2003 REGULAR REPORT ON ROMANIA'S PROGRESS TOWARDS ACCESSION {COM(2003) 676 final}

A. Introduction

1. Preface

2. Relations between the EU and Romania

Recent developments in bilateral relations

Community assistance

Twinning

Negotiations

B. Criteria for membership

1. Political criteria

1.1 Recent developments

1.2 Democracy and the rule of law

The parliament

The executive

The judicial system

Anti-corruption measures

1.3 Human rights and the protection of minorities

Civil and political rights

Economic, social and cultural rights

Minority rights and the protection of minorities

1.4 General evaluation

2. ECONOMIC CRITERIA

2.1 Introduction

2.2 Economic developments

2.3 Assessment in terms of the Copenhagen criteria

The capacity to cope with competitive pressure and market forces within the Union

2.4 General evaluation

3. Ability to assume the obligations of membership

3.1 Chapters of the acquis

Chapter 1: Free movement of goods

Chapter 2: Free movement of persons

Chapter 3: Freedom to provide services

Chapter 4: Free movement of capital

Chapter 5: Company law

Chapter 6: Competition Policy

Chapter 7: Agriculture

Chapter 8: Fisheries

Chapter 9: Transport policy

Chapter 10: Taxation

Chapter 11: Economic and Monetary Union

Chapter 12: Statistics

Chapter 13: Employment and social policy

Chapter 14: Energy

Chapter 15: Industrial policy

Chapter 16: Small and medium-sized enterprises

Chapter 17: Science and research

Chapter 18: Education and training

Chapter 19: Telecommunications and information technologies

Chapter 20: Culture and audio-visual policy

Chapter 21: Regional policy and co-ordination of structural instruments

Chapter 22: Environment

Chapter 23: Consumer and health protection

Chapter 24: Co-operation in the field of justice and home affairs

Chapter 25: Customs union

Chapter 26: External relations

Chapter 27: Common foreign and security policy

Chapter 28: Financial control

Chapter 29: Financial and budgetary provisions

3.2 Translation of the acquis into Romanian

3.3 General evaluation

C. Conclusion

D. Accession Partnership: global assessment

Annexes

Human rights conventions ratified by the candidate countries

Statistical annex

A. INTRODUCTION

1. Preface

In Agenda 2000, the Commission said it would report regularly to the European Council on progress made by each of the candidate countries of Central and Eastern Europe with preparations for membership, and that it would submit its first Report at the end of 1998.

The Luxembourg European Council in December 1997 decided that:

"From the end of 1998, the Commission will make Regular Reports to the Council, together with any necessary recommendations for opening bilateral intergovernmental conferences, reviewing the progress of each Central and Eastern European applicant State towards accession in the light of the Copenhagen criteria, in particular the rate at which it is adopting the Union acquis [...] The Commission's reports will serve as the basis for taking, in the Council context, the necessary decisions on the conduct of the accession negotiations or their extension to other applicants. In that context, the Commission will continue to follow the method adopted by Agenda 2000 in evaluating applicant States' ability to meet the economic criteria and fulfil the obligations deriving from accession."

Consequently, the Commission has published a series of yearly Regular Reports on Romania covering the years 1998 to 2002.

The Thessaloniki European Council in June 2003 concluded that:

"Bulgaria and Romania are part of the same inclusive and irreversible enlargement process. Following the conclusions of the European Council in Copenhagen and depending on further progress in complying with the membership criteria, the objective is to welcome Bulgaria and Romania as members in 2007. [...] Building on significant progress achieved, the Union supports Bulgaria and Romania in their efforts to achieve the objective of concluding negotiations in 2004, and invites them to step up their preparations on the ground. [...] The European Council in December 2003, based on the Regular Reports from the Commission and the Strategy Paper, will assess progress achieved with a view to setting out the framework for the conclusion of accession negotiations."

It is therefore appropriate to produce a Regular Report this year on Romania's progress towards accession, on the same basis as in previous years.

The structure followed for this Regular Report is largely the same as that used in previous years. The present Report:

- describes the relations between Romania and the Union, in particular in the framework of the Association Agreement;

- analyses the situation in respect of the political criteria set by the 1993 Copenhagen European Council (democracy, rule of law, human rights, protection of minorities);

- assesses Romania's situation and prospects in respect of the economic criteria defined by the 1993 Copenhagen European Council (a functioning market economy and the capacity to cope with competitive pressures and market forces within the Union);

- addresses the question of Romania's capacity to assume the obligations of membership, that is, the acquis as expressed in the Treaties, the secondary legislation, and the policies of the Union. In this part, special attention is paid to nuclear safety standards, which were emphasised by the Cologne and Helsinki European Councils. This part includes not only the alignment of legislation, but also the development of the judicial and administrative capacity necessary to implement and enforce the acquis. The European Council stressed the importance of this latter aspect at its meeting in Madrid in 1995 and on a number of subsequent occasions, most recently in Copenhagen in December 2002. The Madrid European Council stressed that the candidate countries must adjust their administrative structures, so as to create the conditions for the harmonious integration of these States. The Copenhagen European Council underlined again the importance of judicial and administrative reform in the candidate countries, stating that this will help bring forward their overall preparation for membership.

The Report takes into consideration progress since the 2002 Regular Report. It covers the period until 30 September 2003. In some particular cases, however, measures taken after that date are mentioned - notably the revision of the Constitution. It looks at whether planned reforms referred to in the 2002 Regular Report have been carried out and examines new initiatives. The Report also provides an overall assessment of the situation for each of the aspects under consideration, setting out for each of them the main steps still to be taken by Romania in preparing for accession.

For each of the negotiating chapters, this Report provides a summary evaluation of the extent to which commitments made in the negotiations have been implemented, as well as an overview of transitional arrangements that have been granted. The commitments made by Romania reflect the result of the accession negotiations and, in accordance with the principle of differentiation underlying the negotiation process, may differ from those made by other countries. Where Romania has committed itself to completing specific measures by the time of accession, the Commission assesses the relevant preparatory processes. For chapters on which the accession negotiations continue, and final commitments remain to be defined, an indicative assessment is given of the state of implementation of the commitments that have been made to date.

Depending on further progress in complying with the membership criteria, the objective is to welcome Romania as a member in 2007. The time scale for the implementation of commitments made by Romania takes account of this perspective.

The Report contains a separate section examining briefly the extent to which Romania has addressed the Accession Partnership priorities.

As has been the case in previous Reports, "progress" has been measured on the basis of decisions actually taken, legislation actually adopted, international conventions actually ratified (with due attention being given to implementation), and measures actually implemented. As a rule, legislation or measures which are in various stages of either preparation or Parliamentary approval have not been taken into account. This approach ensures equal treatment for all the candidate countries and permits an objective assessment of each country in terms of their concrete progress in preparing for accession.

The Report draws on numerous sources of information. Romania has been invited to provide information on progress made in preparations for membership since the publication of the last Regular Report. The information it has provided within the framework of the Association Agreement and the negotiations, and various peer reviews that have taken place to assess its administrative capacity in a number of areas, have served as additional sources. Council deliberations and European Parliament reports and resolutions have been taken into account in the preparations. [1] The Commission has also drawn on assessments made by various international organisations, and in particular the contributions of the Council of Europe, the OSCE and the international financial institutions, as well as those of non-governmental organisations.

[1] For the European Parliament the rapporteur is Baroness Nicholson of Winterbourne.

2. Relations between the EU and Romania

Recent developments in bilateral relations

Romania has continued to implement the Europe Agreement and has contributed to the smooth functioning of the various joint institutions.

The Association Council met in May 2003. An Association Committee meeting was held in December 2002. The system of sub-committees continues to function as a forum for technical discussions.

The Joint Parliamentary Committee comprising representatives of the Romanian and European Parliament met in Bucharest in November 2002 and in Brussels in June 2003. The Joint Consultative Committee with the Economic and Social Committee met in December 2002 and in June 2003. No progress has been made with regard to establishing a Joint Consultative Committee with the Committee of the Regions.

An accession roadmap was developed in close consultation with Romania and adopted in November 2002. A revised Accession Partnership was adopted by the Council in May 2003. More details on this instrument can be found in Part D. of this report.

As a candidate country for accession to the EU, Romania was invited to participate as an observer in the Intergovernmental Conference on the future institutional architecture of the Union.

The share of the European Community in Romania's foreign trade has continued to increase. Turnover in trade with the EC in 2002 was 10 % up on 2001 and accounted for 62.3 % of Romania's overall trade. In 2002, exports to the EC were 11 % up on 2001, accounting for 67.2% (EUR 11.1 billion) of Romania's total exports. Its main industrial exports to the EC were textiles and clothing, machinery and equipment, footwear and steel products. In 2002, imports from the EC were up by 9 % on 2001, accounting for 58.4 % (EUR 10.2 billion) of Romania's total imports. Its main industrial imports were machinery and equipment, textiles and clothing, transport equipment, chemical products and steel products.

