sheltered lives in 20 luxurious tile-roofed villas and bungalows.

Uniformed guards speak into walkie-talkies and suspiciously eye nonresidents who drive by the complex, which includes a park and a private club.

Few know exactly who lives at the World Trade Village, an island of mocking opulence that has sprouted in the middle of a wasteland on Bucharest’s northern edge. Neighbors derisively call it “Beverly,” for Beverly Hills.

“Let me tell you, sir, that only the second- and third-tier of gold bugs live here,” says Mihai Lazar, an electrician. “You won’t find big sharks. The richer live even better.”

Seven years after the collapse of communism, Romania is a showcase of stark contrasts.

For the few who have gotten wealthy, life is a beautiful dream. For the great majority, it’s a daily struggle. The average monthly salary is 330,000 lei (just over $100)--enough to buy one pair of imported leather shoes.

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Not long ago, Romanian tourist agents were advertising nine-day package tours to the Olympic Games in Atlanta for $2,950. It is an unimaginable sum for most Romanians.

“This is what I could afford to buy today: a kilogram (two pounds) of tomatoes, four hen eggs, a piece of cheese and a loaf of bread. Total cost: 4,500 lei ($1.40),” says Lazar, 42, who moonlights as a taxi driver to augment his meager electrician’s salary.

Labor protests, galloping inflation and a slowly implemented program to convert state businesses to private ownership have marked the country’s jolting transition to a market economy. About half the country’s 23 million people live near the poverty level.

In Bucharest, a metropolis of 2.2 million, there’s ample evidence that Romania is embracing the market mentality. Shops and streets overflow with goods. There are elegant restaurants and casinos like the Casa Vernescu. Food is again plentiful, though few can buy what they like. The new elite’s flashy cars are everywhere.

But a short ride from the city center, paved roads give way to bumpy cobblestone streets lined with decrepit houses. Homeless children beg for spare change. Newspapers sometimes carry ads from people offering their kidneys for cash.

Here and there, a symbol of the new times, palatial villas have sprung up. A three-story splendor outfitted with a rooftop satellite dish and an exterior marble staircase catches the eye of the traveler.

“It belongs to a man who runs a car-repair business,” says a neighbor. “But he didn’t steal [to get rich]. He’s smart and he fixes only Mercedes, BMWs and Volvos.”

Widespread corruption, abuse of power and get-rich-quick schemes are the hot topics of conversation in newspapers and among Romanians.

A pyramid investment scheme collapsed in 1994 at a cost of $1 billion to ordinary Romanians--but only after some officials lined their pockets. A chain of upsets followed in the insurance, banking and investment funds sectors, further undermining investors’ confidence.

Hard feelings have accompanied the emergence of a small rich business class, several of whose members appear to owe much of their success to links to the Party of Social Democracy, a center-left group that has held power since the ouster of dictator Nicolae Ceausescu in December 1989.

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Interior Minister Doru Ioan Taracila recently disclosed that police investigations into alleged fraud, smuggling and tax evasion cases had revealed losses worth the equivalent of more than $1 billion.

Taracila said Romania’s biggest private bank, Dacia Felix, led the list of alleged fraud cases. He accused the bank’s former vice president, Sever Muresan, and two other officials of defrauding the bank of $635 million that they used to buy companies in Western Europe.

“The authorities don’t have handcuffs for Romania’s biggest crook,” the newspaper Romania Libera headlined, alleging that Muresan has avoided arrest because of good ties with the government. Muresan denies any wrongdoing.

Government critics say Taracila’s revelations are an attempt by the ruling party to cleanse its image before the Nov. 3 presidential and parliamentary elections.

The government has repeatedly promised to crack down on fraud, but few lawbreakers have been convicted and many Romanians consider corruption to be widespread.

A recent newspaper cartoon showed a swindler holding a judge and a police officer in his lap, a sackful of money nearby. “Hey, guys, who says there is no purchasing power in this country?” he asks.

The poor performance of the ruling party in June’s local elections is seen as a sign that opposition parties have their best chance yet to win power at the national level.

But splits within the opposition, the continued popularity of President Ion Iliescu in rural areas and the ruling party’s control of the state television will probably work in the government’s favor.

“It will be a tough battle. Political opposition is growing,” said Sergio Cunescu, a leader of the Social Democrat Union. “The next government will have to clean up the country of crooks.”