EC Structural Funds - Cui Bono?

I'm cocooned at the moment in a cosy flat in a wind-swept and snow-bound concrete block in down-town Bucharest.

The ever-watchful Open Europe operation has targeted two big elements of EC spending in reports just out – on Structural Funds and its Development (or “external” assistance). Its report on the latter subject has been drafted for the UK House of Commons Select Committee on International Development which has started an investigation of the EC’s Development Assistance budget. In combination with Member States’ own aid budgets the EU as a whole provides 60% of global Official Development Assistance (ODA) making it the largest donor. "Despite some improvements", the Committee says, "concerns have been expressed about the effectiveness of EC development assistance, the slow disbursal of aid, the geographical distribution of EC aid and poor coordination between Member States".
This blog (and papers on my website) have also made a more detailed critique in relation to its state-building programmes in transition countries. The committee points out  that

Total EC external assistance in 2010 was €11.1 billion. The UK share of this was approximately €1.66. A new Commission policy paper, “An Agenda for Change” was published in October 2011 for approval by the Council in May 2012. At the same time, negotiations are proceeding for the Multi-Annual Financial Framework, and the replenishment of the European Development Fund. Together these will set the parameters for EC development aid from 2014-2020. The Committee invites evidence on:
• The comparative advantage of the EU as a channel for UK development and humanitarian assistance and the UK’s ability to influence EU development policy;
• The proposals set out in the “Agenda for Change”;
• The proposals for future funding of EC development cooperation;
• Progress towards policy coherence for development in climate change, global food security, migration, intellectual property rights and security.

The Open Europe paper is a fairly political briefing on the issues of geographical distribution, administration (costs and waste), EC “value-added” and policy issues (eg questionable reliance on budgetary support) – but seems to have been written by epople with little familiarity with the field of development work.

Its other paper – on EC Structural Funds - is a rather better one which actually looks at what the research has actually tells us about the success over the years of this funding in dealing with its basic objective – namely reducing regional differentials within countries. The answer is "difficult to prove”. Of course, the 60 billion euros a year programme is now more about building up the missing technical and social infrastructures of new member States and the paper argues that this should be properly recognised by the richer member states being taken aut of the programme’s benefits. The paper reminds that

the previous UK Labour Government proposed limiting the funds to EU member states with income levels below 90% of the EU average and suggests that this could create a win-win situation. Such a move would instantly make the funds easier to manage and tailor around the needs of the poorest regions in the EU. The paper estimates that 22 or 23 out of 27 member states would also either pay less or get more out of the EU budget, as the funds are no longer transferred between richer member states.

Structural Funds are, however, an important political tool for those committed to "the European project” in developing and sustaining clienteles. This should never be forgotten!

I have never been a fan of the EC Structural Funds which I have seen expand from almost nothing in the 1970s to 350 billion euros in the 2007-2113 period (60 billion a year – eg 5 billion annual contribution for UK). As a senior politician with Strathclyde Region which was the first British local authority to forge strong relations with the European Commission in the 1980s (when we had no friends at Margaret Thatcher’s court), you might imagine that I was positive about the European funding which we then received. In fact, I was highly critical – mainly for the dishonesty of the claims made about its net benefits. The British Treasury simply deducted whatever we gained from our European funding from our UK funding.

The programme really expanded in the Delors era on the watch of Scottish politician Bruce Millan as Regional Commissioner (1989-1994). In those days, we believed in regional development. In my own case, it was my whole intellectual raison d’ etre! The subject was coming into its own academically – and it was indeed the subject I first focussed on in my own academic career (before I moved into public management). It spawned thousands of university departments and degrees many of which seem still – despite public spending cuts - frozen in institutional landscapes. And I have never seen an intellectual questioning of what it has brought us – although I did recently come across this short critical article on the related field of urban development.

This Open Letter by some prominent Hungarians has just been published about the situation in that country - and is a useful briefing on the issues - as is this EuroTribune one. When I worked in that country, I vividly remember one of my older Hungarian colleagues telling me that she hoped that, this time, the country might actually succeed in something - since the history of her country to that point seemed to have consisted of a series of failures.She must be crying herself to sleep these nights!

The cartoon is one of Honore Daumier's - "The Gargantuan". At times like these, we are in desperate need of the caustic insights of the likes of Daumier, Goya, Kollwitz et al - and those influenced by them such as the Bulgarian caricaturists of the early and mid- part of the last century.