A new consolidated Additional Protocol on agricultural trade entered into force in April following adoption by the EU Council of Ministers in December 2002 and ratification by the Romanian parliament in March. This Protocol, which incorporates the results of the "double profit" negotiations concluded in June 2002 extends the liberalisation process to sectors where market protection has been substantial (e.g. cereals, dairy products, beef and sheep meat) and where Romania has important export interests. It potentially covers trade worth EUR 200 million.

Overall, bilateral trade in agricultural goods has grown in the past two years. Romania has seen significant growth in its exports of live animals (sheep, horses), vegetables and wine. Other key sectors are cereals and oilseeds. There has been marked EU export growth in the meat sector (mainly pork and poultry).

In September 2002 the EU adopted definitive safeguard measures on imports of certain steel products, with erga omnes effect. These measures are the absolute minimum necessary to protect EU steel producers from serious injury due to surging imports resulting from US protectionism, culminating in the US safeguard measures of March 2002.

On the basis of a Council Decision of May 1997, modified by a Council Decision of September 2002 and following a technical assessment mission which took place in November 2002, the Commission was mandated to open formal negotiations with Romania on a PECA (Protocol on European Conformity Assessment).

Community assistance

Three pre-accession instruments have been financed by the European Community to assist the candidate countries of Central and Eastern Europe with their pre-accession preparations: the Phare programme; SAPARD, which provides aid for agricultural and rural development; and ISPA, which finances infrastructure projects in the fields of environment and transport. The support provided by these programmes is focused on the Accession Partnership priorities, which are intended to help the candidate countries meet the criteria for membership.

The Phare programme allocated commitments of EUR 2 billion to Romania during the 1992-2002 period, with commitments of EUR265.5 million in 2002. [2] For the years 2000-2003, total financial assistance to Romania amounted to around EUR 280 million annually from Phare, EUR 156 million from SAPARD, and EUR 247 million from ISPA.

[2] An additional allocation of EUR 13 million was granted for Cross-Border Co-operation (CBC) Programmes in 2002.

Phare provides support for institution building, investment to strengthen the regulatory infrastructure needed to ensure compliance with the acquis, and investment in economic and social cohesion. Phare also helps the candidate countries develop the mechanisms and institutions that will be needed to implement Structural Funds after accession and is supported by a limited number of measures (investment and grant schemes) with a regional or thematic focus.

There has been a slight improvement in the absorption rate of funds during the reporting period, but the overall capacity for programming, operational management and financial control remains insufficient.

The 2003 Phare Programme for Romania consists of an allocation of EUR 265.5 million for the National Programme. In addition, EUR 13 million has been allocated to cross border co-operation (CBC) programmes with Bulgaria (EUR 8 million) and Hungary (EUR 5 million). A further allocation of EUR 7.3 million has been made for CBC-type investments on the external borders of Romania. The 2003 Phare programme focuses on the following priorities:

* Political criteria: Phare is continuing support for actions in the field of child welfare and is assisting with the implementation of the national strategy to improve Roma conditions (focusing on education). Support is also provided for the implementation of the strategy for integration of the disabled, strengthening the anti-discrimination institutions and supporting civil society (EUR 34.9 million).

* Economic criteria: support is provided for the Romanian National Bank to strengthen its capacity in acquis related areas, to help the government improve economic analysis and macro-economic planning capabilities, and for the national cadastre (EUR 11.4 million).

* Strengthening administrative capacity: support is provided for strengthening the capacity to manage, monitor and assess EU financed programmes, developing the Ministry of Finance's IT system, supporting civil service reform through the continuation of the "Young Professionals" scheme and through institution building for the Romanian Parliament (EUR 27.4 million).

* Meeting the obligations of the acquis: twinning [3], technical assistance and investment is provided in the following areas: agriculture; energy; transport; statistics; social affairs; employment; environment; health; telecommunications; justice and home affairs; and customs (EUR 56.4 million).

[3] Technical support provided by experts from the public administrations of the EU Member States.

* Economic and social cohesion: investment support is provided for regional development programmes focusing on areas facing particular problems. Complementary institution building measures at national and regional level are also funded (EUR 112 million).

* Participation in Community Programmes (EUR 23.4 million).

Romania also participates in and benefits from Phare funded multi-country and horizontal programmes, such as TAIEX (Technical Assistance Information Exchange Office), the Small and Medium-sized Enterprises Facility, SIGMA (Support for Improvement in Governance and Public Management) and the nuclear safety programme.

Furthermore, Romania currently participates in the following Community programmes and agencies: Leonardo da Vinci II, Socrates II, Youth, Life III, Enterprises and Entrepreneurship, Culture 2000, Framework Programme 6 for Research and Technological Development and Euratom, Gender Equality, Combating Social Exclusion, Combating Discrimination, IDA II, European e-content, Customs, Fiscalis, Community Action in the field of Public Health, Incentive Measures in the Field of Employment, Civil Protection Mechanism. Participation in the European Environment Agency began in January 2002.

Phare helps meet part of the costs of participation in these programmes and agencies. In order to streamline Community legal procedures and thereby facilitate future participation by Romania in Community programmes, a Decision was adopted in February 2002 by the EU-Romania Association Council establishing the general principles for such participation.

Overall, the impact of Phare has been positive. Effective transfer of know-how, equipment and financial resources has taken place in a number of important fields such as:

* Transport infrastructure (rehabilitation of the Vestem-Miercurea section of the Bucharest-Arad road and the road section Ramnicu Sarat - Marasesti, and widening of sections of the road from Bucharest to Giurgiu).

* Justice and home affairs: strengthening border management and the management of migration; supporting the prevention and control of money laundering.

* Supporting investment in the establishment of new businesses and the development of existing small enterprises.

* Initiating activities in the area of human resource development and vocational education and training in line with the priorities of the European Social Fund.

* Fighting against marginalisation and social exclusion by improving access to education for disadvantaged groups, with a special focus on Roma.

* Supporting improved collaboration between national and local authorities on the implementation of the national strategy for improvement of the situation of the Roma, in particular by allocating funds for local partnership projects through the Resource Centre for Roma Communities.

* Supporting civil society to strengthen non-governmental bodies and associations in areas such as: anti-discrimination, civic education, human rights promotion, local administration, media, NGO development & training, parliamentary practice and organisation, penal reform, gender equality, support for disadvantaged groups, partnerships between NGOs and local authorities, and the setting up of a network of citizens' advice bureaux.

* Supporting the development of modern child welfare services through projects proposed and implemented by local authorities and raising awareness of children's rights.

The Phare programme permits extended decentralisation of management, which entails waiving the requirement for ex ante approval by Commission Delegations for tendering and contracting. This approach was underlined in the Roadmap for Romania. For this to be possible strict pre-conditions covering programme management, financial control and structures regarding public finance must be met. An extended decentralised implementation system (EDIS) should be put in place by the end of 2004 at the latest.

Romania has embarked on the preparation for EDIS in accordance with the four steps outlined in the "Roadmap to EDIS for ISPA and Phare". Romania has completed stage 1, gap assessment, and has started work on stage 2, gap plugging.

The Commission approved the Romanian SAPARD programme in November 2000. The financial allocation from the Community for SAPARD in Romania for 2003 is EUR 162.2 million. The allocation for 2002 was EUR 160.6 million.

The Multi-annual Financing Agreement, which sets out the rules for implementing SAPARD, was signed in February 2001. The Annual Financing Agreement for the year 2003 was signed in July 2003.

Following a decision in July 2002 to confer management on the Romanian implementing structures for three out of the eleven measures ("processing and marketing", "rural infrastructures" and "technical assistance"), the Commission made an initial payment of EUR 37.5 million to the National Fund in August 2002. The National Act of accreditation for the implementation of three new measures ('investments in agricultural holdings', 'diversification of activities' and 'vocational training') was submitted to the Commission in July 2003. With the approval of the accreditation by the Commission the Agency will manage 81% of the amount available for Romania under the programme.

Since the start of the implementation of the programme until the end of August the SAPARD Agency approved 518 projects involving EUR 389.2 million of public support (of which the EU is contributing EUR 292 million).

ISPA programming is governed by the national strategy papers for transport and the environment, which the Romanian authorities finalised in 2000. The strategies for the environment and transport sectors are currently under revision.

The strategic objectives in the field of transport are intended to address serious weaknesses in the network of roads and railways and are focussed on the modernisation of the trans-European corridors crossing the country. Other priorities are dealing with increased traffic levels around urban areas and developing the use of waterways.

In the environment sector, Romania faces acute problems concerning air, water and soil pollution - all of which require large-scale investments from both the public and the private sectors. The major environmental impact is the poor quality of water, which results from the discharge of untreated or partially treated waste water. Another major cause of environmental damage and related health hazards is the uncontrolled disposal of (mainly urban) waste.

In 2002, a total commitment of EUR 256.5 million was made for Romania under ISPA. The allocation for Romania until the end of 2002 represented 23% of the overall ISPA budget. In 2003 a provisional commitment of EUR 255.1 million was made for Romania.

