Area Handbook for Romania Part 27

Enlisted ranks also have familiar t.i.tles when translated. Basic soldiers hold the ranks of private and private first cla.s.s. Conscripts serve their entire tours as privates unless they acquire a speciality or are put in charge of a small group. Corporal is the lowest noncommissioned officer rank. Senior noncommissioned-officer grades include the ordinarily used sergeant ranks, including one (and possibly more) that is seldom seen but is equivalent to sergeant major or senior master sergeant.

Rank insignia tends to be ornate. All uniforms except the work and combat types display it on shoulderboards. Those of general officers have intricate gold designs with large gold stars. Other officer ranks have smaller stars cl.u.s.tered at the outer ends and stripes running the length of the boards. Stripes and borders on any one board are the same color, but the various service branches have different colors to identify them. For example, armored troops have black; frontier troops have light green.

Enlisted men's shoulderboards have no borders, and the background color, like the stripes and borders of the officers', indicates the service branch. Rank is shown by stripes that run across the outer end of the board. Privates have no stripes, corporals and privates first cla.s.s have yellow stripes, and sergeants have bra.s.s. Other devices that also identify the service branch appear on the inward end of the shoulderboard on all ranks except those of the general officers and privates.

Cap insignia is more easily distinguished than that on the shoulderboard. Enlisted men wear a large bra.s.s star. General officers wear a star with a round blue center and red points mounted on an ornate round background. Other officers wear the red and blue star but without background.

There is less variety in uniforms than is common in Western and most of the other Warsaw Pact forces. Other than for extreme weather and rough work, enlisted men have one type of uniform for winter and one for summer. Material for winter wear is olive-green wool; for summer it is cotton and may be olive green or khaki.

Officers have a field or service uniform, which is similar to the enlisted men's, and a blue uniform for dress. The dress blouse has no belt, and shoes are low cut. The service uniform blouse is sometimes worn with a Sam Browne belt. Overcoats, except for b.u.t.tons and insignia, are plain and conventional.

Service and dress uniforms are generally well tailored and made from durable materials. Cloth in the officers' uniforms is more closely woven and of finer texture; that in enlisted men's uniforms is warmer and more durable, but it is bulkier and does not hold its shape as well. Combat and extreme-weather clothing is heavy and loose fitting, reminiscent of the Soviet World War II winter wear.

A variety of decorations may be awarded to service personnel; a number of them may be given in three cla.s.ses, and at least one of them is given in five. About a dozen have been authorized by the communist regime since 1948. Romanians may wear on their uniforms medals awarded by other Warsaw Pact countries but not those of any other foreign country.

The highest decoration is the Hero of Socialist Labor--Golden Medal, Hammer and Sickle. This is considered a dual award, although the parts are always awarded together, and the medal itself is a single one. Other awards that may be given to both military personnel and civilians include the Order of the Star, Order of Labor, and a medal commemorating "Forty Years Since the Founding of the Communist Party of Romania." The third one of the group is given those who were active in the Communist Party between 1921 and 1961 or those who did party work between the two world wars or during the early days of the country's communist regime.

Decorations designed exclusively for the armed forces include the Order of Defense of the Fatherland, the Medal of Military Valor, and the Order of Military Merit. Others recognize service during specific events, such as the Liberation from the Fascist Yoke medal and the Order of 23 August, both of which commemorate World War II service against Germany.

Despite the number of decorations authorized and the many cla.s.ses provided for in several of them, medals are awarded less profusely in Romania's forces than in many armies, especially those that are made up largely of conscripts or that serve in a largely internal security role.

Ceremonies that occur most often involve awards from foreign delegations at the conclusion of their visits to the country or the retirement of older, senior-ranking officers.

THE MILITARY ESTABLISHMENT AND THE NATIONAL ECONOMY

Although the labor force is smaller than the national leadership considers adequate, almost all physically fit young men are conscripted.

Only a few, those who are essential to the support of a family or who have other exceptional circ.u.mstances, are deferred or exempted. On the other hand, the approximately 4 percent of men in the military age group that serve in Romania's armed forces is about the European average and is lower than average for the Warsaw Pact nations.

Some Romanian officials have suggested that the burden on the economy may be greater than that indicated by a comparison of national statistics arguing that, because labor productivity is low, the loss of 4 percent of the labor force may diminish total production. On the other hand, some Western a.n.a.lysts have argued that, because most of the conscripts are unskilled and underemployed, the military's drain on the manpower pool entails no great loss to productive enterprise (see ch.

14).

In monetary terms the armed forces have been somewhat less of a burden.

Between 1967 and 1970 their costs averaged approximately 3.1 percent of the gross national product (GNP), which is low when compared either with the average for Europe or with the average of the other Warsaw Pact members. Beginning in 1970, however, in an effort to reduce dependence upon the Soviet Union, Romania began to stimulate local production of military materiel and to purchase some items from other countries. This resulted in a sharp increase in defense spending in 1970. Unless the size of the armed forces is reduced, some continuing increase in expenses over pre-1970 levels will be necessary if Romania chooses to continue its policy of nondependence upon the Soviet Union.