Scintillating writing

Left the Sirnea valley (1,400 metres up) not a moment too soon – with heavy snow being forecast even in Bucharest and the southern plain. But not before I had made a special trip to buy 4 kilos of the pungent home-made burdurf from my neighbours down the hill – for my money the place they make the best cheese in the Balkans. Initially with a strong cheddar taste, it matures into a variety of classic cheeses – depending on where you keep it. I’ve known it as a variant of an Italian Parma but, when stuffed into jars and kept in the cellar, it comes out as a juicy, pallat-blowing Pont L ‘Eveque French cheese. I felt like an urban coward as I abandoned the hardy villagers to the winter conditions – and excused myself with reference to the lack of water (from which several other houses too high up the hillside were also suffering) and also with my hacking chest cough .
Morning did indeed dawn with blustering winds and snow blanketing the cars. So the planned visit to a Black Sea workshop is off.
Instead I immersed myself in Chris Hitchins’ Hitch 22 - a Memoir which had arrived last year in Sirnea and whose first half covers exactly my own period of growing up and coming to political consciousness in Britain. I made no reference to his death last month – partly because I was somewhat offended that it eclipsed the obituaries of Vaclaw Havel. Whatever one may think of the man, he was a magnificent writer who captures so well in this book the nature of Britain the 1960s and 1970s - whether it was the totalitarian system run by the pupils of schools who have groomed the offspring of its governing elites for their on their own future roles; or the atmosphere and values in the local branches of the Labour Party in those days.
He became an early activist in the International Socialist movement (whose people I fought in the labour party) but then, sadly, became an apologist for American interests. In that sense, he continued the great English intellectual tradition of the earlier part of the century of switching sides. Terry Eagleton’s review of the book is a good summary of what his enemies think -

The Oedipal children of the establishment have always proved useful to the left. Such ruling-class renegades have the grit, chutzpah, inside knowledge, effortless self-assurance, stylishness, fair conscience and bloody-mindedness of their social background, but can turn these patrician virtues to radical ends. The only trouble is that they tend to revert to type as they grow older, not least when political times are lean. The Paul Foots and Perry Andersons of this world are a rare breed. Men and women who began by bellowing "Out, out, out!" end up humiliating waiters and overrating Evelyn Waugh. Those who, like Christopher Hitchens, detest a cliché turn into one of the dreariest types of them all: the revolutionary hothead who learns how to stop worrying about imperialism and love Paul Wolfowitz.
That Hitchens represents a grievous loss to the left is beyond doubt. He is a superb writer, superior in wit and elegance to his hero George Orwell, and an unstanchably eloquent speaker. He has an insatiable curiosity about the modern world and an encyclopaedic knowledge of it, as well as an unflagging fascination with himself. Through getting to know all the right people, an instinct as inbuilt as his pancreas, he could tell you without missing a beat whom best to consult in Rabat about education policy in the Atlas Mountains. The same instinct leads to chummy lunches with Bill Deedes and Peregrine Worsthorne. In his younger days, he was not averse to dining with repulsive fat cats while giving them a piece of his political mind. Nowadays, one imagines, he just dines with repulsive fat cats.