Six new environmental projects were approved in 2002 and technical assistance was approved for the preparation of five new ISPA environmental projects. In the transport sector, one technical assistance measure was approved. A technical assistance measure was also approved to strengthen ISPA-related implementation capacity, within the framework of EDIS.

Twinning

One of the main challenges still facing the candidate countries is the need to strengthen their administrative and judicial capacity to implement and enforce the acquis. As of 1998, the European Commission began to mobilise significant human and financial resources to help them with this process, using the mechanism of twinning administrations and agencies. The Commission further strengthened this emphasis on institution building through the action plans for strengthening administrative and judicial capacity and through the elaboration of a roadmap for Romania.

The twinning process, funded under Phare, makes the vast body of Member States' expertise available to the candidate countries through the long-term secondment of civil servants and accompanying short-term expert missions and training.

Furthermore, the candidate countries can draw on Member States' expertise through "Twinning Light", an exchange of expertise mechanism to support projects of limited scope.

For Romania, 97 twinning projects have been delivered over the period 1998-2002. Twinning will continue to be an important element of the 2003 programme, contributing 21 projects. Projects span a broad range of sectors including justice and home affairs, internal market, public administration reform, social affairs and employment, and support for the management of the structural funds.

Negotiations

Negotiations were opened with Romania in February 2000. All 30 negotiating chapters have been opened. Of these, 20 have been provisionally closed and the following chapters remain to be concluded: Free movement of persons, Freedom to provide services, Competition policy, Agriculture, Transport policy, Energy, Regional policy and coordination of structural instruments, environment, cooperation in the field of justice and home affairs, and Financial and budgetary provisions. Negotiations continue on the basis of the same principles that have guided the accession negotiations until now, whereby each country is judged on its own merits.

B. CRITERIA FOR MEMBERSHIP

1. Political criteria

The political criteria for accession to be met by the candidate countries, as laid down by the Copenhagen European Council in June 1993, stipulate that these countries must have achieved "stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities." [4]

[4] In the meantime, through the entry into force of the Treaty of Amsterdam in May 1999, the political criteria defined at Copenhagen have been essentially enshrined as a constitutional principle in the Treaty on European Union. Article 6(1) of the consolidated Treaty on European Union reads: "The Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms and the rule of law." Accordingly, Article 49 of the consolidated Treaty stipulates that "Any European State which respects the principles set out in Article 6(1) may apply to become a member of the Union." These principles were emphasised in the Charter of Fundamental Rights of the European Union, that was proclaimed at the Nice European Council in December 2000.

In its 1997 Opinion on Romania's application for EU membership, the Commission concluded:

"Romania's new institutions are democratic and their stability now seems guaranteed. They do, however, need to be anchored by greater respect for the primacy of law at all levels of the apparatus of State. Elections are free and fair; they led to a genuine change-over in November 1996.

There remain a number of shortcomings with regard to respect for fundamental rights, even if the measures adopted and the undertakings given by the Romanian authorities since November 1996 are steps in the right direction. For instance, much still remains to be done in rooting out corruption, improving the working of the courts and protecting individual liberties from the activities of the police and secret service campaign or in the course of criminal proceedings.

By the same token, even if the Hungarian minority seems well integrated (given the recent improvement in its situation), the same cannot be said for the Roma (gypsies), who constitute a sizeable minority in the country.

Lastly, the reforms concerning the protection of children in orphanages are a major step forward but have still to bear fruit.

The improvement now under way since the new government came to power suggest that Romania is on the way to meeting the political conditions laid down by the Copenhagen European Council."

In its 2002 Regular Report, the Commission found that:

"In its 1997 Opinion, the Commission concluded that Romania fulfilled the political criteria. Since then, the country has made progress in consolidating and deepening the stability of its institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities. This has been confirmed over the past year. Romania continues to fulfil the Copenhagen political criteria.

The launch of a major programme of administrative reform is an important development and ensuring the successful implementation of these reforms should be considered as a priority. Significant progress was also made with the decision to demilitarise the police. This will increase the public accountability of police officers - although further actions are needed to ensure the proportionality of their actions. New institutional structures have been created for fighting corruption, which remains a cause for very serious concern, but they have yet to have an impact.

Romania still needs to improve the decision making and legislative processes. In particular, the Government's reliance on emergency ordinances should be reduced and parliament's ability to scrutinise legislation increased. Reform of the judiciary has been limited. A lack of resources means that the judicial system is severely strained and the executive's involvement in judicial affairs has not been reduced in practice. In order to address these issues, judicial reform should be made a political priority and a comprehensive strategy to improve the functioning of the judicial system should be drawn up.

Romania continues to respect human rights and freedoms. It has made significant progress with child protection, reducing the number of children in residential care and improving actual living conditions. Progress has also been made in promoting equal opportunities between men and women, with developing structures to reduce trafficking in human beings and with setting up the institutional framework to fight discrimination. The development of a probation system has continued although prison conditions remain extremely poor. Additional steps need to be taken to strengthen safeguards for freedom of expression.

Positive developments took place with regard to the treatment of minorities. Legislation extending the official use of minority languages was implemented relatively smoothly. Important steps were taken to implement the National Strategy for Improving the Condition of Roma, with the aim of effectively combating discrimination and improving living conditions, although additional financial resources will be necessary to make further progress."

The section below provides an assessment of developments in Romania, seen from the perspective of the Copenhagen political criteria, including the overall functioning of the country's executive and its judicial system. Such developments are in many ways closely linked to developments regarding its ability to implement the acquis, in particular in the domain of justice and home affairs. Specific information on the development of Romania's ability to implement the acquis in the field of justice and home affairs can be found in the relevant section (Chapter 24 - Co-operation in the field of justice and home affairs) of part 0 of this Report.

1.1 Recent developments

The political situation has continued to be relatively stable over the reporting period. In September 2003, the small Humanist Party terminated its coalition with the ruling Social Democratic Party (PSD). However, the PSD maintained its protocol of co-operation with the Democratic Union of Hungarians in Romania. This arrangement has provided a secure majority in both houses of Parliament.

A major constitutional revision was adopted following a referendum in October 2003. It introduced changes that are required for EU accession, as well as reforming the parliamentary and judicial systems. Government methods used to encourage voter turnout provoked criticism from independent observers. The Protocol on Romania's accession to NATO was signed in Brussels in March 2003.

1.2 Democracy and the rule of law

Romania has achieved stability of institutions guaranteeing democracy and the rule of law. This was the conclusion of the 1997 Opinion and the subsequent Regular Reports, and has been confirmed by developments over the past year. This section focuses on the most significant developments since the last Regular Report.

The parliament

A committee comprising of representatives from both houses was set up in the autumn of 2002 to take forward the process of constitutional reform. It has been able to deal effectively with a large number of complex and politically sensitive issues. One of the major features of the constitutional revision is a clarification of the functions of the Chamber of Deputies and the Senate a reduction in the number of senators (from 140 to 110) and deputies (from 345 to 220).

As noted in last year's Regular Report, the high volume of legislation processed -- combined with limited resources -- has limited Parliament's ability to effectively scrutinise legislation. This is a particular concern relating to the legislative adoption of the acquis, where procedural deadlines are particularly short. The use of emergency ordinances was reduced over the reporting period (see below section on the executive) although the continued use of this legal instrument effectively bypasses Parliament's position in the legislative process.

Shortages of parliamentary research staff with legal expertise and support staff for parliamentary parties remain. Career development and training policies for existing staff still need to be developed. The Legislative Council, a parliamentary advisory body, remains understaffed.

External oversight of Parliament's activities by civil society remains limited in practice and committee meetings are generally closed to the public.

The executive

In June 2003 a major restructuring of the government took place. A number of ministries were merged and the overall number of ministries was cut from 23 to 14. At the same time six new positions of Minister Delegate were created. The position of Minister Delegate does not have a formal legal basis and it remains to be seen how the respective attributions will be taken up in practice. A feature of the restructuring is that a considerable number of bodies have been placed under the direct control of the Prime Minister's office. A further innovation was the creation of a National Control Authority with mixed roles of supervision and co-ordination over other institutions. In separate developments, three government ministers were forced to resign in October 2003 and twenty state-secretary positions were abolished in February 2003.

A comprehensive revision of the Civil Servant Statute was adopted in March 2003. The new legislation establishes the principle that recruitment mechanisms be competitive and based on transparency, professional merit and equal access. All recruitment must in future be carried out according to an annual plan approved by the government. The revised statute also establishes the right of civil servants to unionise (with the exception of higher civil servants). It defines the conditions of conflict of interest and stipulates provisions for the declaration and control of the wealth of civil servants. The amended law also redefines the competencies of the National Agency of Civil Servants - the body responsible for implementing civil service reform. Significantly, the Agency has been given the possibility to use the court system to enforce civil service legislation. However, the capacity of the Agency itself remains limited and it has little authority over line-ministries.