The armed forces engage in construction projects on a scale that local leaders say is an important contribution to the economy. They are employed in industrial construction, roadbuilding, railroad maintenance, and important agricultural and irrigation projects. Large numbers of troops partic.i.p.ated in the disaster relief efforts made necessary by the great floods during the spring of 1970.

SECTION IV. ECONOMIC

CHAPTER 14

CHARACTER AND STRUCTURE OF THE ECONOMY

In 1972 Romania entered the second year of a five-year economic plan that is intended by the leadership to advance the country on the road to industrialization and to increase its economic potential sufficiently to make the economy one of the most dynamic in the world. This goal is to be attained mainly through a continued high rate of investment, a significant improvement in productivity, and an expanded and more efficient foreign trade. Although significant strides in industrial development had been made in the past, this achievement entailed a neglect of agriculture, an inadequate provision for consumer needs, and a balance of payments deficit with Western industrial nations that threatened to undermine the leadership's policy of political and economic independence from the Soviet Union (see ch. 10).

Rigidly controlled by the PCR (see Glossary), the economy suffers from the basic weakness common to all centrally controlled economies, that is, a lack of adequate incentives for managers and workers. Rapid industrialization since 1950, made possible by ma.s.sive inputs of capital and labor and aided by heavy imports of advanced Western industrial plants and technology, has involved a waste of resources on a scale that may hamper economic progress at the present stage of development. In trying to evolve a system of incentives that would lead to a more economic use of resources, the PCR is facing a dilemma. Greater efficiency requires more flexibility, which, in turn, implies a greater freedom of initiative at lower economic levels than the PCR has been prepared to grant thus far. In the search for a solution numerous administrative changes have been made since 1968 without basically altering the nature of the system.

A major problem facing the economy is its heavy dependence on imports of raw materials and equipment and the failure, thus far, to develop a sufficient volume of exports salable in world markets. At the present stage of development, Romanian industrial products compete poorly with the output of advanced Western nations. Expansion of agricultural exports, which have a ready market in many areas, has been hampered by the slow development of the country's agricultural potential and by a growing domestic demand. Although greater attention is to be devoted to agriculture under the current Five-Year Plan (1971-75), the additional resources to be allocated to this sector are not commensurate with the magnitude of its needs. Instead, major emphasis is placed in the five-year period on the development of the chemical, electronic, and precision tool industries for domestic needs and export.

The state of the economy in the early 1970s was revealed by two Romanian economists in articles evaluating their country's economic progress.

According to their calculations, the per capita national income in Romania in 1975, provided that the economic targets for that year are reached, will approach the level attained by Italy and Austria in 1968 and will be somewhat larger than half that in France and the Federal Republic of Germany (West Germany) in the same year. At the same time they estimated that, even with continued acceleration of the rates of industrial modernization and growth of labor productivity, it will require several more five-year periods to reach the 1971 economic level of the more developed nations.

ORGANIZATION

The economy is highly socialized. The state owns virtually all industry and shares with collective farms ownership of more than nine-tenths of the farmland. Private artisan shops contribute only a fraction of 1 percent to the industrial output, and private farmers' limited holdings are confined mainly to marginal lands. The state owns all natural resources other than the collective and private farmlands; maintains complete control over the country's physical resources, finances, and labor; and has a monopoly of foreign trade and foreign exchange. The functioning of the economy is directed by comprehensive long-term and annual state plans, which are binding for all economic ent.i.ties.

Control over the economy is strongly centralized, despite half-hearted attempts since 1968 to grant more freedom of initiative to lower management levels in the interest of greater flexibility and efficiency.

Supreme decisionmaking power rests with the Standing Presidium of the PCR and the Council of State, the memberships of which are almost identical (see ch. 9). Compliance with PCR decisions is enforced through an administrative hierarchy that consists of three distinct levels: the Council of Ministers, all of whose members hold high positions in the PCR; economic ministries, which are responsible for specific sectors of the economy; and trusts and combines, which group enterprises along functional or territorial lines. Specialized committees with ministerial rank administer certain aspects of economic activity; chief among these are the State Planning Committee and the Committee for Prices (see ch.

8).

The organizational structure of the economy has undergone frequent changes in efforts to resolve economic problems by administrative means.

Officially, the reorganizations have been declared necessary to keep economic management abreast of the requirements of socialist economic development. The frequency of the changes, however, and a lack of clarity in many of the directives have brought about a blurring of jurisdictional lines with consequent overlapping of functions and conflicts of authority. The organizational problem has been compounded by the contradictory nature of the motives that have prompted the reforms--to grant more discretionary power to enterprise managers and, at the same time, to strengthen central controls by enhancing the directing role of the compulsory economic plans. In 1971 economic officials considered important aspects of the economic organization to be still in an experimental stage.

