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Strategic partnership for success

1567 afisari
By Claudia Ariton
An ally, a partner and a friend. That's a brief description of Romania used by His Excellency Hans Klemm, the Ambassador of the United States of America to Bucharest, during his confirmation hearing in the US Senate. Even before he was appointed as Ambassador, he knew that Romania was a strong strategic partner of the United States, only to discover later how much deeper and broader the relationship between the two countries really was. The goals of this partnership are simple, yet extremely powerful: to promote security, promote democracy and promote prosperity. In his Excellency's own words, "we need to continue building on our strong relationship." In an exclusive interview with Business Arena, Ambassador Klemm also expressed confidence in Romania's economic prospects for the future.
What expectations did you have when arrived in this country last year?
How do these expectations match the reality of your work in Romania?

I was first introduced to Romania 35 years ago by my professor, writer Matei Călinescu, at the Indiana University. But then it took 35 years for me to actually arrive in Romania. We have a very extensive consultation process that occurs for ambassadors wherever they go and that was true for me as well. I had about six months to prepare for my mission here, then President Obama nominated me and I was confirmed by the United States Senate. So, I had the opportunity, during that period, to talk to a lot of people about Romania and, you might remember, in my confirmation hearing in the United States Senate, I described the relationship between the United States and Romania as one between allies, as between partners and between friends. And that kind of shaped my expectations. I thought it was going to be a very rich relationship. And I have discovered, to my surprise, that, in fact, it is a much broader and much deeper relationship than I have been prepared for. Particularly in the area of cooperation between our two militaries and in providing for international security both here and in the South-Eastern part of Europe, the Black Sea and also in the conflict zones like in Afghanistan, in Iraq and in other parts of the world as well. So, our cooperation is very, very strong.
We also have a very strong cooperation in the law enforcement area – it is deeper than I had expected – working together to fight organized crime, fight cybercrime, to counter terrorism, to counter the proliferation of weapons of mass destruction, to fight corruption generally, both to support Romania’s efforts to fight corruption, and also to fight corruption in the United States and in third countries as well.
Then, we have a very strong cooperation in the area of foreign policy in regard to countries like the Republic of Moldova or Ukraine, where, again, we are trying to counter Russian aggression in the Black Sea region with the use of sanctions and other tools. We also have a good cooperation in the economic area. But what further surprises me is the eagerness the Romanian Government had, and also the Romanians that I meet, for example, in the area of science and technology, education and culture, to find ways to strengthen the ties between our two countries, between institutions of higher education in both of our countries. So, what I expected was to find a very robust relationship as allies, as partners, as friends, but I was surprised how even broader and deeper that partnership is.

How would you characterize the Romanian – US relations and what areas should be improved?
I am astonished when I meet with rectors of Romanian universities. I had the chance to visit, for example, the University of Suceava, the University of Iasi, the University in Timisoara, the University in Craiova, the University in Oradea, in Bucharest, and, in each of these cases, the rectors were very eager to rebuilt or create new relationships with counterpart universities and colleges in the United States. We already have a very strong platform to support those relationships with the Fulbright program, the Fulbright Commission that supports Romanian scholars and students to go to study and work in the United States and also brings American scholars and students to study and work in Romania. But there’s a great eagerness among the Romanian institutions of higher learning, the Magurele high intensity laser facility for example and other laboratories in Romania to find ways to strengthen ties and bonds with counterpart institutions in the United States, and that’s something that I would really like to work on, to support, during my time here as Ambassador of the United States.

How is the outcome of the recent US presidential election likely to impact the Romanian – US relations?
To be fully honest, I think it’s a little bit too early to tell. My expectation is that there will be a great deal of continuity in the US foreign policy and, in particular, in terms of bilateral relationships between Romania and the United States. About the incoming administration, President-elect Trump hasn’t fully articulated his foreign policy goals yet. I anticipate that will happen once his cabinet has been fully decided. Just recently he identified whom he will nominate as Secretary of State, for example. So, I think in the coming months, there will be an ample opportunity for the Trump administration to articulate its foreign policy priorities. My anticipation, however, is that there will be a great deal of continuity and that the future of the relationship between United States and Romania is one that our relationship will only get better.