Overall, the law represents a considerable improvement over previous legislation and provides a legal basis for the professionalisation of the civil service although further amendments are still required. The law does not apply to a wide range of non-statutory staff employed by the public administration.

Limited progress has taken place in areas related to remuneration and career structure. Implementing legislation is still needed to establish promotion procedures and reduce the discretionary nature of the process. Legislation adopted at the end of 2002 for salary structures is only temporary and the current salary system remains inconsistent, discretionary and lacking in transparency.

The body responsible for designing the reform process is the Central Unit for Public Administration Reform. Its staff numbers have been increased and it has been able to conduct diagnostic work on the modernisation of the public administration, promote debate on reform issues amongst stakeholders, and establish consultative networks. While its achievements are positive in themselves, the unit has no real authority over the rest of the Romanian public administration, and with only eight staff members is under-resourced to carry out a reform of the entire administrative system.

The newly established National Institute of Administration is responsible for the training of civil servants. It started its activities during the reporting period by providing in-service training. The National Institute operates through eight regional training centres and courses cover a wide range of subjects, including management of EU funds. At the same time, the National Institute does not have the resources to meet the considerable training needs of the administration. A scheme for young professionals has been launched in collaboration with Central Unit for Public Administration Reform in order to prepare middle managers for the public administration.

In December 2002 the Government adopted a memorandum which foresees the training of 6 000 specialists in European matters by 2004. A decision was also taken to recruit 500 specialised advisors for European integration, who will be seconded from the Ministry of European Integration and detached to line ministries. The procedures for making these appointments lack transparency and these initiatives were taken without full consultation with the bodies responsible for civil service management and reform.

At the political level, the Inter-ministerial Committee for Monitoring Reform in Public Administration met in July 2003 after almost one year of inactivity.

The Executive's practice of legislating through emergency ordinances, and to a lesser extent "ordinary" ordinances, has reduced the transparency of the legislative process, has limited the opportunity for adequate consultation on draft laws, and has contributed to a situation of legislative instability. In response to criticisms on the use of these legislative procedures, the government accepted that the use of emergency ordinances had been abused in the past. In February 2003, an internal screening procedure was introduced to limit the use of these procedures, and the use of ordinances has been reduced over the reporting period. While this represents progress, Ordinances are still used excessively by the Executive and often in cases where there are no obvious grounds for urgency. The revised Constitution maintains the possibility of legislation by ordinance but clarifies the circumstances under which they can be used and delays their entry into force until they are formally tabled in parliament.

Over the reporting period, the government used votes of confidence for adopting major packages of legislation. While this accelerates the legislative process, it severely limits the possibility for public and parliamentary scrutiny of what are often very sensitive issues (anti-corruption measures, judicial reform and civil service reform). Relying on this process has compromised the quality of the legislation adopted and has reduced the support from key stakeholders.

With regard to policy-making and co-ordination, the main development over the reporting period was the establishment of the Executive Committee for European Integration. The committee is chaired by the Prime Minister and has a standing membership of the Minister for European Integration, the Minister for Foreign Affairs, and the Minister for Public Finances. It meets weekly and discusses specific issues related to accession. Other ministers participate depending on the subjects being discussed. The Executive Committee functions efficiently and has to a considerable extent taken over the role of the Inter-Ministerial Committee for European Integration, raising the EU accession process to a higher political level.

The Ministry of European Integration is responsible for all technical issues related to EU accession. It has continued to play an effective co-ordinating role and has been able to work effectively with other ministries in order to prepare negotiation documents. Nearly all ministries have an EU accession department that is headed by a Secretary of State.

There are persistent weaknesses in the process of legislative preparation. Laws are often prepared hastily, without a sufficient assessment of feasibility, impact and budgetary implications. The consequent need for amendment increases legislative instability. At the working level, formal consultation rules are generally observed but inter-ministerial co-ordination remains limited in terms of substance. Ministries have a limited ability to resolve technical and policy issues without recourse to the political level.

The General Secretariat of the Government has the responsibility for administrative and logistical management of government business and the legal review of documents. However, the General Secretariat has no capacity for substantial policy co-ordination and there is little qualitative monitoring of policy implementation.

In January 2003 legislation was adopted setting procedural requirements to ensure transparency of the decision-making process - the so-called "sunshine law". Key provisions include the obligation to publish draft legislation, to allow the participation of the public and NGOs in the decision making process (under certain conditions), and to submit annual reports on the transparency of their decision-making process. If implemented, this legislation could significantly improve the decision making process. However, available evidence indicates that most departments of both central and local government have continued to issue legislation without respecting the new rules.

Over the reporting period, consultation with external stakeholders when formulating policy and preparing legislation remained limited. NGOs and civil society have been invited to comment on a number of legislative drafts - although this situation is not typical and the time available for providing input is usually short, which limits the effectiveness of the consultation procedure. A regular dialogue has been held with representatives of the business community.

The activity of the National Council for the Supervision of the Archives of the Former Secret Police has been effectively blocked following a dispute with the Romanian Intelligence Service (which holds the files).

Over the last three years there has been a steady transfer of responsibilities to local authorities: welfare assistance, health, pre-university education, transport, emergency services, public utilities. However, the existing legislative framework is unclear and Romania lacks a strategy for managing the process of decentralisation in a transparent and stable manner. This problem is compounded by limited consultation with representatives of local authorities on draft legislation that will have an impact at the local level.

The shift of competencies has not always been matched with an adequate transfer of resources. The ability to raise local revenues remains limited and as a result many local authorities have dedicated resources to meet increasing current expenditures while the level of capital expenditures has steadily decreased. Legislation governing financial transfers to local government lacks transparency and gives a strong controlling function to county councils at the expense of local councils. An additional source of funding for local investments are the "special funds" managed by central government, which are allocated at the discretion of the ministries concerned. Political considerations are often a major factor in deciding allocations.

A major problem facing local authorities is that of limited administrative capacity to implement decentralised responsibilities. Systems for managing human resources are underdeveloped, remuneration is very low, training is limited and in many cases recruitment and promotion are not merit-based. As a result there has been a high turnover of local civil servants. Considerable efforts are also needed to improve financial management and to remedy shortages of information-technology equipment and skills.

Despite these difficulties, a number of positive developments have taken place over the reporting period. One important element was the political agreement on making prefects (i.e. the local representatives of central government) professional civil servants instead of political appointees, by 2007. Legislation on conflicts of interest placed restrictions on the business activities of locally elected officials as well as prefects and sub-prefects (see section on anti-corruption measures). Following an initiative of the Ministry of European Integration, local authorities are obliged to prepare and submit plans for the implementation of the EU acquis at the local level.

The judicial system

The Romanian judicial system has four levels of courts: local courts, tribunals (at the county level), courts of appeal, and a Supreme Court of Justice. The General Prosecutor is attached to the Supreme Court. In general, cases enjoy a judgement in substance in the court of first instance and two degrees of judicial redress: appeal on facts and appeal on law. There is also a Constitutional Court in Romania which has a two-fold jurisdiction: the examination of laws before their promulgation by the President, and the examination of laws already in force when their constitutionality is challenged before ordinary courts.

The Superior Council of the Magistracy is responsible for disciplinary matters as well as judicial promotions. A new selection procedure for the Superior Council has been introduced whereby a number of judges are selected by the body of the judiciary and are then proposed to the parliament, although in practice the selection process remains politicised. The overall position of the Superior Council in the judicial system remains weak, and further efforts are needed to ensure that the Superior Council can fulfil its responsibilities.

In June 2003, an Emergency Ordinance revised the civil procedure code and introduced a significant reallocation of responsibilities within the court system. Tribunals now act as courts of first instance in all commercial cases and can no longer rule on appeals involving questions of fact. All such appeals from local courts and tribunals have become the exclusive competence of the courts of appeal. The Supreme Court has been given exclusive competence in all appeals involving questions of law. This change is an attempt to improve legal certainty in Romania by unifying the interpretation of the law at the highest level. This is a major reform and if it is to be successful needs to be accompanied by a major increase in resources to the new institutions as well as the necessary redeployment and retraining of judges.

The same Emergency Ordinance removed the discretionary power of Romania's General Prosecutor to bring extraordinary appeals against judicial decisions in civil cases. This system of extraordinary appeals represented an exceptional form of redress that was incompatible with the European Convention on Human Rights (ECHR). This reform therefore represents important progress - although concerns remain, since the General Prosecutor retains the power to bring extraordinary appeals in criminal cases and did so in 156 cases in the first half of 2003 (compared to 295 cases in 2002 and 367 in 2001).

Despite this development, the independence of the judicial system remains a concern. The Minister of Justice retains the power to directly appoint judges (from amongst the members of other legal professions as well as auditors of the National Institute of the Magistracy). In the absence of clear rules on distributing cases to judges, Court Presidents can have considerable influence over the handling of cases in the courts. The ongoing reform of the judicial system needs to address these issues as a matter of priority.