The novellist, Blake Morrisons is a more sympathetic reviewer -

The best parts of the book are those dealing with his parents – his mother, Yvonne, who committed suicide when he was 24, and his father, a former naval officer known as "the Commander". Yet even here, the polemicist is in danger of eclipsing the memoirist. "I had once thought that he'd helped me understand the Tory mentality, all the better to combat and repudiate it," he writes of his father. "And in that respect he was greatly if accidentally instructive. But over the longer stretch, I have come to realise that he taught me – without ever intending to – what it is to feel disappointed and betrayed by your 'own' side."
Hitchens began to leave home almost from infancy. A precocious child, whose first words came out as complete sentences ("Let's all go and have a drink at the club" was one of them, allegedly), he was packed off to boarding school at eight – a strain on the family budget, but if there was going to be an upper class, Yvonne wanted her son to be part of it. By 10 he knew all there was to know about dictatorships. But though beaten and bullied, he was never buggered. And there were books, starting with War and Peace and moving on to Wilfred Owen and George Orwell. When a housemaster warned him that he was in danger of "ending up a pamphleteer", he felt encouraged.
1968 was a heady year to be a student. He appeared on University Challenge, spoke at the Oxford Union and dined with government ministers. But he also held forth from upturned milk crates, organized sit-ins and was charged with incitement to riot. The spirit of the times was intoxicating but there were limits: sex and rock'n'roll were fine, but not long hair (an affront to one's working-class comrades) or drugs (a "weak-minded escapism almost as contemptible as religion").
At Oxford he met his first Americans, including Bill Clinton, who took his dope in the form of cookies rather than inhaling (and whom he accuses of snithving to the American authorities on the US draft-dodgers). Clinton aside, Hitchens admired these Americans, and he began to have a recurrent dream of finding himself in Manhattan and feeling freer for it. "Life in Britain had seemed like one long antechamber to a room that had too many barriers to entry," he writes. In truth, every door in London seemed to open to him. But the contradictions of his journalistic career were troubling ("with half of myself I was supposed to be building up the Labour movement and then with another half of myself subverting and infiltrating it from the ultra-left"), and perhaps that's what attracted him to the US, to which he flew on a one-way ticket in 1981 – here was a chance to quit the British class struggle and be wholly himself.
There's a lot to argue with here. But to take issue with Hitchens you will need to be formidably prepared (as widely read, widely travelled and rhetorically astute as he is) and to forget the idea that he "only does it to annoy", out of contrariness rather than conviction. You'll have to sharpen your invective, too. Humour is one of his deadliest weapons and there's plenty on display, some of it gently directed at himself

For those who want to hear the text itself, Utube has serialised the entire book (although I can't get any sound!)

Back to basics

The northern skies looked more promising as light came to Ploiesti and, after de-icing, the car headed to the mountains at 09.15 and started to encounter the snow at the royal station of Sinaii – or rather its branch of Pennywise.
But the roads were good – even up past Bran and Moiecu - and only got problematic on the village track where passing returning weekenders was a tight squeeze between the piles of snow at the sides of the road.
Impossible to park in my usual places in the village – so I eventually skidded up to the hotel car-park and abandoned the car there.

Walking – let alone carrying the stuff I’m starting to transfer from the Sofia flat – in the metre of snow (almost) which now blankets the fields is a real test of fitness!

The new road which lies now at the foot of our garden was, of course,  both impassible and invisible – but I did notice that we had lost the gate which did allow the car onto the garden slope on the odd ocassion the track was dry enough to get me far enough to the house.

I was carrying so much in the car (books, wine, rakia, 7 paintings and an old carpet) that I had not wanted to add the camera – and now regret it. The old house was looking fantastic – with lights from all 6 windows on the middle level casting a superb glow as I struggled up the hill from the old neighbours who greeted me so warmly (and with hot tuica).

We have, however, no water – and no gas (a split canister?). But the kitchen fire quickly spread warmth – and gave the necessary heat for soup et al. The cat – who was last here in late September – seems glad to be back in the nooks and crannies but doesn’t quite know what to make of the metre of snow.  

The European future

Venturing north now on the last stage of this trip - to see how the mountain house is coping with the weather. I fear some frozen pipes since I proably lost some anti-gel in last year's tap split and leak.

I referred a couple of weeks ago to the debate about the future of Europe in the Eurozine network. Ywo more interesting pieces by Swedish authors are now available - Per Wirten’s Where were you when Europe fell apart?

In his book, Ill Fares the Land, Tony Judt predicted that neoliberal agitation for a "minimal state" would cease after the crash in 2008 and be replaced by the return of the state and a battle about its characteristics: should it be democratic or authoritarian, kindly or malevolent, based on surveillance or trust? He turned out to be right. That battle is being fought already.
The longstanding, wishful call for "more Europe" has been converted into a meaningless platitude. Sharper, more focused opinions are now necessary: the parliament must be the engine of politics, the Commission must submit to the will of the parliament, social responsibility and a redistributive policy from wealthy to poor regions must become a reality – otherwise there is no future either for the euro or the European idea .

and Bjoern Elmbrant’s Whose Europe are we living in?

The euro crisis has shown that this is the Europe of the big nations at the small nations' expense, the Europe of banks rather than of citizens. Instead of demanding that their own banks take responsibility, imposing debt rescheduling and a higher equity, Merkel and Sarkozy have rigged what critics call a "fake debate". What was in fact the consequences of the financial crisis of 2008 has instead been described as the result of budgetary indiscipline. Although this might be true for Greece and possibly Portugal, countries such as Ireland and Spain had a large budget surplus and low national debt when Lehman Brothers crashed in 2008......