Media reports have claimed that Donald Trump’s victory to become President probably means that the Transatlantic Trade and Investment Partnership (TTIP) is no longer going to be a priority. What would be the positive impact of such a US-EU trade agreement, and what would be its threats in your view?
There was a great deal of effort in the past years to cover an agreement on a Transatlantic Trade and Investment Partnership and the goals there were, of course, economic in origin - to further expand the flow of trade and goods and services, as well as investment, across the Atlantic between the European Union and the United States. It also had strategic purposes, as well, by strengthening our economic ties, strengthening the strategic ties between the United States and the European Union. That work unfortunately was not concluded as yet. The United States even up until this past fall put quite a bit of energy in trying to come to at least a framework conclusion to the TTIP negotiations. But in several areas, services and agriculture, I think most prominent, we found that the political context in Europe made it really difficult to come to an agreement. Our negotiators, as per my understanding here, are going to try to develop a summary of the negotiations so that should the incoming Trump administration choose to take up the TTIP negotiations – and they haven’t excluded that by any means – there will be basis for them to do so.

Romania has recently come out of its own parliamentary elections, won by the social democrats.
How will you collaborate with the new Government?

Very well, I anticipate. When I first arrived here, in September 2015, it was a government led by a social-democratic prime minister and we were able to accomplish a great deal in terms of strengthening our relationship and strengthening the strategic partnership under Prime Minister Ponta. I fully anticipate that once a new prime minister is chosen, once a new government is confirmed by the Parliament, the United States will be able to work well with the incoming Government.

To what extent could Romania hope to attract more US investment?
I think that the prospects for Romania to attract more investment are very positive, considering that the country has the fastest growing economy in the European Union and still does offer skilled workforce, often with very, very strong language and technical skills, math and science, in particular. Romania is also blessed with natural resources: agriculture, forestry, energy, major deposits of gas and oil are still in Romania. All these things are very attractive features of this economy. I think the potential for Romania to continue to grow at a fast rate is just tremendous, especially if it makes some key investments in infrastructure, if it makes some key investments in education, if it undertakes thorough administrative reform.

What are the main difficulties that US investors have to face in Romania?
In the past 14 months, since I’ve been the American Ambassador to Romania, I have met businessmen and businesswomen all the time, representing American companies or representing American investors, but also representatives of Romanian companies and other foreign firms from third countries that are present in the Romanian market. Depending on where they are located, there are some differences in what they see as the primary obstacle to expanding their businesses. I would say that there are three major “buckets”, if you will, of comments that I have received regarding the Romanian market.
One is the work force. In some Romanian cities, like Cluj, Timisoara, I talked to investors there and they find it very, very difficult to get the skilled labor that they need in order to expand their operations. There are efforts being made in those cities, Cluj and Timisoara, to strengthen the ties existing between the universities, for example, in those cities and companies, so that students who are being educated and trained are better prepared to enter the work force and to develop the skills that are needed by the companies in those areas. But I’ve also heard similar comments in Iasi, for example, and efforts are being made there too by the American companies. Oracle is present in Iasi, Amazon is present in Iasi. These are very prominent companies in American IT and they are trying to expand their operations. They are looking for ways to make sure they have access to good-quality, skilled employees.
So, one obstacle to growth is labor and I know that the Government is conscious of this, the President has talked about it, the Minister of Labor has talked about it, the Minister of Education has talked about it… The second “basket” or “bucket” of obstacles has to do with infrastructure. Roads and rail in particular and sometimes we also hear about telecommunications infrastructure, access to broadband, but particularly roads. We have a major investor in Craiova, Ford Motor Company, and they have plans and hopes to greatly expand their manufacturing operations in Craiova, but there is no highway leading from Craiova into Europe. And all the parts that they need in order to assemble their vehicles come through very, very small roads and all the finished cars that they produce or engines that they produce also go out of the factory on these very small roads and it’s a big problem.
Then, the third set of constraints on expanding investments or expanding operations has to do, broadly, with the public administration, the predictability, the transparency, the consistency of tax and regulatory policy and the customer service orientation, the professionalization, the depoliticization of the Romanian public administration.
We put together an annual report on the investment climate in Romania. It is being updated and hopefully before the end of the year it will be posted on the Department of Commerce’s website. It provides basic information about the Romanian market that could be of interest to potential investors.

What kind of assistance can your Embassy provide to potential US investors looking for opportunities in this market?
We do so actively on a day-to-day basis. Here, in the Embassy, we have two Americans, Mr. Greg O’Connor and Mr. Joshua Burke, who represent the US Department of Commerce and Foreign Commercial Service. They have a staff of Romanian colleagues that help them provide advice to US companies who are considering making investments in Romania or are already established here in Romania and are seeking to expand or are trying to work through some uncertainties or have difficulties with their operations here in Romania.
When companies come to the Embassy for advice or for information, we meet with them very readily and this is truly part of our day-to-day business - to support and provide information to prospective investors to come to Romania. It’s not just all individual companies, but it’s also, for example, portfolio investors, hedge funds and some companies who are looking to make equity investments in Romania, and we provide them with information and our perspective on the market here in Romania, the positive aspects of it and some of the challenges that companies have faced in the market.
But when it comes to the instructions that I have received from my president, for example, our primary objective is to encourage Romanian companies and individuals to invest in the United States. And we’ve done that with some success! Every year from the past several, the president has hosted a summit to encourage foreign companies to invest in the United States. And last summer, there were four Romanian companies who participated in that summit, considering investment in the US. We encourage them to take a hard look at entering the US market.