The National Institute of Magistracy and the Training Centre for Clerks are the two institutions responsible for providing training to professionals in the court system. A number of positive developments took place during the reporting period. Training of entry-level professionals has been developed, curricula have been improved, and the National Institute has embraced new legal subjects such as ethics and justice for minors. The National Institute has established a network of regional trainers and set up three Regional Centres which are now fully operational. Continuous training for clerks is less developed. There is, however, no clear policy on in-service training for judges and prosecutors, and training activities have focused on further developing academic knowledge rather than on developing applied skills or professional ethics. Specialised training on issues such as economic crime, money laundering and the fight against corruption remains limited. Understaffing and inadequate budgets have also limited these institutions' activities.

The number of judges in the Romanian justice system has remained roughly constant when compared to last year (currently 3677), although there has been a reallocation from local courts to tribunals and courts of appeal. The total number of judicial vacancies has risen to 308 (up from 73 last year) and the average caseload per judge has also increased (to 550 cases, up from 531 last year). This heavy workload is still a particular problem in the tribunals and courts of appeal.

Judicial promotions are now based on a merit-based system using open competitions although judges are still required to have a minimum number of years in the profession.

ROL 550 000 million (EUR15.7 million) has been allocated to upgrade and build new court houses. This has helped improve working conditions, although serious deficiencies in court infrastructure remain in certain regions, particularly in Bucharest. There has been some progress in the introduction of computers into courts and prosecutors' offices, although actual needs are far from being met. The introduction of the Integrated Case Management System has been disappointingly slow and training of magistrates and clerks in the use of the system is at a very early phase. In January 2003 the salaries of judges and prosecutors were increased by an average of 21% (30% for those specialising in corruption cases). While the increase in salaries should improve motivation and retention rates while reducing the susceptibility to corruption, its effect is likely to be limited given that it follows a two and a half year pay freeze for the judiciary.

The enforcement of civil decisions is the responsibility of private bailiffs, and in most cases is effective. However, the requirement to pre-pay the bailiffs can make it difficult for lower-income groups to have decisions in their favour enforced.

In September 2003, a Judicial System Reform Strategy was adopted by Government Decision. Its aim is to address the weaknesses within the justice system and objectives include ensuring legal certainty and conformity with the European Court of Human Rights, improving the quality of judgements, and enhancing the independence of the judiciary towards the executive. Various measures to achieve these objectives are described including constitutional change, developing alternative dispute resolution mechanisms, providing better career prospects, and improving training and information technology. While there are important issues that the strategy does not address in sufficient detail it nevertheless represents a significant acknowledgement that further judicial reform is necessary. A next step will be to agree upon a definitive action plan that provides sufficient human and financial resources to effectively implement the strategy.

In June 2003 a new Code of Criminal Procedure was adopted. By removing several of the incompatibilities between the previous Code and the case law of the European Court of Human Rights, the revised Code expanded the legal guarantees of a number of fundamental freedoms and liberties. Key provisions include a clear establishment of the presumption of innocence as a ruling principle of the criminal trial process; limits on the powers of prosecutors on pre-trial imprisonment and restraint measures; enhanced guarantees to juvenile defendants; new provisions giving the entitlement to compensation in cases of unlawful imprisonment; and extended judicial control over measures including witness protection and undercover investigations.

The revised Constitution contains important reforms in the judicial area. Among the most significant are enshrining the principles of the judiciary as a separate and equal power vis-à-vis the executive and the legislature, and the right to a fair trial in a 'reasonable time'.

Institutional changes are also proposed, including the transformation of the Supreme Court into a High Court of Cassation and Justice responsible for ensuring the consistent interpretation and implementation of the law throughout Romania. Judges in the new High Court will be appointed for life rather than for six-year terms, which should strengthen the independence of this institution.

The Superior Council of the Magistracy, which is responsible for safeguarding the independence of the judiciary, will also be reformed. The mandate of members has been extended from four to six years -- which is intended to reduce the effect of political patronage. The composition of the Superior Council has also been amended to include two representatives of civil society. At the same time, the Minister of Justice's position has been strengthened on the Council, and the one-year non-renewable mandate of the Council's Chairman could limit the possibility for strong, independent leadership.

Anti-corruption measures

International reports and surveys indicate that corruption in Romania continues to be widespread and affects all aspects of society. It undermines the effectiveness and legitimacy of state institutions and restricts Romania's economic development. Although significant efforts were made during the reporting period to intensify the fight against corruption there has been no reduction in perceived levels of corruption and the number of successful prosecutions remains low. There have been very few prosecutions of high-level corruption despite this having been identified as a priority.

Although not yet complete, the legal framework for fighting corruption is relatively well developed. The Romanian government should therefore focus attention on enforcing existing legislation.

In December 2002, over one year after the National Programme for the Prevention of Corruption and the National Action Plan against Corruption were adopted, the government announced a programme to reschedule the timetable of the original Action Plan. A number of new measures were also added. The strategy will focus on those groups it identified as being most susceptible to corruption: the judiciary, public administration, and private enterprises. However, it fails to substantially address the issues of corruption at the political level and is weak with regard to addressing the links between corruption and organised crime.

The National Anti-Corruption Prosecutor's Office (NAPO) became operational in September 2002. NAPO is responsible for conducting investigations into high-level corruption or corruption involving state officials. During the reporting period, NAPO received reports of 2 285 cases of alleged corruption and sent 119 of these to the courts. Last year's Regular Report noted that filling NAPO's posts would be a test of the government's commitment to the fight against corruption. One year later, NAPO still remains seriously understaffed, which means that prosecutors are responsible for an excessive number of cases (46 on average) and limits the possibility for effective investigation.

The operational independence of NAPO is jeopardised by the Minister of Justice's responsibility for anti-corruption enforcement and the 'co-ordination' role that the General Prosecutor has been given over NAPO activities. Only the Minister of Justice or the General Prosecutor may order an investigation into the wealth of national politicians or high-level officials.

In April 2003 a package of anti-corruption legislation was adopted using the legislative mechanism of a vote of confidence. The process of adoption restricted possibilities for consultation and as a result the legislation was not thoroughly prepared. Nevertheless, the package does contain several positive features. Requirements on the public disclosure of assets held by elected politicians and senior officials have been extended, the concept of "conflict of interests" has been introduced into Romanian law, and the number of outside interests considered incompatible with being a public official has been significantly expanded. In May 2003 a further requirement was introduced for all individuals covered by the scope of anti-corruption legislation to declare the exact details of all their savings (world-wide) whose cumulate total exceeds EUR10 000. Despite these developments, a number of shortcomings remain. The legislation on conflict of interest is weak and, for politicians in particular, the definition of conflict of interest is limited. There are also potential loopholes such as the possibility to transfer assets to relatives outside the scope of the law. Available evidence indicates that these anti-corruption provisions are not being fully or consistently applied.

New legislation on the funding of political parties and electoral campaigns entered into force in March 2003. The law contains a number of positive elements: the disclosure of the identity of major donors is obligatory, as is publication of and the total amount of anonymous donations. However, there are a number of omissions in the text - the most significant of which are the possibility for parties to be financed by NGOs between electoral cycles and a lack of clarity in the definition of membership fees.

Progress has been noted in aligning with the acquis on protecting the financial interests of the Communities (1995 Convention). Further legislative steps are required to introduce the concept of criminal liability of legal persons.

Romania remains involved in the Stability Pact Anti-corruption Initiative sponsored by the OECD Secretariat, and participates in the Council of Europe's Group of States against Corruption (GRECO). NAPO has designated a prosecutor under GRECO for the 2002-2005 Second Evaluation group of experts. Romania has made limited progress in implementing the recommendations made in the May 2002 GRECO evaluation report. Further efforts should focus on producing a strategic assessment of the nature and scale of corruption, introducing a wide-ranging public information programme, and restricting the powers of the Minister of Justice to intervene in both the supervision of judges and the work of prosecutors.

1.3 Human rights and the protection of minorities

Romania continues to respect human rights and fundamental freedoms. This was the conclusion of the 1997 Opinion and the subsequent Regular Reports, and has been confirmed over the past year. The following section focuses on the most significant developments since the last Regular Report.

Romania has ratified the main human rights conventions (see Annex I). The European Convention for the Protection on Human Rights (ECHR) has direct effect in Romania, but certain difficulties remain with its full application.

In 2003, Romania ratified Additional Protocol No. 13 to the ECHR concerning the abolition of the death penalty in all circumstances. As previously reported, Romania has signed but has not yet ratified Additional Protocol No. 12 to the ECHR prohibiting discrimination on any grounds. Romania has formally recognised the competence of the UN Committee for the Elimination of Racial Discrimination in accordance with the International Convention for the Elimination of all Forms of Racial Discrimination (1965).

The National Council for Combating Discrimination has made significant progress during its first year of activity and the issuing of decisions sanctioning cases of discrimination has been an important demonstration of its authority.