It is a Europe characterized by increasing nationalism. Just like during the Weimar republic in Germany in the 1920s, today's nationalism is kindled by political ineffectiveness and an economically strapped petit bourgeoisie. The issue concerns not only the new poverty in indebted countries in the south. In northern Europe, the margins of the middle class are gradually getting smaller – deep in debt, they no longer think that solidarity is something they can afford.
Nationalism is the next-door neighbour of selfishness and self-interest. We see rightwing populism at work also when popular and intelligible EU reforms are made void, for example when the Danish People's Party reintroduced controls at the borders to Germany and Sweden. Border controls can now also be "temporarily" reinforced in other parts of the union "in extreme situations". If countries are allowed to decide for themselves what an extreme situation might be, Schengen belongs to the past.
Migration issues are a Pandora's box, if you open it just a little, hatred and dirt emerge. We are now seeing that box opening

Is Europe democratic, then? Less and less. Swedish political scientist Sverker Gustavsson has described three conditions for democracy to work: democracy must "deliver", i.e. be able to solve problems; democracy must admit that there are various routes and that opposition is legitimate; and democracy must be predictable, not arbitrary.
If we use these criteria to test the way the euro crisis has been handled, the result is discouraging. The ability to solve problems is weak. Mistakes have been made and decisions have been wrong and ill-timed. Fear of a free debate about the financial markets has resulted in politicians lying – this has been admitted. But how do you make citizens interested in an imminent crisis when there are no clear alternatives and when politicians don't dare to tell the truth? Finally, there has been a lack of predictability, as the EU keeps changing its stand, adopting ideas it rejected one month earlier. Paragraph 125 of the Lisbon treaty stipulated that no rescue packages were to be allowed, but then rescue packages were issued. It is forbidden for the ECB to buy government bonds from countries in crisis, yet this has been done through the back door.

The fact that indebted countries are now governed by "guardians" is also harmful to democracy. These countries lose their sovereignty as austerity measures are forced onto them from above and devaluation is not an option. Schools are shut down. Hospitals reduce the number of operations. Salaries are cut. Pensions are cut. State property is sold off. In Greece there is talk of selling off "cultural goods". Are we talking about the Parthenon here? Where is the respect?
The question why the citizens should bow down to decree is legitimate. Especially when they have hardly been able to influence these measures, for which there is no majority within the population. The sense of powerlessness is a breeding ground for large-scale rightwing populism. The design of the euro not only threatens the EU but democracy in general.......
And so we have been left with a European Union dominated by the German obsession with budget discipline. There is nothing wrong with having your budget in order, but in turn it has paved the way for a neoliberal agenda and the argument that we have too much welfare

Romanian paintings

Januaries in Bucharest were bitterly cold and snowy a decade or so ago. I remember the snow covering cars in the mid-1990s. These days it was just a bit nippy as I zipped through the various bookshops – and took in the incredible (renovated) palace which now houses the Artmark auctioneers at C Rossetti 5. I have to say that such opulence (and staffing) completely turns me off. It simply shows the huge mark-up they must put on the paintings they sell. Although the prices seem a bit more reasonable than they were, there were in fact no paintings which interested me in those displayed for the 26 January auction which, this time, includes quite a bit of the Ceaucescu family possessions and memorabilia which you can see in the catalogue on the site which can be downloaded. It brought back the memory of the (private) visit I was able to make in 1990 to the richly-endowed mansion the couple had at the back of the Peles palace in Sinaii. Gold-plated bath taps no less - at a time when the population was starving! I had good connections in those days as I was working for WHO - which had been in with the old governments! I was there to show a new face - and explore new possibilities. Which I did in the gloom and in the front of an ambulance which was the means of transport for the young doctor who took me around the country.

The ArtMark auction paintings were hiding the gallery's more interesting permanent exhibition. Better to visit between auctions!

I had noticed in the Humanitas bookshop a new book (rather pricey at 25 euros) on a superb classic Romanian painter unknown to me Camil Ressu (born 1880) A good video of his portrait work is available here.
But I was persuaded to buy in Artmark a fascinating and well-crafted 300 page plus book (in English) – The Self-Punishing One; arts and Romania in the 1980s and 1990s on the works and times of 3 uncompromising Romanian artists (Stefan Bertalan; Florin Mitroi, Ion Grigorescu). How writers coped with the "communist" repression is a common theme of discussions (I mentioned the Herda Mueller exchange here in November recently) but I come across discussions about the effects on artistic endeavours much less frequently. The only thing I can find online on a similar theme is in German.