STRUCTURE AND GROWTH

Data on gross output and national income in absolute terms have not been published. Official statistics on these social accounts have been limited to a few index series for overall, productive sector, and per capita values and a percentage breakdown of gross output and national income by productive sector. The arbitrary nature of the pricing system and differences in statistical treatment compared to Western practice preclude a direct comparison of the published growth rates of the economy and its components with similar rates in Western countries. The same holds true for comparisons of economic structure. Independent studies of the economy by Western scholars in Western statistical terms yielded significantly lower rates of growth and a different structure of economic activities from those officially announced.

According to official data, national income (net material product, which excludes private and government services not directly related to production) more than doubled between 1960 and 1970, and industrial output more than tripled. Agricultural production, by contrast, increased by less than one-third. The rates of economic and industrial growth, even when translated into Western terms, have been relatively high and among the highest in countries of Eastern Europe. Such high growth rates have usually been a.s.sociated with early stages of industrial development. The high growth rates were made possible by an official policy that allocated more than 30 percent of national income to investment. Growth rates in the 1966-70 period were somewhat lower than in the preceding five years, with the exception of agriculture, the performance of which was slightly better.

The predominant growth of industry has been a direct consequence of the leadership's policy. This policy was reflected in a disproportionately large allocation of investment to industry at the expense of other economic sectors. In the 1966-70 period, for instance, industry received 55 percent of total investment--60 percent if the construction industry is included--compared to less than 13 percent granted to agriculture.

Within industry preponderant emphasis has been placed on the development of the capital goods sector at the expense of consumer goods. Whereas total industrial output increased at an average annual rate of 11.8 percent from 1966 to 1970, production of capital goods rose at a rate of 12.7 percent, and production of consumer goods grew by only 9.5 percent annually.

As a consequence of the uneven sectoral growth, the structure of the economy changed significantly between 1960 and 1970. According to official data the contribution of industry to the net material product rose from 44 to 61 percent, whereas that of agriculture declined from 33 to 20 percent (see table 4). The relative importance of construction and transport rose slightly, but that of trade declined by half. A strikingly different structure of the economy emerges in terms of the Western concept of gross national product (GNP), which includes housing and services and treats both taxes and subsidies in a different manner.

The contribution of industry was less than that of agriculture in 1960, but by 1967 it had increased more rapidly than is indicated by the official data (see table 5). The role of agriculture, on the other hand, declined more rapidly.

_Table 4._ _National Income (Net Material Product) of Romania, by Economic Sector, 1960, 1967, and 1970_ (in percent)

---------------------------------------------------------- Economic Sector 1960 1967 1970 ---------------------------------------------------------- Industry and handicrafts 44.1 51.7 60.8 Construction 9.0 8.4 9.6 Agriculture 33.1 28.6 20.0 Transport and communications 3.8 4.2 4.2 Trade 6.5 4.6 3.2 Other sectors 3.5 2.5 2.2 ----- ----- ----- Total 100.0 100.0 100.0 ---------------------------------------------------------- Source: Adapted from _Anuarul Statistic al Republicii Socialiste Romania, 1970_ (Statistical Yearbook of the Socialist Republic of Romania, 1970), Bucharest, 1970; and U.S. Department of Commerce, Office of Technical Services, Joint Publications Research Service--JPRS Series (Washington), _Translations on Eastern Europe: Economic and Scientific Affairs_, "Development of National Income Discussed," _Probleme Economice_, Bucharest, April 1971, (JPRS 53,521, Series No. 491, 1971).

Published labor statistics leave many serious gaps, and unofficially reported data do not always agree with official figures in the annual statistical yearbooks. Information released on the size of the economically active population is limited to percentage changes over the years.

The economically active population increased by only 3.5 percent from 1960 to 1967 and remained stationary thereafter to 1969. During the ten-year period the number of persons active in industry increased by half, whereas the number of those engaged in agriculture declined by 19 percent. Nevertheless, in 1970 about half the population was still engaged in agriculture, and only 22 percent were active in industry.

Although there is no officially recognized unemployment, a substantial amount of underemployment is reported to exist in industry and, even more so, in agriculture. The reasons advanced by Romanian economists for this situation are the duty and the right of every citizen to work and the inability to achieve quickly full and efficient employment in a country that inherited a backward and predominantly agrarian economy with a large peasant population. Efforts toward obtaining full and efficient employment have been handicapped by the rapidly rising volume of investment needed to create new nonagricultural jobs. The average investment per nonagricultural job increased almost fivefold to 324,000 lei (for value of leu, see Glossary) from the 1951-55 period to the 1966-70 period, and a further 40 percent rise in cost was projected for the 1971-75 period.

_Table 5. Gross National Product of Romania, by Sector of Origin, 1960 and 1967_ (in percent)

------------------------------------------------- Economic Sector 1960 1967 ------------------------------------------------- Industry and handicrafts 24.4 32.9 Agriculture and forestry 31.8 22.0 Construction 7.6 11.1 Transport and communications 7.6 8.8 Trade 6.5 5.4 Housing 9.2 7.0 Government and other services 12.9 12.8 ----- ----- Total 100.0 100.0 ------------------------------------------------- Source: Adapted from U.S. Congress, 91st, 2d Session, Joint Economic Committee, _Economic Developments in Countries of Eastern Europe_, Washington, GPO, 1970.

PLANNING