New legal provisions have clarified the responsibilities of the National Council. However, a number of the gaps in the legislative framework raised in last year's Regular Report have not been resolved (i.e. indirect discrimination and the burden of proof - see Chapter 13 - Social policy and employment). The legal framework also needs to be revised in order to clarify the role of the National Council vis-à-vis other public institutions.

Since starting its activities in August 2002 the National Council received over 450 petitions. It carried out 37 investigations and out of these, it applied sanctions in 31 cases. However, the legal authority of the National Council to issue sanctions remains unclear.

In general, greater transparency is needed in the way in which the National Council carries out its activities. Although existing staff members demonstrate considerable motivation and ability in carrying out their functions, overall staff resources are too limited to match the ambitious mandate of the Council. Particular attention should be paid to clarifying the roles of the technical departments and to reinforcing the investigations and legal departments.

As noted in last year's Regular Report, the fact that the National Council remains administratively subordinate to the government appears to limit its capacity to act independently. Only one member on the board of directors comes from the vulnerable groups covered by the board's mandate.

The Office of the Ombudsman deals with complaints lodged by persons whose civil rights and freedoms have been infringed by the public administration. Over the year from September 2002, the institution received a total of 4 485 petitions. A total of 444 petitions were declared admissible and investigated. A total of 43 own initiative investigations were also carried out. The majority of cases related to property rights, while a significant number of other cases related to the right to a decent standard of living, the right to a fair trial, access to justice and the right to health care.

The Ombudsman's office has limited resources in terms of powers, staff, and budget to cope with the high number of complaints received. Nevertheless, the effectiveness of the institution has improved over the reporting period. At the end of 2002 the Ombudsman moved into improved premises. The institution's three regional offices in Alba, Bacau and Dolj counties were set up in 2003.

The Ombudsman is accountable to Parliament, but as noted in previous Regular Reports, Parliament pays limited attention to the Ombudsman's reports. The Ombudsman's 2002 Annual Report also concluded that some public authorities have not yet fully understood the role of the Ombudsman as an autonomous and independent authority.

The revised Constitution gave the Ombudsman the right to ask the Constitutional Court to declare on the unconstitutionality of laws prior to their entry into force. It also extended the term of office of the Ombudsman from four to five years.

Civil and political rights

Romania has continued to make significant progress in the reform of child protection. More than half of the 86 000 children in public care are now placed with families (extended family, foster care), while 37 000 children remain in residential care (including special schools). A methodology for the closure of large residential institutions has been developed and is being implemented. During the reporting period, 54 large institutions were closed. By June 2003, a total of 776 units providing alternative child-protection services had been established (mother and baby centres, family type homes, counselling services). Some 120 large institutions remain. However, the majority of these have been restructured into family-type modules and material living conditions are generally appropriate.

The situation of disabled children has also improved. The majority of the old style residential institutions have been closed or restructured, while preparations are underway to close the remaining inappropriate institutions. A growing number of services are available to support disabled children and their families so that children do not have to be placed out of home.

Significant progress has been made with the development of strategies at county level in order to ensure a correct implementation of the national strategy. Regional differences in the implementation of the reform are decreasing as knowledge of best practices on child protection is extended. Work is underway to finalise national standards for child protection services that will be disseminated through training and information activities. This is a matter of urgency, as the lack of national standards hampers transparent monitoring of public and private service providers and risks allowing practices that are not in the best interest of the child.

The National Authority for Child Protection and Adoption continues to be well managed and work to improve the functioning of the inspection bodies is ongoing. In June 2003, it was transferred under the authority of the Ministry of Labour and Social Protection with the intention of making child protection policy an integral part of social policy.

The moratorium on inter-country adoption has been extended until new legislation on children's rights is enacted and the necessary administrative capacity in place. Extensive consultations are being carried out in order to ensure that the legislation will respect the ECHR and the UN Convention on the Rights of the Child. Preparations are underway to develop the administrative structures and capacity to implement the new legislation. Concerns remain about the lack of specialised courts for family law and the lack of free legal representation in decisions concerning children and in particular decisions that seek to terminate parental rights.

Implementation of the laws on the Status of the Policeman and the Organisation and Functioning of the Romanian Police (adopted in the summer of 2002) began during the reporting period. This marks an important step in the reform of Romania's police forces. Under their new status, policemen are civilian public servants serving the rule of law. Demilitarisation of the police has meant that jurisdiction for prosecuting abuses by the police has been transferred from the military to the civilian court system. However, the other security forces, including the gendarmerie, remain subject to military judicial control.

Despite these positive developments, there has been little measurable progress in terms of increased police efficiency. New legislation has not been accompanied by a modernisation of police structures and the Romanian police force remains a highly centralised body with little exposure to principles such as transparency, accountability, sound and efficient management or modern human-resources policy.

Cases of excessive police violence against suspects, even in connection with petty crimes, have continued to be reported during the reporting period. Several of these cases have involved the use of firearms, and police officers enjoy a certain penal immunity when using firearms in order to fulfil police duties.

In April 2003, Romania authorised the publication of the report made by the Council of Europe's European Committee for the Prevention of Torture, as requested in last year's Regular Report. The report was particularly critical of conditions in police detention facilities, and drew attention to the fact that all categories of detainees are ill-informed about their rights, have difficulty accessing legal advice, and are subject to various forms of ill-treatment.

Romania remains seriously affected by trafficking in human beings and is a country of origin, transit and destination for victims. While the greatest problem concerns the trafficking of women and girls for sexual exploitation, there are also a number of children and handicapped persons who are trafficked in order to be exploited as street beggars or thieves. There is evidence that victims of trafficking are bought and sold by their "owners" and live under degrading conditions.

The 2001 Law for Combating Trafficking, which criminalises trafficking and provides assistance and protection to victims, has not led to a noticeable improvement of the situation. A number of new legal measures were therefore taken at the end of 2002 to address the problem of trafficking. The Criminal Code was amended to increase the sanctions for rape and other sexual offences against minors. Punishments were increased for the production, transportation, trading and distribution of pornographic materials involving minors, as well as for belonging to organised groups involved in these activities. The National Action Plan, referred to in last year's Regular Report, has proved to be a consistent reference point in the anti-trafficking work of the Romanian authorities and NGOs.

In November 2002, Romania ratified the UN Convention against Transnational Organised Crime and the Protocol on preventing, countering and punishing trafficking in human beings, especially women and children.

Actions have been taken to increase administrative capacity in this area. In order to improve collaboration between the different agencies, a new structure was established within the General Directorate Against Organised Crime and Drugs, bringing together staff from the General Police Inspectorate, the Border police, and the General Directorate for Computerised Record of Persons. A working group has also been established to collect and exchange intelligence and to produce strategic analyses on illegal migration and trafficking in human beings. In February 2003 an Inter-Ministerial Working Group for the Co-ordination and Evaluation of the Prevention and Combat of Trafficking in Human Beings was established and a methodology approved for repatriation of Romanian nationals who have been victims of trafficking. In October 2002 the National Refugee Office started to provide direct assistance to trafficked women.

Approximately 4 100 prison detainees are held in pre-trial detention (just under 9% of the total prison population). Due to overcrowding it is not always possible to separate pre-trial detainees from convicted criminals, as is required by both domestic Romanian legislation and international treaties ratified by Romania. The revised Constitution has significantly reduced the legal limit for pre-trial detention - it is now 180 days whereas previously it was half of the maximum period of imprisonment for the crime with which an individual is charged. Amendments to the Code for Penal Procedure in June 2003 have also placed a limit of one year (exceptionally two in the case of particularly serious crimes) on detention before the first court ruling on the charges. Judicial review is applied both during the pre-trial detention and during the judicial phase.

Romania's prison population is high compared to the size of its population. Overcrowding remains the most serious problem, and despite the building and modernisation of some prison facilities, the number of inmates exceeds the capacity of the prison system by approximately 25% (although this represents an improvement compared to the previous period). While efforts have been made to improve prison facilities, overall prison conditions are very poor: the quality of food is below acceptable standards; educational and cultural activities are insufficient; and staff shortages mean that many inmates spend all day locked in their cells.

Alternatives to imprisonment are very limited, which is a major cause of the overcrowding. The probation system is still in the process of being developed and only exists in half of Romania's counties. Legislation on pardoning certain penalties has resulted in 2 700 prisoners being released. However, there is very little assistance for former inmates released on parole to reintegrate successfully into society.

No changes have been made to the legal aid system during the reporting period. In criminal cases legal assistance is mandatory if: the defendant is under arrest; the law provides a sanction of imprisonment exceeding five years; a defendant is judged as being unable to make his own defence. Legal aid is also mandatory for certain categories of defendant, including minors and military personnel. However, in many cases none of these criteria can be met and no legal assistance is guaranteed. As a result, access to legal defence can be limited at all stages of criminal proceedings. In civil cases, legal aid can be granted if the party concerned proves that they have insufficient means to employ a lawyer - but in practice few such requests are granted. Remuneration of the lawyers providing legal aid is low and is not dependent on the time spent on the case. The motivation for lawyers to provide legal aid is therefore limited, especially in complicated and time-consuming cases. As stated in the previous Regular Report, limits to the right to legal representation are a human rights issue that needs to be addressed.