What kind of assistance does your Embassy provide to entrepreneurs?
We’ve done a lot of work in the area of entrepreneurship, in supporting innovation, particularly looking at the information technology sector. And we’ve done this because we have a policy, that President Obama has been very supportive of, which is to encourage entrepreneurship, to encourage innovation, to encourage start-up ecosystem in countries like Romania, because we think it is a potentially very powerful engine in terms of overall economic growth and can also contribute to higher educational outcomes. So, we’ve done a great deal of work in this area, firstly because we believe it’s in our interest, but also a lot of Romanian entrepreneurs have come to us with request for support both in terms of trying to improve the legal and regulatory environment here in Romania, access to capital in Romania, but then also to establish links with the American companies, investors and individuals operating in IT. We participated, for example, in a conference in October together with the Israeli Embassy and the Embassy of the Netherlands to share our experience - not only the American experience, but also the Israeli experience, the Dutch experience - in creating the right environment and to support the development of the IT sector.

What is the total volume of US investment in Romania?
If you look at the official statistics, the United States is not even in the top ten in terms of investment in Romania. I think the latest statistics that we saw placed it at number 12. But one problem is the way companies are counted. Ford, for example, which is a major investor, is listed as a company headquartered in The Netherlands, not in the United States. So, Ford’s investment here is counted as a Dutch investment, not as an American investment. And if you look at the top ten brands, if you will, from the United States, this is a case for each of them, that their European operations are headquartered in Germany, England, The Netherlands, Switzerland or Austria and their investments in Romania are calculated to be based in those countries. So if you try to account for all of that, we estimate that the United States is probably around the third largest investor by nationality in Romania. And some of the companies represen­ted in this market are major American firms: Ford, ExxonMobil and across the IT spectrum Oracle, HP, IBM, Motorola and Microsoft, also Citibank is here, MetLife, a very large US bank and, I think, now the largest US insurance company, Cargill and Bunge, two very, very large American firms in the agricultural sector. I had the pleasure of visiting a farm in Teleorman county a couple of months ago. I went to that farm because they have a very long-standing relationship with Cargill, an American provider of seeds and fertilizers.

The US Embassy has been an active supporter of Romania’s efforts to fight corruption. What elements have yet to be improved in that area in your view?
Romania truly has done an increasingly credible job of waging an effective fight against high and medium-level corruption. The National Directorate for Anticorruption (DNA) and the other rule of law institutions are actually seen as, not only by the United States, but also by your neighbors here in the South-Eastern Europe, as models for creating an infrastructure and judicial independence and prosecutorial resources and effectiveness in Romania’s fight against corruption. Other countries have started to come to Romania for technical assistance, which is something the DNA should be very proud of. It’s not just the DNA, it’s also, again, the independent judiciary, it’s the Government of Romania and the people of Romania supporting the provision of adequate resources to the DNA to ensure that when the DNA identifies acts of corruption it indicts, prosecutes and eventually, within the justice system, the convictions of those who have stolen from Romania are obtained and those people go to jail.
I often ask this question to other Romanians, if there is any danger that this effectiveness the DNA and the Romanian judiciary have been able to acquire could be undermined somehow by changes in legislation to weaken the effectiveness of the DNA and other prosecutors, as well as the judiciary as a whole. This is something that the Minister of Justice, Raluca Pruna has talked about, for example. She said this publicly, so I hope she doesn’t mind me quoting here, but she basically has confidence that the judicial institutions here in Romania are adequately strong and there is a strong public support and also a strong support from civil society. It’s not only the Minister of Justice, I’ve heard this from others as well, that this fight can be maintained as effectively as it has been in the past several years. In fact, the Ciolos government came out with a draft national anticorruption strategy, during the summer, where it said that this fight must be continued in the judicial sense, but then also additional measures should be taken to prevent corruption through education, through training of government bureaucrats in ethics.
My colleagues and I, the Americans who work at the Embassy, every year must take a mandatory course of training in ethics. It’s mandatory, once a year, just to remind us of our responsibilities as public servants and also of the legal prohibitions on certain acts that could cause ethical considerations and also might be illegal. So, I would encourage the Romanian government to undertake something similar to ensure that all public-sector em­ployees here receive regular training in fighting corruption, in ethics and a better understanding of the laws that operate in terms of public procurement. Also, the government is now reforming the operations of this agency that’s responsible for seizing assets from those who are convicted of acts of corruption. I think it’s very important that it won’t become possible for somebody who is convicted of acts of corruption to spend some time in prison, then leave and get back all the assets that they had before going to prison, assets that they stole from the Romanian state. That should be prohibited. And, again, in the area of education, it’s important to provide civic education to Romanian high-school students and university students. So there are many things that can be done in this area of preventing corruption. Putting more government services online is something that other countries have found to be effective. Take Estonia, for example. They were very aggressive in putting government services online, turning them into eServices, eGovernment, as an effective tool to combat corruption.