Whence to the experience of visiting the Ploesti Art Gallery – The "Ion Ionescu-Quintus" Art Museum of Prahova county's activity, with the two departments, Art Museum Ploieşti and Memorial House of painter Nicolae Grigorescu in Câmpina, in accordance with the Law 311/2003 to give it its proper title (needed if you are to find it on the internet!). It is housed in a splendiferous palace in Ploiesti’s centre - which is a large city 50 kms north of Bucharest on the main highway to the Carpathians and Europe. Its oil resources gave it strategic and economic importance at the beginning of the 20th century – evident in some of the architectural gems which can be seen if you look hard enough. Josef Isser is perhaps the city’s most famous artistic son although the country’s most famous painter (Nicolae Grigorescu) comes from the county (Prahova) and is also well represented in the gallery’s collection - as is Theodor Pallady.
However, we apparently arrived at an inopportune time – 15.50 Friday – and got no response when we rang the bell as requested. The security guard was concerned – not least because an alarm was ringing - and ran around the building a couple of times before assuring us that the gallery was open until 17.00. After 10 minutes I was depositing my business card with a message of disappointment when the huge door suddenly opened and a surprised-looking woman explained – to the security guy not us – that there was no electricity although the lights appeared a few seconds after her “explanation”. Thereafter the usual shrill altercation between Romanian custodians and citizens – with no sense from the former that any apologies were due. And a special graphic exhibition had taken over the building – with only half a dozen of the permanent exhibits being on display. The (European) graphics had been hung so low that it was very difficult to see their detail. The best feature for me was the building - with superb entrance hall, painted ceilings and old and fully-functioning tiled stoves keeping the rooms at their required temperature. We were supposed to pay 2 euros – but somehow managed to emerge without payment. Another typical Romanian experience of public services!

Two courageous speeches

I have admired – if not envied - the German political system since I first encountered it in the 1960s as a student – and was able in the 1970s and 1980s, on my various European trips, to compare the seriousness with which politicians (national and regional) were taken in Germany (eg the interviews in the weekly Der Spiegel magazine) with the shallow and elitist coverage of the London media. Willy Brandt and Helmut Schmidt were both, in their very distinct ways, inspiring Chancellors – and their Green politicians blazed a trail.
Helmut Schmidt (age 92) came out of retirement in December and gave a very powerful address to his Social democrat colleagues about Europe. It’s worth watching (in German) and reading (in English) – first for what he says about German responsibilities -

For all our surpluses in reality constitute the deficits of the other nations. The claims that we have on others are their debts. It is a case of undesirable damage being done to what was once elevated by us to a statutory ideal: »external balance«. This damage must unnerve our partners. And when foreign, mostly American, voices – then they came from all quarters – have been heard to call for Germany to take the leading role, all this together causes further unease in our neighbours. And it revives bad memories.
This economic development and the simultaneous crisis in the ability of the organs of the European Union have continued to force Germany into a central role. Together with the French president, the Chancellor has accepted this role willingly. However, there has appeared in many European capitals and likewise in the media of many of our neighbours a growing concern about German dominance. This time it is not a question of an overly strong military and political central power, but rather of an overly powerful economic centre.
At this point, it is necessary for a serious and carefully considered warning for our politicians, our media and our public opinion to be issued.
If we Germans allow ourselves to be seduced into claiming a political leading role in Europe or at least playing first among equals, based on our economic strength, an increasing majority of our neighbours will effectively resist this. The concern of the periphery about an all too powerful European centre would soon come racing back. The possible consequences of such a development would be crippling. And Germany would fall into isolation.
The very large and very capable German Federal Republic needs – if only to protect us from ourselves – to be embedded in European integration. For this reason, ever since 1992 and the times of Helmut Kohl, article 23 of our constitution obligates us to cooperate »with the development of the European Union«. Article 23 obligates us as part of this cooperation to the »principle of subsidiarity«. The present crisis regarding the ability of EU organs does not change these principles.
Our geopolitically central location and, in addition, our unfortunate role in European history in the first half of the twentieth century and our current capacity, all these things together demand from every German government a very large measure of sympathy towards the interests of our EU partners. And our willingness to help is essential.
We Germans have indeed not achieved our great reconstruction of the last sixty years alone and through our own might. Rather it would not have been possible without the aid of the Western victorious powers, without our involvement in the European Community and the Atlantic Alliance, without the aid of our neighbours, without the political break up of eastern Central Europe and without the end of the communist dictatorship. We Germans have reason to be grateful. And likewise we have the duty to show ourselves worthy of the solidarity we received through providing our own solidarity towards our neighbours.