The positive trend noted over previous years in the area of asylum has continued during the reporting period, and in January 2003 the new Aliens Law entered into force. One of the main improvements is the exemption from penal sanctions of asylum seekers who illegally enter or remain in Romania. This new legislation has also brought significant improvements to the procedure for determining whether refugee status can be granted, and is largely in line with international refugee-law standards. However, the law contains certain shortcomings: the definition of refugees needs revision; provisions allowing for "cessation", "withdrawal" and "cancellation" of protection do not comply with the provisions of the 1951 Geneva Convention; and there are gaps in the protection regime applicable to persons who have been granted humanitarian protection.

Applicants with humanitarian status continue to receive fewer benefits than those with refugee status. However, other concerns raised in last year's Regular Report have been addressed (short time limits for processing cases at border points and excessively long detention in airport transit zones).

The administrative capacity for dealing with asylum seekers and refugees has continued to improve. At the same time, a better quality of decision-making is required. A particular concern is the practice of the Romanian authorities to declare aliens, including persons in need of international protection, "undesirable for reasons of public order and national security" in an arbitrary manner.

Freedom of expression is guaranteed in the Constitution, and both the written press and electronic media are able to report freely. In May 2003, the government submitted the draft of a revised Penal Code to Parliament. The draft contains several important features: repeal of the crime of "insult", removing the possibility of a prison sentence for slander; and the alignment of rules on the burden of proof with the ECHR. If adopted by Parliament, these amendments will enable journalists to report more freely. In a further development, the legislative processing of the draft law on the compulsory right to reply -- criticised in last year's Regular Report -- has been suspended.

Despite this progress, certain limits on the freedom of expression are a matter of concern. The number of genuinely independent media sources is limited and ownership is highly concentrated, which has resulted in a degree of self-censorship. Harassment of journalists by regional authorities is a problem in certain parts of Romania, although the occurrence of such cases has fallen over the reporting period.

Romanian legislation on the free access to public information was adopted in 2001. However, application of the law is partial and a significant number of authorities have failed to respond to requests for information. This situation has led to court cases being brought against public institutions for non-respect of the law although the situation remains unresolved. In one case the General Prosecutor used his powers of extraordinary appeal to prevent the release of information that the Bucharest Court of Appeal has ruled should be made public.

A number of Romania's most important media companies are heavily indebted to the state. In several cases, "fiscal facilities" have been granted by the Ministry of Finance that allow the rescheduling of outstanding debts. Under these circumstances, the continued operation of a number of media outlets is, to an extent, dependent on the good will of the Romanian authorities.

Freedom of religion is guaranteed by the Constitution and is observed in practice. In May 2003, the Ministry of Culture and Cults recognised the Jehovah's Witnesses. There are 15 recognised religions in Romania. Non-recognised faiths are able to operate without restriction but do not benefit from the same legal advantages as recognised religions. The 1948 Decree on Religious Denominations remains in need of reform.

There is no legal discrimination on the basis of sexual orientation in Romania. At the same time, prejudice against homosexuality remains widespread in Romanian society and there have been credible reports of police harassment.

With regard to freedom of association, in December 2002 legislation was adopted on the functioning and organisation of political parties that very substantially increased the requirements for establishing a political party. Under the provisions of the law, parties require at least 25 000 founding members, resident in at least 18 of Romania's counties, with no less than 700 members in each of these counties. The legislation also introduced requirements for registration and re-registration that are both burdensome and also potentially discretionary in their application. Only registered political parties are eligible for public funding. Registered parties are also able to purchase the buildings that they occupy at advantageous prices. These provisions are not likely to affect the main political parties (which are all in support of the law) but they will make it increasingly difficult for new parties or for regional and ethnic parties to establish themselves.

There are no restrictions on the freedom of assembly.

Progress has been made with the restitution of properties confiscated under the communist regime. The legal framework for restitution is now fully functional and the authority responsible for enforcing restitution has become operational during the reporting period. However, progress with actual restitution has been mixed - depending on the type of good concerned.

Restitution of agricultural lands is advanced and as of July 2003 a total of 90% of total lands had been given back. Restitution of forested lands is slightly less advanced, with 79% of the lands returned. The legislation in force sets a limit of restitution of 50 hectares for each applicant.

The process of restituting buildings is ongoing and a total number of 210 000 claims were filed for either restitution in kind or compensation. However, at the end of the reporting period only 3% of properties had been returned, monetary compensation was awarded in 1% of cases and other forms of compensation offered in 2% of cases. No law has yet been adopted in order to establish the criteria for calculation and the procedures for payment of monetary and other forms of compensation.

Secondary legislation has been adopted to facilitate the restitution of property belonging to religious denominations. A total of 7 568 restitution applications were filed, although by September 2003 only 118 restitution decisions had been issued. While this process covers church property, it does not apply to actual churches. The political sensitivity of this issue for the Orthodox Church has resulted in a stalling of promised legislation to address this issue. As noted in last year's Regular Report, this is a particularly important issue for the Greek-Catholic Church, which had a large number of properties confiscated by the communist regime.

The European Court of Human Rights issued 34 substantive judgements against Romania during the reporting period. The most significant of these judgements (Pantea v. Romania) found that Romania had violated Articles 3, 5 and 6 of the European Convention of Human Rights. The findings concerned mis-treatment when in prison, unlawful arrest, excessively long detention before seeing a judge, and inability to conclude a case in a reasonable time. With regard to the arrest procedures, the findings of the Court were particularly significant as they ruled that Romanian prosecutors could not be considered as independent magistrates and were therefore not able to issue arrest warrants. The Romanian authorities have addressed the legislative short-comings identified by the Court although it should be noted that the most serious parts of the judgement also related to the behaviour of certain public officials.

The large majority of other judgements against Romania concerned the (non) restitution of properties confiscated during the communist regime. Most of these cases found violations of the right to a fair trial (Article 6) as well as the right to protection of property (Article 1 of the first additional Protocol to the Convention). A number of changes in Romanian law have sought to address these issues. Other judgements concerned violation of the right of prisoners to receive mail and the lack of access to a court in order to review the final outcome of an administrative procedure. Measures were already taken a number of years ago by the Romanian authorities to address these issues.

Economic, social and cultural rights

The new labour code, adopted in February 2003, prohibits both direct and indirect discrimination, although no specific reference is made to discrimination based on gender. Romanian legislation has established the principle of equal treatment between women and men as regards access to employment. However, further actions are needed to translate this principle into action and while some steps have been taken to implement the National Action Plan for Equal Opportunities, overall progress has been limited. The setting up of the National Agency for Equal Opportunities between women and men is at a preparatory stage and should be finished in 2005.

In May 2003, legislation was passed on preventing and combating domestic violence. The law is a positive development and offers improved protection for the victims of violence. In order to implement the law, the National Agency for Family Protection should be made operational as soon as possible.

Women remain under-represented in political life, with 11% of deputies and 9% of senators. In the Government, only two out of 22 cabinet ministers are women. The revised Constitution guarantees equal opportunities for men and women in filling of public functions.

Fighting social exclusion and poverty remains a government priority and further legislative progress was made during the reporting period. The legal framework for the provision of social assistance is now in place - but there are a number of issues that will need to be addressed if these provisions are to be effectively implemented. Most importantly: institutional responsibilities for social inclusion at both central and local levels are confused and divided between a large number of bodies; staff numbers related to the provision of social assistance need to be increased; and training needs to be developed.

In Romania, there are 420 000 persons registered with disabilities, of whom 20 000 live in residential care. Conditions in these institutions vary considerably from relatively good to very poor. Most of the large residential institutions for persons with intellectual disabilities are over-crowded and offer inadequate living conditions. After years of relative inaction, a major series of reforms was launched during the reporting period to improve care of the disabled. The National Authority for Handicapped Persons was established in 2003 as the regulatory authority for the sector and is responsible for policy formulation as well as for drawing up national standards. At the same time, the existing county inspectorates for disabled people were replaced by the newly created directorates for social assistance and new regional inspectorates. Although compulsory quality standards for services for handicapped persons were adopted in March 2003, quality standards for residential care do not yet exist. On a more practical level, access facilities for disabled persons to buildings and other infrastructure have started to be provided.

In addition to these administrative changes, the National Strategy for the Protection and Reintegration of Disabled Persons in Romania was approved in November 2002. The strategy is comprehensive in its coverage and key objectives include the prevention of institutionalisation, development of alternative forms of assistance, and social re-integration. The strategy has been followed by a national action plan to support its implementation. These are positive developments - although it will take time before an assessment of their actual impact is possible.