A hot topic in the local market: when will Romania enter the Visa Waiver program?
In my first trip out of Bucharest, my wife and I went to Alba Iulia. And we were walking around the “Cetate” and some person came up to me, I think it was a university student, a younger man, and he said: “Are you the Ambassador? Can I ask you a question? When are we going to participate in the Visa Waiver program?”
The Visa Waiver program is not policy, is not regulation, it is law. And there are some criteria that must be met for countries who wish to be a part of the program, which includes about 30 countries. The law stipulates that countries must meet five different criteria to qualify.
Romania has met four of the five criteria, but the big one, which is arguably the most difficult, is getting the refusal rate for applicants who wish to go to the United States for business or for tourism to a level of around 3%. Romania has currently around 10%. You’re not alone. There are five countries in the European Union in this situation.
We’re trying to provide as much information as possible so people, when they come to the Embassy to apply for a visa, have a very, very strong idea what’s required in order to qualify for a visa and hopefully that will discourage people who can’t qualify for a visa from applying, bringing down the refusal rate.
There was a legislation introduced in the United States Senate in 2014 to raise that threshold from 3% to 10%. The legislation was supported by President Obama. When I testified for Congress last year, I was seated next to a colleague who was hoping he’d be our next Ambassador to Poland, and we both were prepared to say that we fully support this legislation. Unfortunately, the Congress did not support it as a whole, and it wasn’t approved. Immigration is, as in most countries, a very sensitive topic in the United States. It was one of the key issues around which the presidential campaign centered.
President-elect Trump has made it clear that he would like to make changes to our immigration law and policy. There is an opportunity for the new Congress to take up this question about the Visa Waiver program. It’s very difficult to predict at this moment.
So, the hard part of this answer is that it’s really up to the Congress now to decide what approach it will take on the immigration reform.

What goals would you like to have achieved by the end of your term in Bucharest?
I think we are doing a tremendous work in military, law enforcement and in other areas, as well. So, we aim to promote security, promote democracy, strengthen the democratic institutions. Romania is making a great contribution in this area, with, for example, its fighting against corruption and its strengthening of the rule of law. And then we also aim to promote prosperity, strengthening the economic ties between our two countries, trade and investment. So, these are the three goals - to promote security, promote democracy and promote prosperity – in order to strengthen the strategic partnership between the two countries.
I would like to strengthen the ties between our two countries within the area of education, science and technology and culture. (…) We would like to rebuild the presence that the United States used to have in culture. I often meet with people who have very fond memories of our library downtown during the communist period, which people saw as a safe haven, where they went and had exposure to the Western world. We no longer have that presence downtown. We do have a library here, we have American corners throughout the country, but people tell me that they would like to see United States have a higher profile, for example, in areas like culture, art, music and theatre. We are trying to see what we can do in this area, given our limited resources.
So, we would really like to see what we can do to strengthen the ties between our two countries, our two societies in the area of science, education and culture.

You have traveled extensively in Romania. What areas do you like most?
The last major trip I had outside of Bucharest was when I went up to Maramures and Satu Mare. It was in October, just as the leaves were changing in color and it was just incredibly beautiful. We traveled from Baia Mare to Sighet, and then we also traveled from Oradea through the Apuseni national park down into Cluj. The countryside was all golden and red, and it was just incredibly beautiful. That was the beautiful part, but then you go to a town like Sighet and that is a place that was not well-treated by the 20th century history. In 1944, it was a victim of German policy towards the Jews, and then in the 1950s there was a prison used by the communist regime to punish the democrats. This is true in the United States, as well. Every country has its incredibly beautiful aspects, but then also, looking back at its history, has its sore spots.

The interview is also available in our print edition of Business Arena.

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