As for what he says about the financial measures Europe needs to take -

The governments of the entire world in 2008/2009 saved the banks with guarantees and taxpayers’ money. Ever since 2010, however, this flock of highly intelligent (but also prone to psychoses) financial managers have continued to play their old game of profit and bonification. In any event, the countries that participate in the common European currency should join together to put into practice far-reaching regulations of their common financial markets. Regulations to separate normal commercial banks from investment and shadow banks, to ban the short selling of securities at a future date, to ban trade in derivatives, provided they are not approved by the official stock exchange supervisory body, and regulations for the effective restriction of transactions that affect the Euro area and are carried out by the currently unsupervised ratings agencies

And it was remiss of me not to have mentioned before now the courageous speech given in Berlin in November by the Polish Foreign Secretary who dared also to talk about German responsibilities, Here are some of the responses.

Romania's demonstrations - in perspective

Monday’s blogpost carried an excerpt (and heading) from The Economist magazine’s Eastern Approaches blog about apparent riots in Romania. After visiting the location here in Bucharest of the demonstrations and reading both the (Romanian) comments on the Economist blogpost and local papers, I think the Economist got the balance wrong. One of the discussants put it well -

1. The violence was limited in scope and intensity. It is now clear that it was provoked by fans of two football teams (Dinamo, Steaua) as a reaction against a recently enacted law requiring violent supporters to register with police stations before the match. The picture and the title suggests that the protests were very violent and much broader than they were in fact. The leaders of these football fans organizations made it very clear in the press they were not interested in politics and that their agenda was different.

2. Protests themselves are small in scope. It seems that at the peak, they were not more than 1,500 (more like 1,200) in Bucharest. Very few of them can explain the reasons they are protesting for. This is very typical for Occupy-type movements. Bucharest population is well over 2 mil. Also typical to Occupy-type movements, the are slogans are EQUALLY directed against opposition (USL) and government (PDL+UDMR). Some protesters are what you'd define as anti-globalization (against what they believe is new world order etc., you know the story), some are against the Rosia Montana gold mining project, some are from animal protection NGOs etc. The crowd is very colourful.
3. Protesters have been summoned by USL (socialists+liberals, the opposition). There are evidences on all major newspapers (check www.evz.ro). Some were called by SMS etc. The protests turned against opposition as well (they booed when Orban appeared).
4. About protests in other cities,In Iasi, major city, 320,000 (20-120 protesters):
In Craiova, major city of 300,000 population (<100 protesters)
5. Don't use sources such as Realitatea TV or Antena 3. They have a known political agenda for years. They compare with FoxNews, just that they are much worse. There are so many other sources. Since so much of the press is somehow connected politically, you should use as many different sources as possible. Just to give you an idea: Realitatea TV was showing the case of a retired military earning 500 EUR/month (state pension), WHILE at the same time being employed as assistant professor in some (private? I don't remember) university and earning a salary. He committed suicide because he was too poor. They were over-dramatising this episode.
As far as I could find out, only the pensions of the military personnel have been trimmed. These were huge anyway (more than 1,500 RON, I'd guess on average 2,000 RON?). Many of the military employees have received early retirement when joining NATO (probably out of fears that they may still be connected to KGB structures); the Romanian army was considered as oversized. They have received large pensions and many of them have IN ADDITION other jobs, since they are still relatively young (I have examples in the family). This group has been very vocal lately. Some participants in the 1989 events were receiving special pensions as well, apart from other privileges (free land etc.). Apparently these pensions were large and have been trimmed.

One additional remark: The Economist blog ran a story some time ago (entitled Can an Englishman rent his castle?) showing that in Romania very few live in rented flats, very few have mortgages (these are essentially the high-income earners). Most people own outright their homes and the housing costs are very low. The situation is not that bleak. There are other, more complex social and psychological problems affecting the population.