The right to strike is generally recognised in Romania, although there are exceptions for certain key categories of workers. Industrial relations have been generally good over the reporting period - although the Social Pact, concluded in 2002 between the Government, the employers' confederations and a number of trade union confederations, has not been renewed. New legislation on trade unions was adopted in February 2003 updating the framework for the establishment and functioning of trade unions. The law strengthens the position of trade unions in several important respects, and by setting out the minimum requirements for setting up new union branches, it should allow the development of social dialogue at small and medium enterprise level. The new labour code identifies a number of areas in which labour and industrial relations are based on collective agreements. Both the labour code and the law on trade unions include provisions on the involvement of workers' representatives at enterprise level.

In March 2003, legislation was adopted strengthening the role of the Economic and Social Council as an autonomous body to promote social dialogue. However, considerable work remains to be done to promote autonomous bi-partite social dialogue and to develop the social partners' capacity to play an active role in the implementation of the social acquis. There are major differences between the 10 employers' organisations represented at national level. This significantly reduces the effectiveness of social dialogue, as they fail to represent a single voice in protecting and representing their interests. Similarly, fragmentation and the lack of sufficiently developed structures reduce the unions' representativeness and consequently their ability to promote social dialogue.

Romania has ratified the revised European Social Charter.

Minority rights and the protection of minorities

Relations with the Hungarian minority continued to be good and further progress was made during the reporting period. The revised Constitution enshrined the right of national minorities representing a "considerable proportion" of a local community to use their own language when dealing with local authorities. The constitutional revision also introduced the right for Romanian citizens belonging to national minorities to use their mother tongue in court proceedings. The law providing for bilingual signs in localities where minorities represent over 20% of the population has now been applied in the vast majority of cases. In the same localities, implementation has also started of the legal requirement for police officers to speak the mother tongue of the respective minority.

Romania has a large Roma population - estimated at between 1 800 000 and 2 500 000 [5]. Discrimination against the Roma minority continues to be widespread in practice and the social inequalities to which the Roma community is exposed remain considerable. Living conditions are poor and access to social services is limited.

[5] In some cases estimates are considerably higher than official figures, due at least partly to the reluctance of some Roma to identify themselves as such. According to the 2002 census, the official figure for the Roma population was 535,000.

Lack of access to housing of an acceptable standard remains a very important problem for the Roma population. Despite some positive local initiatives taken during the reporting period, there is still no systematic approach to this issue. County-level strategies for relations with the Roma have been developed by the police. While cases of unjustified police violence against Roma communities continued to be reported, there have also been cases of police officers being sanctioned for such abuse (which is a significant development). Roma have been able to benefit from the new framework for anti-discrimination and are responsible for over half of all complaints made to the National Council for Combating Discrimination.

Over the reporting period the Government has continued with implementation of the Roma Strategy (adopted in 2001), although the results have been uneven. In the health sector, a major development has been the official recognition of the post of "health mediator", and 166 mediators have been hired and trained. In the area of labour policy, the National Employment Agency and its county offices have started active co-operation with the Roma County Offices in order to improve access to the labour market (although to date there has only been limited progress). Vocational training programmes for Roma have also been initiated. However, further reforms are needed to increase employment opportunities for the many Roma who have not completed compulsory education. In the education sector, legislation has been modified to provide educational programmes for Roma who did not attend school. National programmes also include reserved places in high school and university for Roma students.

Progress in the other areas covered by the Roma Strategy has been limited due to a lack of clear policies and limited funding. As a part of the government reorganisation, responsibility for Roma issues was moved to the Secretary General of the Government. This move is likely to give Roma issues a higher political profile - although these organisational changes have also delayed allocations from the state budget for implementation of the Roma Strategy. The government's reliance on the Roma Party to implement and monitor the strategy is a matter for concern, as it has led to the effective exclusion of other Roma organisations.

As regards the use of minority languages, there was a very slight decrease in the 2002-2003 academic year in the number of mother-tongue educational units and in the number of students being educated in their mother tongue. The Department for Inter-Ethnic Relations financed the publication of several secondary school textbooks in the German, Hungarian and Serbian languages. The constitutional requirement for education to be organised only in Romanian or in languages of international circulation has been abrogated, opening up the possibility of private universities teaching exclusively in minority languages. Two private Hungarian universities continued to function well.

The situation for the Csango minority improved over the reporting period. In the 2002-2003 academic year classes were run in two villages for members of the Csango community who wanted to study Hungarian as an optional subject. According to Csango representatives, parents in a further four villages have filed requests that their children be taught Hungarian in the 2003-2004 academic year.

1.4 General evaluation

Romania continues to fulfil the political criteria.

The political will to address administrative and judicial reform exists and a number of positive initiatives have been launched over the last year to reform the public administration and the judiciary. For example, the Civil Servant Statute was revised and a major reorganisation of the court system was launched. However, the reform process is at an early stage. The Romanian civil service remains characterised by cumbersome procedures, limited transparency and a limited capacity for policy execution. The judicial system needs to improve the management of cases and the consistency of judgements as well as to increase the independence of the judiciary. These key issues must be urgently addressed.

Romania still needs to develop a strategy to address reform of the policy and legislative process. Progress was made with the restriction of the use of emergency ordinances. Laws on the freedom of information and transparency in the legislative process are also positive developments but have only been partially implemented. Constitutional reform of the parliamentary system should be accompanied by measures to increase parliamentary capacity to effectively scrutinise draft legislation.

Corruption in Romania continues to be widespread and affects all aspects of society. A number of high-profile measures were launched over the reporting period - but the implementation of anti-corruption policy as a whole has been limited. The measures taken have yet to have an impact and substantially increased efforts are needed.

Romania continues to respect human rights and fundamental freedoms, and has made good progress in a number of important areas.

Structures have been established to implement anti-discrimination legislation and a number cases of discrimination were sanctioned. The capacity of the Ombudsman's office was strengthened. The good progress noted in last year's report in reforming the system of child protection has continued and further initiatives have been taken to enhance the rights of national minorities. The implementation of the Roma Strategy has continued although a lack of resources has meant that the results have been somewhat limited. Similarly, the process of property restitution has continued, but remains far from complete.

Reforms have been launched in a number of other areas: modernisation of the police, improving care for the disabled, reducing social exclusion, improving the social dialogue. To date, the main work in these fields has consisted of developing strategies and preparing framework legislation. The challenge for the future will be the effective implementation of these initiatives. While the proposals to reform the Penal Code are positive developments, further efforts are needed to strengthen the freedom of expression. Additional measures are also needed to further reduce prison overcrowding.

2. ECONOMIC CRITERIA

2.1 Introduction

In its 1997 Opinion on Romania's application for EU membership, the Commission concluded:

"Romania has made considerable progress in the creation of a market economy"; it "would face serious difficulties coping with the competitive pressure and market forces within the Union in the medium term".

In its 2002 Regular Report, the Commission found that:

"Romania has continued to make progress towards being a functioning market economy, for which the prospects have improved. Sustained and full implementation of planned measures together with the completion of the reform agenda should allow Romania to be able to cope with competitive pressure and market forces within the Union in the medium term."

Based on the findings of the 2002 Regular Report, the Roadmap for Romania - adopted by the Commission in November 2002 - summarised a number of benchmarks for further economic reforms.

In examining economic developments in Romania since the Opinion, the Commission's approach was guided by the June 1993 conclusions of the Copenhagen European Council, which stated that membership of the Union requires:

* the existence of a functioning market economy;

* the capacity to cope with competitive pressure and market forces within the Union.

In the analysis below, the Commission has followed the methodology applied in the Opinion and the previous annual Regular Reports.

2.2 Economic developments

Despite a less favourable international environment, economic growth remained robust. Further progress towards economic stability was achieved but macroeconomic risks have recently increased. The Romanian economy grew by 4.9% in 2002 and is expanding for the fourth year in a row in 2003 as GDP rose by 4.3% year-on-year during the first semester. Against this favourable background, further gains towards domestic stabilisation were achieved as inflation fell more than targeted. While the current account deficit dropped sharply in 2002, it began widening again in the second quarter of 2003 on the back of rapid wage and credit growth. Albeit slightly rising, the unemployment rate remained at a single-digit level.

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Further progress towards the completion of the authorities' reform agenda took place. Privatisation advanced in the industrial sector, with the sale of additional large enterprises while preparations for divestitures in the energy sector moved beyond the first steps, although much more slowly than originally planned. Large layoffs in some of the largest state-owned loss-makers were carried out in order to improve their financial performance and their privatisation prospects. In the banking sector, the largest remaining state-owned bank could not be sold to a strategic investor as originally intended. Nevertheless, the reduction of public shareholding to below 50% is imminent following the agreement with the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) on the purchase of a controlling minority stake in the bank. The incentives for a more efficient allocation of resources were strengthened thanks to partially successful efforts to tighten enterprise financial discipline, further adjustments in energy tariffs, and improvements in the institutional framework for a market economy. At the same time, arrears to the budget and the energy utilities continued to accumulate, energy continued to be provided at below cost recovery prices and the efficiency of the public administration and of the judicial system remains insufficient to substantially improve the business envi